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  • Industry spotlight
  • disruptive innovation

The power of plant-based food and drink

One of the biggest shifts in consumer behaviours in recent years has been the plant-based rebellion. According to the International Food Information Council’s 2021 Food & Health Survey, one in four of the 1,014 respondents in the US are eating more plant-based protein than they were a year ago.

It also found that there had been a 19% year-over-year increase in people consuming plant-based protein, with many seeing meat as having the greatest detrimental impact on the environment of all food sources.

As the trend moves into the mainstream, investors’ appetites for the market have grown. The world’s first vegan fund, the US Vegan Climate ETF [VEGN], was launched in September 2019 and has risen 59.3% since then to have $57.1m in net assets as of 30 June.


Returns rise of the US Vegan Climate ETF since September 2019 launch


The fund has holdings in stocks such as Beyond Meat [BYND], which has one of the most prominent seats at the meat alternative table — its products were in 52,000 retailers across more than 80 international markets by December 2020. In comparison, its rival Impossible Foods, is in just five.

The growing demand for plant-based alternatives has prompted many established food retailers and manufacturers, including Kraft Heinz [KHC], Tyson Foods [TSN] and Kroger [KR], to expand their offerings in the space. But what areas of the market are seeing the most interest?


Food for thought

Emergen Research forecasts the global plant-based food and beverage market to be valued at $32.29bn by 2027, as companies increasingly look for clever ways to innovate recipes.

In the past year alone, Kraft launched a vegan mayonnaise, Tyson Foods rebranded its Raised & Rooted range to offer completely vegan products, and Kroger added more than 500 meatless items to its plant-based brand Simple Truth.

However, it’s not just the food market that plants are disrupting, but beverages too. Specifically, dairy products. In fact, the dairy market has gone on to become one of the biggest battlegrounds in the plant-based revolution.

Global dairy alternatives saw $16.9bn in sales in 2020, according to data from Euromonitor International as reported in Bloomberg. This accounts for 12% of total milk sales — and the plant-based milk aisle is only getting more crowded.


Valuation of global dairy alternatives sales in 2020


One of the biggest brands in the space is Oatly [OTLY], which went public on 20 May with a market capitalisation close to $10bn. The stock has since climbed 21.1% to trade at $24.46 by the end of June.

While Oatly commands a significant market share in western Europe, Euromonitor research suggests that it doesn’t even register among the top brands in the US, which include products made by manufacturers such as Danone [BN.PA] and Blue Diamond Growers.


Digging deeper

At the agricultural level, new technologies in robotics and the cloud are changing the future of farming so that it can keep up with spiralling demand. Benson Hill’s revolutionary crop design platform is just one example of how machine learning and genetics can improve plant growth.

The company is expected to begin trading on the New York Stock Exchange in the third quarter of 2021 under the ticker BHIL, following its recent merger with special purpose acquisition company Star Peak Corp II. The combined entity will have an estimated market cap of $1.35bn.

“You’ve seen that quite a lot in sectors where an alternative solution is growing up… they tend to have an insurgent, disruptive brand positioning that… resonates with early adopters” - Will Hayllar, global managing partner at OC&C


As an investment trend, the plant-based market has the capacity to increase rapidly if more consumers seek out more environmentally conscious meals. Will Hayllar, global managing partner at OC&C, expects a “shakeout” of the market over the next three to four years as many brands struggle to achieve scale. The fact that a lot of alternative milk brands are significantly more expensive than dairy products is what’s fuelling the industry amid these early stages of growth, he says.

“You’ve seen that quite a lot in sectors where an alternative solution is growing up… they tend to have an insurgent, disruptive brand positioning that… resonates with early adopters,” Hayllar told the Financial Times in May.


This article was originally published in our Opto Magazine. You can purchase your copy via our Opto Shop.

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