Beyond Meat Case Analysis
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Executive Summary
Beyond Meat (BM) produces plant-based meat alternatives based in Los Angeles, California. BM was established in 2009 by Brent Taylor and Ethan Brown. The US initiated BM products in its markets in 2012 as the store designed and produced products to emulate pork sausages, beef, and chicken. During its initial phases, BM sold frozen products. A notable event in the company is the replication of beef burgers. In 2014, BM announced the commencement of processes to create plant-based alternatives for beef burgers. In 2018, BM established another Missouri-based production facility that tripled manufacturing space in the company. Moreover, the company had over 50 international markets. For instance, BM partnered with Canadian organizations like A&W restaurant and Tim Horton's. However, while BM has market leadership in the plant-based protein products market sector, it has come under increased competition. BM's former partners have broken off to form competing upstarts. Established brands such as Nestle have formed divisions to compete in the industry. Other long-existing companies such as Impossible Foods have gotten better. Thus, BM needs to pursue intensive market strategies to capture new markets.
Problem statement
BM's strategic focus is to overcome the perspectives of consumers on plant-based products. Most consumers of meat products often disregard plant-based alternatives over claims of poor quality and unsatisfactory taste (Segovia-Siapco et al., 2019). Moreover, consumers also seek to invent cost-effective approaches to distributing and producing their products globally to leverage competitive advantages. The main issue at BM is to urgently develop customer loyalty from high-quality products and services in its stores and fostering animal welfare globally (Choudhary, 2020). Also, BM must enhance its operations at the store level by improving its inbound and outbound logistics. The main consequence of maintaining the status quo and improve competitiveness.
External Environmental Analysis
The external analysis will incorporate an evaluation of opportunities and threats at BM. The opportunities plant-based text represents the possible options that BM can leverage to improve its competitive advantages. The main opportunities at BM include social trends that support the use of plant-based products. Recently, plant-based products have been incorporated in efforts towards attaining a healthy lifestyle. US-based family doctors often advise families to incorporate plant-based products as an alternative for animal products. The adaptation of plant-based products in most US families' recipes increases the demand for plant-based products consequently plant-based sales of BM products (Segovia-Siapco et al., 2019).
Another opportunity at BM is the demand for healthier living and tackling obesity in western countries. Animal products often provide high levels of cholesterol and sugars that perpetuate obesity and prevent healthier living. Western countries like the US support the use of healthier food products in meals to prevent conditions like obesity and chronic lifestyle illnesses (Choudhary et al., 2020). The need for healthier lifestyles directly enhances the market share of companies that produce alternatives for animal products. BM can invest in its research and development (R&D) department to investigate different plant-based dishes that can be included in its menu.
Factory production conditions and animal welfare are a major opportunity at BM. The conditions at BM production facilities improve the quality of products that are void of contamination. The company must e, ensure minimum contamination of plant-based products. The company uses organic raw materials to produce plant-based products to substitute animal-based products. Animal welfare societies also support the use of plant-based products consequently observing animal rights (Choudhary, 2020). Animal welfares in the US argue that the killing of animals as sources of food goes against animal rights. In this regard, animal welfare societies endorse plant-based foods producing companies like BM. The external analysis of BM can also be assessed through a PEST analysis.
PEST Analysis of BM
PEST analysis is an approach of assessing a company’s external environment based on its political, environmental, social, and technological impact,s. The political environment at BM relates to the general need to conserve the environment and wildlife. Individuals that support environmental and wildlife conservation support the use of alternative products that preserve the life of animals. BM’s economic environment BM supports the growth of BM due to its ability to operate in states with a free-trade economy. The ability to trade in free trade economy destinations improves BM’s revenue generation abilities. BM’s social environment recognizes environmental needs and lifestyle concerns. Health representatives propose the use of low sugar and cholesterol products to avoid chronic illnesses among customers (Segovia-Siapco et al., 2019). Sugary food and animal fats clog blood vessels in individuals’ triggering cardiovascular conditions, weight issues or even death.
The technological environments at BM are characterized by the use of social media tools like Facebook, Twitter, and YouTube for marketing. BM leverages social media platforms to engage customers in different geographic locations (Choudhary, 2020). The competitor environment at BM is characterized by the presence of rival companies like Impossible Foods, Cargill, Kelloggs, Hormel Foods, and Perfect Day. Impossible Foods is IBM's biggest competitor due to its large market segment.
Internal Environmental Analysis
SWOT analysis' strengths and weaknesses will provide a framework to examine BM's internal environment.
Strengths
BM provides the market with sufficient nutritious foods without resorting to GMOs. The company's products are built from five components of meat including water, carbohydrates, minerals, fats, and proteins that combine to provide higher levels of nutrition than real meat. Further, unlike its competition, BM uses beans and peas are sources of proteins instead of soy. Beans and peas GMO-free thereby reducing the hesitancy of market consumption. BM is also highly innovative. The company has managed to make inroads in converting meat-eaters into plant-based meat consumers. The successful replication of real meat has provided a competitive advantage over the competition. Further, BM has an extensive network of restaurants and retailers that it partners with. Retailers such as Kroger at KFC have a huge market base that BM taps into. Therefore, apart from reaching a broad range of consumers, BM gains visibility and therefore enhances brand recognition.
Weaknesses
One of the weaknesses of BM's product portfolio is a health concern. The nature of its R&D innovation of meat mimicry from texture to taste is unprecedented. One of the issues that critics discuss is the company's use of saturated fat such as coconut oil as known causes of cardiovascular diseases. BM's product portfolio is also limited in terms of choices that can meet the needs of customers. The company is only able to develop a few variants and varieties of products that mimic meat. However, these products to a large extent fail short of rolling out substitutes for meat variants such as seafood and lamp among others.
Appraisal of Existing Issues
Retaining Market Leadership
One of the strategic issues that are affecting BM is its ability to retain market leadership in the face of competition. The company might have been the pioneer and first mover into the animal-based meat product. However, other startups have studied and are now replicating BM's business model to greater efficiency thereby creating fierce competition in the sector. Some of these startups and divisions of mainstay companies include Tyson, JBS, Nestle, Sunfed meats, and Purple Carrot among others. All these companies have launched into the market plant-based burgers after BM's signature plant-based burgers thus compete for the same market audience. However, the largest competition comes from a company called Impossible Foods (Campos, 2019).
The company was founded in 2011 by Patrick O. Brown in California. By 2016, Impossible Foods had introduced into the market the now-famous Impossible Burger. Impossible Foods has a similar product portfolio and menu to BM's. Both companies have managed to rearrange and recreate plant-based protein products. However, BM and Impossible Foods are differentiated by the selling points. BM sells itself as a healthier option. This is because its plant-based protein products are extracted from peas and beans. On the other hand, Impossible Foods extracts its plant-based protein products from soy. While soy is predominantly GMO-based, it substitutes such a disadvantage with cost-effectiveness (Campos, 2019). Therefore, in the present world where the costs of commodities account for the largest decision-making factor especially in the mass market, Impossible Foods is offering the market the cheaper choice. In addition, the use of soy has enabled Impossible Foods to develop a wider that features sausages, pork, and budgers which go beyond the variety BM offers the market.
Under (Financial) Pressure
Among the initial public offerings IPOs of 2019, BM was one of the most successful. Trading started at $25 per share and closed at $65.75 per share (Campos, 2019). Thus, on the day of stock introduction, the company managed to gain a stock value of 163%. It was a record-setting stock value gain for a newly introduced sock in recent history. Part of the reason for pursuing the IPO was to help the company diversify its product portfolio. However, there has not been much in terms of the introduction of new product variants as compared to competing companies. Thus, there has been an undercurrent among some investors who are concerned about BM's ability to pursue sustainable innovation and maintain its financial results. Furthermore, some of the startups in the market such as Tyson Food were once the earliest and the biggest investors in BM. Tyson had a 5% stake in BM since 2016 but decided to exit in 2019 (Campos, 2019). As a result, there is a real concern among investors who worry BM's $4 billion valuations may soon tumble (Campos, 2019).
Strategic Alternatives & Evaluation
BM needs to pursue intensive growth strategies. The objective is to leverage both current and new products in order to reach and penetrates existing and new market rents commensurate with unmet consumer needs (Zhan et al., 2020). The company can pursue market development and product development intensive growth strategies.
Market Development
BM as analyzed has an extensive network of retailers such as Kroger and KFC. The company also has an opportunity to leverage other market development strategies such as franchising given the goodwill and brand value attached to its name. The first stage in the process of market development is market segmentation (Campos, 2019). Since BM faces increased competition in a now saturated North American market, it needs to identify new market opportunities in other global regions especially in emerging economies where the message of healthy living and sustainable existence has taken root. The next step is for BM to develop a promotional strategy that will enable the brand to penetrate the segmented markets. Thus, BM will map and enter new geographical markets particularly where it has already existing sales channels through the Kroger and KFC retailing partnership.
In terms of evaluation, where is market development can provide uncontested market opportunities, it is expensive and has a higher failure rate due to multiple elements that must be factored such as culture. However, BM has robust partnerships and already existing sales channels.
Product Development
BM can modify or improve the current product portfolio to increase sales. As analyzed, BM is suffering from a low product portfolio and product variants offered do not meet consumer expectations, tastes, and preferences. Thus, apart from just increasing the quality, BM needs to increase the number of product variants (Zhan et al., 2020). The company has an established R&D department and gained capital in 2019 through its IPO. It needs to find and develop talent that can enable the company to innovate new product variants as per the market needs. In particular, BM can pursue a brand extension strategy by launching several new product models and their brand name.
In terms of evaluation, leveraging the brand extension strategy can help BM quickly capture new market shares especially given that the company's brand value is revered and recognized. However, there is a higher risk of failure especially if the innovative products do not receive market support thereby tarnishing the brand image of the company.
Recommended Action Plan
Marketing Development
Of the two choices, the most feasible and objective recommended action is for BM to pursue market development. The company needs to create buyer personas in emerging economies where it has its support sales channel. The buyer personas will enable the company to conduct a survey of the market to determine market size and particular cultural needs, tastes, and preferences (Choudhary, 2020). Thus, BM can introduce to the market product variants through its restaurant market channel supported by Kroger and KFC but more importantly incorporate individual vendors and chain stores through franchising and licensing (Choudhary, 2020). To increase awareness, the company can pursue an aggressive strategy of product education to exhibit the health benefits of plant-based products.
References
Campos, M. (2019). A fork in the road for synthetic meat. Association for Computing Machinery (ACM).
Choudhary, A. (2020). Sustaining a First Mover Advantage in a Fast-Growing Meat Substitute Market.
Choudhury, D., Singh, S., Seah, J. S. H., Yeo, D. C. L., & Tan, L. P. (2020). Commercialization of Plant-Based Meat Alternatives. Trends in Plant Science, 25(11), 1055-1058.
Segovia-Siapco, G., Burkholder-Cooley, N., Haddad Tabrizi, S., & Sabaté, J. (2019). Beyond Meat: a comparison of the dietary intakes of vegetarian and non-vegetarian adolescents. Frontiers in nutrition, 6, 86.
Sexton, A. (2016). Alternative proteins and the (non) stuff of “meat”. Gastronomica, 16(3), 66-78.
Zhan, W., Jiang, M., & Li, C. (2020). The service strategy of customer-intensive services under advertising effects. Kybernetes.
