5 Stocks to Bet on as the Global Food Industry Changes Gear
The global food sector is in the midst of structural change with a number of significant investment themes building. Consumers around the world are becoming more aware of the animal welfare and environmental sustainability challenges within the global food system, and they are increasingly demanding food that is healthy, sustainable, and cruelty-free.
As a result, demand for alternative meat and plant-based products is accelerating and is expected to grow strongly over the longer term.
As shown in the chart below, global plant-based food sales are expected to grow at 19% p.a. between 2020 and 2030 driven by health, animal welfare, and environmental sustainability.
Plant-based food sales are expected to represent 7.7% of the global protein market in 2030. Dairy and meat substitution will continue to dominate the plant-based food sector as the transition away from traditional products accelerates.
A similar theme is developing in the cultured/cultivated meat sector for similar reasons. As shown in the chart below, global demand for cultured/cultivated meat is expected to grow at 16% p.a. between 2021 and 2028 driven by rising demand for alternative protein sources, cellular technology advancements, and a growing focus on animal welfare and environmental sustainability.
These emerging trends will significantly impact long-term stock performance within the food sector. Prudent investors are positioning their investment portfolios to benefit.
5 stocks positioned to benefit
Here are the top five stocks for investors looking to benefit from the changing face of the food sector:
MeaTech (NASDAQ: MITC) is a global food technology company developing advanced biotechnology and engineering capabilities to produce slaughter-free meat which is delicious, nutritious, and safer than farm-raised meat.
The company’s goal is to develop a replacement for conventional steak by maximizing cell-based content rather than using non-meat ingredients. By developing cultivated meat that better mirrors the characteristics of premium farm-raised steak, MeaTech is positioning itself as a provider for alternative meat products which resemble conventional meat in their taste and nutritional values.
The company recently announced the opening of its US office in California, which will help MeaTech accelerate its go-to-market strategy, enhance its investor relations activities, and will further improve the company’s access to R&D and technical talent.
Archer Daniels Midland
Archer Daniels Midland (NYSE: ADM) is a global leader in transforming agricultural products into food ingredients, fuels, and industrial products. The company is involved in all parts of the global food supply chain, and its mission is to enable nature’s power to improve people’s quality of life. Archer Daniels Midland is a long-term sector leader with solid fundamentals, a strong balance sheet, and a history of paying reliable dividends.
ELSE Nutrition (TSE: BABY) (OTCMKTS: BABYF) is an emerging leader in the infant formula and children’s nutrition markets. The company manufactures and distributes Else, the first 100% plant-based, dairy-free, and soy-free baby nutrition.
In an industry that continues to rely upon cow’s milk and soy (95% of infant formula is processed from dairy), Else Nutrition is offering an alternative product that caters to infants with intolerances and allergies from traditional products, as well as those who fail to thrive on dairy-based nutrition.
The company uses plant ingredients that are natural, healthy, tolerable, and easily digested by babies who aren’t benefiting from traditional infant formula. Most recently, Else announced the conclusion of a ground-breaking preclinical study, paving a novel product path in an eighty-billion-dollar infant formula market
Ingredion (NYSE: INGR) is an innovative producer of plant-based dairy and meat alternatives, and healthy beverages and baked goods. By pushing hard into health-based market segments which are structurally growing, Ingredion is positioned to benefit from the long term consumer trend towards plant-based meat alternatives and non-calorically sweetened beverages. The company’s revenue and market share growth prospects are strong as a result.
United Natural Foods
United Natural Foods (NYSE: UNFI) is a distributor of natural and organic food products. The pandemic was a transformational event for the company as it led to improved customer awareness of the company’s capabilities and the benefits of eating healthy and sustainable products. The company is uniquely positioned to capture a greater share of the grocery food market driven by its industry-leading products, value-added services, and private label portfolio.
Positioned to benefit from the tectonic changes in the food industry
The food industry is in the midst of structural changes which will greatly influence investment performance within the sector in the coming decade and beyond. Healthy and sustainable meat and dairy alternatives are positioned to gain significant global market share in the coming years, while the traditional meat and dairy sectors will face corresponding market share pressure.
Prudent investors are positioning themselves in the leading stocks which will benefit from the sector’s building tailwinds for superior long-term growth and stock performance. MeaTeach 3D, Archer Daniels Midlands, ELSE Nutrition, Ingredion, and United Natural Foods are particularly well-positioned to benefit from these growing structural tailwinds.