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New Horizons

Published on 01/04/2021

As the world is focussing more on the environmental impacts of their actions, we’re seeing a change in the food and beverage companies that are emerging: from unlikely partnerships, to edible insects. But how sustainable are these companies both on the market and environmentally, and what is this doing to stock prices across the globe?

Many of us are conscious of our impact on the environment, Veganuary saw record numbers in 2021 and plant based meats are more prevalent in supermarkets across the globe. No longer is Linda McCartney the sole torchbearer for vegetarian sausages, the aisles are bursting with meat-free alternatives.

Take Beyond Meat (BYND), one of the world’s largest plant-based meat manufacturers which launched in 2009 and now stocked by major supermarkets and served in TGI Friday’s and Dunkin’ Doughnuts restaurants as well as most recently McDonalds, KFC and Pizza Hut to name a few. In January this year, they announced that they are forming PLANeT Partnership with beverage and snack giants PepsiCo to “develop, produce and market snacks and beverages made from plant-based protein — bringing together Beyond Meat’s innovation expertise with PepsiCo’s marketing and commercial capabilities.”

This collaboration comes after Burger King teamed with Impossible Foods - Beyond Meat’s biggest rival - to create the Impossible Whopper, their much publicised meat free burger. But why collaborate at all? Well for Beyond and Impossible, it adds a level of expansion that would be otherwise impossible. And for Pepsi and Burger King, it allows them to remain competitive and branch out to new markets.

The day the announcement was made, Beyond Meat was up 18%, but Analysts have been skeptical of the partnership - how many people are clamouring for vegan Doritos?

But big-name partnerships aren’t the only food stock that is making waves - according to a report published by Barclays in 2019, the market for edible insects - sold either in powder form or whole - is going to jump from $1 billion to $8 billion in the next nine years. Jiminy Cricket!

The main considerations for such a colossal leap are growing global populations, and diminishing food resources. Crickets hit the top spot in edible bugs, primarily due to their high nutritional value, and how easy they are to farm and process. Initially a food source quite common in Asia, it’s now spreading west, insects can be used in a wide variety of westernised dishes from protein balls, added to pasta dishes or pizzas.

According to Global Markets Insight the worldwide market for edible bugs was $112m in 2019 and is projected to reach more than $1.5bn by 2026.

This predicted growth comes from consumers understanding of the impact meat and dairy farming has on the environment - how many of you or your vegan and vegetarian friends changed their eating habits because of the documentary Cowspiracy? Insects are a high source of protein, but without the environmental impact that fishing or mass farming can have.

According to the International Platform of Insects for Food and Feed (IPIFF), nine million Europeans tried eating insect products in 2019, with this number set to rise in the next nine years, and the biggest companies in the market — still small fry by industrial agriculture standards — are ramping up.

And whilst a mealworm lasagne might not be on the cards for you just yet, insects can make great feed for the animals that may be culturally a bit more palatable. Everyone’s favourite chicken shop Nando’s, for example, have started funding research into using insects and algae as chicken feed so as to reduce its reliance on soy - the second biggest contributor to global deforestation after beef.

Whilst these newer entrants into the stock market may not be making huge waves just yet, the tide is turning with sector dominators getting onboard. Here at Upside, we are all about the outlying ideas, the developing trends and the market shakers.

We’re about choice when it comes to investment ideas, just like the choice out there in the food market, because we know there’s a science to being right.

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