Sam’s Stance – The Game Changers

January 21, 2020

‘The Game Changers’ is a new Netflix documentary, which has been dividing opinions worldwide. Advocating a plant-based diet, and featuring several high-profile athletes, it has received mixed reviews with some critics arguing it is heavily biased and flawed. Whichever side of the fence you sit on, plant-based diets are certainly a topic of conversation as people all over the world are starting to take a greater interest in health, well-being and the environment.

 

The UK, especially, is one country leading the way in plant-based alternatives. In 2018, it was said that there were 600,000 people in the UK identified as vegan; four times the amount in 2014. According to supermarket giant, Sainsbury’s, 25% of Brits are predicted to be vegan or vegetarian by 2025. These statistics demonstrate a significant shift in consumer preferences, which is only expected to continue.

 

The rising demand for meat and dairy alternatives has led to considerable levels of M&A activity as traditional Food & Beverage companies adapt their investment strategies to remain competitive and increase market share. Large industry players like Unilever, Wessanen, Nestle and Kellogg have all been active, as they look to expand existing positions. There were 106 completed investments and acquisitions of companies manufacturing or selling vegan food products in 2018 (an increase of 34% on the year prior), and in a recent report by the Good Food Institute (GFI), it showed that in 2017-2018, US retail food sales grow 2% overall, whereas plant-based meat sales grew by 23%, exceeding $760m in sales.

 

One of the biggest disruptors in the market has been Beyond Meat, the US-based provider of plant-based “meats”. Previously backed by Tyson Foods, the US’s largest meat producer, it had a market cap of $12bn earlier this year after its IPO. Its stock has fallen considerably since, with increased competition in the market casting doubt over the sustainability of its growth. However, some analysts have suggested its revenue will grow dramatically in the coming years, if it can achieve a surge in sales to restaurants looking to add plant-based “meats” to their menus. It is currently trialling with McDonalds, for example, which has the potential to unlock an additional $325m in annual sales.

 

Noteworthy examples of recent UK activity include:

  • Strong Roots, a UK-based vegetarian frozen foods business, raised £15m from private equity firm, Goode Partners
  • Allplants, a UK meal-kit delivery service of healthy, plant-based, frozen and ready-to-eat meals, which raised £7.5m in Series A funding

 

The plant-based Food & Beverage sector is not anticipated to be headed for a slowdown anytime soon. The market is said to be at an early stage in its lifecycle and as competition increases and consumer awareness of health and the environment grows, consolidation and investment are likely to follow suit.

 

Though I am sure I am not the only one that went all in on the Christmas turkey, I am excited to see what lies ahead for this sector of the market in the year to come.

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