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- Beyond Meat says it plans to increase prices to boost its profit margin.
- It also plans $70 million of cost cuts and will discontinue some products, like its plant-based jerky.
- US sales fell by a third in 2023. The company attributed it to "misinformation," sales discounts, and low demand.
Beyond Meat has unveiled details of a massive turnaround plan, including raising the prices of its plant-based meat and cutting overall costs as it struggles with slumping sales.
The maker of plant-based patties and sausages told investors on Tuesday that it would have to increase prices to bolster its margins.
CEO Ethan Brown said on a company earnings call that Beyond Meat had conducted "extensive pricing analysis" and would raise prices early in the second quarter.
That comes alongside a significant cost-cutting program, Brown said, which will see Beyond make a "minimum of $70 million in cuts" in 2024.
"Though varied across channels and product lines, we expect the overall impact of these pricing changes to meaningfully impact margin across the balance of the year," he said.
"This change in strategy does not reflect an abandonment of our long-sought price parity goal," Brown said, referring to the company's goal of making plant-based meat the same price as animal meat.
Brown said that as well as restoring the company's margins, the pricing action aimed to create more of a tiered pricing system, with higher prices for more premium products like its upcoming Beyond IV, its new range of plant-based beef and burgers made with avocado oil which it will roll out at US retailers in the spring.
Some products, including those in grocery stores, would barely change in price, Brown said.
CFO Lubi Kutua told investors that Beyond Meat was "pretty confident" that overall, the changes in price would offset or more than offset the expected loss of volume caused by higher prices.
Misinformation about plant-based meat is 'scaring customers away'
Beyond Meat posted net revenues for 2023 were $343.4 million, a decrease of 18% compared to 2022. US sales fell by almost a third, whereas international sales rose about 20%, mainly because of a significant jump in distribution to restaurants. It attributed declining US sales to weak demand for plant-based products, as well as Beyond Meat offering more discounts.
In 2023, sales of Beyond Meat's products to the food-service industry — which includes restaurant chains like McDonald's and Pizza Hut — made up less than a quarter of its US business, compared to more than half of its European business. Its US business accounted for around 60% of its total revenues, compared to 72.5% in 2022.
The company posted a gross loss for the year of $82.7 million, compared to a loss of $23.7 million in 2022.
Brown said that Beyond Meat had struggled as the meat industry tried to "poison" the plant-based industry with misinformation and claims about the products not being healthy, which had been "scaring customers away."
"The broad pricing programs we put in place over the last 18 months simply didn't accomplish the goal of crossing from early adopters into the mainstream," Brown said. "In retrospect, the noise and swirl surrounding the category reached decibels that were perhaps sufficient to ground out pricing and other messages."
The rounders of Bosh!, a UK-based plant-based brand that makes recipe books and sells packaged products, told Business Insider in January that they expected retailers to start stocking more "green" meatballs and bean burgers in place of fake-meat products amid rising concerns about ultra-processed foods. They also expect more interest in naturally vegan products like tofu and tempeh.
As part of its overhaul, Beyond Meat is "tightening" its portfolio, Brown said. This includes discontinuing its plant-based jerky just two years after it was introduced to focus on more profitable products instead, he said.
Beyond Meat plans to cut at least $70 million from its operating budget for 2024, Brown said. This includes consolidating its production network to just one contract packager in the US. In November, the company cut its non-production workforce by about 65 people, or 19%.
Beyond Meat's share price surged on the announcement of the quarterly results and turnaround plan, jumping by around 55% in pre-market trading Wednesday.