By Thomas Kostigen
Beyond Meat ( NASDAQ: BYND ) has delivered earnings beyond expectations since its stock market debut last May. And it’s poised for more growth. The company’s name is apt because it sees that the world’s appetite is indeed going beyond meat to plant-based diets.
Beyond Meat produces beef substitutes including burgers and sausages. Its patties are increasingly available at grocery stores and fast food restaurants. According to the World Resources Institute, meat consumption has declined by a whopping 33 percent over the past 50 years. People are turning to alternative vegetarian and vegan diets.
According to one report, plant-based foods grew more than 11 percent last year and sales increased more than 30 percent in the 2017-2019 period. Where’s the beef? It’s largely being consumed oversees, namely in the developing world. As US diets become more plant-based and less animal-based, meats, seafood, and dairy products are being passed over.
Forbes magazine reports, “The surge in sales is the latest sign that mainstream consumers are seeking out more alternatives to animal-based foods, and in many cases, retailers are making those options easier to find.” Case in point: milks. Nearly $2 billion was spent last year on plant-based milks, crowning it the top seller in the alternative foods category. (The traditional US dairy market is worth more than $40 billion in market size, for comparison.)
There are a lot of factors to consider before stating that plant-based foods are healthier than other food groups. But at least the perception of health is a factor. Moreover, plant-based alternatives fit more easily into lifestyle categories — vegetarianism, etc. And if you are a vegetarian and an investor looking for stock ideas, perhaps buy what you eat?
In addition to the health benefits people consider when choosing plant-based foods, there are also climate issues to consider. The United Nations even describes plant-based diets as a major opportunity for mitigating and adapting to climate change ― and includes a policy recommendation to reduce meat consumption.
Cattle raised on pastures created by clearing woodland are particularly emission-intensive. Emission-intensive refers to high amounts of carbon dioxide that are released not the atmosphere. Carbon dioxide is a greenhouse gas that increases the probability of global temperature rise.
The UN notes that cattle production often comes with large-scale deforestation, as seen in Brazil and Colombia. Cows also produce large amounts of methane, a potent greenhouse gas, as they digest their food, according to the UN climate report.
The report states with “high confidence that balanced diets featuring plant-based and sustainably produced animal-sourced food present major opportunities for adaptation and mitigation while generating significant co-benefits in terms of human health.”
To be sure, plant-based diets seem to be good for your health and the planet. As more people opt for vegetables instead of meat, the market for plant-based products is destined to expand. So, a plant-based approach to investing may not be such a bad idea. Additionally, plant-based companies fit neatly into the fast-growing environmental, social and governance (ESG) style of investing. That means these companies may appeal to ESG fund managers, too. As always, it’s wise to consult a financial advisor for the best-in-class companies, or funds in which to invest in this growing field.
Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.