In another sign of continued demand for plant-based meat, newly publicly traded Beyond Meat on Monday reported fiscal second-quarter sales almost quadrupled and raised its outlook for the year. But when it comes to its mission of having its “revolutionary” product replace animal protein consumption? That likely won’t happen any time soon.
Beyond Meat said Monday sales in the quarter that ended June 29 jumped 287% to a better-than-expected $67.3 million. It raised full-year revenue outlook by $30 million to top $240 million as it has recently added to its customer list Dunkin’ Donuts parent following others including Tim Hortons coffee chain and Carl’s Jr. fast food joint.
Its sales to supermarkets, which count customers including Amazon’s Whole Foods, also surged, led by demand for fresh refrigerated products versus frozen items both in the U.S. and internationally.
Gross margin, or percentage of sales left after minus the cost of goods sold and a measure of profit, widened to 33.8% from 15%. (Its stock slumped 13% in after-hour trading, however, after the company said it will sell another 3.25 million shares in a secondary offering, mostly by selling stockholders.)
Beyond Meat is “well positioned for long-term growth,” Seth Goldman, the company’s executive chairman, said on a conference call late Monday, adding the El Segundo, Calif.-based company has added new suppliers and production facilities to ease concerns it won’t have enough supplies to meet growing demand. “We made meaningful investments to build a revolutionary business.”
Demise of traditional meat? Not even close
Revolutionary it may be, but the long growth runway that likely is still ahead for Beyond Meat and its rivals including Impossible Foods also likely faces a limit.
While U.S. sales of packaged plant-based meat alternatives jumped 10.3% to $895 million, traditional meat rose 2.3% to top $90 billion in the year through May 25, according to data from market research firm Nielsen, which tracks actual in-store sales. Its study also echoed other findings that meat eaters are the main buyers of plant-based meat as only 5% of U.S. households are vegan or vegetarian.
But here’s the interesting contrast: some 98% of plant-based meat buyers also buy meat, and they actually spend more on meat than the average meat buyer, $486 vs. $478 a year, Nielsen data shows. While about 22% of U.S. households are buying meat substitutes, up 1.6 percentage points from last year, only 27% of meat alternative buyers shop for them five or more times a year.
Even though the buzz surrounding Beyond Meat and Impossible Foods — with both seeking to challenge the conventional definition of what meat is —has helped to fuel a bigger-than-ever appetite for meat alternatives of all kinds, other studies also point to consumers buying them not to entirely replace animal proteins.
Dining Alliance, the largest U.S. group buyer for restaurants and purchases on behalf of 18,000 indie restaurants with up to 10 locations each, found in a recent study of a $7.5 billion foodservice buying pool that meat alternative purchases from indie restaurants almost quadrupled last year, following a 22% increase in 2017.
Despite the jumps in demand, meat substitutes still represent less than 0.1% of all protein ordered by indie restaurants and other food services, its study shows.
Consumers want more options on their plates and plant-based meat also gives restaurants a more premium feel that they hope will help drive customer visits, but it won’t replace meat, Christina Donahue, president of Dining Alliance, told me recently. Read: Beyond meat, other plant-based alternatives still have long growth runway
Premium it is. Price for an average case of meat alternatives paid by restaurants has gone up 29% to $80 in the past two years, faster than other categories, Dining Alliance’s study showed.
Nielsen data also showed that at supermarkets, plant-based meat costs 10 cents per gram, more than double 4 cents for beef and 2 cents for chicken, pork and turkey.
“With new innovations, health and wellness and social considerations, plant-based foods will continue to shine and grow,” Nielsen said in the study. “But meat is formidable and resilient…..Plant-based alternatives will not be the demise of traditional meat.”
Related on Forbes: Study highlights the high cost of private equity firms’ retail buyouts
Related on Forbes: Starbucks is taking a page from Amazon with a new investment
Related on Forbes: Nestlé and Starbucks bet on coffee creamers
Related on Forbes: Groceries are becoming bigger stars on Amazon Prime Day
Related on Forbes: McDonald’s first major acquisition in years could be a game changer