The Fake Meat Boom Fueld By Cheap Capital Is Crashing
In recent years, there has been a steady decline in the sales of fake meat and lab-created food. Though once heralded as the future of sustainable eating, these alternative options seem to have failed to capture the masses. While initial hype and curiosity led to a surge in purchases, consumers have gradually grown skeptical of the health implications, taste, texture, and the highly processed nature of these products.
The implosion of Beyond Meat Inc. suggests that the plant-based meat trend might just be a fad. Consumers are now favoring real meat as the company issued a profit warning for the third quarter as demand for fake meat sags. On Thursday, Beyond Meat slashed its revenue forecast for the year for the second time in months:
Year Forcast
Sees net revenue $330 million to $340 million, saw $360m to $380m, estimate $366 million (Bloomberg Consensus)
Still sees operating expenses up to $245 million, estimate $239.9 million
Still sees capital expenditure $10 million to $15 million, estimate $21.7 million
The plant-based food company expects revenue of about $75 million for the third quarter, well below $88.5 million Bloomberg Consensus.
Preliminary Third Quarter Results
3Q Prelim Rev About $75M, Est. $88.5M
3Q Prelim FCF $7.6M, Est. $12.4m
Doesn't Expect to Sustain Positive FCF in 4Q, Est. -$24.9m
The company's net revenues for the third quarter were primarily affected by:
Decreased sales volumes in U.S. retail and foodservice channels, largely due to continued and increased weakness in the plant-based meat category
Less effective promotions, worsened by fixed-fee promotional programs that failed to boost sales as expected
A shift in product sales mix towards lower sales of core products like Beyond Burger, Beyond Beef, and Beyond Sausage, compared to certain non-core products such as Beyond Steak, Beyond Chicken Tenders, Beyond Popcorn Chicken, and Beyond Chicken Nuggets.
The struggling plant-based food company also said its global operations are 'under review' as it cuts 19% of its global non-production workforce after growth failed to materialize.
Even with today's dismal report, the company's shares unexpectedly jumped 9% in the early cash session. This surge is likely attributable to a substantial short position. About 40% of the float, or 24.7 million shares, are short. -Source-Zerohedge
Furthermore, the perception that these foods lack authenticity and natural flavor has played a significant role in their declining popularity. As society becomes more conscious about the origins and quality of their food, more people are turning towards fresh, whole foods and farm-fresh meats that are minimally processed. This shift in consumer demand suggests a return to the roots of traditional eating, where taste, nutrition, and simplicity take precedence over artificial substitutes. Learn how to feed your family during hard times by becoming a student of Food Storage Feast