Getting to Know About Beyond Meat Business Model

Beyond Sausage. Flickr Image.

This article talks about Beyond Meat’s business model and covers the following topics:

Without further ado, let’s get started.

1. Beyond Meat’s Products

Let’s start the discussion of Beyond Meat’s business model by first getting to know its products.

Beyond Meat offers its plant-based meat products across 3 main platforms and they are beef, pork and poultry.

From these major platforms, the company’s plant-based meat products are further divided into 2 categories, which are (1) Ready-to-cook (“Fresh”), and (2) Ready-to-heat (“Frozen”).

Ready-to-cook (“Fresh”)

Beyond Burger

Under the ready-to-cook category, which the company refers to as “fresh” platform, there are quite a few offerings in this category.

For example, the Beyond Burger, Beyond Sausage, and Beyond Beef are some of the popular flagship products under the ready-to-cook segment.

Besides, there are also the Beyond Breakfast Sausage, Beyond Fried Chicken and Beyond Meatball which also fall under the ready-to-cook section and they have been gaining popularity.

Ready-to-heat (“Frozen”)

Beyond Beef Crumbles

In terms of the ready-to-heat or “frozen” segment, Beyond Meat offers only 1 selection, which is the Beyond Beef Crumbles.

Like its counterparts in the ready-to-cook section, the Beyond Beef Crumbles has also been gaining traction among the consumers’ appetite lately as it offers not only simplicity but also nutritional ingredients that are packed with 14 grams of protein and 1 gram of fiber per serving.

Moreover, the Beyond Beef Crumbles contains no soy and GMO products and is certified Kosher and Halal.

2. Customers and Distributors

Next, we will talk about Beyond Meat’s business model from the perspective of its customers and distributors.

How does Beyond Meat sell its plant-based meat products to its customers?

The answer lies in its distributor channels.

Basically, Beyond Meat sells most of its products through its distributor channels.

Beyond Meat’s distributor channels are divided into 2 major categories, and they are:

(1) Retail, and
(2) Restaurant and Foodservice

Beyond Meat has a very strong presence at some of the leading food retailers in the United States.

As of Dec 31st, 2020, Beyond Meat has offered its products through approximately 28,000 retail outlets in the U.S. alone and approximately 34,000 retail outlets outside of the U.S. according to its 2020 annual filings.

Net revenue from sales through retail channels alone reached as much as $300 million in fiscal 2020, representing a year-over-year increase of more than 100% or $156 million.

Some of Beyond Meat’s largest retailers that carry the company’s products include Walmart, Kroger, Target, Whole Food Markets, Sam’s Club, Costco, etc.

In 2020, Costco accounted for approximately 13% of Beyond Meat’s gross revenue, making it one of the company’s largest customers.

On the other hand, Beyond Meat also distributes its products directly to restaurants and food service outlets.

By the end of 2020, Beyond Meat’s products are available in over 42,000 restaurants and foodservice outlets in the U.S. alone and 18,000 more outlets outside of the U.S.

While Beyond Meat’s retail sales rose significantly in fiscal 2020, the company’s foodservice revenue has tumbled in the same fiscal year, due largely to the COVID-19 disruptions.

As of Dec 31st, 2020, Beyond Meat’s net revenues from sales through restaurant and foodservice outlets clocked in at only $106 million, a decline of more than 30% or $47 million on a year on year basis.

Other than the U.S., Beyond Meat also has been slowly expanding its product offerings in the international market.

The company uses mainly distributors to sell its products in the international market.

As of Dec 31st, 2020, Beyond Meat’s international market revenue reached $82 million, representing a year-on-year decline of 16%.

3. Supply Chain

The discussion of Beyond Meat’s business model will not be complete without going into the topic of the supply chain.

The supply chain represents some of the company’s most critical parts of the business operation because it is through the supply chain that Beyond Meat gets most of its raw materials to manufacture its products.

In general, the main ingredient used in manufacturing Beyond Meat’s plant-based meat products is pea protein.

The company acquires pea proteins from a number of suppliers for its fresh as well as its frozen products.

According to the 2019 annual report, Beyond Meat uses suppliers such as Roquette and Puris Proteins, LLC to supply the required plant-based protein for its products.

In general, Beyond Meat uses multi-year supply agreements, which usually extend from 1 to 3 years, to keep a constant stream of supplies for the needed raw materials.

Other than pea protein, another critical ingredient that Beyond Meat needs to produce its products is plant-based flavors. Plant-based flavors are flavors developed by Beyond Meat but the raw materials used in producing the flavors are sourced from 3rd parties.

In this aspect, Beyond Meat does not manufacture the flavors.

Instead, it’s being produced by vendors who produce the flavors according to a formula developed by Beyond Meat.

These flavors are then qualified through a lab analysis to ensure quality and manufacturability.

According to Beyond Meat, the ingredients used for producing the flavors are readily available from many suppliers and will not drastically affect the company’s operation in the event of a supply cut from a vendor.

4. Manufacturing Process

Once Beyond Meat successfully secures the raw materials such as the pea protein and flavors, the company will begin manufacturing its plant-based products.

During the manufacturing process, Beyond Meat relies on its own manufacturing facilities as well as 3rd parties’ manufacturing facilities which the company refers to as co-manufacturers.

The following diagram which was extracted from Beyond Meat’s 2019 annual report summarizes the manufacturing process:

Beyond Meat manufacturing steps

Manufacturing processes that are performed in Beyond Meat’s facilities :

1. A dry blend is first performed to combined plant protein in the manufacturing facilities.

2. An extrusion is then performed on the dry blend to add water and steam.

3. A combination of steps such as heating, cooling, and variations of pressure is executed here to weave together the blended proteins.

4. The formed woven protein is then cut into pieces to expedite the freezing process and assist in the final manufacturing process.

5. The final products here are frozen woven protein which will be used as the basis of all Beyond Meat’s products.

Manufacturing steps that are performed in Beyond Meat’s co-manufacturers’ facilities :

6. The frozen pieces of woven protein are then passed to Beyond Meat’s co-manufacturers for further processing. During this step, flavors and other ingredients are added and combined.

7. The final step in the co-manufacturers’ facilities is to package the product and prepare them to be shipped out to distributors and customers.

For your information, Beyond Meat has added a couple of co-manufacturers in 2020. For example, in 1Q20, Beyond Meat has successfully expanded a partnership with a distributor in the Netherlands to co-manufacture the company’s plant-based products.

The construction of the facilities in the Netherlands was completed in 1Q 2020.

Moreover, Beyond Meat also has registered a new subsidiary named Beyond Meat (Jiaxing) Food Co., Ltd., in the Zhejiang Province in China in 2Q 2020.

5. Distribution

In the prior discussion, Beyond Meat relies solely on its co-manufacturers for the manufacturing of all of its plant-based meat products.

As such, the company’s final products are usually shipped out from these co-manufacturers’ facilities by 3rd-party logistic providers.

During the distribution step, Beyond Meat’s products are transferred and stored in cold-storage facilities. Some of the products are also shipped directly to the customers.

6. Sales, Marketing and Consumers Reach

The final topic in the discussion of Beyond Meat’s business model is about how the company markets its products and builds its brand so that more people are aware of Beyond Meat’s unique approach in producing its flagship plant-based meat products.

Sales

Beyond Meat has a 36-person strong sales team as of Dec 31, 2020.

The sales team is organized into 4 divisions such as retail, foodservice, international and strategic partnerships.

These experienced sales personnel work in close collaboration with a network of brokers and distributors who have access to accounts across the U.S., Canada and globally to support and drive sales for the company.

Field Marketing Representatives

Other than a sales team, Beyond Meat also created a team of field marketing representatives.

The role of the field marketing representatives is to provide samples of Beyond Meat’s products directly to consumers at stores and at events.

Other than working at stores and events, Beyond Meat’s field marketing representatives also work together with food trucks to support consumer sampling, content creation as well as media, influencer and customer activation

According to the 2019 annual report, more than 2,000 such events, with approximately 428,000 samples distributed.

These field events help promote consumers’ awareness of Beyond Meat’s core missions and to drive sales for the company’s plant-based products.

Digital Marketing and Social Media

Beyond Meat also has been actively engaging consumers via social and digital media to drive brand awareness and interest in the company’s plant-based meat products.

In this aspect, Beyond Meat has partnered with a network of brand ambassadors to develop a strong following of celebrities from the world of sports and entertainment who share the company’s core values and missions.

Aside from brand ambassadors, Beyond Meat also uses social media platforms such as Facebook, Instagram and Twitter for online collaboration.

As of Dec 31, 2020, the company has 440,000 Facebook followers, 970,000 Instagram followers, and more than 118,000 Twitter followers as well as roughly 93,000 LinkedIn followers.

Conclusion

Beyond Meat is a new force to be reckoned with in the food industry.

The company is one of the fastest-growing food companies in the U.S. and possibly in the world.

The company’s core mission is to address concerns related to human health, climate change, resource conservation and animal welfare.

The intact and effective business model has propelled Beyond Meat to a new high in terms of sales and stock price which has nicely run up to $120 as of this article was published.

Despite being unprofitable and having negative free cash flow up until the fiscal 1Q 2021, my opinion is that the company will someday achieve success with its revolutionary plant-based meat products.

References and Credits

1. Financial data and numbers in all charts and tables in this article were obtained and referenced from Beyond Meat’s financial statements available in Beyond Meat annual reports.

2. Featured images in this article are used under Creative Common Licenses and obtained from the following source:

a. Flying Puffin
b. Tony Webster
c. Christoph Scholz
d. Beyond Beef Crumbles

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