Summer is approaching, bringing with it the promise of increased economic activity as countries relax restrictions on leisure activities and gatherings. The season is perhaps more highly anticipated than ever after extended lock-downs and social isolation, and the re-opening of terraces and restaurants couldn’t come at a better time.
The successful roll-out of vaccinations is changing mindsets towards COVID-19, and also the way many countries are measuring the spread of the virus. In developed economies, with a few exceptions, trend monitoring is now tracking the proportion of people vaccinated rather than focusing on daily contamination numbers.
It’s inevitable that process of re-opening is likely to be hampered, with structural adjustments required to balance the demand for an operational food service workforce and the underlying supply which remains high. The tightened labor conditions pertinent to the sector have led eligible employees to seek out other avenues for work stability and income streams.
The re-opening of the F&B sector is sparking enthusiasm, and many positives can be drawn for various stakeholders. As consumers have gained an understanding of the importance of supporting small businesses, they will now have the option of doing so. Being able to place orders directly using a restaurant’s own platform is likely to reduce usage of online delivery intermediaries. This is a big step in the long-awaited return to normal.
It also draws attention to a seismic shift in consumption, as experimental vegan and vegetarian diets adopted during lockdowns have become the norm. In recognition of this, many restaurants are adapting their menus if not with a full vegetarian menu, certainly with dedicated options or a ‘flexitarian’ concept.
As with any sweeping trend, major analysts and blockbuster firms with an active interest in the sector have valued veganism’s contribution to the market. In the United Kingdom alone, a total of 70 vegan-related trademarks were registered during 2020, according to UK-based law firm EMW. That’s the second highest number of vegan-related trademarks since 2019, during which 92 were registered. This demonstrates clear acceptance of vegan products, and indicates it may just be the next big industry innovation of the F&B sector.
A similar trend has been uncovered in the United States where the plant-based market growth rate more than doubled in the past year to 27% with a valuation of US$7 billion. An estimated 57% of US consumers now opt for plant-based alternatives over animal products.
Companies such as Else Nutrition, Beyond Meat, and all major players in the fast-food sector are accelerating R&D programs, forming new teams of nutrition scientists expected to deliver a brand new range of intellectual property portfolios. This comes in conjunction with a current estimated CAGR of 24% for the coming seven years in the sector – an estimated five-fold growth in market size.
In this regard, Israeli-based Else Nutrition (BABY), a young player in the plant-based nutrition business offers attractive opportunities, not only in terms of technical price action, but also because it covers a specialised niche that includes plant-based products for people of all ages, from toddlers to adults. Last year, the company reported 165% revenue growth during FY2020, a trend that is likely to pick up speed as it integrates into new distribution channels in both retail stores and online delivery. Recently announced partnerships include Sprouts Farmers Market, Big-Y, Amazon, and iHerb confirm further growth is on the horizon.
The company’s online business model looks promising, as it expects sales growth to double every 3-4 months in the first stage of development. This is justified by existing brand loyalty and effective repeated sales during the few months of the business’ products being available online.
As consumers venture back into the world bringing their healthy habits with them, and economies re-open and make moves to support the change, the vegetarianism play is a safe bet for mid-term investments.