Beyond Meat predicts small drop in revenues in Q3 (vs Q2) amid Delta uncertainty, hints at 'new innovation rolling out with one of our big partners'
While Beyond Meat lost some distribution with Dunkin, it has also picked up several new foodservice accounts and is performing well in Peet’s and Philz Coffee, said Brown during the firm’s Q2 earnings call Thursday afternoon.
“If you look at the universe of QSRs that we’re working with that are large and global in nature, I think … you will see some activity this year that is test in nature and things like that or market analysis …, and then the general uptick will be in 2022 from what we’re seeing.
“But provided plans don’t change, there’s something exciting that’s coming actually, in the very near term, it’s a new innovation from us that’s rolling out with one of our big partners.”
Beyond Burger 3.0: ‘Early feedback has been very positive’
He added: “We are thrilled with the response to our new Beyond Chicken product and the continued accolades we are receiving for our latest iteration of the Beyond Burger (v3.0)… Early feedback has been very positive … [but] it remains too early to draw any definitive conclusions about the incrementality of Beyond Burger 3.0 versus 2.0.”
Dunkin… ‘there was a change in management’
Quizzed by analysts about a significant reduction in distribution at Dunkin, he said: “There was a change in management …and they decided to do a review of the menu and make changes and we were part of that. A couple of years ago, Tim Hortons did the same thing. [But] we remain engaged with Dunkin’ around future innovation and collaborations and our distribution throughout their western US stores…
He added: “I think you’ll see us continue to add distribution of the largest QSRs at a very healthy pace, provided we don’t see a sustained resurgence in COVID… “
The new Beyond Chicken tenders and nuggets have been well-received, he added: “You’re going to see more activity from our poultry platform in terms of number of customers and activity in the balance of the year.”
International expansion
Outside of the US, he said, Beyond Meat launched Beyond Meatballs in Europe and Australia, got added to the permanent menu at Pizza Hut UK, introduced a spicy Beef Wrap at KFC China in 2,600+ stores on a limited time basis, and launched an e-commerce platform on JD.com, unlocking distribution in roughly 300 Chinese cities
Q2 results: Net revenues +31.8% to $149.4m, net loss $19.7m
Beyond Meat posted a 31.8% year-in-year increase in net revenues to $149.4m in the second quarter (ended July 3) and a net loss of $19.7m, with a recovery in the foodservice business (+218.3% to $43.7m) bolstering more modest growth in retail (+6.2% to $105.7m) as the firm lapped the panic-buying period of 2020, said Brown.
Losses from operations more than doubled to $18.6m in Q2, 2021 vs $8.2m in Q2, 2020, driven by growth in headcount, marketing, production trials, legal expenses, and higher outbound freight costs, said Brown.
In the US, retail sales were down -14.3%, while foodservice sales were up 269.4%, he said: "We are pleased to report record net revenues and the return to growth in foodservice as our customers welcomed consumers back to their venues. We are also proud of our retail performance, where we drove year-over-year growth despite cycling last year's demand surge driven by consumer panic-buying.”
Importantly, he said, “Our key brand metrics of household penetration, buyer rates, purchase frequency and repeat rates remain robust.”
That said, given the recent uptick of COVID-19 cases, which could disrupt demand patterns in foodservice, he said, “We believe caution for the balance of the year generally remains appropriate."
Bernstein: 'The opportunity to drive further and faster international expansion seems promising'
In a note issued Thursday night, analysts at Bernstein said: "On the one hand, the caution about the outlook for foodservice sales next quarter is disappointing.... But the 80bp sequential increase (120bp YoY) in household penetration in the US is encouraging. And the sequential improvement in International sales from $27.6m last quarter to $48.3m this quarter is also encouraging.
"Looking out to 2022, the big question remains over how quickly and to what extent sales momentum can be recovered in the US, while the opportunity to drive further and faster international expansion seems promising, especially once new plants in the Netherlands and China are fully up and running."
“On the foodservice side, there are two things going on. One, there is a labor shortage that has impacted at least one of our launches, which was postponed until the first part of next year. And second… as this Delta variant comes in… particularly independent operators, are a bit less confident in their outlook and being more conservative in [their] orders… and so for us, the main characteristic of the third quarter and our guidance is simply a lack of visibility.”
Ethan Brown, founder and CEO, Beyond Meat (pic credit: Beyond Meat)
