Not too long ago, plant-based meat seemed poised to take over dinner plates the world over. Fueled by concerns about animal welfare, the environment and health, investment poured into the alternative protein industry. The frenzy for fake burgers and sausages reached its peak with the initial public offering of Beyond Meat in the United States in 2019.
The shares, priced at $25, soared nearly 10-fold within two months of trading to give the company a market value of nearly $14 billion.
The stock has plunged 94% since then. Beyond meat reported a first-quarter loss of $59 million this week on a 16% drop in revenue to $92 million.
Why has fake meat lost its sizzle? The first problem is that didn’t get enough converts. In the US, sales of plant-based meat substitutes leveled off as inventories increased due to the pandemic. Sales totaled $1.37 billion last year, up from $1.38 billion in 2021 and $1.4 billion in 2020, according to the Plant Based Foods Association. Price hikes have helped flatter the numbers. Sales volumes decreased 8% year over year.
The second problem is that plant-based meat is more expensive than real meat. Omnivores have switched to cheaper cuts of animal meat. Vegetarians have preferred simpler plant proteins like tofu or quinoa.
The third difficulty — highlighted by Lex amid the market’s initial enthusiasm for Beyond Meat — is the low barriers to market entry. There are now more than 60 plant-based meat companies, each with more than $500,000 in retail sales, according to The Good Food Institute.
The catalog of problems puts Beyond Meat in a difficult situation. Cash and cash equivalents declined for the eighth consecutive quarter to $258 million. Net debt is $1.1 billion. The company plans to raise $200 million via a stock sale. Last year he announced two rounds of layoffs.
Private rival Impossible Foods also reportedly planned to cut jobs, despite record sales in 2022. Brazilian meat giant JBS closed its U.S. plant-based food business, Planterra Foods, just two years later. its launch.
In its heyday, Beyond Meat’s shares traded at up to 122 times revenue. The rating dropped to just twice. But it still looks expensive compared to other food makers like Hormel and Conagra, both of which are profitable and boast growing sales.
The broth now resembles the unappetizing leftovers from a failed culinary experiment.
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