How investors can cash-in on ‘Veganuary’

As Veganuary sweeps the nation and big brands like Greggs are boosting their profits by offering more vegan foods, there’s an opportunity for investors to gain exposure to this emerging trend. Around 1% of the UK population is vegan*, but far more are part-time vegans or interested in trying more vegan food. Almost a quarter of food products launched last year were vegan, and 65% of Brits have eaten meat substitutes**, so this is clearly a trend that is going to grow and grow.

Everyone from KFC, to Burger King and most supermarkets are now offering vegan foods, but investing in pure vegan companies is pretty tricky, as most that offer vegan food and meat substitutes also have a much bigger business in meat-based food. Investors hunting for vegan plays immediately think of US firm Beyond Meat, which produces plant-based meat substitutes, and saw its share price soar by 900% at its peak. But it’s a rarity to find a firm 100% focused on veganism and vegetarianism.

Some big listed companies are getting on the vegan act, including Premier Foods, which has a new plant-based range called Plantastic, while consumer goods giant Unilever has various vegan brands and products. In more niche areas make-up brand Warpaint has a vegan line of cosmetics, while Science in Sport makes plant-based protein and supplements. However, these companies have much larger business lines – and revenues – from non-vegan products.

A vegan focused ETF was launched in the US last year, the US Vegan Climate ETF, but isn’t yet available to UK investors, although it feels only a matter of time before one is launched here. It invests in companies according to vegan and climate-focused criteria, although its main holdings aren’t what many ethical investors might expect – including tech giants Microsoft and Apple.

Four ways to invest in the vegan boom

Securities Trust of Scotland: This investment trust focuses on investing in companies that have strong environmental, social and governance (ESG) policies, with manager Mark Whitehead saying he wants to invest in firms that are a ‘force for good’. Among the holdings in the trust are foods company Danone, flavouring brand International Flavours & Fragrances and nutrition and health company DSM, which are all set to benefit from more people eating meat substitutes.

Sarasin Food & Agriculture Opportunities: Managed by Henry Boucher and Jeneiv Shah, this fund focuses on a number of ESG companies, with veganism included in this as a way to solve certain ethical dilemmas, such as animal cruelty, climate change and human health. Included in the portfolio is Dutch-listed life science company DSM, which works on a product to make vegan food tastier, as well as working to reduce emissions from dairy farming.

Greggs: The nation was gripped with vegan sausage roll fever last year when the fast-food brand launched its first vegan offering. It followed this up with a vegan steak bake this year and has plans for vegan doughnuts, among other launches. Chief executive Roger Whiteside said the vegan sausage roll helped the firm to have a ‘phenomenal’ 2019. A word of warning, many investors have spotted this trend so the share price and current valuation leaves no room for disappointment.

Kerry: This Irish food producer has the potential to benefit from more producers moving into vegan products. The London-listed firm is an ingredients business, and could profit as more producers look to make the next wave of vegan products tastier and appeal to a wider audience. It has also launched vegan products in its existing businesses, such as vegan sausages under the Richmond brand.

* According to the Vegan Society
** Based on data from Mintel

These articles are for information purposes only and are not a personal recommendation or advice.

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Laura Suter is Personal Finance Analyst at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.