Beyond Meat reported yesterday that its supermarket sales have nearly tripled year-over-year. The plant-based meat company’s U.S. retail sales jumped by 194.9% in the second quarter, and its international retail sales by 166.7%. The global boost in consumer sales can be attributed to a number of factors, including more cooking at home, more time to experiment with food, a real-meat shortage in grocery stores, and the strategic placement of Beyond Meat products right in the real-meat aisle.
But despite a surge in the company’s stock price on Tuesday, Beyond Meat’s stock tumbled back down on Wednesday following its earnings release. Shares fell 8% during premarket trading, and are now down 4.5% mid-market.
So why the slump? Despite Beyond Meat’s burgeoning grocery-store sales, the company has been hit hard by shutdowns in the restaurant industry. Its food-service sales dropped 60.7% in the U.S., and 56.5% internationally, with Beyond Meat acknowledging a “meaningful slowdown” in the sector, which accounted for 49% of its total revenue in the same quarter last year.
And with COVID-19 cases spiking across the country, it’s unclear when restaurants will reopen in full force, which presents a significant question mark in Beyond Meat’s financial forecast. The company’s 2020 guidance “remains suspended until further notice.”
Furthermore, while the company is emphasizing a pivot toward its thriving retail business to offset the loss of food-service business, Beyond Meat will have to battle rival fake-meat producer Impossible Foods for its grocery-store customers.
The two plant-based meat giants are currently locked in a distribution war as the companies race to secure vendors. Earlier this week, Beyond Meat unveiled new partnerships with Walmart and bulk-goods warehouses Sam’s Club and BJ’s Wholesale Club (Beyond’s list of vendors already includes Costco Wholesale).
Impossible Foods, whose vendors include Safeway, Albertsons, and Wegmans, bagged its own deal with Walmart last week.