Vegan and plant-based companies may be of special interest to the Australian investor looking to add some socially conscious investments to their portfolio. But many of these companies are young, untested and facing an uncertain future. Read on to learn about vegan stocks and investment opportunities in the industry.
What are vegan stocks?
Vegan stocks are stocks from companies that market to vegans. Most of these companies are food manufacturers that specialize in vegan-friendly and plant-based products. The vegan diet excludes meat, dairy products, eggs and all other ingredients derived from animals. Dietary staples include fruits, vegetables, legumes and whole grains. Publicly traded companies that exclude animal products from their offerings may be considered vegan stocks.
Why invest in vegan stocks?
It’s a growing industry that’s adding companies that qualify as socially responsible investments, and more and more people are becoming interested in veganism. The global plant-based meat market — a hearty component of many vegan diets — was worth $US 12.1 billion in 2019 and is forecasted to reach $US 74.2 billion by 2027, according to a report from Meticulous Research. With this in mind, it's no surprise that the plant-based food market is well-positioned to grow at a healthy rate.
In addition to a positive growth forecast, vegan stocks qualify as socially responsible investments. Socially responsible investments support companies that aim to have a positive social or environmental impact. This type of investing has become more popular in recent years and gives investors the opportunity to support companies and causes they truly care about. Whether you’re a vegan, vegetarian, flexitarian or just want to support companies that refrain from selling animal products, vegan stocks are one way to introduce socially responsible investments into your portfolio.
Finder survey: Are Australian overall investment portfolios net positive or negative?
Response
Yes
50.1%
No
49.9%
Source: Finder survey by Pure Profile of 1004 Australians, December 2023
What unique risks do vegan companies face?
The risks facing vegan stocks are the same risks that face many new, rapidly evolving industries: instability.
This portion of the global food market is still small, to say the least. And while it’s definitely growing, it hasn’t proven itself long-term. Many companies that specialize in vegan and plant-based products are startups. And startups are an inherently risky investment. There’s no guarantee these newer companies will stand the test of time, especially considering how the coronavirus pandemic has affected the way we dine.
Beyond Meat — one of the biggest players in the plant-based meat space — sells half its products to restaurants. And a number of its competitors are in the same boat. In light of the pandemic, restaurants simply aren’t seeing the same numbers of patrons, even considering the shift toward takeout, pickup and delivery options. There’s no telling how the pandemic will affect the restaurant industry long-term. And with such a large cut of plant-based company sales going to restaurants, these companies will undoubtedly be affected.
Veganism has begun to take root in Australian dietary trends, but these companies may be too new for the experienced Australian investor to gamble on.
Vegan stocks
If you’re ready to add some socially conscious stocks to your portfolio, you have a few options. Do note that most of these stocks are available on US exchanges, which are available for purchase through some Australian brokers. To purchase US stocks, you'll need to open a share trading account.
Company summary
GrainCorp Limited operates as an agribusiness and processing company in Australasia, Asia, North America, Europe, the Middle East, North Africa, and internationally. It operates through two segments, Agribusiness and Processing. The company handles and trades in wheat, barley, sorghum, corn, oilseeds, pulses, organics, animal fats, and used cooking oils and vegetable oils for animal feed purposes; handles, processes, and stores grains and oilseeds; refines, bleaches, deodorizes, and blends edible fats and oil products; and crushes, processes, manufactures, and distributes edible oils. It also supplies vegetable oil and molasses-based feed supplements to enhance farm productivity; and produces canola oil and canola meal. In addition, the company provides blended and single oils, infant nutrition, bakery products, margarines, spreads, and frying shortening; crushes oilseed products used in cooking oils, spreads and shortenings, prepared foods, meal for dairy, poultry and livestock, cosmetics, and lubricants; and operates bulk port terminals. Further, it engages in the procurement, shipping, accreditation, and value-added supply of tallow and used cooking oil. GrainCorp Limited was founded in 1916 and is headquartered in Barangaroo, Australia.
Costa Group Holdings Limited produces, packs, and markets fruits and vegetables to food retailers. It operates through three segments: Produce, Costa Farms and Logistics, and International. Produce segment engages in farming, packing, and marketing of berries, mushrooms, glasshouse grown tomatoes, citrus, and avocados and bananas primarily to food retailers. Its Costa Farms and Logistics segment operates logistics, wholesale, and marketing services including warehousing and ripening facilities, and trading within Australia. International segment engages in licensing blueberry varieties in Australia, the Americas, China, Africa, and internationally; and berry farming activities in Morocco and China. It also exports its products. The company was founded in 1888 and is headquartered in Docklands, Australia. As of February 26, 2024, Costa Group Holdings Limited was taken private.
Australian investors looking for a vegan-focused ETF may be pleasantly surprised to discover the U.S. Vegan Climate ETF (VEGN): the first publicly traded fund to focus on vegan investments.
The U.S. Vegan Climate ETF holds over $US 18 million in assets and has an expense ratio of 0.6%. It’s a socially responsible fund that primarily filters out companies involved in animal products, testing, farming and animals used for sports or entertainment purposes. But the fund also exempts companies that:
Extract, refine or produce fossil fuels
Consume fossil fuels for energy
Have a significant carbon footprint
Have a history of environmental habitat destruction
Produce tobacco
Produce armaments and products designed for military or defense use
Have a history of human rights abuses
As of May 2021, the U.S. Vegan Climate ETF holds over 200 companies, including Apple, Microsoft and Facebook.
Compare trading platforms
Before you can invest, you’ll need a brokerage account in Australia. Explore your platform options below.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Bottom line
For Australians ready to add some plant-based investments to their portfolio, vegan stocks represent an investment opportunity on the rise and gaining momentum. But most companies in this industry have plenty more ground to cover before they can be considered a stable investment.
Yes, Beyond Meat products are 100% vegan-friendly.
Vegan pure plays — companies that exclusively offer vegan products — are rare. In fact, most of the U.S. Vegan Climate ETF’s top 10 holdings are tech companies that don’t offer vegan products, like Intel, AT&T and Microsoft. A stock can be considered a vegan stock if it offers vegan or plant-based products or if it offers products that don’t exploit animals. But be careful: some companies considered to be a vegan investment offering plant-based foods may also manufacture meat products. If you have strict ethical investing guidelines, investigate a stock before you purchase it to better understand what the company does and what it offers.
Veganism is a lifestyle characterized by the exclusion of animal products from material purchases and food consumption. Veganism aims to limit animal cruelty and the environmental impact of animal exploitation.
Shannon Terrell is a writer for Finder who studied communications and English literature at the University of Toronto. On any given day, you can find her researching everything from equine financing and business loans to student debt refinancing and how to start a trust. She loves hot coffee, the smell of fresh books and discovering new ways to save her pennies.
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