INB 260 - Presentation
The Chinese Market
- After we determined that Asian consumers would be a good market to expand to, we selected China as the target country and examined industry trends there. - Almost 99% of food sales in China are through offline retail, which indicates that Beyond Meat will need a significant supermarket and restaurant presence to succeed. - For the food industry in China particularly, meat products have the largest projected revenue and volume growth in the coming years. Since Beyond Meat's products seek to provide an alternative to meat products, it should appeal to this growing base of consumers. - Finally, consumer spending in China has been growing by about 7% a year thanks to its growing middle class and economy.
Beyond Meat Overview
- For our American firm that we believe should expand internationally, we selected "Beyond Meat," a Los-Angeles based producer of plant-based products designed to replace meat. - Some of their products include breakfast sausages, burgers, beef, sausage, and beef crumbles. - Beyond Meat was founded in 2009 by Ethan Brown, is headquartered in El Segundo, California, and currently has around 400 employees. - It is publicly traded on the NASDAQ exchange under the symbol BYND, and its parent organization is Savage River Inc. founded in 2008. - Beyond Meat's mission is to improve human health, positively impact climate change, improve animal welfare, and address global resource constraints.
Products
- Here are some pictures of Beyond Meat's products. - The top left and center show the burger patty while the top right shows their sausages. - The bottom left shows the beef, and the bottom right shows the beef crumbles.
Survey & Statistics
- Our initial thoughts were that Beyond Meat should significantly expand into the Asian market with a country such as China. - To see if the product would be well received, we found some research and studies to support this hypothesis. - Nearly 70% of Asian consumers surveyed were "very interested" in nutrition and eating healthy. - Almost 40% of them believe that eating less meat significantly relates to having a balanced diet. - Lastly, according to Beyond Meat's founder, Ethan Brown, 93% of the people who purchase the Beyond Burger are not vegan or vegetarian, indicating that the products have a wide appeal to a broad consumer base.
The Chinese Market Graphs
- The graph on the top shows how China has the largest market for food in the world, thanks to its huge population. - The graph on the bottom shows that meat products have a significant lead compared to other food products for forecasted revenue growth.
Infographic
- This infographic shows exactly how Beyond Meat seeks to achieve its mission. - On average, it takes 58 gallons of water and 41 square feet of land to produce one 1 and 1/4 pound beef burger. - With Americans eating an estimated 50 billion burgers every year, this is a huge drain on resources. - Beyond Meat burgers have the same four building blocks as beef products: protein, fat, trace minerals, and water, and it can make a product that doesn't sacrifice taste or quality. - To put things in perspective, Beyond Meat burgers use 99% less water, 93% less land, 90% less greenhouse gas emissions, and 46% less energy.
Foreign Risks
- While China may seem like a great country to expand to, there are significant risks from government policy and foreign exchange risks. - It is widely known that China has a very strict and regulated economy, but if Beyond Meat seeks out local players in the market and forms an alliance or partnership with them, navigating the regulatory landscape will be much easier. - Similar to how we learned that Microsoft developed a new R&D facility in China to earn the government's trust, Beyond Meat should pursue similar tactics to gain a foothold on the market. - Foreign exchange risk will also impact profitability. - Currently, the People's Bank of China pegs the rate of the Chinese yen to the dollar. $1 usually equals around 7 Chinese yen. - This relative stability in foreign exchange rates due to the policy of the Chinese government should help hedge foreign exchange rate risks. - Furthermore, if the government allows the Chinese yen to appreciate while the U.S. government allows the dollar to depreciate, this will actually translate into foreign translation gains in the financial statements.