Meatless alternatives are on the rise, but so is global meat consumption

Meatless alternatives are on the rise, but so is global meat consumption

One of the dangers investors is looking at the world with blinders on because it means missing the larger picture. For example, if we were to look at the recent stock price success of Beyond Meat, a new constituent in the Tematica Research Cleaner Living index, and chatter over the expanding reach of Impossible Foods, one might think the world was no longer interesting in meat.

To the contrary, we are continuing to see the tailwind of our New Global Middle-Class investing them spur demand for the protein complex.

When it comes to the burgers or steaks on your plate, looks and tastes can be deceiving as “meatless meat” and “plant-based meat” gain traction.

Sales of meat alternative grew 30% in 2018 compared to the previous year, according to Nielsen Product Insider.

While the alternative meat market could grow to be worth $140 billion globally in the next ten years, according to Barclays, it’s still a small percentage of the current $1.4 trillion global meat market which is also showing no signs of slowing down.

Still, the demand for alternatives has increased.

Despite the trend in eating plant-based “meat,” global consumption for meat is still on the rise, driven in part by countries like China and Brazil which saw a massive increase in recent decades.

The average person in China, for instance, went from consuming just nine pounds of meat per year in 1961, to 137 pounds per year in 2013, according to The Economist.

“As countries get wealthier, there’s a tendency to eat more meat as a sign of wealth, as a sign of like, ‘I can afford it,’” said Lily Ng, CEO of Foodie, a food magazine and online platform based in Hong Kong.

Globally, the average amount of meat consumption has nearly doubled over the past 50 years.

Although, countries including the U.S. and the U.K. may have reached a so-called “Meat Peak” — which means total meat consumption has hit a peak and declined slightly recently. In addition to that, one in three people in the U.K. says they’ve stopped or cut down on eating meat, according to a survey by Waitrose supermarket.

Source: Meatless alternatives are on the rise, so is global meat consumption

SpartanNash Introduces Clean Ingredient Initiative for Private Label Products

SpartanNash Introduces Clean Ingredient Initiative for Private Label Products

Grocery and fresh food distributor SpartanNash has introduced a Clean Ingredient Initiative for its Our Family and Open Acres private label brands that focuses on simpler products with reduced ingredient lists and clean, easy-to-read labels. SpartanNash is joining a growing movement among private label product companies to tap into our Clean Living investing theme and to a lesser extent our Middle-class Squeeze and Digital Lifestyle ones as well.

While most first think of private label brands because of their more affordable price points, as Nielsen points out “private-label growth is also being driven by the wider choice that the digital economy offers to consumers and the globalization of shopping trends (media, technology, e-commerce).” We’ve seen this first hand with Thematic King Amazon as it flexes its private label products across food, furniture, apparel, and basics. Add in the growing tailwind associated with consumers shifting their food, snack and beverage preferences for healthier and good for you products, and SpartanNash has tapped a thematic trifecta.

 

In 2018, more than 425 private label products underwent packaging redesigns or reformulations to remove synthetic colors, MSG and other ingredients. This year, another 175 products will be added to the Clean Ingredient Initiative. For example, Our Family ice cream now has four SKUs that contain only four or five ingredients, including milk, sugar, cream and the appropriate flavoring. SpartanNash has also successfully partnered with its manufacturers to remove added MSG from a number of Our Family soups, and Our Family fruit and grain bars have been reformulated to remove synthetic colors.

“Consumer preferences are changing, and our store guests are looking for healthier food options, clean labels and ‘free from’ formats when shopping at their local grocery store or putting food on the table,” SpartanNash VP, Private Brands John Paul said. “Our Clean Ingredient Initiative provides them with exactly that, all while giving them the quality, budget-friendly savings and great taste they’re used to with Our Family and Open Acres products.”

Source: SpartanNash Introduces Clean Ingredient Initiative for Private Label | Progressive Grocer

A Content is King primer on the developing world of e-sports

A Content is King primer on the developing world of e-sports

 

 

Amid expanding markets such as digital commerce and streaming video that sit at the top of our Connected Society investing theme —and to some extent, our Content is King one  — other growing markets and their opportunities can be stepped over and missed from time to time. One that I’ve been keeping tabs on from the periphery market is e-sports, but even I tend to sit up and take notice when the market for this form of content consumption is set to grow from $493 million in 2016 to $660 million this year, and more than $1.1 billion in 2019. That’s remarkable growth, fueled by a growing base of global enthusiasts, and one that is seeing Corporate America sit up and take notice as well.

That’s right, as amazing as it might sound, more than 20 years after the first video game tournaments, top e-sports tourneys now draw audiences that rival the biggest traditional sporting events. A decade ago, amateur competitions drew a few thousand fans in person and over the Internet. In October 2013, 32 million people watched the championship of Riot Games’ League of Legends on streaming services such as Twitch and YouTube — that’s more than the number of people who watched the TV series finales for Breaking Bad, 24 and The Sopranos combined; it’s also more than the combined viewership of the 2014 World Series and NBA Finals.

In 2015, Twitch reported more than 100 million viewers watch video game play online each month. According to the Entertainment Software Association, more than 150 million Americans play video games, with 42% of Americans playing regularly. The key takeaway from this litany of statistics is the e-sports market has continued to grow. And it is poised to continue doing so, as casual-to-serious players become tournament viewers.

In the last few months, streaming service Hulu has picked up four new series that are centered around e-sports as part of its move to replicate the success at Netflix (NFLX) and Amazon (AMZN) in their push to create original and proprietary content. Another sign that e-sports are turning into a big business was at rating company Nielsen (NLSN) when it launched a new division focused on providing research on e-sports.

One of the opportunities being assessed by Nielsen lies in measuring the value of e-sports tournament sponsorships. In 2017 there are more than 50 such events, with recent and current e-sports tournament sponsors including Coca-Cola (KO), Nissan, Logitech (LOGI), Red Bull, Geico, Ford (F), American Express (AXP) and a growing list of others.

Tournaments streamed to everyone over Twitch.tv have reported five million concurrent viewers for Dota 2 and 12 million concurrent viewers for League of Legends. And these viewers tend to be the ones consumer product companies want — more than half of e-sports enthusiasts globally are aged between 21 and 35 and skew male. That’s the sound of disposable income you hear — and so do those sponsors.

The ripple effect is even moving past tournaments into movies and other content forms. Video game maker Nintendo (NTDOY) is reportedly near a deal with Illumination Entertainment, a partner of Comcast (CMCSA) to bring its flagship Super Mario Bros. franchise to the big screen. Granted Super Mario is not quite the same as some of the games associated with e-sports, but it is one of the most popular video game franchises of all-time, with the series of games selling over 330 million units worldwide. Over the last few quarters, we’ve seen a film hit screens based on the Assasin’s Creed game that was first released in 2007, and this leads us to think we could see more storylines developed much the way Disney (DIS) and 21st Century Fox (FOXA) are doing with the Marvel characters and Time Warner (TWX) with Batman, Superman, and other DC comics properties.

When I see a market taking shape like this, with these characteristics and all the confirming data points to be had, it means looking at which companies are poised to benefit from this aspect of our Content is King investing theme.

In this case, that means interactive gaming content ones like Electronic Arts (EA), Activision Blizzard (ATVI) and Take-Two Interactive (TTWO) among others. In looking at the industry data, we find a rather confirming set of data given the most recent monthly video game sales data for September published by NPD Group showed robust year-over-year sales, up 39% to $1.21 billion.

Breaking it down, software sales soared 49% due to the continued shift to console and portable platforms and away from PCs, and hardware sales rose 34% vs year ago levels. The top three games of the month were Activision’s Destiny 2, NBA2K18 by Take-Two and Madden NFL 18 by Electronic Arts. That set the stage for third-quarter 2017 earnings for these companies, especially given that in September Activision’s Destiny 2 became the best-selling game of thus far in 2017.

Recently, Electronic Arts shared on its third-quarter 2017 earnings call that among its growth priorities is the expansion of live services, which includes the integration of the company’s e-sports business across more gaming titles. As such, EA sees competitive gaming becoming a greater piece of its portfolio, as it builds on Madden NFL Club Championship, the first e-sports competition to feature a full roster of teams and players from a U.S. professional sports league. Tournaments to represent all 32 NFL teams are already underway.

Meanwhile on its September quarter earnings call Activision Blizzard confirmed its e-sports Overwatch League will begin regular season play on January 10, it has inked sponsorship deals with Hewlett-Packard (HPQ) and Intel (INTC) and the Overwatch community now spans more than 35 million registered players. The league has 12 inaugural teams complete with physical and digital merchandise for sale to fans.

We’ll be watching to see the initial reception as pre-season competition begins next month at the Blizzard Arena Los Angeles and we’ll be sure to crunch the numbers and understand what’s baked into existing expectations for ATVI shares and the others. Those answers will help determine how much additional upside there is to be had near term, following the meteoric rise of ATVI shares this year — up more than 75% year to date vs. 25.7% for the Nasdaq Composite Index and more than 15.0% for the S&P 500.

 

 

 

Thanks Nielsen for confirming our Food with Integrity investing theme

Thanks Nielsen for confirming our Food with Integrity investing theme

There is nothing quite like being told “you’re right” and the latest data from Nielsen serves to confirm our Food with Integrity investing theme. We’ve had other data from grocery leader Kroger and compared sales data among other grocery chains and key organic and natural product suppliers, but we always love confirming third party confirmation, especially when it has a slew of data.

Consumers today are adopting a back-to-basics mind-set, focusing on simple ingredients and fewer processed foods. As health and wellness becomes an increasingly mainstream trend with consumers, living a healthy lifestyle supported by natural/organics products continues to be important to the U.S. shopper.

Retailers are taking notice and responding to this trend. Organic products are increasing in quantity across shelves and categories in the store. In the U.S. alone, volume sales of products with an organic claim on the package grew 13.1% over the 52 weeks ended July 30, 2016.

Organic produce and fresh items have been around for a long time and may have started this trend years ago. Today, these goods are reaping the benefits of high sales and increased awareness with consumers. But organic products are rapidly growing across every department in the store, and with 48% of U.S. consumers choosing local, natural and organics products when possible, there is a huge growth opportunity for retailers and manufacturers who offer organic product assortments.

Source: Tops of 2016: Fresh Organic