investment proposal draft

ADMP INVESTMENT PROPOSAL (BEYOND MEAT)

TO: Clark Hansen, CEO

FROM: Winston Burks, Research and Development

DATE: March 5, 2024

SUBJECT: Beyond Meat Investment Proposal

After conducting research on the plant based food company Beyond Meat, I recommend that AMDP does not invest. Beyond Meat came onto the scene to disrupt the agriculture industry, which produces one-third of the world’s greenhouse gasses linked to human activity (Creswell). The company possessed a ton of potential and was backed by high profile investors such as Bill Gates. However, there are conflicting opinions on how sustainable Beyond Meat really is. This combined with some shaky financial numbers as of late make an investment into the company a risky one.

This memo contains:

· An explanation of AMDP’s sustainability and ethics standards

· Overview of Beyond Meat’s background, financial data, and claims

· Two expert opinions on Beyond Meat’s environmental impact

· Final recommendation

AMDP Standards

AMDP’s mission emphasizes sustainability and ethics. Here are the standards we live up to:

Triple Bottom Line (3BL): An accounting framework that includes three different measures of performance: social, environmental and financial. These measures are also commonly called the three Ps: people, planet and profits (Slaper).

Corporate Social Responsibility (CSR): A management concept that details a company’s contributions to the well-being of society through social and environmental initiatives. These contributions could include being environmentally friendly, promoting equality, diversity, and inclusion, giving back to the community, and ensuring business decisions are ethical (Reckmann).

Social Enterprise: A business whose primary goals involve specific social objectives. They aim to maximize profits while also maximizing their benefit to society and the environment. The profits are used to fuel their social initiatives (Investopedia).

Carbon Footprint: The total amount of greenhouse gasses emitted into the atmosphere as a result of human activities. A company’s carbon footprint can be measured by quantifying the amount of the gasses emitted across its operations, industrial activities, as well as machinery and equipment. Reducing one’s carbon footprint is essential for addressing climate change, and by measuring it, companies can better understand where their highest sources of emissions come from and can strategize ways to minimize them. (Badamesi).

Company Background

With the mass consumption of animal based products being a major contributor to climate change, Ethan Brown wanted to give consumers an alternative. He met with two University of Missouri professors who were trying to reset the protein from plants to take on the muscular form of meat. After two years, he finally licensed the technology. In 2009, Brown would launch Beyond Meat. The company caught the eye of some high profile investors such as Bill Gates, Twitter co-founders Biz Stone and Evan Williams, as well as Tyson Foods. When asked why he invested, Bill Gates said he “couldn't tell the difference” between Beyond Meat and real chicken (Bronner). Beyond Meat also received investments from celebrities Leonardo DiCaprio and Jessica Chastain (Shanker, et al). In 2019, Beyond Meat became the first plant based meat substitute to go public (Popper).

Financial Data

According to the Wall Street Journal, Beyond Meat financial statements as of late are concerning:

1. Revenue: Beyond Meat earned revenues of $418.9 million, which was -9.85% loss from the previous year. This loss comes after 3 years of positive growth.

2. Net Income: In terms of net income, Beyond Meat is operating at a loss of $366.1 million. Unlike their revenue, Beyond Meat has been in the red in terms of net income for the past three years.

3. COGS and SG&A Expenses: Beyond Meat’s Cost of Goods Sold including Depreciation and Amortization was $477.3 million, which was an increase from $351.4 million from the previous year. Their Selling, General and Administrative expenses tallied $297.1 million which was also an increase from the previous year, which was $272.4 million.

Company Claims

Beyond Meat's mission statement states “We Believe There’s a Better Way to Feed Our Future. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves.” This statement lines up perfectly with AMDP’s standard of Triple Bottom Line. Aligning with the AMDP standard of carbon footprint, Beyond Meat also has a commitment to carbon footprint reduction. On the company’s website, it states that a Life Cycle Assessment study was conducted by an expert in food system sustainability. In the study, the environmental impact of Beyond Burger® was compared to a beef patty. The result was that Beyond Burger® uses 97% less water, 97% less land, 37% less (non-renewable) energy, and generates 10x less Greenhouse Gas Emissions than a beef patty.

Expert Opinions

When it comes to the opinions of experts surrounding the topic of Beyond Meat, there is some skepticism among some professionals.

Opinion 1

Roxana Dobre, a manager of consumer goods research at Sustainalytics, a firm that rates the sustainability of companies based on their environmental, social and corporate governance impact states the following: “We don’t feel we have sufficient information to say Beyond Meat is fundamentally different from JBS… the problem with plant-based products, generally speaking, is that while they may be fixing one problem, combating the fact that growing meat is very carbon-intensive and emits a lot of carbon dioxide, depending on the ingredients and where they are sourced from, you could still be involved in deforestation issues… you still need the space to grow the soy that is in many of these products” (Creswell).

Opinion 2

Ricardo San Martin, a research director of the alternative meats program at UC Berkeley, also has a skeptical view: “The dominant narrative from the plant-based industry and the venture capitalists supporting it is that these companies are better for the environment, they’re better for health, they’re better for this and better for that, but it is really a black box. So much of what is in these products is undisclosed. Everybody has a supply chain, and there is a carbon footprint behind that chain” (Creswell).

Final Recommendation

I recommend that AMDP should not invest in Beyond Meat. The financial statements are concerning and questions the current demand for meat alternatives. While Beyond Meat’s mission aligns with AMDP’s standards of sustainability, the skepticism from some experts is worrisome. Ultimately, I do not believe it is in the best interest of AMDP to invest in Beyond Meat at the moment.

Thank you,

Winston Burks

Works Cited

https://time.com/5582512/beyond-meat-best-ipo-2019/

https://www.entrepreneur.com/leadership/with-72-million-in-funding-the-entrepreneur-behind-beyond/307715

https://www.beyondmeat.com/en-US/mission

https://www.wsj.com/market-data/quotes/BYND/financials/annual/income-statement

https://finance.yahoo.com/news/beyond-meat-reports-fourth-quarter-210500444.html

https://www.nytimes.com/2021/10/15/business/beyond-meat-impossible-emissions.html

https://www.nytimes.com/2019/05/02/technology/beyond-meat-ipo-stock-price.html

https://www.ibrc.indiana.edu/ibr/2011/spring/article2.html

https://www.businessnewsdaily.com/4679-corporate-social-responsibility.html