Future of... Food of the Future II: What will the coming revolution mean for Global Chems & Machinery?
Food of the Future II: what will the coming revolutions in consumer diets (plant-based meat) and gene editing mean for chemicals and machinery stocks?
The biggest change in food and agriculture in over 20 years is upon us
The biggest change in food and agriculture in over 20 years is upon us
In 1997, GMO technology was introduced to the US agricultural market, and farmers in the Americas, and subsequently elsewhere, have never looked back, with US corn yields improving by 50% over 20 years. In this second Q -Series report on "Food of the Future", we analyse how chemical and agricultural machinery companies will need to adapt to two fast-emerging trends: 1) a generational shift in diets as alternatives to animal meat build traction; and 2) the commercialisation of gene editing technology in seeds, which is set to change farm economics through yield improvement but also allow value capture for seed companies via "output traits". To investigate these implications, UBS Evidence Lab surveyed 3,000 consumers and 120 US-based farmers, reviewed 20+mn social media interactions, and engaged with industry experts. We also launched our interactive model to isolate sensitivities to grain markets from the twin forces of lower growth in global meat consumption and the potential impacts of gene editing.
Protein shake: the rise of plant-based meat (PBM). UBS estimates a 30% CAGR to 2025
Protein shake: the rise of plant-based meat (PBM). UBS estimates a 30% CAGR to 2025
To analyse the impact of changing consumer diets, we leverage off the first Q-Series report on alternatives to meat by the UBS Consumer Staples team. UBS forecasts the global PBM market to reach ~USD$50 billion by 2025, implying 2.5% penetration of total meat consumption volume (~4% on a $ value basis) from sub-1% today.
Gene editing will affect food supply in more diverse ways than did GMO
Gene editing will affect food supply in more diverse ways than did GMO
Gene editing should bring opportunities for greater value capture for seeds companies, but will also likely drive a step change in crop yields.
What will it mean for Chemicals and Machinery stocks?
What will it mean for Chemicals and Machinery stocks?
What will these forces for change mean for investors in Global Chemicals and Machinery? The speed and trajectory at which consumers adopt the meat alternative market will have significant implications for seed, fertiliser, crop protection (CP), consumer ingredients, machinery and animal feed companies. The alternative protein market could bring incremental value capture for ingredients companies, potentially up to a ratio of 4x higher than animal meat applications; 2) but on the negative side, lower growth in meat consumption could leave grain markets oversupplied and therefore have a detrimental impact on input suppliers (CP and fertilisers) and machinery companies.
