Author Topic: Betting on a transition to more sustainable foods (i.e. food-tech)  (Read 6627 times)

Aardvark

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Yes, I know it's betting and not investing, but there is no "bettor's alley" on this forum, so I am posting here.

Context:
I am convinced that in the next decade or two there is going to be a successful transition to diets that are more socially just and less environmentally destructive. I think this will be driven by various technologies maturing while existing systems start to falter. Plant based alternatives, cultivated meat, precision fermentation, and various other exciting things are happening in food tech, and I think they are going to overthrow animal agriculture and also certain crops.

The question:
Assuming that I am correct about the above, how might I invest/bet in a way that leads to a profitable outcome?
I've come across the VegTech Plant-based Innovation & Climate ETF (EATV ticker), which looks interesting, but I would like to get a more detailed understanding of my options here. I assume that there is a way to short the meat market, but I don't really know how, and the timeline on the demise of animal meat is difficult to predict.

Any thoughts/ideas/musings around this would be appreciated. This is 90% a genuine question, and 10% a case study that I am hoping to learn from :)
« Last Edit: December 14, 2022, 08:56:28 AM by Aardvark »

seattlecyclone

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #1 on: December 14, 2022, 04:43:49 PM »
Interesting question.

I wouldn't recommend shorting the stock for big meat/dairy companies. Even if your hypothesis is correct the transition isn't going to occur overnight, and you'll be paying interest on the borrowed shares until then.

The EATV ETF would probably be an easy way to make a bet in the general direction of what you think will happen, though some of their top holdings (Dole, AB InBev, Crocs) make me think the fund maybe isn't as focused on plant-based food innovation as you would like. Crocs isn't even a food company at all! These big companies surely do devote a portion of their resources into sustainability investments, but it's likely a pretty tiny portion. Most of the money you'd put into these places would then just go into collecting dividends from their existing large food/beverage businesses. While beer and pineapples are both plant-based products they're not terribly innovative.

Really, the way to make bets like this is to seek out some earlier stage angel or venture capital investments. Find a few early-stage companies experimenting with ways to make meat alternatives tastier and/or cheaper than the existing players, put some money in, and see what happens.

maizefolk

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #2 on: December 15, 2022, 12:23:28 AM »
Which crops did you have in mind?

I ask because the problem with the meat/animal ag side of your prediction is that there are hundreds of companies (most of them still privately held) competing in this space and even if your prediction pans out it is way to early to figure out which small subset of those companies will succeed and which large subset will fail.

And even if you knew perfectly accurately who was going to fail and who was going to succeed, my guess is many/all of the winners aren't publicly traded. When people want to buy into a space where most companies are private, the few publicly traded companies often get bid up to ridiculously high valuations. That's basically what happened with Beyond Meat, a reasonably generic publicly traded meat substitute companies that was briefly worth $10B+ because (I assert) investors were really excited about Impossible Foods, a company that actually has cool new technology for meat substitutes but is still privately held. The price history of BYND over the past 18 months shows how well that worked out.

Metta

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #3 on: December 15, 2022, 09:52:56 AM »
We've been vegans for quite a long time and we had the same thought when we saw a lot of dairy substitutes come on the market a few decades ago. So we did our diligent research and invested in Hain and Tofutti. We ended up selling Hain fairly quickly. I don't remember why but I think it was sold or merged or something and we decided to exit. Tofutti we held onto for quite a long time and it just didn't go anywhere. Eventually there were a lot of competitors in the dairy-free space, some public, most private. We didn't lose money on Tofutti. We just didn't make money. At some point we needed to pull money for a down payment on a house and we sold the Tofutti stock.

I say this to illustrate the problem. We thought that an early entrant into the dairy-free market that simultaneously had a huge market share in the kosher market (which it was created to serve) would be a fantastic stock. Plus I had high hopes that they would send stockholders coupons for free ice cream. (Never happened.) But the problem is that you can't predict the future. The early entrant might have an installed base of manufacturing that they can't change inexpensively, while new entrants are using the latest manufacturing techniques. They might have a recipe that works fine if there isn't a lot of competition, but fails when the competition ups their game.

Making bets on new tech is part of what we do in our portfolio. It isn't the main thing we do, but we do devote a tiny portion of our money to things that are just freaking cool that we love. So we bought Apple early, which has been a phenomenal stock. We've bought weird little Israeli defense stocks that my husband understands (because this is his area of specialty) that have done fairly well. We bought Tefron because it was first to the market with a new way of creating seamless lingerie. (Stock didn't do much and we sold it when we needed money to buy a house and because we saw that the competition had adopted Tefron's innovations and were doing a better job with them.)

We love things that are cool and innovative and we love feeling that we have a tiny part of them through our stocks. We watch them carefully to ensure that they continue to be good investments. However, most of our money is in safe, boring index funds.

So if this is something you enjoy, do it! Do your due diligence. Research the companies and read their SEC reports. Check the competition. Try the food. When the P/E comes down to a level that makes sense to you, buy the stock. Then keep track of it. Keep reading the annual reports. Keep track of management and the competition. No guarantees, but it's a lot of fun.

EvenSteven

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #4 on: December 15, 2022, 11:10:46 AM »
If you want to buy into some privately held start ups at early stages in the ag tech sector, it might be worth checking out AgTech NEXT. You can meet and hear about lots of new companies there.

BDWW

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #5 on: December 15, 2022, 12:07:55 PM »
Disclosure: I work for an agricultural tech company focused on genetics.

I think your initial premise is flawed/incomplete. I don't foresee lab grown meat in particular ever being commercially viable outside policy intervention.  Reliably growing simple(constrained) biological material is extremely difficult and input heavy. 

The perhaps most prominent long running example being algae bio-fuels. Short synopsis: Specific algae are very good at producing excess lipids, which then can be relatively easily processed into oil/diesel like fuels. 
The problem is that low level biology is darwinism at light-speed. Any other organism that can enter the environment and out-compete or feed on the algae wins out.  The only mildly successful attempts have been very clean systems that keep out foreign contaminants. This of course greatly increases input costs, and is ultimately what is preventing it from being commercially viable. It simply can't compete on cost with more traditional fuel sources.

Lab grown meat will suffer the same fate. The level of hygiene and labor inputs needed to produce the end product will fail in comparison to most traditional agriculture. Life on earth has been doing this for billions of years, and have produced wonderfully complex and robust systems to out-compete other organisms.  TLDR: plants and animals have immune systems and the ability to gather resources on their own. Then add in genetic selection and increasing genetic manipulation.

Now some of the more inefficient protein animals (read beef) may have high enough input /environmental costs that some sort of tech-protein may be able to compete. However, when you start looking into the feed and conversion efficiencies of pork and especially chicken, they simply don't stand a chance.

If you take that even further you have insects; primarily crickets and mealworms at the moment.  They have all the benefits of being a self-sufficient organism and extremely good conversion efficiencies.

Many of the other tech-food alternatives have similar achille's heels. The impossible foods and beyond products are highly processed and would ultimately be subject to the same issues as current modern agriculture, i.e. monoculture crops reliant on industrial-scale processes just with an extra input laden step.

Basic economics tells us that in order to compete successfully, these products will need to produce a desirable product with lower or comparable input costs, and I just don't see that happening in the near future.

The wildcard would be governmental policy or societal pressure that distorts the market enough to overcome the inefficiencies.

I realize you weren't asking for feedback on that portion of your post, so (obviously) feel free to ignore this post if you don't think it adds to the discussion.





harvestbook

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #6 on: December 16, 2022, 09:02:44 AM »
It really seems like the most profitable approach in every way is to grow your own organic garden.

I realize this can be a challenge in an urban environment, but even there you can find co-op space or even just supporting local ag through a farmer's market or food-box subscription. Most people have a window, ledge, or porch space where they could grow a few tomatoes.

I've saved more in food costs over the years than my portfolio could ever produce, and it's relatively shielded from inflation (I am almost entirely petrol-free and save many of my own seeds.) Not to mention health benefits that pay for themselves many times over.

Sometimes the simplest solution is the best one. I realize this doesn't solve much on the societal scale at an individual level, but each home garden tilts the scale a little away from the petrochemical economy. I've tried to outsmart the world several times, knowing "what it needs," but the world doesn't seem to care much what I think.

MustacheAndaHalf

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #7 on: December 16, 2022, 10:52:23 AM »
Lab grown meat will suffer the same fate. The level of hygiene and labor inputs needed to produce the end product will fail in comparison to most traditional agriculture. Life on earth has been doing this for billions of years, and have produced wonderfully complex and robust systems to out-compete other organisms.  TLDR: plants and animals have immune systems and the ability to gather resources on their own. Then add in genetic selection and increasing genetic manipulation.

Now some of the more inefficient protein animals (read beef) may have high enough input /environmental costs that some sort of tech-protein may be able to compete. However, when you start looking into the feed and conversion efficiencies of pork and especially chicken, they simply don't stand a chance.
Evolution favors surviving preditors, finding food, and reproducing.  Evolution may be sublimely tuned, but it doesn't matter much to a cow in a pen.  Their food, protection and reproduction are all outside their control.

When companies like Beyond Meat (BYND) grow quickly, it's hard to know if they are sacrificing profits to grow faster (like Amazon in its early days), or if their business model isn't profitable (especially with high inflation).  BYND stock has lost about 80% YTD, but they're not alone:
https://www.morningstar.com/stocks/xnas/bynd/trailing-returns

High inflation is hitting growth companies hard, and some of them will go under.  According to Yahoo Finance, Beyond Meat is losing cash quickly and has a year of cash left.  Even if substitute red meat has potential, I don't think I'd invest in the most well known provider right now.  I also mention them because I believe they even got into fast food restuarants, which was an achievement in itself.
https://finance.yahoo.com/quote/BYND/key-statistics?p=BYND

Scandium

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #8 on: December 19, 2022, 02:17:04 PM »
My bet is that as usual the large established firms will buy up the most successful upstarts, often before or right after they go public. So even if you're right (i'd give it maybe 10-15% chance, always assume humans will do the most selfish, sort-term thing) the chances of benefitting financially seem slim.

ChpBstrd

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #9 on: December 20, 2022, 11:00:05 AM »
You're envisioning a transition which would occur over a decade or more, and which would end at a point where food spending returns to where they are today (unless consumers find a way to divert more of their incomes to food, they'll have the same resources to work with throughout the transition). For sustainable foods to increase market share and spawn the sort of rapidly growing corporations you'd like to invest in, these new products would need to become cost competitive with the old products. These are much different assumptions than were applicable to, say, the iPhone or Viagra, products which created their own demand.

Even if that does happen, it's unclear which incumbent firms will adapt and thrive, if not lead the way into these new markets. Meat producer Tyson, for example, has launched its "Raised and Rooted" brand of plant-based faux meats. So it's unclear if Tyson would be hurt by the shift, or if they'd just shift product lines. 

Another option is to go short the sort of companies you think would be stranded by a cultural / technical shift toward sustainable foods because of legacy branding. Here are some examples:

Texas Roadhouse (TXRH)
Wingstop (WING)
Ruth's Hospitality (RUTH)

Of course, the danger here would be if that these niche marketers could do well despite the overall cultural shift, sort of like how cigar bars are somehow still a thing despite the drastic reduction in smoking.

blue_green_sparks

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #10 on: December 20, 2022, 11:38:09 AM »
It really seems like the most profitable approach in every way is to grow your own organic garden.

I realize this can be a challenge in an urban environment, but even there you can find co-op space or even just supporting local ag through a farmer's market or food-box subscription. Most people have a window, ledge, or porch space where they could grow a few tomatoes.

I've saved more in food costs over the years than my portfolio could ever produce, and it's relatively shielded from inflation (I am almost entirely petrol-free and save many of my own seeds.) Not to mention health benefits that pay for themselves many times over.

Sometimes the simplest solution is the best one. I realize this doesn't solve much on the societal scale at an individual level, but each home garden tilts the scale a little away from the petrochemical economy. I've tried to outsmart the world several times, knowing "what it needs," but the world doesn't seem to care much what I think.
Just harvested some sweet Marconi peppers and cherry tomatoes for lunch. My Florida gardens have their ups and downs for sure but as long as I continue to put in just a few hours each week, we have a nice supplemental food supply. I do focus on the more expensive stuff and fresh herbs are just so easy to grow. We also have a pond with tilapia, bream and catfish so once in a while I break out the ole fly rod.

Metalcat

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #11 on: December 20, 2022, 12:03:57 PM »
This is kind of the same question as any bet on future trends.

It's one thing to predict a change is coming, it's another to be able to single out a specific stock that is likely to outperform the average in the larger sector.

For example, we all know renewable energy is on the rise, but a lot of the big players in this space are the oil&gas companies that are transitioning to becoming energy companies. So how do you profit as a retail investor?

What food company do you invest in?

Are you envisioning the collapse and failure of large food companies that then get replaced by different companies? Seems unlikely. I would assume more of a shift within the existing food companies.

I'm sure there will be some moonshots in there, but how does someone predict which companies those will be??

Because you don't just need to find a way to make money doing this, you need to find a way to make *more* money than what gains would be captured by index funds. Because A LOT of this will be captured by basic index investing.

PDXTabs

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #12 on: December 20, 2022, 12:21:51 PM »
This is kind of the same question as any bet on future trends.

It's one thing to predict a change is coming, it's another to be able to single out a specific stock that is likely to outperform the average in the larger sector.

This is very true. Knowing that something will be big in the future is different than profiting from it. A bunch of investors lost a bunch of money betting on railroads in the UK during the 19th century. A bunch more investors lost a lot of money betting on the internet at the end of the 20th century. British railroads and the global internet have been really successful at changing society, but that doesn't mean that the investors did well. Global Crossing is probably my favorite example. Global Crossing changed the world by running fiber across oceans, and then they went bankrupt. We still use the fiber today.

YttriumNitrate

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #13 on: December 20, 2022, 12:23:27 PM »
Well, roughly half the US's corn crop is used as animal feed [1], so if half the demand for corn went away the prices would crater. As farmers moved to other crops, the prices of soy and wheat would also plummet.

At least for a little while, companies like Kraft and Pepsico that benefit from low crop prices would do well.

ChpBstrd

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #14 on: December 20, 2022, 01:09:09 PM »
Well, roughly half the US's corn crop is used as animal feed [1], so if half the demand for corn went away the prices would crater.

Another difference between tech and food is that food products are highly substitutable. If the price of corn fell too far, people in the US and around the world would start eating more corn instead of rice/wheat/peas, propping the price back up again.

The illustration goes to show how difficult it is to deduce cause and effect in these food markets, much less pick long-term winners.

maizefolk

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #15 on: December 20, 2022, 01:17:41 PM »
Well, roughly half the US's corn crop is used as animal feed [1], so if half the demand for corn went away the prices would crater.

Another difference between tech and food is that food products are highly substitutable. If the price of corn fell too far, people in the US and around the world would start eating more corn instead of rice/wheat/peas, propping the price back up again.

The illustration goes to show how difficult it is to deduce cause and effect in these food markets, much less pick long-term winners.

I don't necessarily agree with this. The big floor on corn prices in the long term is the cost of production, which has increased substantially as a result of 1) nitrogen prices 2) interest rates. If the price of corn falls it'll drive down supply by forcing a lot of farmers into bankruptcy before it gets low enough to get first-world consumers to shift their eating preferences and drive up demand.

And even outside of the first world, we've seen major spikes in the price of wheat (the staple food for the middle east and north africa) and rice (staple food of south, east, and southeast asia) produce riots, government interventions in food markets, and even the collapse of regimes all before they got to the level of pricing shift that would cause people to shift their dietary preferences from rice to corn or wheat to corn.

YttriumNitrate

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #16 on: December 20, 2022, 02:39:08 PM »
Another difference between tech and food is that food products are highly substitutable. If the price of corn fell too far, people in the US and around the world would start eating more corn instead of rice/wheat/peas, propping the price back up again.

The illustration goes to show how difficult it is to deduce cause and effect in these food markets, much less pick long-term winners.
I'm not convinced that there's enough human demand worldwide for food to support corn prices anywhere close to what they are now in a world where people don't eat meat. US farmers produce roughly 12 billion bushels of corn per year. That works out to roughly 85 pounds of corn for every man, woman, and child in the world. On a 2,000 calorie diet, that one crop from one country could feed the entire world for roughly two months. Adding in the US's 3.2 billion bushel annual crop of soy (70% of which is currently used as animal feed[1]) could add a few more weeks that the entire world was fed.
« Last Edit: December 21, 2022, 06:48:46 AM by YttriumNitrate »

chemistk

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #17 on: December 21, 2022, 06:25:02 AM »
My bet is that as usual the large established firms will buy up the most successful upstarts, often before or right after they go public. So even if you're right (i'd give it maybe 10-15% chance, always assume humans will do the most selfish, sort-term thing) the chances of benefitting financially seem slim.

Underrated comment. Food is an incredibly challenging space to operate profitably, especially in new and different growth areas where supply chains aren't readily scalable. It takes a long time to cultivate the sort of raw inputs needed to take a small upstart all the way to national and even international-level production. Many of the inputs into most of the food supply chains are also used by other companies in the space, as well as other industries. Most of the large & established private and public food companies have been around enough to know when they need to work on their own versions of alternative/sustainable/better-for-you products.

I would expect, as Scandium points out, that it's far more likely that a large legacy company would be interested in buying the IP that a small upstart has, folding them in, and leveraging their existing (and often massive) supply chains to use that brand to their advantage. And when those companies can't or won't buy up the little guys, there's a very good chance they'll work to create their own products if they see an opportunity to be profitable in that space. Many large food companies have been able to create subsidiaries distanced enough from the parent company that you would never even see 'Coca Cola' or 'Kraft Heinz' or 'Mondelez' or 'Nestle' anywhere on the label. There are already plenty of organic, vegan, sustainable, non-GMO, etc. brands in the BFY sections of pretty much every major and specialty grocer which are wholly owned by one of the big guys, and there's no way for you to tell on the packaging that it's the case unless you're already aware of the sub-brands and subsidiaries that each company owns.

Moreover, most of the major companies also operate or fund VC firms, propping up some to all of the R&D at a lot of these small upstart technologies. Like the previous example, the names of the VC firms are not typically easily traced back to the parent company, and most of the R&D, etc. is kept private.

If the company in question is somehow able to avoid being bought out, as well as to be able to establish their own supply chains that are rugged and flexible enough to account for the unpredictability that is inherent to global food production, they also have to deal with a regulatory environment that's incredibly challenging to work within, given that it's stacked pretty heavily in favor of the larger, established brands.

Not to mention, many food trends tend to veer more toward flash-in-the-pan, for combinations of some of the reasons I've already mentioned. Usually it's a combination of lower than expected consumer demand (often driven by QC issues and/or $ per serving) as well as an inability to deal with the complexity and unpredictability of food supply chains.

For these, and other reasons, I don't really see many great options for investing in these technologies without having spent a long time in the food industry - and even then, with a keen eye, sometimes there's just no good way to know what consumers will and will not like.

EverythingisNew

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #18 on: December 21, 2022, 07:10:35 AM »
I think the majority of people will always eat meat because we are omnivores. Our bodies from our vitamin demands (iron) to our teeth are designed to be omnivores. Also as poorer countries gain wealth their people will eat more meat. My grandparents frequently talk about how they only ate meat on special occasions and how they are so blessed now to have it so often. An increase in meat consumption is likely as countries develop.

But there might be an increase in vegetarian eating from developed countries were people have been out of poverty for many years. I have often thought that cows (the biggest animal methane gas producers) should be the first to be reduced. I personally don’t eat beef, but I also don’t eat fake beef because it reminds me of beef!

You should try investing a small amount into stocks that you are passionate about! I own the farming stock Bunge (BG) because I thought it was a hedge against inflation to own farming and I like the name :) I never put more than $5k in an individual stock and usually I start with a $200 purchase when I think of the idea and then I watch it. When I hit my limit (I did on Google and TMobile) and I want to buy more, I think surely you are more creative than this! There are other opportunities! Trying to stay creative keeps me below my limit. Also I only play in my IRA accounts because it’s a major pain and expensive to document the taxes on frequent trading in a brokerage account! I learned this the hard way! I also learned the hard way to not put too much in an individual stock or idea when something I was sure was a good deal and I truly believed in went down for many years with huge losses. Never again! But it does scratch an itch to invest in your ideas on a small scale. Go for it!
« Last Edit: December 21, 2022, 07:30:38 AM by KateFIRE »

Metalcat

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #19 on: December 21, 2022, 07:21:08 AM »
I think the majority of people will always eat meat because we are omnivores. Our bodies from our vitamin demands (iron) to our teeth are designed to be omnivores. But there might be an increase in vegetarian eating… I have often thought that cows (the biggest animal methane gas producers) should be the first to be reduced. I personally don’t eat beef, and this makes my whole family rarely
eat it.

You should try investing a small amount into stocks that you are passionate about! I own the farming stock Bunge (BG) because I thought it was a hedge against inflation to own farming and I like the name :) I never put more than $5k in an individual stock and usually I start with a $200 purchase when I think of the idea and then I watch it. When I hit my limit (I did on Google and TMobile) and I want to buy more, I think surely you are more creative than this! There are other opportunities! Trying to stay creative keeps me below my limit. Also I only play in my IRA accounts because it’s a major pain and expensive to document the taxes on frequent trading in a brokerage account! I learned this the hard way! I also learned the hard way to not put too much in an individual stock or idea when something I was sure was a good deal and I truly believed in went down for many years with huge losses. Never again! But it does scratch an itch to invest in your ideas on a small scale. Go for it!

I'm not really buying the omnivore argument because it's optimal. Because it's tasty? Sure, but not because it's optimal.

The vast majority of people, if given access to an incredibly unhealthy, suboptimal diet will eat that awful, suboptimal diet.

Our teeth may be good for shearing meat, but they're also great for masticating roughage, and a shocking number of people are malnourished due to their outright refusal to eat roughage.

I don't buy any argument that says that people will eat any sort of way because it's optimal, because the evidence is VERY clear that we will not optimize for much except energy density, which is primarily why meat wins.

There are plenty of obese vegans and vegetarians out there for this very reason.

maizefolk

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #20 on: December 21, 2022, 07:42:58 AM »
I own the farming stock Bunge (BG) because I thought it was a hedge against inflation to own farming and I like the name :)

Bunge is definitely a fun name, but I would argue it isn't actually a farming stock. Their business model is the same one as Cargill, ADM, and Continental: they're primarily middle men who buy grain from farmers, potentially process it, and then sell it on to food processors. So they're likely to actually see a fair bit of margin compression as the prices farmers charge for grains and oilseeds rise.

Hotstreak

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #21 on: December 23, 2022, 08:00:52 PM »
This thread is full of people commenting on an industry they're not familiar with about possible changes which they clearly don't understand.


If you think you're going to out-guess actual industry experts, you are incredibly naive.  Take the time you are using to think about this, and work instead.  Go back to index fund investing and leave the insider bids to the insiders.

maizefolk

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #22 on: December 23, 2022, 08:19:21 PM »
This thread is full of people commenting on an industry they're not familiar with about possible changes which they clearly don't understand.


If you think you're going to out-guess actual industry experts, you are incredibly naive.  Take the time you are using to think about this, and work instead.  Go back to index fund investing and leave the insider bids to the insiders.

I'm pretty sure chemistk is an insider (or an otherwise relevant industry expert). Have really enjoyed reading their contributions on this topic.

Metalcat

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #23 on: December 24, 2022, 07:48:33 AM »
This thread is full of people commenting on an industry they're not familiar with about possible changes which they clearly don't understand.


If you think you're going to out-guess actual industry experts, you are incredibly naive.  Take the time you are using to think about this, and work instead.  Go back to index fund investing and leave the insider bids to the insiders.

???

Most people in this thread have actually been rather insightful and have mostly questioned the ability to outperform index funds with this kind of speculation.

Where are you seeing a majority of posters who don't know what they are talking about???

Literally the very first responses are people challenging the assumption that there are specific lucrative beta to be made here...

I'm so confused.

YttriumNitrate

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #24 on: December 24, 2022, 08:39:15 AM »
I'm pretty sure chemistk is an insider (or an otherwise relevant industry expert). Have really enjoyed reading their contributions on this topic.
I would also add that the longer the time period the less accurate industry experts tend to be in their predictions. On a year or two time frame (or less), an industry expert is going to have a clear advantage over the average person in their predictions. The time frame mentioned in the original question was "the next decade or two" so any expert advantage would shrink considerably.

chemistk

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Re: Betting on a transition to more sustainable foods (i.e. food-tech)
« Reply #25 on: December 27, 2022, 06:00:36 AM »
I'm pretty sure chemistk is an insider (or an otherwise relevant industry expert). Have really enjoyed reading their contributions on this topic.
I would also add that the longer the time period the less accurate industry experts tend to be in their predictions. On a year or two time frame (or less), an industry expert is going to have a clear advantage over the average person in their predictions. The time frame mentioned in the original question was "the next decade or two" so any expert advantage would shrink considerably.

I agree with this assertion, but that also really reinforces the last point that I made - you have no way to know what Western* consumers will and won't like. Go back over the past 50 or so years and look at what most people would stock in their pantry, the types of meals they would cook, the diet books the read, the cookbooks they reference, or the restaurants they would consider to be popular. Barring cultural staples (and I'd definitely consider hamburgers, hot dogs, mashed potatoes, etc. to be cultural staples in North America), the ride from the food of the 70's and earlier to the food of today has been a pretty wild one. It would have been possible then just as it is now, to predict with reasonable confidence whether a food trend will be popular YoY, but beyond 5 years, that predictability shrinks considerably and in some cases you would have never guessed that something would become huge (Sriracha, for example).

Even the best consumer demand planners get something completely wrong - I've heard of products that companies planned to roll out, often spending years in R&D and investing in major production capabilities, only to squeak out a few products and then write off all the assets after it's clear that consumers just don't care about it like they thought they would. It's not exclusive to food, but I think more so than some other industries, not being able to accurately predict trends is anathema to established food brands - most of which are profitable by thin margins. Because, to your point, even the best insiders don't know what's on the horizon, you'll frequently find that the upstarts and the one-offs are more likely to be bought out very early or cultivated through VC.

*Non western food culture, and really food culture outside of North America, is exceptionally slow to change. Although it may be obvious, it's important to point out that countries and peoples which have been around for hundreds or thousands of years are extremely slow to see new food trends and ideas incorporated into their cuisine. Much of the time, these trends are barely impactful on the typical diet of someone living a society with food traditions that can be measured in centuries. There are exceptions, of course. To that end, perhaps something to keep an eye out for would be technologies which seek to replace a cultural staple with an accepted equivalent.

 

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