US – Beyond Meat has decided to undertake a cut in its workforce and a slash in sales forecast as a business strategy that aims to take in a hit from inflation and rising competition.
The group now expects its full-year revenue for 2022 in the range of US$400mn to US$425mn, down from a previous forecast of US$470mn to US$520mn and from reported 2021 revenues of US$464.7mn.
Ethan Brown, Chief Executive Officer of Beyond meat, said the company would reduce staff numbers by about 200, representing about 19 percent of its global workforce.
Beyond Meat has noted that it expects to make operating savings of about US$39mn over the next 12 months on its cost reduction measures.
Even before this year’s rise in inflation stoked fears of a global recession, the global plant-based meat market had lost some of its momenta, with Canadian group Maple Leaf Foods announcing it was scaling back its plant-based meat operations earlier this year.
During the announcement of its quarterly earnings in February, the company reported a sales decline of 3.7% for its Greenleaf Foods division, which includes plant-based meat brands Lightlife and Field Roast.
Maple Leaf President and CEO Michael McCain said that in response, the company is reallocating the amount of capital and space in the supply chain to plant-based to be consistent with a much smaller growth rate than anticipated.
Growth in plant-based meat sales has stalled since 2020 when the market had a boom of 45% growth rate compared to 2019, according to SPINS data released by the Good Food Institute and Plant Based Foods Association.
These growth rates helped inform inflated 2021 estimates for Beyond Meat, Maple Leaf Foods, and Kellogg’s MorningStar Farms brands.
The category, particularly vulnerable because its products are typically sold at a premium to the real meat, has hit a stutter occasioned by the cost-of-living crisis which is biting into consumer spending. industry analysts say.
Brian Holland, managing director, and senior research analyst at Cowen said that while he found the companies’ estimates to be aspirational, the slowdown has been much faster and more abrupt than expected.
Based on its positioning, performance, and price, however, it has failed to capture a majority of consumers, he said.
Beyond Meat, which will release third-quarter results on November 9, said it had been “negatively impacted by ongoing softness in the plant-based meat category overall, especially in the refrigerated subsegment, and by the impact of increased competition”.
It added that inflation was exerting pressure on the category, with consumers trading down into “cheaper forms of protein, including animal meat”, while delayed and canceled product promotions had also affected its revenue outlook.
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