In its latest earnings call, Beyond Meat articulated a three-step turnaround plan.
Observers, investors and analysts agree that Beyond Meat is a troubled brand-business in need of a turnaround. In yet another analysis of Beyond Meat on CNN, there was the familiar litany of issues. As CNN points out, Beyond Meat is facing a “waning” of interest in plant-based meat products. Part of this is due to price points and customers’ desires to fall back on less expensive alternatives. With prices high, people have been cutting back on dining out. This impacts Beyond Meat’s non-grocery channels. There have been some C-suite resignations. And, there has been a recent report on the hygiene of a processing facility in Pennsylvania. Adding to these woes is the fact that McDonald’s has not added the highly touted McPlant burger to its menu in the US, while Dunkin took its Beyond Sausage breakfast sandwich off its menu.
CEO, Ethan Brown reiterated most of these issues in the earnings call. Mr. Brown stated, “As consumers intensify (their) focus on making ends meet, health and environmental considerations take a back seat. This phenomenon makes it more difficult to broadly convey our core value proposition to the consumer.
“To summarize the current situation, we face an economy where blistering inflation pressure is shifting consumer behavior in the grocery store, category where competition has dramatically increased despite a broad and precipitous category slowdown and a consumer base whose focus understandably turned to fulfilling immediate basic needs of pursuing the broader benefits that represent our core value proposition.”
In a turnaround plan, the first step is to stop the bleeding. Mr. Brown stated Beyond Meat must “…significantly reduce operating expenses, while focusing on a more narrow (sic) set of strategic partner, retail, and food service opportunities and utilizing lean value streams across our beef, pork, and poultry platforms.”
Second, Beyond Meat will “… aggressively manage down inventory and rationalizing our production network..” This is due to “…more moderate volume assumptions to improve overhead absorption, address underutilization fees, and support margin improvement.”
And, third, Mr. Brown indicated that Beyond Meat would apply “…a laser focus to our sales and marketing activities, emphasizing those opportunities that we believe strike the right balance between restoring near-term growth and nurturing our most valuable long-term opportunities.” This means “restoring growth in retail and food service, through a series of targeted innovation, sales and marketing execution.”
All of these are important strategies. When a brand-business is in trouble, focusing on Financial Discipline, Operational Excellence and Leadership Marketing are critical for a turnaround.
Financial Discipline is priority number one. Make money. Get back to profitability. Eliminate waste. Improve productivity. Every brand needs to earn the right to continue to grow. Financial Discipline is more than cost cutting. It is also a focus on building brand value. Cost cutting takes you only so far. Brand value contributes to quality revenue growth.
Operational Excellence means focusing on delighting customers so that an increasing percentage of customers look forward to purchasing more often. Operational Excellence involves creating an efficient and effective balance between meeting customer expectations and minimizing waste. When managed properly, Operational Excellence both decreases costs and improves customer satisfaction. And, this in turn helps generate quality revenue growth leading to brand value.
Leadership Marketing means focusing on building the relevant differentiation of the brand. Innovation and renovation are important. But, so is clarity of the brand’s Purpose and Promise, both internally and externally. Articulating the brand’s Purpose and Promise help to increase brand value.
Thus, here is what Mr. Brown’s turnaround plan lacks. There is no mention of the brand-business’ Brand Promise. Mr. Brown does suggest that there must be better communications of the health benefits of Beyond Meat. And, there must be a better connection between the brand-business and its role in sustainability. These are about the brand’s Purpose. But, there is nothing about the brand-business’ Brand Promise. And, the CEO of Impossible Foods is saying exactly the same thing.
Beyond Meat has not created a relevant, differentiated brand promise. Without a relevant, differentiated brand promise, a brand tends to fall into commodity corner.
A Brand Promise summarizes in a brief statement the special contract that exists between a brand and its customers. A Brand Promise describes what the brand is intended to stand for in the mind of a specific group of customers or prospective customers. By consistently living up to and delivering the Brand Promise, a brand will be relevant and distinctive. A Brand Promise is something that a brand continuously strives to achieve. It is a future-focused description because it states what the brand will do for its customers.
A Brand Promise has three components: the Brand Claim, the Brand Character and the Brand Support. The Brand Claim is the combination of functional benefits, emotional and social rewards: that is, “what does the brand do for me?;” “how do I feel when the brand does this well?” and “how are my social interactions and connectedness enhanced when the brand does this well?”
The Brand Character reflects the values of the customer (that means, who is the person we wish to have as a loyal customer?) and the brand’s personality (if the brand were a person, what would be those traits most compelling to the target customer?).
The Brand Support is the combination of relevant, differentiated features that are necessary to bring the Claim to life for those with the articulated Character. Identify the Brand Support only after the Brand Claim and Brand Character are identified.
The role of the Brand Promise is multidimensional. First and foremost, it defines the brand. Brand Promise defines the parameters for all development, communications, innovation and renovation on behalf of the brand. Brand Promise must be a motivating, relevant, differentiated description of the brand experience that you want the brand to deliver. Consistently living up to this Promise is the way customers perceive the brand’s performance quality.
The Brand Promise is an internal force as well. All employees must know and understand the Brand Promise. They must be able to define it and deliver it, day after day, for every customer. Regardless of function, employees must know what they need to do to live up to the brand’s Promise to its customers.
Beyond Meat has had and still has many operational issues and retail challenges.
It is a mistake to believe the Brand Promise can fix everything. But, it is also a mistake to believe that Brand Promise is a mere marketing construct. Not only does Brand Promise define the total brand experience, it is a galvanizing force within the brand’s organization.
A brand is a multidimensional, multilayered, multifaceted relevant differentiated idea. That idea is the Brand Promise. And, since a brand is a promise of a relevant, differentiated experience, the Brand Promise is key. This is especially true for new brands and for brands in intensely competitive market spaces.
Beyond Meat has never clearly differentiated in a relevant manner from its original competitor, Impossible Foods. That was a mistake. Now, that quality plant-based meat and chicken alternatives are taking up a lot of grocery refrigerated and frozen spaces, being known for something special is a make-or-break necessity.
Being first in a category does not matter if entries that follow are relevant and differentiated and high quality. Beyond Meat could have an amazing relevant differentiated Brand Promise. If the brand-business’s management team starts to focus on brand-business revitalization, let’s hope this time the focus is on the brand.