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The Spoon

Daily news and analysis about the food tech revolution

earnings call

Beyond Meat Revs Up for International Expansion Despite Coronavirus

It seems the end of 2019 was a mixed bag for Beyond Meat. On its earnings call yesterday, the plant-based protein company reported quarterly revenue that exceeded analyst estimates but narrowly fell short of profitability. On the call, Beyond’s CEO Ethan Brown also pointed to retail expansions and new fast-food partners, and called out recent backlash from the meat industry against plant-based proteins.

Numbers and drama aside, the part of the call that made me perk up was Beyond’s ambitious plans for international expansion. “This is a time of growth for Beyond Meat,” CEO Ethan Brown stated on the call. He added that the company plans to open a new co-packing facility in the Netherlands by the end of this quarter, which will “increase the availability and speed with which we can get Beyond Meat’s products to customers across Europe and the Middle East.”

But most of all, Beyond has set its crosshairs on Asia. “We [will] continue to focus on Asia with the goal of producing in the region before the end of 2020,” said Brown. If successful, that would give the company a quick foothold for establishing a strong presence in the region, and specifically China, which is something of the holy grail for the plant-based meat sector. Beyond has added incentive to move quickly because one of its most prominent competitors, Impossible Foods, also recently stated intentions to start selling its meatless meat (specifically pork) to Chinese consumers.

When asked by an investor how Beyond plans to cater to the distinct taste profiles of each region, Asia and otherwise, Brown brushed him aside. He said that the R&D for regional development would not be a “massive investment” for the company. He went on to say that first and foremost, Beyond was trying to create a “blank canvas” which can be used regionally to make distinct products that cater to local tastes. “So to some degree, it’s really about just being as true as we possibly can to the taste, texture, appearance and aroma of the animal protein that we’re targeting.”

As Beyond prepares to put the pedal to the metal on its international expansion, regional R&D might actually be an area which will require more attention than Brown expects. That’s especially true of Asian consumers, which often have different taste preferences than Western diners — a fact that David Yeung, CEO of Hong Kong-based alternative meat company Omnipork, which already sells via Taco Bell in China, pointed out to me last year.

If you’ve been reading the news at all lately, you might wonder: Will the coronavirus hinder these international expansion plans? According to Brown, not at all. He told Yahoo Finance this week that the coronavirus would not prevent the company from selling in China in 2020. “It adjusts some of our plans, but I am not taking my foot off the gas,” he said. Brown just better be prepared to hit some roadblocks (local tastes, international supply chain snafus, and coronavirus panic) on the road ahead.

In Earnings Call, Beyond Meat Claps Back Against Critiques that It’s Too Processed

Yesterday Beyond Meat reported its Q2 2019 earnings. Over the call, the plant-based meat company touched on its high revenue growth, new fast-food partnerships, and product revamp — but CEO Ethan Brown also touched on a recent spate of criticism leveled against the company regarding its products.

From the earnings call transcript:

In my hope that as a company we are helping consumers to understand that there are at least two processes, both of which begin with the same inputs. At a high level, the traditional proteus are in plant material at the form of feed or grasses along with water through an animal. The animal’s biology works from the digestive tract through to the muscular system to convert these inputs to muscle, which are then harvested for meat in processing facilities.

At Beyond Meat, also at a high level, our processes start with the same inputs, plant material, from which we gather protein, lipids, trace minerals and vitamins, and combined with water, run these through a system of heating, cooling, pressure and mixing that build meats directly from plants.

This statement seems to be in direct response to recent pushback Beyond has been getting against its processing methods. Some consumers are put off by the new crop of meatless meat, preferring simpler alternatives like black bean burgers or grass-fed beef. Apparently, that feeling is shared by some restaurant groups. Last week Chipotle’s CEO Brian Niccol said that they didn’t want to serve Beyond Meat or Impossible Foods products because they are too heavily processed.

During the earnings call, Brown was clearly addressing Niccol and others hesitant about Beyond’s production methods.

We offer the consumer transparency. They are welcome to visit our production facilities in Missouri to learn more about how we build meat. It is my belief they will leave inspired and with a stronger understanding that when it comes to meat, it’s not a question of processed or not no matter which process they prefer.

Despite defending Beyond’s processing, well, process, Brown did state that the company is moving towards a more clean-label approach. “The simpler and cleaner the ingredient list, the better, and we’re constantly striving in that direction,” he told investors during the earnings call. He also pointed out that Beyond Meat is free of genetically modified or artificial ingredients.

At the same time, he noted that Beyond is trying to close the taste gap between their product and meat from a cow. Brown estimated that their product tasted roughly 80 percent identical to beef right now, but that bridging that final 20 percent would be a difficult push. Odds are, the solution will lie in even more processing.

Chipotle joins other fast-food chains, such as Taco Bell and Arby’s, who are also choosing to eschew meatless meats. But plenty of others QSR’s — from Dunkin’ to White Castle to Burger King — are hopping on the plant-based protein bandwagon.

Since consumers aren’t typically expecting clean label ingredients when they eat out at fast food, I don’t think that controversy around Beyond’s processing methods will negatively affect future QSR partnerships — especially since meatless meat is having quite the moment in quick-service dining. But when it comes to fast-casual restaurants with a healthy spin, like Chipotle, anti-processing pushback could be a real concern.

Right now, Beyond is stuck between a rock and a hard place. They want to make their plant-based meat taste even more like the real thing, but they also want to make it out of simple, minimally-processed ingredients. I don’t think the company will be able to have their cake — er, burger — and eat it, too.