Disrupting an industry does not guarantee financial success.
Sometimes, when a company takes market share from its incumbents by showing them what they are doing wrong, the deep-pocketed establishment simply corrects course. Banks, for example, have not disappeared because digital disruptors changed consumer expectations.
In many cases, the disruptor does the hard work and demonstrates consumer demand. Established leaders then pick the best parts of what disruptive actors have shown them.
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It’s an uphill battle for a new company when it tries to step into the land of the giants. That’s why most energy drink companies have only been successful when they partner with Coca-Cola or Pepsi.
Without the big guys getting a piece of the action, they can create copycat products that capture market share from upstart players. Those new products may not even be a success, but they divert some business.
That’s essentially what happened to Beyond Meat.BYNDa once high-flying company that proved there was at least some demand for plant-based meat.
Image source: Beyond the Meat
Beyond Meat faces survival concerns
Beyond Meat may have pioneered a new generation of planetary-sourced meat, but the company doesn’t sell anything that’s all that special. Like its closest rival, Impossible Foods, the company has sought to create plant-based meats that taste and behave like animal-based meats.
That’s a formula that any player in the meat space can copy and one that has made it very difficult for Beyond Meat to continue growing and making money.
The company saw its net income decline 8.7% in the third quarter, while it lost $7.3 million. That was an improvement from the year-earlier quarter, when it lost $14.8 million.
That has led TD Cowen to issue a report saying the company has entered “survival mode” with a possible “going concern” risk for the plant pioneer due to deteriorating trends in its business and the negative cash flow. food diving reported.
Beyond Meat knows it has problems
The company has not commented on the report, but CEO Ethan Brown shared his comments on the company’s financial health in its third-quarter earnings report.
“We are disappointed by our overall results as we continue to experience worsening consumer headwinds in specific and broader sectors. As we shared last week, we are conducting a review of our global operations with the aim of reducing further significantly our operating expense base as we seek to accelerate our transition to a sustainable and ultimately profitable business,” he said.
Beyond Meat’s cash and cash equivalents balance, including restricted cash, was $232.8 million and total outstanding debt was $1.1 billion as of September 30, 2023.
“We believe the company’s deteriorating financial condition and weak category consumption present a ‘going concern’ risk to investors,” the TD Cowen report said.
Beyond Meat plans to exit some product lines and recently laid off 65 employees, about 8% of its total workforce.
Brown tried to end his comments on a hopeful note.
“While we expect the current headwinds to persist in the coming quarters, we are confident in the long-term trajectory of our business, its central relevance to the growing health, climate and natural resource challenges facing our global community, and our ability to emerge as a stronger and more agile organization as a result of the decisive measures we are taking to adapt to the current macroeconomic reality and business environment,” he added.
Beyond Meat did not respond to an immediate request for comment.
