• by Danielle Oster , August 9, 2023

Plant-based meat company Beyond Meat reported $102.1 million in net revenue for Q2 in its earnings report yesterday, a 30.5% decline year-over-year.

While analysts anticipated the company would report losses, Beyond Meat’s earnings fell below expectations of $108.74 million, according to Street Insider. The company’s U.S. losses were even greater, as it reported a 40.1% decline on the quarter compared to 2022, including a 45.4% drop in food service channels.

“Ongoing category headwinds compressed net revenues, which in turn impacted product sales mix and gross margin, overshadowing significant strides in operational efficiency, including meaningful year-over-year reductions in operating expenses, COGS per pound, and overall cash consumption,” Beyond Meat Founder, President, and CEO Ethan Brown said in a statement, also attributing the comparative losses in part to a particularly strong Q2 in 2022.

In an earnings call with investors, Brown explained that the percentage of U.S. consumers who view plant-based meats as healthy dropped dramatically from 2020 to 2022, from 50%, to 38%, according to data from the Food Marketing Institute.

“As was the case during the ascent of plant-based milk -- this change in perception is not without encouragement from interest groups who have succeeded in seeding doubt and fear around the ingredients and process used to create our and other plant-based meats,” he said, while claiming there was a significant gap between this broader narrative and the “strong health credentials” of Beyond Meat products.

He hinted that marketing spending for the remainder of the year would likely focus on “cleaning up the health narrative.”

In fact, the company will be “much more aggressive in our marketing around the goodness within our products,” Brown noted, pointing to its “There’s Goodness Here” campaign that debuted last week. The aim is to celebrate "the ingredients we use, the farmers who grow them and the process that we use to turn the plant material into meat -- all these things [that] are part of our health message.”

Beyond Meat Chief Financial Officer Lubia Kutuya explained that the company was also “navigating some challenges that are reducing the overall effectiveness of promotional spending,” something he said goes beyond the plant-based meat category.  “Our goal is to be sharper in terms of how we deploy our promotional spending.”

Brown hinted that the company’s priority of addressing the health narrative could mean diverting funds from other areas to increase marketing spending.

In response to a question about the possibility of reallocating spending from research and development to marketing, Brown said it was important to address misperceptions around health through industry coalitions, while also making it a focus of the company's branded marketing efforts.

"We are looking at how do we reallocate funding toward marketing to clean up this messaging because it is just an education issue. I mean the facts are there. The health benefits of our products are very strong,” he added. “I won't comment specifically on how much we're going to allocate toward R&D versus [marketing], but I think the emphasis...is the right one.”