US plant-based food manufacturer Beyond Meat spent almost $6m on repackaging and repurposing products in response to the Covid-19 pandemic.
In an earnings call for its second quarter financial results, the company said it had experienced a significant shift in demand from its foodservice to its retail business in the wake of the pandemic.
This prompted it to convert a “meaningful portion” of its foodservice inventory into products for retail.
Mark Nelson, CFO, told investors: “To provide some context on what this undertaking entailed, these [repackaging] activities primarily involved costs associated with retrieving finished goods products from third-party storage facilities, transporting them to our own and our co-manufacturing partner’s facilities for repacking, direct labour and holding fee costs associated with the physical repacking itself, installing new retail packaging as well as disposal of the original foodservice packaging and transportation back to our warehousing facilities.”
He added that the company also incurred costs associated with the write-off of unrecoverable portions of the original inventory. But he added that following this “rebalancing” the company did not anticipate a need for further repacking.
Chief executive Ethan Brown added repurposing of stock was one part of the business’ plan “to pivot resources away from Covid-19 impacted business segments”, and reroute to meet consumers in the unstable economy.
“Under these two broad themes, we developed value pack for retailers, offered promotional and reduced pricing at retail to encourage greater consumer trial during a period of higher beef, switched foodservice production lines over the retail products, repacked foodservice inventory for retail sale, supported our foodservice partners with incremental programs and continued to invest in what our brand stands for by providing free product to first responders and those in need,” said Brown.
“Many of these efforts, like the Covid-19 crisis itself, continue. And I’m proud to report that early indications suggest each have been highly effective.”
The company reported gross profit for the quarter of $33.7m, compared to $22.7m in the second quarter of 2019. Included in the cost of goods sold during the quarter was $5.9m of expenses related to the product repacking activities.
The company is one of a number of organisations that have employed strategies of repurposing processes and business priorities to combat the shifting markets and demand as a result of the Covid-19 Pandemic.
In June, food procurement organisation Foodbuy created projects to ensure essential supplies were accessible to key workers and charities.
It set up a trio of “essential food” box projects - focused on preparing the essentials food box, repackaging and redistribution, and a box-on-demand service for charity partners that want to create packages themselves or request one-off donations.