This Small Meats Company Could Soar as it Aggressively Pivots into Veganism


Longtime readers know exactly how I feel about plant-based food.

It’s the future.

Old folks look at red meat and see a fancy steak plate or a juicy burger.

Young folks, though, look at red meat and see lines of cows packed into hardly livable conditions, emitting tons of methane gas every year and contributing significantly to global warming… all just to produce a piece of meat which is actually pretty bad for your heart and liver.

Because they look at animal-based meat through this entirely different lens, young folks are doing something their parents never thought was possible: they’re shunning meat-eating.

According to a Utopia survey of 18- to 24-year-olds in Germany, more than half of those surveyed have given up meat-eating.

A survey from The Food Institute found that 65% of Generation Z consumers want a more “plant-forward” diet, while 79% choose to go meatless one or two times per week.

Perhaps most relevant, a YouGov poll found that one out of every five young people believes that the future of eating is meat-free.

They’re right.

We are sprinting into a meatless future — and over the next decade, the enormous legacy animal-based foods industry is going to be entirely disrupted by emerging plant-based foods companies that are winning over the hearts (and wallets) of young consumers.

But… as with any booming industry… the plant-based food industry will go from dozens of equally formidable competitors fighting for market share today… to a consolidated hierarchy dominated by a few titans of industry at scale… meaning you can’t just pick any old plant-based food stock to buy today and hope to score big returns.

You have to pick the right vegan stock.

There’s one plant-based food company that represents a smart investment in this megatrend, mostly because it’s already a well-established player in the packaged foods market that just happens to be simultaneously capitalizing on booming plant-based demand.

Going “Green” to Unlock Huge Returns

Most readers have heard of Maple Leaf (OTC:MLFNF) before — or at least seen the company’s products in grocery stores.

Maple Leaf is a Canadian packaged foods company with an assortment of frozen and refrigerated meats products under various brands, like Maple Leaf sausages, Schneider’s salami plates, or Swift’s chicken pot pies.

This company has quietly emerged as a leading player in the packaged meats category over the past few years, with its portfolio of healthy, organic packaged meat brands that have scored bigger and bigger grocery store distribution deals on the back of stronger and stronger consumer demand for healthy foods.

That’s all fine and dandy. Net sales rose 6% between 2015 and 2018.

But it wasn’t until 2019 that Maple Leaf turned into a big growth company…

Because that’s when Maple Leaf began an all-out blitz into the plant-based meats category.

Specifically, in 2017, Maple Leaf acquired two plant-based food brands — Lightlife and Field Roast — but originally folded them into its broader business.

Then, in 2019, Maple Leaf created a separate subdivision for those brands — called Greenleaf, with its own reporting segment, Plant Protein Group — and aggressively upped marketing and advertising spend for those brands, while committing to broader distribution deals and building out a huge 230,000 square foot manufacturing facility in Indiana dedicated entirely to plant-based food processing and packaging.

The results of this plant-based blitz are in the numbers.

In 2019, Maple Leaf’s newly established Plant Protein Group reported 27% sales growth. So far in 2020, sales are up more than 30%.

Of course, this has led to an acceleration in the overall Maple Leaf growth narrative.

What was 6% sales growth over three years between 2015 and 2018… turned into 13% sales growth in one year in 2019… and 10% sales growth so far in 2020, amid a global pandemic.

As impressive as this growth acceleration has been, this is really just the beginning for Maple Leaf.

Management hopes to increase the size of its Plant Protein Group by around 17X over the next 10 years… from C$176 million in 2019… to C$3 billion by the end of the decade… implying that double-digit sales growth will be the new norm for this formerly low growth company.

That seems totally doable for a few reasons:

  1. Plant-based food eating is on the rise.
  2. Lightlife and Field Roast are two top-quality alternative meat brands, with the New York Times rating the Lightlife burger as the third-best plant-based burger in the world (behind only Beyond Meat and Impossible Foods).
  3. Lightlife and Field Roast are also dramatically expanding their reach across the retail and foodservice segments, with Lightlife recently scoring a huge partnership to be the plant-based meat supplier for KFC’s plant-based chicken sandwiches throughout all of Canada.
  4. Management just conducted what they believe to be the most extensive consumer research in the history of the U.S. plant-based category, and is leveraging that research to revamp Lightlife and Field Roast’s product portfolios to be more relevant than ever before from both a product and marketing perspective.

Overall, management’s goals may appear ambitious… and they are… but they are also very achievable.

If management does turn its plant-based business into a C$3 billion business, then my modeling suggests that Maple Leaf will net about $600 million in net profits by the end of the decade.

A 20X multiple on that implies a potential future valuation of $12 billion — which is up about 5X from today’s $2.5 billion market cap.

And… if the company keeps firing on all cylinders into the 2030s… then 10X gains become not just possible, but likely.

So… if you’re looking for a high-quality and already established (yet still explosive) way to play the plant-based food megatrend… then Maple Leaf stock may be your best choice.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

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