Changing Tastes

On May 3, 2021 chef Daniel Humm announced his Michelin-Starred restaurant, Eleven Madison Park in New York, would reopen with a fully plant-based menu. The most fashionable restaurants are beginning to turn the tide. The future of fine dining is plant-based. As with any fashion trend, the average consumer will be expected to follow those who regularly dine at Michelin-starred restaurants. The trend is still early on for now.

Time To Get Back Together and Eat

Meanwhile, the world is beginning to wake from its COVID-induced slumber. After over a year of intense stress and increased regulation, people can begin rebuilding their lives as they previously knew them.

With the summer weather starting and July 4th in the US coming up fast, that means barbeques with friends and family. Outdoor gatherings are much safer than indoor dining and we expect Americans to be much more social this summer than last as the CDC lifts some COVID restrictions. 

That means big trips to grocery stores to grab enough food to feed backyards full of picky eaters. More of those guests are interested in plant-based meat than ever before. In fact, as many as 6% of US consumers say they are vegan. That is a 500% increase compared to 2014. The reasons that more consumers are going vegan include the belief that a meat free diet is healthier, more ethical, or better for the environment. 18% of global greenhouse gas emissions come from animal agriculture. While some posh New York diners are getting their plant-based meals at Michelin-starred spots, most shoppers are buying it in grocery stores right now.   

As consumers stock up for what is bound to be the biggest year for outdoor social gatherings ever, it is important to note their financial position. Consumers are sitting on a huge pile of savings. The savings rate during the pandemic nearly doubled in the US. That, coupled with the desperate desire to see people and socialize again, makes spending on backyard barbeque staples look set for the best year on record. This could be the big moment many plant-based meat companies have been excited about for years. Traditional meat is still cheaper but with some extra cash in their pockets, more consumers are ready to splurge.  

Not All Vegan, but Give It Time

Now, 90% of plant-based food consumers are not vegan or vegetarian. Meat eaters are at least curious about how vegan meat tastes. But there will be some holdouts who do not consider plant-based meat the right option for them. Given the health and environmental benefits, it is not a decision that is based on diet as much as it is perception.

Mostly these are traditionally masculine folks who feel eating meat is an inherently masculine activity. There are some lab-grown “cultured” meat products that are cruelty free but still 100% traditional meat in composition on the way for these consumers.    

Can the trend stick? The market for plant-based meat was growing prior to COVID. With increased restrictions, more consumers made the switch to eating less meat less frequently for budgetary and dietary reasons. Going forward, Millennials and Gen Z are going to control more spending decisions. They are also the demographics most likely to be vegan and vegetarian. 35% of Gen Z want to be meat-free by 2021. 41% believe climate change is the single most important issue facing the planet. These young people will drive change in how we all eat.     

Increasing Institutional Investor Support

As of December 2020, one-third of all US assets under management (AUM) by money managers is focused on sustainable investing. That is trillions of investment dollars. These funds will continue to invest in new plant-based meat companies, which in turn will continue to spend to push the public perception of products like plant-based meat. As an investor, it is smart to consider which companies are positioned to be the beneficiaries of large institutional investments. If you can get in before these companies receive institutional investment or IPO, you are going to be compensated with higher returns in exchange for supporting a company before it is fully de-risked.    

Ample Room to Grow in to an $850B+ Market

The future looks bright for plant-based meat. After years of strong forecasted growth, the market value of plant-based meat is expected to reach $35B in 2027. In the same year, traditional meat is expected to grow to a market value of $863B. It’s clear that the market for plant-based meat will continue to eat into this nearly $1T market in the decades to come. Smart investors already hold some exposure to this megatrend in their portfolio. There’s just so much room to grow.

As the global COVID restrictions are gradually relaxed and eventually phased out, the money-making strategies that previously worked may not deliver any more. It is important to be ready to adjust your strategy accordingly towards new opportunities. Look out for opportunities to grow your money as part of this plant-based megatrend.

Thank You For Your Loyal Readership.

The Financial Star.