Dive Brief:
- Beyond Meat on Wednesday reported its first positive quarter in almost three years, in part due to price increases on certain U.S. products. Net revenues were $81 million for the third quarter this year, reflecting a 7.6% increase year over year.
- Despite trends pointing toward positive signs, quarterly sales volumes took a hit with the company reporting a 7.1% fall, compared with a 3.5% rise a year ago.
- CEO Ethan Brown told analysts in an earnings call that the company’s first priority is getting “leaner and more efficient,” as it looks to continue to work toward profitability through its aggressive pricing strategy.
Dive Insight:
With consumers reigning in spending and the lure of expensive plant-based products falling, Beyond Meat has faced notable economic woes in recent years.
The company turned to raising prices of its products such as meatballs and steaks in order to offset higher ingredient costs. After eight consecutive quarters of declining revenue, the strategy may be paying off.
“While the business seems to be finding some stability, it is doing so as a shell of its former ambitions as the market has not developed as intended,” said Peter Saleh, managing director of BTIG and food distributions analyst, in a research note sent to Food Dive.
Brown told analysts that the company was able to reduce its operating expenses this quarter to their lowest level in four years — down $2.4 million versus the second quarter of 2024. Increases in revenue were “driven by a full quarter benefit of price increases on certain products in the U.S., combined with substantially reduced trade discounts in both U.S. and international retail,” he said.
The company has been working to combat the struggles of the plant-based category — price and critiques on unsatisfying taste and texture — by implementing lean management practices and principles over the past two years, Brown said.
This has included layoffs, reformulating the recipes of its products and reworking a pricing strategy.
But until now, the company has yet to see its efforts mirrored in profitability.
“We believe that Beyond 4’s clear health messaging and premium ingredients are contributing to our return to growth,” said Brown.
In order for Beyond Meat to reach a sustainable pace of profitability, Saleh said it may need to rethink its messaging.
“Even if you do change consumer perception of the health of a product, is that enough to drive meaningful revenue and volume? I’m not convinced of that,” he said in an interview with Food Dive.
