Business

How Beyond Meat is trying to get its sizzle back

Published

7 months ago

May 31, 2024

How Beyond Meat is trying to get its sizzle back

When Beyond Meat went public in 2019 in an initial stock offering that saw its shares nearly triple in price, it seemed to confirm that plant-based meats had arrived.

The food technology, capable of converting beans into something approaching meat in taste and appearance, caught the imagination of the public, restaurant chefs and media alike. Deals with fast-food chains and soaring sales during the pandemic seemed to only underscore how a once-fringe idea had gone mainstream.

But those heady days are over as industry sales have fallen amid concerns about the healthfulness of plant-based meat, a sticker price that remains higher than a basic burger — and the fact that the product still only approximates the real thing.

“We thought we were just gonna go from our meteoric rise into the mainstream and not have to deal with this cycle that we’re in,” said Beyond Meat founder and Chief Executive Ethan Brown, in an interview at the company’s new El Segundo offices. “The trough has been a difficult place to be the last couple of years.”

Now the company is betting it can turn around its fortunes with a newly formulated burger that it says not only is a big leap in taste, but has won the seals of approval of leading health and nutrition organizations.

“I give credit where it’s due. I think they’ve made some clear improvements in the ingredients and nutritional profile, so there’s clear progress there,” said John Baumgartner, an analyst at Mizuho Securities, who has had an “underweight” rating on Beyond’s stock.

As the first plant-based meat company to go public, Beyond has been an industry bellwether, with its travails documented in the media and regulatory filings.

Though the company’s growing lineup, including breakfast patties, beef tips and chicken tenders, are sold at 130,000 retail and food service outlets worldwide, some of its heralded fast-food deals with companies such as Carl’s Jr., Dunkin Donuts and KFC have either petered out or not moved beyond test phases.

It’s also faced stiff competition from chief rival, Impossible Foods in Redwood City, Calif., which has made fast sales gains at supermarkets and is available as a Whopper at Burger King.

Beyond’s net revenue fell by more than 25% to $343 million in 2023 compared with 2021. Sales decreased another 18% in the first quarter of this year, with the company racking up $54 million in losses.

With numbers like that, investors have taken a beating. The stock is down more than 90% since its all-time highs topping $200 in 2019. Shares closed Thursday at $7.35.

The sales decline has taken a sharp financial toll, with the company’s cash position falling from $733 million in 2021 to $190 million last year.

That prompted TD Cowen in a May earnings note to say the company may run out of money if it can’t stem the bleeding or raise funds — an outcome Brown dismisses. In Beyond’s quarterly conference call, the chief financial officer talked about raising funds through either debt or equity.

“It’s challenging,” Baumgartner said. “The category is still trying to find its way.”

Sales of plant-based meats and seafood were down 12% in 2023 to $1.2 billion, with unit sales falling even more by 19%, according to the Good Food Institute.

While the novelty of plant-based meat has worn off, what has stuck are persistent cries of “fake” or “faux” meat by critics — a diverse group that includes nutritionists, the entrenched meat industry and whole food absolutists who proselytize eating foods closer to nature.

The meat industry has for years helped bankroll a campaign highlighting the highly processed nature of Beyond’s and other makers’ plant-based beef products. “Fake meat, real chemicals,” is one such campaign sponsored by the Center for Consumer Freedom, a business backed nonprofit.

“Our campaign simply informed the public about what’s in fake meat. Consumers have seen past the marketing spin and realized that these products are just ultraprocessed goop that costs more and isn’t healthier than real meat,” said James Bowers, executive director of the center, in an emailed statement to The Times.

Beyond has tried to stress that all its ingredients come from plant-based sources, but there are many nutritionists on the web who also have voiced concerns about the fat and sodium content of the older burgers — and an industrial process that creates a product Grandma would not have stocked in her kitchen.

Baumgartner thinks those voices have resonated more than any industry-backed campaign.

Brown maintains entrenched food lobbies are the real culprit, while also acknowledging their effectiveness.

“So if you look at 2020, 50% or more of consumers thought that plant-based meat was healthy. That dropped to 38% in 2022. And it’s probably lower today,” he told The Times.

Beyond is banking its turnaround on the fourth iteration of its burger meat, which began wide distribution in May. Beyond has switched from canola and coconut oils to avocado oil, reducing saturated fat by 60% to 2 grams per serving, while cutting sodium by 20%.

Brown said the new recipe, which includes peas, red lentils, faba beans and brown rice, was developed through consultation with the company’s scientific and nutritional advisors, as well as leading health groups.

The new burger has earned key endorsements by the American Diabetes Assn. and Good Housekeeping that Beyond plans to slap on its labeling. The American Heart Assn. is including the product in its heart-healthy recipe collection.

Beyond also says its major recipe change has resulted in its “meatiest, juiciest” burger ever, citing early taste tests to back up its claim. That’s an important consideration, given the competition.

Impossible Foods, founded by a Stanford University biochemist, makes soy-based burgers, using a bean that has been manipulated by the food industry for decades to make an assortment of products. The company’s burgers also contain a genetically modified plant-based version of heme, an iron-containing molecule that is a component of beef.

In online taste tests, Impossible often beat Beyond’s burgers, which are based on peas. Brown chose peas due to alleged health concerns over soy-based products, the vast majority of which are genetically modified.

Impossible’s burgers became the darlings of foodies and chefs at high-end restaurants prior to pandemic, and since then, like Beyond, the company has continued to improve them, with multiple versions now available.

While both companies laid off workers amid the industry’s downturn, Impossible has seen strong retail sales and claims it is “the fastest growing meat from plants brand” in the country. It’s also managed to make its Impossible Whopper stick on Burger King’s menus. As a privately held company, it does not release detailed financial information.

Overseas, Beyond, which can market its product as non-GMO, sells in far more markets, and, though McDonald’s decided against selling a Beyond-based burger in the United States, it does so in Europe.

Despite how much is riding on its newest burger, Beyond has raised the retail prices, partially to offset the higher costs of the ingredients, but also to improve its margins.

Baumgartner questioned the move, especially after Beyond had cut the price of its prior burger.

“I think what complicates the matter now is in 2023, when you had inflation and you were seeing food prices going up, Beyond cut their prices. Now, as prices have generally stabilized, Beyond Meat is raising prices.”

Brown dismissed the concerns, saying the company needs to raise its margins after the prior price cut destroyed them, while doing nothing to improve sales.

While Brown’s goal has been to achieve pricing parity with animal meat, he said Beyond’s customers — health conscious and concerned about the environmental issues surrounding the beef industry — have been found to be “price insensitive.”

The fundamental challenge for Beyond, he said, is turning around the wider perception that its products are not good for you.

“Once that narrative became complicated for people because of misinformation or whatever, it became harder to grow the business. We have addressed that thoroughly in this product,” he said.

Business

As Delta Reports Profits, Airlines Are Optimistic About 2025

Published

49 minutes ago

January 11, 2025

Press Room

As Delta Reports Profits, Airlines Are Optimistic About 2025

This year just got started, but it is already shaping up nicely for U.S. airlines.

After several setbacks, the industry ended 2024 in a fairly strong position because of healthy demand for tickets and the ability of several airlines to control costs and raise fares, experts said. Barring any big problems, airlines — especially the largest ones — should enjoy a great year, analysts said.

“I think it’s going to be pretty blue skies,” said Tom Fitzgerald, an airline industry analyst for the investment bank TD Cowen.

In recent weeks, many major airlines upgraded forecasts for the all-important last three months of the year. And on Friday, Delta Air Lines said it collected more than $15.5 billion in revenue in the fourth quarter of 2024, a record.

“As we move into 2025, we expect strong demand for travel to continue,” Delta’s chief executive, Ed Bastian, said in a statement. That put the airline on track to “deliver the best financial year in Delta’s 100-year history,” he said.

The airline also beat analysts’ profit estimates and said it expected earnings per share, a measure of profitability, to rise more than 10 percent this year.

Delta’s upbeat report offers a preview of what are expected to be similarly rosy updates from other carriers that will report earnings in the next few weeks. That should come as welcome news to an industry that has been stifled by various challenges even as demand for travel has rocketed back after the pandemic.

“For the last five years, it’s felt like every bird in the sky was a black swan,” said Ravi Shanker, an analyst focused on airlines at Morgan Stanley. “But it appears that this industry does have its ducks in a row.”

That is, of course, if everything goes according to plan, which it rarely does. Geopolitics, terrorist attacks, air safety problems and, perhaps most important, an economic downturn could tank demand for travel. Rising costs, particularly for jet fuel, could erode profits. Or the industry could face problems like a supply chain disruption that limits availability of new planes or makes it harder to repair older ones.

Early last year, a panel blew off a Boeing 737 Max during an Alaska Airlines flight, resurfacing concerns about the safety of the manufacturer’s planes, which are used on most flights operated by U.S. airlines, according to Cirium, an aviation data firm.

The incident forced Boeing to slow production and delay deliveries of jets. That disrupted the plans of some airlines that had hoped to carry more passengers. And there was little airlines could do to adjust because the world’s largest jet manufacturer, Airbus, didn’t have the capacity to pick up the slack — both it and Boeing have long order backlogs. In addition, some Airbus planes were afflicted by an engine problem that has forced carriers to pull the jets out of service for inspections.

There was other tumult, too. Spirit Airlines filed for bankruptcy. A brief technology outage wreaked havoc on many airlines, disrupting travel and resulting in thousands of canceled flights in the heart of the busy summer season. And during the summer, smaller airlines flooded popular domestic routes with seats, squeezing profits during what is normally the most lucrative time of year.

But the industry’s financial position started improving when airlines reduced the number of flights and seats. While that was bad for travelers, it lifted fares and profits for airlines.

“You’re in a demand-over-supply imbalance, which gives the industry pricing power,” said Andrew Didora, an analyst at the Bank of America.

At the same time, airlines have been trying to improve their businesses. American Airlines overhauled a sales strategy that had frustrated corporate customers, helping it win back some travelers. Southwest Airlines made changes aimed at lowering costs and increasing profits after a push by the hedge fund Elliott Management. And JetBlue Airways unveiled a strategy with similar aims, after a less contentious battle with the investor Carl C. Icahn.

Those improvements and industry trends, along with the stabilization of fuel, labor and other costs, have created the conditions for what could be a banner 2025. “All of this is the best setup we’ve had in decades,” Mr. Shanker said.

That won’t materialize right away, though. Travel demand tends to be subdued in the winter. But business trips pick up somewhat, driven by events like this week’s Consumer Electronics Show in Las Vegas.

The positive outlook for 2025 is probably strongest for the largest U.S. airlines — Delta, United and American. All three are well positioned to take advantage of buoyant trends, including steadily rebounding business travel and customers who are eager to spend more on better seats and international flights.

But some smaller airlines may do well, too. JetBlue, Alaska Airlines and others have been adding more premium seats, which should help lift profits.

While he is optimistic overall, Mr. Shanker acknowledged that the industry was vulnerable to a host of potential problems.

“I mean, this time last year you were talking about doors falling off planes,” he said. “So who knows what might happen.”

Business

Insurance commissioner issues moratorium on home policy cancellations in fire zones

Published

2 hours ago

January 11, 2025

Press Room

Insurance commissioner issues moratorium on home policy cancellations in fire zones

California Insurance Commissioner Ricardo Lara has issued a moratorium that bars insurers from canceling or non-renewing home policies in the Pacific Palisades and the San Gabriel Valley’s Eaton fire zones.

The moratorium, issued Thursday, protects homeowners living within the perimeter of the fire and in adjoining ZIP codes from losing their policies for one year, starting from when Gov. Gavin Newsom declared a state of emergency on Wednesday.

The moratoriums, provided for under state law, are typically issued after large fires and apply to all policyholders regardless of whether they have suffered a loss.

Lara also urged insurers to pause for six months any pending non-renewals or cancellations that were issued up to 90 days before Jan. 7 that were to take effect after the start of the fires — something he does not have authority to prohibit.

“I call upon all property insurance companies to halt these non-renewals and cancellations and provide essential stability for our communities, allowing consumers to focus on what’s important at the moment — their safety and recovery,” said Lara on Friday during a press conference in downtown Los Angeles.

Insurance companies in California have wide latitude to not renew home policies after they expire, though they must provide at least 75 days’ notice. However, policies in force can be canceled only for reasons such as non-payment and fraud.

Insurers have dropped hundreds of thousands of policyholders across California in recent years citing the increasing risk and severity of wind-driven wildfires attributed to climate change. The insurance department said residents living in fire zones can be subject to sudden non-renewals, prompting the need for the moratoriums.

In addition, Lara asked insurers to extend to policyholders affected by the fires time to pay their premiums that go beyond the existing 60-day grace period that is mandatory under state law.

It’s not clear how many homeowners in Pacific Palisades and elsewhere might not have had coverage, but many homeowners reported that insurers had not renewed their policies before the disaster struck. State Farm last year told the Department of Insurance it would not renew 1,626 policies in Pacific Palisades when they expired, starting last July.

Residents can visit the Department of Insurance website at insurance.ca.gov to see if their ZIP codes are included in the moratorium. They can also contact the department at (800) 927-4357 or via chat or email if they think their insurer is in violation of the law.

The Pacific Palisades fire, the most destructive fire in Los Angeles history, as of Friday morning had grown to more than 20,000 acres, burning more than 5,000 homes, businesses and other buildings. It was 6% contained.

The Eaton fire, which has burned many structures in Altadena and Pasadena, has spread to nearly 14,000 acres and was 3% contained as of early Friday. Ten people have died in the fires.

Business

In Los Angeles, Hotels Become a Refuge for Fire Evacuees

Published

13 hours ago

January 10, 2025

Press Room

In Los Angeles, Hotels Become a Refuge for Fire Evacuees

The lobby of Shutters on the Beach, the luxury oceanfront hotel in Santa Monica that is usually abuzz with tourists and entertainment professionals, had by Thursday transformed into a refuge for Los Angeles residents displaced by the raging wildfires that have ripped through thousands of acres and leveled entire neighborhoods to ash.

In the middle of one table sat something that has probably never been in the lobby of Shutters before: a portable plastic goldfish tank. “It’s my daughter’s,” said Kevin Fossee, 48. Mr. Fossee and his wife, Olivia Barth, 45, had evacuated to the hotel on Tuesday evening shortly after the fire in the Los Angeles Pacific Palisades area flared up near their home in Malibu.

Suddenly, an evacuation alert came in. Every phone in the lobby wailed at once, scaring young children who began to cry inconsolably. People put away their phones a second later when they realized it was a false alarm.

Similar scenes have been unfolding across other Los Angeles hotels as the fires spread and the number of people under evacuation orders soars above 100,000. IHG, which includes the Intercontinental, Regent and Holiday Inn chains, said 19 of its hotels across the Los Angeles and Pasadena areas were accommodating evacuees.

The Palisades fire, which has been raging since Tuesday and has become the most destructive in the history of Los Angeles, struck neighborhoods filled with mansions owned by the wealthy, as well as the homes of middle-class families who have owned them for generations. Now they all need places to stay.

Many evacuees turned to a Palisades WhatsApp group that in just a few days has grown from a few hundred to over 1,000 members. Photos, news, tips on where to evacuate, hotel discount codes and pet policies were being posted with increasing rapidity as the fires spread.

At the midcentury modern Beverly Hilton hotel, which looms over the lawns and gardens of Beverly Hills, seven miles and a world away from the ash-strewed Pacific Palisades, parking ran out on Wednesday as evacuees piled in. Guests had to park in another lot a mile south and take a shuttle back.

In the lobby of the hotel, which regularly hosts glamorous events like the recent Golden Globe Awards, guests in workout clothes wrestled with children, pets and hastily packed roll-aboards.

Many of the guests were already familiar with each other from their neighborhoods, and there was a resigned intimacy as they traded stories. “You can tell right away if someone is a fire evacuee by whether they are wearing sweats or have a dog with them,” said Sasha Young, 34, a photographer. “Everyone I’ve spoken with says the same thing: We didn’t take enough.”

The Hotel June, a boutique hotel with a 1950s hipster vibe a mile north of Los Angeles International Airport, was offering evacuees rooms for $125 per night.

“We were heading home to the Palisades from the airport when we found out about the evacuations,” said Julia Morandi, 73, a retired science educator who lives in the Palisades Highlands neighborhood. “When we checked in, they could see we were stressed, so the manager gave us drinks tickets and told us, ‘We take care of our neighbors.’”

Hotels are also assisting tourists caught up in the chaos, helping them make arrangements to fly home (as of Friday, the airport was operating normally) and waiving cancellation fees. A spokeswoman for Shutters said its guests included domestic and international tourists, but on Thursday, few could be spotted among the displaced Angelenos. The heated outdoor pool that overlooks the ocean and is usually surrounded by sunbathers was completely deserted because of the dangerous air quality.

“I think I’m one of the only tourists here,” said Pavel Francouz, 34, a hockey scout who came to Los Angeles from the Czech Republic for a meeting on Tuesday before the fires ignited.

“It’s weird to be a tourist,” he said, describing the eerily empty beaches and the hotel lobby packed with crying children, families, dogs and suitcases. “I can’t imagine what it would feel like to be these people,” he said, adding, “I’m ready to go home.”

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