There’s increasing support for claims that becoming vegan can help fight climate change and enhance general health. The scientific evidence is hard to ignore, and as healthy alternatives are becoming so much easier to purchase, consumers are gladly adding these items to their shopping baskets.
FTSE 250 company
This is great news for the companies involved in manufacturing these products, one of which is Tate & Lyle (LSE:TATE), a global provider of food and beverage ingredients.
Along with climate change fears, the global obesity epidemic is causing a societal shift towards healthier eating. As a manufacturer of healthy ingredients, such as sugar alternatives like stevia, Tate & Lyle is well-placed to harness this change in consumer attitudes and behaviour towards food.
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The stevia plant comes from South America and its sweet leaves have been used to sweeten food and drinks for centuries. Sweet Green Fields is a pioneer in the growth, scientific development and distribution of stevia-based products. Since 2017 it’s been working in partnership with Tate & Lyle to increase Tate’s portfolio of stevia-based ingredients.
Most of Tate’s ingredients come from plant sources and along with stevia, include locust bean gum, maize, monk fruit, potato, sugarcane and tapioca.
I looked at this FTSE 250 stock for 2020 back in August and noted that its low-calorie, low-sugar and high-fibre options were a great asset to the company. It has a price-to-earnings ratio (P/E) of 15, earnings per share of 49p and a dividend yield of 4%.
Flexitarian
All vegan food is plant-based but not all plant-based diets are vegan as some consumers are eating a plant-based diet, but not identifying as animal product-free. They’ve been given the tag ‘flexitarian’ as they opt for meat-free days, cutting meat intake to benefit their health. The Vegan Society says close to half the UK population is expected to be flexitarian by 2025, which means a massive business opportunity.
In response to this, some FTSE 100 companies have tinkered with existing products to make them suitable for both vegans and the potentially huge flexitarian cohort. Unilever altered its PG Tips tea bags, to make them more compatible with almond and soya milk, while Diageo changed its manufacturing process to make Guinness and Baileys vegan-friendly. Tesco has recently created its Wicked Kitchen range of plant-based meals.
Although most vegan-related businesses listed on public stock exchanges are based in the US, I’ve found a couple in the UK. Food and drug retailer Total Produce (LSE: TOT) is listed on AIM. I think this company may also be well-positioned to benefit from the plant-based diet revolution. It’s a producer and provider of fresh produce, operating out of 39 countries and serving the retail, wholesale and foodservice sectors throughout the world.
It has a £456m market cap, 2.5% dividend yield and P/E of 13. It reported a jump in interim profits and revenue in August after contributions from its 45% acquisition of the Dole Food company proved fruitful in more ways than one. Its turnover exceeds €4.25bn, and it’s aware of its environmental footprint and is attempting to reduce it. In Ireland, it pledged to target a 40% reduction in its carbon consumption by the end of 2020. In fact, the group’s Irish operations have already moved to 100% renewable electric energy sources.
I think both Tate & Lyle and Total produce are stocks poised to do well in 2020 and I consider them a Buy.
