Beyond Meat Just Now Starting to Solicit Competitive Bids for Ingredients

Plant based food maker announces new initiative some investors likely took for granted.

March 2, 2022

Certain aspects of plant based food producer Beyond Meat’s (BYND) newly announced “Cost Down” initiative likely surprised investors who assumed the company was soliciting competitive bids for ingredients like its competitors. The program includes table stakes items like increasing manufacturing throughput and streamlining workflows. What sticks out in the 2022 10-K is what Beyon Meat has apparently not been doing until recently:

“We are pursuing initiatives such as soliciting competitive bids for ingredients…”

For bears, the disclosure is confirmation of a lapse in managerial judgment. Conversely, it may signal upside margin potential for bulls. Either way, the revelation signals Beyond’s growth strategy— prioritizing top line growth— is wearing thin even among insiders.

The competitive bidding initiative isn’t likely to result in the company achieving its goal of price parity with animal protein anytime soon though. Beyond’s main ingredient, pea protein, is sourced primarily from two suppliers; Roquette and Puris. Those supply agreements don’t expire until the end of 2022. The company’s COGS were 74.8% of sales in 2021.

Notably, Beyond Meat filed its annual report five minutes late. In an explanation to the SEC, Beyond Meat blamed the delay on a bad internet link to an exhibit in the report. The company clearly left itself no margin for error when submitting its annual report. If it cuts it as close in operations, don’t expect the cost cutting initiative to bear fruit in time to fully offset inflation and heightened competition.

Beyond’s operating cash burn in 2021 was $301.3 million, an increase of 655% from the previous year.

Related: CAG, K, SYY, KR, HRL, NSRGY, KHC

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