I don’t think it’s something that we’re immediately looking to address. And so, that’s just some general fundamental differences, I think, between the trade in the EU versus the U.S.
Robert Moskow: Okay. Thank you.
Lubi Kutua: Thanks, Rob.
Ethan Brown: Sure, thanks, Rob.
Operator: The next question is from Alexia Howard with Bernstein. Please go ahead.
Alexia Howard: Thank you. Good evening, everyone.
Ethan Brown: Hey, Alexia.
Alexia Howard: So, can we just get back to the dynamic in the U.S. and how do you go about re-recruiting lapsed consumers? If people were somehow disappointed in previous products, what compels them back into this, especially if the price gaps to animal meat products are expanding because of the price increases you’re planning to take? And then, specifically, I guess, linked to that, is marketing spend expected to be up or down in 2024?
Ethan Brown: I think on the question of bringing people back into the category, the biggest deterrent has been this health question, right? And you’ve heard me talk about it before, that there’s a — it’s not without impetus and support from the incumbent industry. And that needs to really be looked at as well. I mean, it’s not just the animal protein players and their lobbyists, but it’s actually the pharmaceutical — members of the pharmaceutical industry, which I find to be kind of disturbing actually. And so, we had to write the message, and we could do that by yelling from the rooftop about the benefits of our existing products, or we can just try to make them even more healthier and unassailable at some point. So that’s what we’ve done, I think, with Beyond IV.
We’ll continue to do it. You can expect future iterations to continue to drive improvements. And then, it’s just linking up with associations and national institutions that really can validate what we’re talking about. And they help develop these products. That’s the fascinating part about this work is that we didn’t just do this in a conference room on our own. We were out in the community talking to doctors and nutritionists in each of these institutions. Our Head of Communications did an amazing job pulling together an ecosystem of doctors and nutritionists and different national health organizations, as well as universities, and we listened. And we worked very closely with them. And I can go back to individual conversations with individual doctors that relate to specific inputs that we used.
And so, I do think that there’s an opportunity here for a more organic style of marketing that relies on the power of social media, that relies on the fundamental truth of the products to bring people back in. And this wasn’t just a health upgrade. This was something that for years we’ve been focusing on creating much more of a neutral beef taste. As I’ve mentioned many times, there’s over 4,000 molecules that make meat taste like meat. And our job is to use the scientific expertise we have here to match those with analogous or the same molecules in plants and then find out what the main drivers are and incorporate those into our products. And I think the team has done an amazing job with this product doing that. So, you get a benefit in health, you get a benefit in taste, and you get the word out.
And we’ve been very successful over the last decade in using people in a position of influence within society to carry that message because they believe in it. And when the message is this powerful, when you have the opportunity to help people really improve their cardiovascular health, to really improve the risk outcomes that they face in their day-to-day life from a health perspective, there are folks in a position of influence that want to talk about that. And so, you’re going to see us go back to that playbook in a very big way to get this message out. And whether it’s ambassadors or influencers, whether it’s some of the institutions, when you’re trying to do something that’s good and people recognize it and there’s a lot of truth to it, you tend to get help.
And I think we’re going to get a little help from our friends on this one.
Alexia Howard: And when will it be out on the shelf? Is it a national launch in the first half of the year?
Ethan Brown: Well, if that’s a personal question I can send you some.
Alexia Howard: Okay, kind of. I don’t know if it really is that big of a leap forward. And just coming back to the marketing spend, is that going to be up or down this year overall? Just — and then, I’ll pass it on.
Ethan Brown: Lubi?
Lubi Kutua: Yeah. Alexia, we do expect, in aggregate, our marketing spend to be down. As you can imagine, if you look at our guidance, our OpEx guidance, and what that implies in terms of a year-over-year decline, we are taking pretty broad cuts across the organization. But I think when you start to dig down into specific areas of the business, specific departments, what really matters is how that spend is going to be directed. So, Ethan touched on this, but it’s really the mix of the marketing spend and really taking a targeted approach, being very deliberate about where we want to spend those marketing dollars. And so, in aggregate, yes, it will be lower, but…
Ethan Brown: Just one comment on pricing. You’re right that in certain areas, there will be more of a delta between animal protein and ourselves, but in others there will not be. And so, this is not a kind of crude application of a price increase. We have some very important partnerships and relationships where getting on the product line, there won’t be much change. And so, including in retail, you’ll see some products where there’s really not that much change. But in the aggregate, based on the elasticity studies we did, we’ll get a nice bump in terms of margin while still offering the consumer value for those that want it.
Alexia Howard: Great. Thank you very much. I’ll pass it on.
Ethan Brown: Sure.
Operator: The next question is from Peter Saleh with BTIG. Please go ahead.
Peter Saleh: Great. Thanks for taking the question. It sounds like you guys have done a lot of work on pricing and the level of pricing. It sounds like it’s a pretty meaningful change in your strategy. So, I’m just curious, is this — are you thinking about this as a one-time price hike to kind of get you in order here? Or is this just a real meaningful change in strategy where you’re thinking this will be a hike this year or maybe two hikes this year and more price hikes as we go forward? Just trying to understand how this strategy is really evolving on pricing. And then, can you just elaborate a little bit on your tiered pricing comments? Is this tiered by distribution channel, by product? Are some prices coming down, or are all prices going up? Just trying to understand those comments. Thanks.
Ethan Brown: Sure. I don’t think it’s a change in the long-term strategy. I mean, if you think about, and this is something that I find enormously fascinating, but won’t dive into too much here, but just the incredible efficiency you have when you take a set of amino acids from plants versus waiting for the animal to process and develop them, bacteria and turn nitrogen into protein, all that stuff, it’s just more efficient. And so, there will be a day when this dramatically underprices animal protein, but that’s not today. We did achieve price parity with certain products in certain markets recently. But in my view, that was not certainly a global statement at all in terms of the products. We still have a big delta for most of our products.
But I will say that the pricing measures we took, I don’t know they made that much difference. I think there was so much noise in the category, so much noise about the category, so much agitation outside the category with people saying negative things about the category, scaring consumers away, that pricing just wasn’t that as effective a tool. And my view is that we probably ended up selling a lot of our products to the same consumer at a reduced price. So, we learned that and moved away from it. But I do think there’s a real opportunity to continue to offer outstanding innovation year after year that does have a more premium price on it while you continue to offer some of the rest of your portfolio at lower pricing. And so, I do think you’ll see that from us.
And so, when we talk about tiered, part of that is that type of dynamic. I think the other is with particular customers and channels. If you think about very large strategic customers that are selling, let’s say, billions of burgers a day, that type of customer price sensitivity is so important. And so, we will continue to drive those type of products to parity as quickly as we can. I hope that helps.
Peter Saleh: Yeah, I know that’s very helpful. And then just lastly on my end, given all the changes you guys are making, do you expect this to have a material impact on the number of doors that you’re in in 2024?
Ethan Brown: Yeah, I think it’s too early to tell. I meant to say it’s billions served, not per day. I think it’s just too early to tell.
Lubi Kutua: Yeah. I mean, Peter, the one thing that I’d call out in terms of distribution outlets is we said we are discontinuing the jerky product. And as you know, there was a pretty significant distribution presence related to that product. It got us into certain channels like convenience, for example, where you look at the rest of our portfolio, doesn’t really play there. And so, certainly on the U.S. retail side, if you include, right, the impact of jerky, those numbers should come down. But apart from that, I think we’re pretty well distributed across U.S. retail, so I wouldn’t expect too much movement in those numbers. I think we would expect over time to continue to grow our presence across U.S. food service. And then, it still feels like pretty early days for us in international quite honestly.
And so, I think there’s room for further distribution expansion in international markets, in the EU and other areas and even same on the international food service side.
Peter Saleh: Great. Thank you very much.
Ethan Brown: Sure.
Operator: The next question is from Ben Theurer with Barclays. Please go ahead.
Ben Theurer: Yeah, thank you very much. And I’ll keep it short. So, thanks for squeezing me in. To follow up a little bit on some of the dynamics in food service, and kind of the success international versus the declining trends in the U.S., and also wanted to bring this back to some of the partnerships over the years you’ve flowed out with Yum! Brands, with McDonald’s and so on. I know Ethan, you talk a lot about the McDonald’s case over in the UK. But what are you seeing, particularly with those food service players in the U.S. as it relates to your products and the rollout of those? Any color you can share on that, that would be much appreciated.
Ethan Brown: Yeah. Thank you very much for the question. It’s a fair one. As I’ve done in the past, I really need to let those partners comment on their view on the category versus we’re just a supplier to them. So, I want to be careful on that front. I think that they look to the type of success we’re having in Europe and then make decisions based on what they’re going to bring here. But I will say the climate here has been so — we’re politicized earlier, and clouded with this misinformation and things of that nature that we really have to straighten that out first. Get the right information out there, make sure the consumer understands the value proposition, and I think the rest will follow from there. I mean, if I could, just on this before that we’re rolling out, what we’re trying to do here is create a question in the consumers’ mind as to why wouldn’t you do this, right?
And of course, if it’s too pricey, that’s an answer, but we don’t think it’ll be prohibitive in its pricing. And health benefits are so clearly there, the support from the medical and nutrition community is there, and the taste is there. So — and obviously environmental benefits. And I will answer your question, but the ability to solve the main issue that people are in their hands about with climate through a change in how we get protein to the center of the plate is absolutely phenomenal. And if you talk to people who study these issues, whether it’s the gentleman at Yale that’s in the video we did for Beyond IV, or folks at NYU, Matthew Hayek is one of them, who studied this. The use of land and biomass to bring carbon back out of the atmosphere and cool our climate and to reduce methane emissions associated with livestock, et cetera, so on and so forth.
It’s an incredible opportunity. And so, we’re going to make sure that consumers understand that, that when we’re talking about healing their body and helping them to achieve better health outcomes, we’re also able to do that on the planetary side. At some point, it becomes such a powerful value proposition that the consumer does come back in. We need to take it away from the politics. We need to take it away from us versus them. Farmers should be very much involved in this and making a great living doing it, not only growing our crops but potentially receiving funds from the government to sequester carbon. And it’s a real path forward for our country and for the globe. So, I think we just have to get people excited about that concept again, and the rest of the industry will follow in terms of restaurants and things of that nature.
But for us to apply a lot of focus on that this year is probably not the right area. Let’s continue to be successful with them in Europe, and let’s see what unfolds here in the U.S. in the future.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Ethan Brown for any closing remarks.
Ethan Brown: Great, thank you. I would encourage folks to visit and put it in the press release with the video that we put together around Beyond IV, again, to get a sense of the health benefits and to get a sense of the global environmental benefits. Both of them are very strong. I think both will bring the consumer back to this discussion. And tasting is believing, we’re try-and-buy-type brand. And as folks taste this new iteration, I think they’ll be quite pleased with it. So, we’re cautious in our optimism. We’ve obviously had some tough years, but by making these changes and creating the sustainable baseline for which we can grow, we’re going to create some room for ourselves to execute and get back on track for growth. Thanks, everybody.
Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
