By Praveen Paramasivam | Lead photo by Shannon Stapleton/File Photo/Reuters
(Reuters) – Beyond Meat Inc is headed for an unappetizing second quarter as the plant-based food craze withers in the face of several weak product tests at restaurants and mediocre reviews.
Analysts have slashed forecasts for Beyond Meat’s sales on supply-chain concerns and waning demand that pulled down shares of the plant-based meat maker and peer Oatly Group AB from their lofty market debut levels.
“Part of the issue with the adoption of the category for new consumers is that you’re not going to change cultural tastes overnight,” Mizuho analyst John Baumgartner said. “Recruiting your next phase of consumers requires more innovation and better tasting products.”
Estimates for Beyond Meat’s second-quarter revenue have fallen by 10 percent over the last three months, according to Refinitiv IBES data.
McDonald’s Corp last week became the latest chain to not go through with an immediate broader launch of Beyond Meat products, after concluding its US test of a burger made with the plant-based meat without confirming future plans.
Tests at Panda Express and Yum Brands Inc’s KFC, Pizza Hut, and Taco Bell have also yet to lead to a permanent or US-wide launch, while Dunkin, Hardee’s, and A&W have discontinued products after launching, according to brokerage Piper Sandler.
Reviews for Beyond Meat’s plant-based jerky also indicate skepticism about the taste of the product, stoking concerns about the sustainability of its sales momentum, Piper Sandler analyst Michael Lavery wrote in a note on Friday.
The company has had to discount more to encourage inflation-hit consumers to pick up its products over those of competitors at grocers, leading analysts to say its expectation for average revenue growth of 27 percent for 2022 now appears steep.
* Beyond Meat is expected to post a marginal increase in revenue for the second quarter, when it reports on Thursday, with loss per share widening to $1.18.
* Wall Street expects Beyond Meat to lose $4.48 per share for 2022, much bigger than the $2.88 it expected on April 27, when the company reported results for the first quarter.
(Reporting by Praveen Paramasivam in Bengaluru; Editing by Devika Syamnath)