These six companies are winning in the meatless movement.
The global pandemic has revealed startling flaws in global supply chains across a variety of industries, especially in the world of meat production. Earlier this year, the spread of the virus among workers at meat processing facilities ground production to a halt, leading to smaller supply and higher prices for meat products across the country. Thanks to these seismic shifts in the market, some analysts estimate that U.S. per capita meat consumption won’t recover to pre-pandemic levels until 2026. This has given fake meat stocks — companies that focus on alternative, plant-based meat replacement products — a huge opportunity to not only capitalize on the investments they’ve made in artificial meats, but to invest even more resources into a meatless future. So which companies are a step ahead in the plant-based meat movement and who still has a lot of catching up to do? Here are six stocks to watch.
Beyond Meat (ticker: BYND)
Since hitting the market in May 2019, shares of Beyond Meat are up by more than 100% thanks partly to investor enthusiasm for a unique and popular product and partly to a successful business model. Beyond Meat has capitalized on the opportunities presented by disrupted meat production while simultaneously pivoting from restaurant sales to retail sales; last quarter, food service revenue fell more than 60%, but retail revenue climbed 194.9% year over year. Analysts have long been dismayed by the high retail price points of Beyond’s burgers, which were nearly double that of regular beef burgers — but Beyond Meat is now offering Cookout Classic burgers at a mere 20% premium, making it easier for consumers on a budget to choose. Beyond Meat has already been a big winner during the pandemic, but the company is making smart moves to make sure it stays relevant for the long run.
Ingredion supplies vegan ingredients to food manufacturers around the world. A lot of Ingredion’s business comes from what the company calls “away-from-home consumption.” Restaurants, bakeries and breweries that get their vegan-friendly ingredients have been shuttered for months, if not permanently, leading to a 13% year-over-year decline in sales this quarter. But this slowdown in business hasn’t stopped Ingredion from expanding, both in terms of markets — with a heavy investment in China that will more than double Ingredion’s supply chain capacity there over the next two years — and in terms of products. Ingredion’s biggest bet in this area is plant-based protein, and the company is opening a pea protein production facility in the second half of this year as it tries to stop Beyond Meat from hogging the plant-based spotlight.
Tyson Foods (TSN)
Although Tyson sold its 6.5% stake in Beyond Meat before the company went public, that hasn’t ended Tyson’s attempts to expand into the alternative meat market; through its Tyson Ventures segment, the company has invested in Memphis Meats and Future Meat Technologies, both of which create lab-grown meat replacements. In addition, Tyson unveiled its new Raised & Rooted brand last year. The brand will not only offer entirely plant-based foods such as meatless chicken nuggets, but also blended plant and meat protein products like burger patties. As you may expect for the largest food company in the U.S., Tyson doesn’t need a targeted approach to the meatless market — but it remains to be seen just how effective this scatter-shot method will be against focused newcomers like Beyond Meat.
Kellogg Co. (K)
You may not think of meatless burgers when you hear the name Kellogg. After all, the global food behemoth has a massive portfolio of products ranging from Corn Flakes to Cheez-Its — but way back in 1999, Kellogg added yet another brand under its umbrella: Morningstar Farms, maker of fine vegan and vegetarian foods. Morningstar has long been a monster in the alternative meat market, owning roughly 33% market share in 2013. Yet, by 2018, that share had plummeted to 17%, and it’s likely lower these days thanks to the arrival of new competitors. That said, don’t count Kellogg out just yet. Morningstar frozen veggies enjoyed a 31% bump in consumption last quarter, and though the pandemic delayed the rollout of Kellogg’s new Incogmeato burgers, they will still hit shelves sometime in the second half of the year.
Conagra Brands (CAG)
Conagra bought its way into the plant-based meat market in October 2018 when the company completed its $10.9 billion acquisition of Pinnacle Food, bringing a slew of new brands under its control. One of those brands was Gardein, maker of fine plant-based meat alternatives. Gardein was already a fast-growing brand before Conagra took it over, with its share of the alternative meat market rising from 6% in 2013 to 11% by 2018; in addition, Gardein’s compound annual growth rate increased 34% from 2012 to 2019. Under Conagra’s control there’s little doubt that Gardein will continue to grow — the brand already offers Meatless Meatballs and Crabless Cakes, and earlier this year, it rolled out its Ultimate Plant-Based Burger. A wide selection, strong growth and deep pockets make Conagra a top competitor in the meatless market.
According to research from Archer-Daniels-Midland, 18% of U.S. consumers bought their first plant-based protein products during the pandemic. That’s great news for the global ingredients company, which just so happens to provide food processors with key meat replacement ingredients like soy protein and wheat protein isolate. ADM has been happy to avoid directly competing with companies offering consumers plant-based foods from grocery store shelves, but the company has recently decided to get off the sidelines and into the game. In May, ADM announced it’s teaming up with Brazilian company Marfrig Global Foods, the world’s largest beef patty producer. The joint venture will be called PlantPlus Foods and will begin selling meat-alternative products in South America later this year — likely the first small step for ADM to directly enter the booming plant protein market.
Six leaders in the meatless revolution:
— Beyond Meat (BYND)
— Ingredion (INGR)
— Tyson Foods (TSN)
— Kellogg Co. (K)
— Conagra Brands (CAG)
— Archer-Daniels-Midland (ADM)
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Fake Meat Stocks: 6 Biggest Winners in the Meatless Revolution originally appeared on usnews.com