It has shifted from being what might be, and the risks involved in getting to that point, to what is actually happening. What matters is that the story around BYND has changed in a positive way.
Maybe another competitor will gain market share at their expense, or a resurgence of Covid in China will make this move questionable at best, or plant-based meat alternatives will turn out to be a short-term fad, or any one of a number of other things could happen that change the story. Of course, there is a chance that they won’t be able to do that for some reason. Having an end-to-end facility there will enable BYND to meet growing demand and reduce costs and could well prove to be the magic ingredient that allows them to start living up to their potential. That is a massive market for meat and, as consumers there become increasingly health conscious, is expected to be big for meat substitutes too. To some extent that question was answered this morning, when we heard that they are building a big manufacturing facility in China. The question that remained was whether or not they could satisfy all that demand and, more importantly, do so at a profit. They even announced deals to supply some major customers, such as McDonald’s and Yum Brands, the parent company of KFC and Taco Bell. They had great brand recognition and as a result, strong demand. It recovered, but has lacked direction since then, exhibiting a worrying pattern of essentially sideways volatility.ĭuring that time, however, a couple of facts about BYND emerged. When the restaurants that were BYND’s primary customers were shut down in droves as the pandemic took hold in early 2020, the stock dipped below $50 for the first time since its debut. Clearly, at those levels the market had got ahead of itself. High R&D costs were squeezing margins and profitability started to look a long way off for Beyond Meat. The market was getting crowded, with competitors large and small seemingly arriving every day, and at some point, every company has to turn potential into profit. As good as the story was, there were some potential problems.
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