Disrupting an industry does not guarantee financial success.
Sometimes, when a company takes market share from the incumbents by showing them what they're doing wrong, the deep-pocketed establishment simply course corrects. Banks, for example, have not disappeared because digital-first disruptors changed consumer expectations.
In many cases, the disruptor does the hard work and proves consumer demand. Then, the established leaders pick and choose the best parts of whatever the disruptive players have shown them.
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It's an uphill battle for a new company when it tries to tread in the land of the giants. That's why most energy drink companies have only succeeded when they partner with Coca-Cola or Pepsi.
Without the big boys getting a piece of the action, they can create knockoff products that capture market share from the upstart players. Those new products may not even be hits, but they siphon off some of the business.
That's essentially what has happened to Beyond Meat (BYND) -), a once high-flying company that proved there was at least some demand for plant-based meat.
Image source: Beyond Meat
Beyond Meat faces survival concerns
Beyond Meat may have led a new generation of planet-based meat, but the company does not sell anything that's all that special. Like its closest rival Impossible Foods, the company has sought to create plant-based meats that taste and behave like animal-based meats.
That's a formula that any player in the meat space can copy and that has made it very hard for Beyond Meat to keep growing and make money.
The company saw its net revenues decrease by 8.7% in the third quarter while it lost $7.3 million. That was an improvement from the year-ago quarter when it lost $14.8 million.
That has led TD Cowen to issue a report saying that the company has gone into "survival mode” with a “going concern” risk possible for the plant-based pioneer due to deteriorating trends in its business and negative cash flow," Food Dive reported.
Beyond Meat knows it has problems
The company has not commented on the report, but CEO Ethan Brown shared his comments on the company's financial health in its third-quarter earnings report.
"We are disappointed by our overall results as we continue to experience worsening sector-specific and broader consumer headwinds. As we shared last week, we are conducting a review of our global operations for purposes of further and significantly reducing our operating expense base as we seek to accelerate our transition to a sustainable and, ultimately, profitable business," he said.
Beyond Meat's cash and cash equivalents balance, including restricted cash, was $232.8 million and total outstanding debt was $1.1 billion as of September 30, 2023.
“We believe that the company’s deteriorating financial situation and weak category consumption presents ‘going concern’ risk for investors,” the TD Cowen report said.
Beyond Meat plans to exit some product lines and it recently laid off 65 employees, about 8% its total workforce.
Brown did try to finish his remarks on a hopeful note.
"While we expect current headwinds to persist in the coming quarters, we have confidence in the long-term trajectory of our business, its central relevance to the intensifying health, climate and natural resource challenges facing our global community, and our ability to emerge as a stronger, leaner organization as a result of the decisive measures we are undertaking to fit the current macroeconomic reality and business environment,” he added.
Beyond Meat did not return an immediate request for comment.
