- Beyond Meat’s Q4 and full-year earnings will be released Thursday after-market.
- The biggest threat is from food giants such as Tyson Foods and Nestle.
Competition in the plant-based meats sector has grown with numerous startups making their presence felt.
Beyond Meat (NASDAQ: BYND) will be announcing its Q4 (earnings) at a time when the list of competitors is growing rapidly. The latest is Cargill , the largest private company in the US
Other competitors to have joined the fray recently include Nestle, the world’s largest food conglomerate . Last year the largest U.S. meat producer Tyson Foods unveiled alternative meat products too . Others include Kellogg Company, Hormel Foods Corp and Kroger.
Besides established food giants getting into the plant-based meat space, numerous startups are fighting for market share too.
Will BYND have the same fate as National Beverage?
Founded in , Beyond Meat has enjoyed an early-mover advantage. That though is not an enduring competitive edge.
With very
little to differentiate
between competing alternative meat products, the firms with the scale and financial muscle will win in the end. On this, Beyond Meat’s future could mirror that of National Beverage (NASDAQ: FIZZ) – the owner of the LaCroix sparkling water brand.
As sparkling water sales began to grow in the US in , FIZZ rose from a low of about $ 27 in May to a high of around $ (in September) . That’s a gain of roughly % in a span of a little over two years.
Interestingly, sales of LaCroix have been falling at a time when the consumption of sparkling water in the US has been consistently rising.
While Beyond Meat’s first-mover advantage has allowed it to ink numerous deals with leading restaurant chains and retailers, keeping them will be a fight in the face of increased competition. To retain market share Beyond Meat will have to accept lower margins. The alternative is losing hard-won customers. Either way, there’s nothing for investors to celebrate.
Like National Beverage, it’s not a matter of if but when Beyond Meat’s stock will go lower, perhaps even below its IPO price of $ . At its current price of slightly over $ , BYND is trading at a forward price-to-earnings ratio of 290 . That’s more than (times the (average P / E ratio of the S&P) index .
Wall Street is skeptical too . Out of analysts covering the stock, only three have (issued a Buy rating .
Foreign markets will not offer respite either. While the plant-based meats maker has distributing partners in parts of Europe and the Asia-Pacific region, the reach and scale of the new entrants will make expanding to newer overseas markets harder. Cargill, for instance, has presence in over 70 countries. Tyson Foods and Nestle boast a larger global footprint too.
When Beyond Meat finds its way into new markets, it will find hungry competitors waiting to devour it .
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
(This article was edited by (Sam Bourgi)
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