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- Beyond Meat's sales tanked by nearly a third in Q2, which the company attributed to weak demand.
- Consumers are financially squeezed and they're skeptical of the health benefits of plant-based meat, execs said.
- US sales plummeted much more than in Europe, where consumers are more concerned about the planet, execs said.
Beyond Meat's sales are plummeting as consumers pull back on plant-based meat.
Inflation and higher interest rates have been squeezing customers' spending power, execs said at Beyond Meat's second-quarter earnings call on Monday. Overall, consumers have been trading down to cheaper proteins and also buying less protein in general, CEO Ethan Brown said.
"But then you get to our category where we are high priced, and so not going to do particularly well in that environment," he said.
Brown said that the "number one issue" with the plant-based meat category was that it ultimately wasn't bringing in enough new consumers.
The company, which has been struggling for months, sold 22.9 million pounds of products in the three-month period, a decrease of nearly a quarter year-over-year. CFO Lubi Kutua said that there had been a "relative underperformance" of its core products – burgers, ground beef, and dinner sausage.
The company posted net revenues of $102.1 million in the quarter to July 1, a decrease of 30.5% year-over-year. Beyond Meat said that this was driven by a 23.9% decrease in the volume of products sold, especially in the US, as the company cycled over a strong second quarter in 2022, and an 8.6% decrease in net revenue per pound caused by changes in its product-sales mix and increased trade discounts which didn't attract as many new customers as expected.
"On the surface, Q2 was a disappointing quarter for us as net revenues and gross profit fell short of our expectations," Kutua said, though he noted that some factors showed the company had improved its operating performance, "giving us reason to be optimistic for the long term."
US retail revenues fell by 38.5% year-over-year. US food-service revenues fell even more drastically, by 45.4%.
International markets saw a much smaller drop in revenues year-over-year. Retail revenues were down 15.6%, while food-service revenues were down by just 0.9%, with an increase in sales volumes "primarily reflecting strong sales to large QSR customers in the EU." McDonald's has rolled out a McPlant burger with a Beyond Meat patty in various European countries, though its US trial failed.
The US made up just under 60% of Beyond Meat's total revenues in the quarter. In 2022, it accounted for 72.5% of Beyond's total annual sales.
Food-service sales accounted for more than half of Beyond Meat's total revenues in the quarter in international markets, compared to just a fifth in the US.
As well as economic concerns, "ambiguity and confusion" around the health benefits of plant-based meats have been stunting the category's growth, Brown told investors, and interest groups had "succeeded in seeding doubt and fear around the ingredients and process used to create our and other plant-based meats." While environmental concerns are a major motivator for people buying plant-based meat in Europe, "here in the US, it's more driven by health," Brown said. He said the company was going to be "much more aggressive" in showcasing these benefits in its marketing.
Brown said that the company was also going to focus on making its products easier to find in retailers' fridges.
Beyond Meet posted a gross profit of $2.3 million, up from a $6.2 million gross loss in the same period a year ago, and a net loss of $53.5 million, compared to a net loss of $97.1 million in second quarter of 2022. It attributed the improvements rise to lower materials and freights costs, decreased production trial expenses, and salary savings from its layoffs in October.
Brown said that the climate crisis also meant that transition to a more plant-based food system "is not only inevitable, but gaining urgency."