Bill Gates and Australia’s own Twiggy Forrest are two billionaires who made their wealth in very different areas, but both have now got a real taste for investing in the food industry.
Gates, who had a fortune estimated at US$130 billion prior to his divorce from wife Melinda, has been a major investor in a string of synthetic meat companies which have listed on US markets.
He has put his money into pioneering companies including Impossible Foods and Beyond Meat, as well as other synthetic protein producers Memphis Meats and Hampton Creek Foods.
Forrest has been in the headlines in recent weeks not because of the iron ore price, but because he’s building a stake in Tasmanian salmon giant Huon Aquaculture.
Just as he battles Brazilian iron ore producers on the global market, Twiggy has picked a fight with Brazilian company JBS which has launched a takeover for Huon valued at $550 million.
His private company Tattarang has built an 18% stake in Huon, and with reports a Canadian company could be a counter bidder he might be in line for a quick profit in any bidding war.
Ordinary investors don’t have the power and market muscle of Forrest or Gates, but they can certainly take note of what they do and follow them into the food industry, which is shaping as one of the hottest sectors to invest in.
Taking the queue from Bill Gates, there are several opportunities on the ASX to invest in plant based meat, a market Credit Suisse analysts believe will grow by 100 times by 2050 to be worth US$1.4 trillion globally.
You will probably know Inghams as a major chicken producer, but the company recently moved into synthetic proteins and plant-based nuggets. The shares had a surge recently but are still pretty much where they were a year ago, at just under $4.
With such a young industry, many of the local companies are at a very early stage and while that is always risky, there could be a major upside. Shares in Beyond Meat, for example, were at US$25 when the company listed in the US, and now they are worth over US$120.
So why not have a look at companies such as Wide Open Agriculture, which is selling a plant based milk product called OatUp made from lupins.
The shares haven’t been great performers, down from $1.23 to 80 cents over the last year but maybe that makes them cheap and tempting, given the potential.
Down in Tasmania, shares in Pure Foods Tasmania have also been steady at just over 60 cents, and the company recently started selling plant based dairy products after acquiring a company called Lauds Plant Based Foods earlier this year.
One to look out for, if it ever comes to the market, is v2food, which is using technology developed by the CSIRO and has a division of Hungry Jacks as an investor.
The Hungry Jacks Rebel Whopper uses a V2food burger patty.
The company is privately held and valued at around $500 million, and is one to look out for if it ever comes to the ASX.
In the meantime, there are still traditional food companies like Bega Cheese and a2 milk, which make their products from cow’s milk.
Neither have been spectacular performers on the market over the last year, but some usually smart money has recently moved down Bega way, and there are ongoing rumours of a takeover for a2.
Something to ponder over your breakfast, regardless of what you are having.