Investing in dairy alternatives

Seven months ago, I found out that I’m allergic to dairy. It was a tragic day. I immediately thought my life was over (drama queen, I know), but what is life without a latte in the morning? And what about cheese?! I can’t do much about the cheese situation, but I was determined to find a way to enjoy my coffee with the same level of froth I’ve become accustomed to.

I’ve never been a fan of almond milk and, having a slight intolerance to almonds, it was never going to make the cut. So, I set off on a mission: rice milk, pea milk, soya… you name it, I’ve tried it. When my husband suggested oat milk, I thought he was crazy – I’d already made up my mind oats wouldn’t work. But as all else had failed, I thought why not? As much as it pains me to admit it, he was right, it’s delicious.

And, as it turns out, it’s not that difficult to cut out dairy. There’s actually quite a few alternatives and brands to choose from. It got me thinking: could this be a new investment opportunity too?

“Gluten free, dairy free, fat free…I love this champagne diet!” — Anonymous

This week, Oatly (my brand of choice), IPO’ed at a value of $13 billion (£9.2 billion). It is set to open its first UK factory in 2023, with CEO Toni Petersson telling the BBC, the UK is “the biggest single market in Europe for us and growing really strong – that’s a place we’re really prioritising in our plans.” The IPO follows other plant-based food brands that have gone public in recent years, such as vegan burger maker Beyond Meat.

Although no Elite Rated managers I spoke to participated in the IPO, Swedish manufacturer AAK, which helps to manufacture Oatly drinks and Beyond Meat burgers, is a holding the Montanaro team uses across their funds. In an interview last year, Mark Rodgers, head of Investments at Montanaro and co-manager on the Elite Radar Montanaro Better World fund, told us more about the fund’s focus on nutrition and well-being.

More a creamer in your coffee kind of person? Nestle, a holding in BlackRock Continental European Income, GAM Star Continental European Equity and Waverton European Capital Growth,* has a range of non-dairy creamers and helped to develop the Starbucks Non-Dairy Creamers from a blend of almond and oat milks. Nestle has also redeveloped favourites like Carnation condensed milk into a plant-based alternatives from a blend of oat and rice flour.

Major supermarkets like Tesco’s and Sainsbury’s – and even Marks & Spencer’s – all have some version of ‘Free From’ ranges in stores. I know for a fact that both Tesco’s and Sainsbury’s carry dairy free cheese! While I don’t think it’s good enough for a casual snack, on top of a burger or in a grilled cheese sandwich it’s absolutely fine. Craving satisfied. Tesco is a holding in BlackRock UK Absolute Alpha*, while Sainsbury’s and Marks & Spencer’s feature in the top ten of Schroder Recovery*.

Ben & Jerry’s, now a Unilever brand, offers dairy-free versions of its ice cream. The range is actually fully vegan meaning it doesn’t include ingredients like eggs or honey either. Magnum, another Unilever ice cream, also has a range of vegan products which are a staple in our freezer. Unilever is a holding in Fidelity Global Dividend*, Guinness Emerging Markets Equity Income*, Ninety One UK Alpha* and Threadneedle UK Extended Alpha*.

Want to discover more vegan investments? Watch our video celebrating World Vegan Day.

*Source: fund factsheet, April 2021

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