Meat tax on the anvil. Buy these 3 vegan friendly stocks

Highlights

• A latest research paper has recommended introducing a tax on high carbon foods like red meat and dairy products.
• Taxes on red meat might encourage sustainable eating habits and could lead to high demand for plant-based food.
• Greggs Plc, Kerry Group Plc and Premier Foods Plc are some prominent food and beverage companies offering plant-based products to replace meat.

The latest research paper of a social purpose company, the Behavioural Insights Team, also known as the Nudge Unit, has recommended introducing a tax on high carbon foods like red meat and dairy products. Red meat is one of the highest carbon footprints foods, emitting carbon at every production stage, including at the farm and processing factories. According to an estimate and independent study, one kilogram of beef releases carbon emissions equivalent to a car driving for 63 miles.

The research suggested a levy on meat at the producer level or to directly tax the consumers to promote sustainable eating, which may lead to a higher price of meat. The UK government’s tax on meat could be similar to the sugar tax, which was introduced in 2018. Under the sugar tax, drinks with over 8g of sugar/ 100ml were taxed at 24p per litre, which motivated the manufacturers to cut back on sugar content in their products.

Meanwhile, a government spokesman has clarified that it was just a research paper and not an official policy.

Taxes on meat might encourage sustainable eating habits and could lead to high demand for plant-based food. Some companies are already operating in the related segment like plant-based meat and vegan foods.

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Let us look at 3 FTSE listed companies that also operate in the vegan food category:

Greggs Plc (LON: GRG)

FTSE250 listed company offers a range of bakery products and drinks through its chain of retail shops and franchisee stores. It has over 2000 shops across the country.

The company’s vegan-friendly foods like sausage and vegan steak bake have received a great response from the customers and acted as a catalyst to bring more people into its shops, leading to higher sales. In its third quarter, the company reported a 3.5% rise in sales compared to pre-pandemic levels of 2019, which indicates the company has fully recovered from pandemic shock despite supply chain disruption and worker shortage.

It opened 68 new shops and expects to open 100 new shops by the end of 2021. In addition, the company is looking to expand its vegan category by introducing new products ahead of the Christmas season.

Greggs Plc’s current market cap stands at £3,079 million as of 21 October 2021. In the last one year, the stock has given 122.10% returns to its shareholders.

Kerry Group Plc (LON: KYGA)

The company operates in the food and beverage sector, which develops and delivers taste and nutrition solutions to other businesses from the food and beverage industries. It also has its own consumer food business.

The company could be a key beneficiary of vegan food trends as it works along with its clients to create food products that taste great and have high nutrition values. One of the drawbacks of plant-based meat products is that they lack the flavour and taste of real meat, nevertheless second-generation companies operating in the segment are constantly evolving their products to taste similar to meats, which might benefit the Kerry Group ingredients business, which can make the vegan burger taste identical to real meat.

Also, through its consumer food business, the company has launched meat-free alternative brand Naked Glory which offers meat-free burgers, sausages, and other products.

Kerry Group Plc’s current market cap stands at £17,146 million as of 21 October 2021. In the last one year, the stock has given 5.64% returns to its shareholders.

Premier Foods Plc (LON: PFD)

The company operates in the food industry that manufactures and distributes food products in the UK and European markets. The company operates through different segments like Grocery, Knighton, and Sweet Treats.

The company has introduced a new plant-based food brand Plantastic, which offers desserts and cake products that uses plant-based ingredients.

As per the company’s latest trading update, it has completely recovered from the pandemic, and its first-quarter sales were up by 6.3% compared to the first quarter of 2019. The company has a positive outlook and expects adjusted profit before tax in the top range of the expectations.

Premier Foods Plc’s current market cap stands at £928.20 million as of 21 October 2021. In the last one year, the stock has given 14.06% returns to its shareholders.