Investors should look for "authenticity" in plant-based firms as industry becomes more mainstream

Cole Orobetz, CEO of plant-based food firm Alpha Foods, says plant-based is now mainstream but investors should be cautious when investing in the sector.

It wasn’t long ago that plant-based foods were specialty items, inaccessible to everyday shoppers both by lack of availability and misconceptions of the diet.

The term “plant-based” has become a popular part of our lexicon, but it wasn’t until recently that consumers started to embrace these food items as more than an unconventional choice.

With global fast food chains serving up meatless burgers, grocers carrying dozens of dairy alternatives, and restaurants with solely plant-based menus, the plant-based sector hasn’t just become a boon for consumers, but investors too.

According to Good Food Institute and the Plant Based Foods Association data, plant-based retail sales reached $7 billion in 2020. But these sales aren’t just coming from fully fledged vegans.

Bolstered by evolving consumer desires for better nutrition and planet-friendly production, plant-based food brands have hit upon a successful strategy in drawing in consumers from both sides of the aisle, the wary and the avid. With so much market density – and demand – for accessible, plant-based alternatives, investors are taking notice.

The plant-based industry has become its own investible asset class. From vegan indexes on the New York Stock Exchange to VCs solely dedicated to plant-based products, there are a wealth of investment opportunities. These opportunities aren’t just prudent investments from a growth standpoint, but also a moral one.

Those who can buy-in to plant-based foods can hit the triple bottom line: beneficial to people, the planet, and profits. But not all plant-based endeavors are all they are chalked up to be.

Like with any burgeoning category, there are companies that do not meet the standards that plant-based brands have been recognised for:

• Planet & Food System Sustainability
• Human health
• Animal welfare

At Alpha Foods, and for many other plant-based food and nutrition companies, products are created with those three pillars in mind. Plant-based companies are more viable in the market if they are keeping good on their claims.

The drive to eat less meat has made such an undeniable structural shift in how consumers examine health, ingredients, and food production practices that even global meat producers are permeating into the consumer preference for plant-based foods.

As the sector cements its place in the mainstream and welcomes new players, investors should be looking for authenticity as they make their fiscal choices. Because of the overcrowding in the plant-based sector, smaller brands will be consolidating and partnering with large brands.

But large brands may not hold the same weight as smaller brands in customer and investor buy-in.

Plant-based brands hoping to generate more investor activity are wise to build a strong identity and maintain authenticity. Investors, both on a commercial and personal level, can see tremendous evolution in this growing industry.