Food Prices Are Soaring. Why Are Beyond Meat Prices Falling?

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With poultry and other meat prices spiking, people on plant-based diets have been spared at least some of the worst effects of food inflation. In fact, Beyond Burgers are increasingly on sale, although Oppenheimer doesn’t think that is a good sign for the stock.

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Analyst Rupesh Parikh reiterated a Perform rating on Beyond Meat (ticker: BYND) on Monday, and said he is concerned that plant-based products, unlike so many other foods, are facing deflationary pressures.

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He writes that store visits this weekend showed price reductions for Beyond Burger patties to the tune of 10% at a New Jersey Costco Wholesale (COST), at $1.50 a burger, compared with his previous visit two weeks before, when they were $1.67.

That said, the new price still had Beyond’s patties priced above those made by privately held rival Impossible Foods, which cost about $1.44 at the same Costco.

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“This pricing action and continued aggressive discounting suggests ongoing challenges for the category and for Beyond’s prospects,” Parikh writes. “We continue to see difficulties in Beyond’s ability to ramp gross margins back to pre-pandemic levels.”

Of course, Beyond Meat and other plant-based protein makers have long sought price parity with traditional meats, a goal that has thus far proven elusive, given several factors ranging from ongoing R&D for new products to agricultural subsidies that benefit meat producers.

So while declining average selling prices may be bad news for some companies—and arguably particularly so for those that aren’t yet profitable—for plant-based products, it is less worrisome. More consumers may be willing to turn to these proteins if they don’t have to pay a premium.

Nevertheless, Parikh and others worry for Beyond Meat specifically that lower prices could be a concern, given that they could indicate that the company is feeling competitive pressures in an increasingly crowded space with a cloudier demand profile.

Beyond Meat didn’t return requests for comment.

The shares are up 3.6% in recent trading to $35.25. The S&P 500 rose 0.7%.

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Credit: www.marketwatch.com /

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