What happened
Shares of Beyond Meat (BYND -1.98%) were falling 5.5% in morning trading on Wednesday even as the market tries to recover from yesterday's bloodbath.
While there was no company-specific news this morning pushing the plant-based meat substitute down, the inflation report issued yesterday will continue to weigh on Beyond Meat's stock as it shows just how much food prices continue to rise.
Image source: Getty Images.
So what
Economists had expected the Consumer Price Index to decline in August because energy prices have fallen sharply in recent weeks. Yet the decline did not have the anticipated impact because everything else continues to get more expensive, including food, which rose 11.4%, the biggest 12-month jump in 43 years.
Beyond Meat was already having trouble gaining traction because its global retail sales fell far more than global food service sales rose in the second quarter. Retail sales account for 70% of total sales, so the impact of its decline was felt more.
Although Beyond Meat has done well in lowering the cost of its plant-based meat alternative to put it closer to real meat prices, the lack of sales meant a lot of its product had to get sold through liquidation channels. Plant-based meat substitutes are still seen as a premium product, which isn't a benefit in an inflationary environment.
Now what
Beyond Meat continues to generate losses, and they widened considerably in the last quarter, which has the market putting its stock through the meat grinder. Shares are down 67% in 2022 and off some 83% from their 52-week high.
When consumers are paying a lot more for consumer staples, even if they're saving a few dollars at the gas pump, luxuries like plant-based beef and chicken substitutes are not going to be top-shelf items for consumers.
