Every Bull market produces new leaders and opportunities to create tremendous wealth. Like end of 1999-2000 was period of Telecom stocks, 2008 was Energy and Financial stocks and currently it is all about Technology stocks. Apple crossing 2 Trillion valuation mark followed by Microsoft and Amazon with 1.5 trillion is just another example of that. Serious wealth has been already created by Tech space and we believe that there is not enough room left. But important question is that which Sector has potential and create Substantial Alpha.
Value Migration from Animal based meat to Plant based is pretty much evident and it has just begun. Following are the reasons which I think are crucial drivers behind the Consumer shift from Animal based meat to Plan based meat
- Environment Friendly – As per one report, if the world went vegan, it could save 8 million human lives by 2050, reduce greenhouse gas emissions by two thirds and lead to healthcare-related savings and avoided climate damages of $1.5 trillion.
- Health Friendly – According to the National Institute of Health, an estimated 300,000 deaths occur every year due to overweight and obesity. Obesity can lead to various health issues like increased risk of heart disease and diabetes; increase the death risk, increased risk of cancer and foodborne illness. Additionally, excess consumption of meat causes an imbalance in the ecosystem as a higher number of animals are killed for human consumption.
- Shift in Consumer behaviour is also one of the Key factors. In the Asia Pacific region, 1/4th of India’s population believes in reincarnation and non-violence and has adopted a vegetarian diet. Thus, the demand for a plant-based diet is in high demand in this country.
- Veganism – Interest in ‘veganism’ increased seven-fold in the five years between 2014 and 2019, according to Google trends. It now gets almost four times more interest than vegetarian and gluten free searches.
“This is why I think people are increasingly aware plant-based products are going to completely replace the animal-based products in the food world within the next 15 years,” Impossible Foods founder and CEO Pat Brown said in a June interview. “That’s our mission. That transformation is inevitable.”
Forecast for the Plant based Industry
As of now globally meat Industry size is 2 Trillion $. Just imaging 10% market share of Animal based meat will produce opportunities of 200 Billion $ and 25% will be 500 Billion$ for Plant based meat producers. Currently Plant based meat size is merely 10$. So, one can assume the amount wealth will be generated in future by Plant based companies.
Enough information about the Sector, now let’s discuss about Stocks which will do well, and which has all the ingredients to become a multi-bagger.
In our Universe BYND (Beyond Meat) is our preferred pick. Beyond Meat Inc. develops plant-based protein food products. The Company offers burgers, sausage, crumbles, strips, and other related products. Following points will give you more clarity.
- Market leader with innovative products
- Penetration rate plant-based meat for US household is less than 5%
- Tailwind provided by Covid-19, Sales grew more than 100% on quarterly basis
- Growing CAGR of 50%+ is sustainable
- Companies does not require monopoly to grow the business because there is enough pie for all the companies before market gets saturated
- Industry bare minimum will grow for 15% for next decade, which means good companies will enjoy 25-35% CAGR for sustainable period
- It has potential to become TESLA of Plant based meat companies
- Veganism trend is here to stay.