Responsible food habits: a way to deal with climatic changes?

Vegan

Cristiano Ronaldo has hit multiple goals with just one bottle a few days ago. 

He has become the poster boy of de-endorsements or “responsible endorsements” if you want to sound chic. 

The most important take away for corporations is that they can’t make money for their shareholders by selling goods and services that potentially have health hazards for their consumers. It’s been a red flag for companies contributing to adverse climatic changes as well. 

ESG is a buzzword nowadays.  As governments and industries are becoming more cautious about climatic changes and their impact on economies and societies, investors are paying more attention to ESG compliances of companies they are investing in. 

You might flip the above statement and that’s right too. 

You see, high ESG compliance is inevitable for any potential multi-bagger company now.

When we talk about companies polluting the environment, most of us would imagine thermal power plants, coal mines, tobacco and liquor manufacturing companies and so on. While most of them score low on ESG parameters these are not the only sources of adverse climatic changes.

It may come as a surprise to many that even agriculture has been one of the chief sources of greenhouse gas emissions.

But as they say, ‘Old habits die hard’. If you agree with this old saying, then old food habits are even more difficult to break.

What started in the city of Wuhan and at its live markets might shape future trends in food consumption and peoples’ preferences of sources of nutrition.

Will people turn more flexitarian—mostly vegetarian and eating meat occasionally, going forward?

The concept of vegan diets and plant-based nutrients isn’t new but it might take off in the post pandemic world like it did never before.

Did you know?

12 plants and 5 animal species meet 75% the world’s food demand

Out of 2.5 lakh to 3 lakh known edible plant species, the man has been using just 150-200

Genetically uniform and high-yielding crops have usurped 75% of plant genetic diversity since 1900 (Source: FAO)

According to Barclays estimates, the share of meat alternatives which is less than a percent at present is likely to jump 10-fold by 2029. Kearney, global management consulting firm, expects the share of conventional meat to fall to 40% by 2040. Cultured meat and meat alternatives might make up 35% and 25% of the world’s meat market.

Although cultured meat is still just a future possibility, the vegan meat options have started proliferating nowadays.

If you carefully observe the recent developments on the corporate landscape, you will realize, big MNCs are already betting on this trend.

For instance, Unilever endeavours to earn Euro 1 billion globally from its plant-based meat and dairy alternatives business over the next 5-7 years. The global FMCG giant aims to achieve its ambitious targets through offerings under its brands such as The Vegetarian Butcher, Wall’s, Magnum and Hellmann’s.

Unilever acquired The Vegetarian Butcher in 2018. At the time of acquisition, Butcher was selling its products in 17 countries through 4,000 outlets. By the end of 2020, Butcher expanded in 45 countries with more than 20,000 outlets selling its products. In China, the Caribbean and Latin America it has tie-ups with Burger King. Tie-ups with such quick service restaurants might help Butcher grow faster.

Unilever’s food ambition 2025:

  • Halve food waste in direct operations from factory to shelve
  • Double the products delivering positive nutrition
  • Reduce calories, salt and sugar from products

Unilever’s India arm-Hindustan Unilever (HUL), has been betting on its food brands such as Knorr, Kissan and Brook Bond amongst others. It started offering Hellmann’s range in India in 2019. Notably, 25% of food advertisement spends on television are by HUL.

Have you read our BUY coverage on Hindustan Unilever?

On June 03, 2021, our research team released a buy report on HUL with a price target of Rs 3,185.   We believe food and refreshment is going to be the fastest growing segment for HUL over the next 3 years.

Click here to read our entire research report.

Homegrown companies are also aiming to grab the market share of the mock meat and dairy alternatives market—Ahimsa Food, The Vegan Eatery, Vegeta Gold, Vezlay, Vegitein and Nutrela, to name a few.

But what works globally would not necessarily work in India. Culturally, India isn’t a big red meat consumer compared to other countries despite being the home to the second largest population of the world. Thus, it remains to be seen how quickly vegetarian meats and dairy substitutes make a headway.

Moreover, experts have been also pointing at potential challenges in making vegan meats popular. For instance, isoflavones (phytoestrogen) in soy can interfere with normal hormonal functioning if mock meats containing soy are consumed in very large proportions.

That doesn’t mean meat alternatives won’t be successful in India; it only means MNCs will have to adopt an indigenized menu.

Climatic changes, ethical eating and health benefits of a vegan diet may perhaps encourage more people to turn flexitarian. Next time you analyze a food staple company, don’t forget to check how concerned it is about consumers’ health and climatic changes.

Capitalizing on global opportunities is simple now…

ESG, climatic changes and changing consumer preferences are attractive investment themes not only in India but across the world. Global funds can let you effectively diversify your equity portfolio besides helping you capitalizing on exciting opportunities. If you want to know about international funds, you may like to read this article: What’s your excuse for not investing in global equity markets?

Disclaimer

We don’t promote or discourage any eating trait/habit of any individual or an ethnic group. References herein, pertaining to food choices, are purely incidental to highlighting the changing consumer preferences as well as the focus areas of corporates.

The blog is for information purposes only. Asset allocation is an extremely important decision.   We strongly suggest you to consult your financial advisor before taking any decision pertaining to your finances.

We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to blog article hereby solemnly declare & disclose that:

We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in securities of the company. We do not have any directorships or other material relationships with the company. We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.

 

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