Veganuary draws to a close after millions of people worldwide committed to an animal product-free month, in a bid to lead a healthier lifestyle or shrink their environmental footprint.
While most will no doubt fall back into their normal consumption habits, a fair chunk will decide to stick with a vegan lifestyle for the foreseeable future.
Veganism is becoming ever more popular as people become increasingly aware of the benefits of changing their diets.
Some 7 per cent of the UK’s population is now vegan, according to a survey by Compare the Market, with a further 14 per cent vegetarian.
There were 88 million vegans worldwide as of 2023, according to the National Center for Biotechnology Information, as the lifestyle’s popularity continues to grow.
And veganism’s new-found popularity has led to a wave of new companies targeting an ever-growing market for goods free from animal products.
So, as millions worldwide rethink their lifestyles, is it time for investors to consider the implications for their portfolios?
Boom and bust? Vegan stocks like Oatly surged during the Covid pandemic but have suffered since
Consumer pressure weighs on vegan push
While veganism might be increasingly common, this hasn’t translated into consistent blockbuster returns for stocks at the forefront of the market.
‘The Vegan Index’ – a market-cap weighted basket of ten leading vegan stocks compiled by eToro – has lost 49 per cent over the past year, and has added just 3 per cent over the last three years.
In comparison, the FTSE 100 is up some 9 per cent over a year, and six per cent over two years. The Nasdaq, meanwhile, has risen 26 per cent in the past year along and 36 per cent in the past three.
But the these vegan stocks have risen 123 per cent over the past five years, having experienced massive gains during the pandemic.
This growth only narrowly falls short of the 136 per cent gain seen by the Nasdaq.
Both the FTSE 100 and S&P 500 have failed to even come close to these gains, rising 23 per cent and 45 per cent over five years respectively.
Danni Hewson, AJ Bell head of financial analysis, told This is Money: ‘Post pandemic there was a boom in demand for plant-based products and no shortage of innovative companies looking to cash in.
‘Flexitarianism became uber-trendy and Veganuary massively popular as people sought out ways to feel healthier and to adopt more environmentally friendly eating habits.
‘But the cost-of-living crisis forced households to put value above all else and if a bit of meat was the cheaper option to feed a family of four then meat was back on the menu in many homes.’
| Brand | Returns 1 year | Returns 3 years | Returns 5 years |
|---|---|---|---|
| Beyond Meat | -52% | -95% | -96% |
| Laird Superfood | 691% | -45% | N/A* |
| Oatly | -38% | -91% | N/A* |
| Else Nutrition Holdings | -91% | -98% | -96% |
| Modern Plant Based Foods Inc | -81% | -98% | N/A* |
| Burcon Nutrascience | -47% | -93% | -92% |
| Ingredion | 22% | 34% | 46% |
| Bunge Global | -18% | -20% | 39% |
| Celsius Holdings | -52% | 59% | 1784% |
| Hain Celestial | -52% | -87% | -79% |
| Source: Etoro | |||
Picking the winners
With the initial boom of vegan stocks having subsided, so too has the value of the most high-profile stocks in the space.
Major players such as Beyond Meat and Oatly have fallen 52 per cent and 38 per cent over the past year respectively and are down 95 per cent and 91 per cent over the past three years.
Both companies recorded pretax losses in the third quarter last year, with Beyond Meat narrowing its loss to $27million from a previous $70million.
Oatly swung to a $33million loss having recorded a profit of some $45million a year earlier.
Other pure-play vegan brands have also suffered, with baby food producer Else Nutrition Holdings proving the biggest loser. Else Nutrition is down 91 per cent over the past year and 98 per cent over the past three.
Meanwhile, Canadian firm Modern Plant Based Foods Inc has dropped 81 per cent in the past year and 98 per cent over three.
There have been some success stories though, largely from firms who have fingers in the meat-free pie but whose operations extend beyond the sector.
Ingredion, which manufactures pea protein and sweeteners delivered a 22 per cent increase in the past year, having grown 34 per cent over the past three and 46 per cent over the past five.
Etoro global market analyst Lale Akoner said: ‘It’s been a white-knuckle ride for investors looking to profit from the vegan boom. What our analysis shows is that correctly predicting a social trend is only half the battle – you also need to be able to stomach stock price fluctuations due to profitability concerns, as many companies are still investing heavily in R&D and market expansion.
‘Veganism is still relatively recent as a mainstream phenomenon, and as with many growing industries, it’s not always the companies that build high valuations off early hype that win in the long term.’
Trends might be shifting
Like most industries in their infancy, many of these firms have struggled to bring prices down sufficiently so as to compete with meat-based staples.
‘People who have tried and loved meat free alternatives are likely to have continued to buy them,’ Hewson said.
‘But persuading people to give them another go if they prefer the taste and texture of the real thing, and it’s cheaper, that’s going to continue to be a stumbling block for companies like Beyond Meat.’
She added: ‘But looking at food trends for 2025 it’s sustainable that seems to be the buzz word, with people looking for seasonality and initiatives to cut down on food waste.’
However, analysts still paint a picture of long-term growth for the meat free sector, having rebalanced after a pandemic boom.
Akoner said: ‘Despite its mixed performance so far, the global vegan food market is expected to grow significantly in the next decade. As the competition intensifies, investors will need to correctly identify companies that will benefit from the movement in the long run.
‘As the old adage goes, the biggest winner in a gold rush is the one who sells the shovels – or in this case, perhaps the pea protein.’
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