Beyond Meat has been touted as one of the most innovative companies in the food packaging industry and possibly one of the fastest-growing too in the world, generating a net revenue of slightly over $400 million in fiscal 2020.
The company’s innovative approach to creating the world’s best plant-based meat products does not come without a cost.
Reportedly, it has spent well over $30 million in research and development in 2020 alone to develop some of the world’s best plant-based protein products.
In this article, we will explore Beyond Meat’s R&D spending and compares it with that of the company’s peers such as Kellogg Company and Conagra Brand which also develop plant-based meat products.
The research and development expenses alone do not tell us much about the big picture of a company’s R&D spending.
As such, we also will look at the ratio of R&D spending with respect to revenue to see how much sales are being spent on research and development.
Without further delay, let’s move on!
Beyond Meat’s Research and Development Spending
Let’s first explore the company’s quarterly R&D expenditure which is shown in the chart above.
According to the chart, Beyond Meat’s quarterly research and development expenses were seen steadily trending higher from fiscal 2019 to fiscal 2021, reaching nearly $16 million as of 1Q 2021.
Year over year, Beyond Meat’s Q1 2021 R&D spending represents a growth rate of more than 100%.
Additionally, Beyond Meat’s R&D spending grew the fastest between fiscal 2020 and 2021.
Beyond Meat’s R&D Spending To Revenue Ratio
In terms of R&D spending to revenue ratio, Beyond Meat’s figure averaged around 6% prior to fiscal 2020 but moved up significantly in fiscal 2021 to more than 14%.
The increasing ratio shows that Beyond Meat is serious about its research and development and is increasingly spending more on R&D with respect to sales.
However, we can’t possibly arrive at a conclusion by just looking at Beyond Meat’s R&D cost and R&D to revenue ratio.
Instead, we need to explore these figures and compare them with that of the company’s peers such as Kellogg and Conagra Brands to see how the numbers stack up against its bigger competitors.
Beyond Meat’s Market Capitalization Comparison
Before going to the comparison of R&D expenses, let’s have a look at the companies’ market cap.
Based on the chart, Kellogg Company is the biggest among the 3 in terms of market cap at about $22 billion.
Conagra Brand ranks 2nd at $17.5 billion.
Beyond Meat is the smallest among the 3 at only $10 billion in market cap.
Among the 3 companies, Beyond Meat is the only company that focuses its business entirely on plant-based protein.
Other players such as Kellogg and Conagra Brands are food packaging companies that have only hopped on the plant-based protein bandwagon recently.
These players have businesses other than the plant-based protein segment.
In other words, Kellogg and Conagra Brand are not entirely plant-based meat products players.
Therefore, the comparison of R&D expenses may not be on an apple to apple basis given the size and the different business models of these companies.
Nevertheless, the R&D costs comparison can serve as a reference or guideline for readers to see where Beyond Meat’s R&D expenditure is with respect to companies that also produce plant-based meat products.
Comparison Of Beyond Meat’s R&D Spending with Peers
According to the chart above, Kellogg Company spent the most on R&D, averaging around $150 million per year between fiscal 2016 and fiscal 2020.
Conagra Brands ranks second at about $50 million on average in terms of R&D costs in the last 5 years.
Beyond Meat spent the least on research and development at $21 million in fiscal 2019 and $31.5 million in fiscal 2020.
Beyond Meat’s spending on R&D in fiscal 2020 was only one-fourth of what Kellogg Company spent and half of what Conagra Brands spent on R&D in the same fiscal year.
Although Beyond Meat spent the least on R&D, the absolute value has grown phenomenally.
For example, Beyond Meat’s R&D costs of $31.5 million reported in fiscal 2020 represent a year-on-year growth rate of more than 50%.
Similarly, Beyond Meat’s R&D spending of $20.7 million reported in fiscal 2019 represents a year-on-year growth rate of more than 100%.
In contrast, both Kellogg and Conagra Brands’ R&D spending has been flat in the last 5 years.
In fact, Kellogg’s R&D spending has even declined since fiscal 2016 and reached the lowest at only $135 million as of fiscal 2020.
Comparison Of Ratio of R&D Spending to Sales
While Beyond Meat’s R&D budget has been the smallest among all companies, its ratio of R&D budget to revenue has been the highest in the last 5 years.
As seen from the chart above, Beyond Meat has the highest R&D to revenue ratio since fiscal 2016 and reported a ratio of 6.9% and 7.7% in fiscal 2019 and fiscal 2020, respectively.
In contrast, Kellogg’s R&D budget to sales ratio was only at 1% in fiscal 2020 and at 1.4% the most reported in fiscal 2016.
Similarly, Conagra Brands spent the least on R&D with respect to revenue at less than 1% of sales from fiscal 2016 to fiscal 2020.
Therefore, we can see that Beyond Meat’s R&D spending has actually been the highest with respect to revenue all these years compared to Kellogg and Conagra Brands.
While Beyond Meat’s ratio has been much higher than its peers, the ratio has been on a decline from as much as 36% of sales reported in fiscal 2016 to only 7.7% of sales in fiscal 2020.
At 7% of sales, Beyond Meat still considerably out-spent its peers in terms of R&D budget with respect to revenue.
Since Beyond Meat is the least established among the 3 companies, it needs to spend as much as possible on research and development to quickly gain a strong foothold in the plant-based meat product market.
Moreover, Beyond Meat also needs to produce and diversify its product varieties to compete with these larger players who reportedly have much greater resources and capital.
And the only way to do this is to spend heavily on research and development to develop more innovative products.
In short, Beyond Meat takes innovation seriously and is determined to lead the plant-based meat product revolution.
In summary, Beyond Meat’s R&D spending has been on a rise and reached as much as $16 million as of fiscal 2021 1Q, a 100% increase from a year ago.
Beyond Meat’s $16 million R&D spending translates to an R&D budget to revenue ratio of more than 14%.
On a yearly basis, Beyond Meat spent $31.5 million and $20.7 million on research and development in fiscal 2020 and fiscal 2019, respectively.
While Beyond Meat’s R&D expense has been on a rise, its peers such as Kellogg and Conagra Brands have a much bigger R&D budget, at a minimum of twice the size of Beyond Meat.
However, in terms of the ratio of R&D expenditure to sales, Beyond Meat’s ratio is much higher than its peers, suggesting that the company is determined to revolutionize the plant-based meat product industry.
References and Credits
1. Financial figures in all charts in this article were obtained and referenced from financial reports available in :
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