Saturday 19 October 2019

Samantha McCaughren: 'Meat industry's appetite is whetted by veggie burgers'

Ethan Brown, founder and chief executive officer of Beyond Meat. Photo: Bloomberg
Ethan Brown, founder and chief executive officer of Beyond Meat. Photo: Bloomberg
Samantha McCaughren

Samantha McCaughren

Are veggie burgers the next big thing?

Vegetarian and vegan diets have been dismissed as faddish and fringe lifestyles choices for many years. They may not yet be considered mainstream but they are an extremely fast-growing sector, giving investors an appetite for a positions in the meat alternatives sector.

Proof of this came with the phenomenal stock market listing of Beyond Meat, a Los Angeles-based producer of plant-based meat substitutes.

Shares have swelled by over 220pc since their initial-public-offering pricing on the Nasdaq of $25 on May 1.

This gave it an initial valuation slightly shy of $1.5bn and will mark it out as one of the most successful IPOs in the US for 2019.

Its alternative proteins business is sold at the likes of Whole Foods, Safeway and featured on the menus of popular US chains Carl's Jr and TGI Friday's.

Alexia Howard, an analyst at Bernstein, said that there were several international winds blowing in favour of plant-based burgers businesses.

"The African Swine Fever situation in China could drive global meat prices up sharply, across pork, beef and chicken.

"As this price escalation plays out, it seems likely that the relative price of plant-based burgers will start to look relatively less expensive, which could also boost demand over the next couple of years."

Closer to home, and the meat alternatives market is not going unnoticed.

The likes of Larry Goodman's ABP Food Group is primarily focused on alternative markets to the UK in a hard Brexit scenario. At the moment over half of Irish beef is sold to the UK. ABP is busy carving out new markets, particularly in China, which is full of potential but would in no way make up for a large hit in the UK.

So while reliance on the UK market is a top concern at ABP and the beef industry, the move to vegetarianism is also being taken very seriously by the company.

Last February, ABP launched a vegan burger in response to not just vegetarian diets, but to so-called flexitarian habits, whereby more and more people are cutting out meat for a few days a week. The company's seasoned pea and soy protein patties are marketed under the Equals label.

Goodman is not the only meat industry leader looking to veggie trends.

One of the highest profile investors in Beyond Meat was Tyson Foods, the largest meat producer in the US, which has come under criticism for its animal welfare standards.

It sold out of Beyond Meat prior to the flotation in order to invest in its own plant protein projects.

It is perhaps to be expected that the likes of ABP would invest in non-meat products.

If supermarket chains are looking for alternative burgers to put on their shelves, why shouldn't it fulfil that need?

And the group knows all too well that meat consumption has plateaued in Europe and the vegan trend provides a nice growth opportunity that could become a lot bigger over time.

I wonder how many vegetarian and vegans tucking into their veggie burgers in the US or UK this weekend know just how much involvement the meat industry has in their conscientious choices?

And if they did know, just how would that sit with them?

A couple of years ago, it looked like the only way was up for the Irish housing market. A report from estate agents Savills in 2017 predicted that the Irish house prices would surpass Celtic Tiger levels by 2020 in Dublin with the rest of the country following the year after.

Prices continued to rise in 2018 but here has been quite a change in the housing market since the start of the year.

According to estate agency Sherry FitzGerald, Dublin prices were down in the first three months of the year, the second consecutive quarter of declines. This chimes with the findings of the Central Statistics Office.

Meanwhile, Davy economist Conall Mac Coille recently updated his mortgage lending volumes forecasts, reducing his estimates for mortgage lending to a more conservative €9.8bn for 2019 compared to €10.2bn previously.

This softening of house prices and demand for mortgages could be due to the Central Bank lending restrictions, the supply of property or Brexit uncertainty.

Whatever the cause, less mortgage lending is not good news for the banks which are also keeping a close eye on Sinn Féin's no consent, no sale bill, which could hit the sale of non-performing loans, further restricting growth avenues for banking in Ireland.

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