After A Tough 2022, Will Vegan Meat Stocks Outperform This Year?
Our theme of Plant-Based Meat Stocks, which includes companies that produce plant-based meat and related vegan ingredients, has risen by roughly 6% year-to-date, compared to the S&P 500 which remains up by about 4% over the same period. This comes after a tough 2022, which saw the theme decline by almost 17%. So what are some of the trends driving the theme presently? The uptake for plant-based meat has actually cooled off a bit in recent quarters as the trend of stockpiling through Covid-19 eased. For instance, Beyond Meat (NASDAQ:BYND), which is one of the few publicly traded, pure-play bets on plant-based meat substitutes, saw its revenue decline by about 21% to $80 million for Q4 2022 (October to December) although its losses were narrower than expected. There have been some positive developments for the theme as well. U.S. inflation has been moderating and this should be a net positive for plant-based meat players, given that this could help them keep production costs in check. Moreover, cooling inflation could help overall consumer spending, benefiting plant-based meat products which are typically priced at a premium to animal meat.
Although there may be near-term headwinds for the theme, the long-term thesis remains relatively strong. The market opportunity for plant-based meat is sizable, given that the global meat market stands at about $1.4 trillion. The uptake of plant-based meat, which accounts for under 1% of the meat market, could rise, given the growing health and environmental concerns associated with animal proteins. UBS, for example, predicts that consumption of plant-based meat will grow about 16% annually through 2027. Within our theme, Beyond Meat has been the strongest performer, with its stock rising by over 50% year-to-date. On the other side, Conagra Brands (NYSE:CAG) has seen its stock decline by about 6% over the same period.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
| Returns | Feb 2023 MTD [1] |
2023 YTD [1] |
2017-23 Total [2] |
| BYND Return | 14% | 52% | -75% |
| S&P 500 Return | -2% | 4% | 78% |
| Trefis Multi-Strategy Portfolio | -4% | 7% | 237% |
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[1] Month-to-date and year-to-date as of 2/27/2023
[2] Cumulative total returns since the end of 2016
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