AI Made My (Plant-based) Burger and the Price Efficiencies of Plant-based Innovation

Chipotle Founder Steve Ells is re-imagining fast food with his newest concept: Kernel's. At Kernel's, robots make your fast-food order once they receive it from the app. The first location in Manhattan is take-out only and open only 4 hours a day. Further expansion is coming with $36 million received in investment. According to Bon Appetit, "The takeout-only spot is betting big on the idea that diners aren't that interested in human connection during their lunch break—and that they want to eat less meat. The menu hovers between traditional fast food (burgers, fried potatoes) and the vegetable-focused bowl lunches of competitors like Sweetgreen or Dig (salads, composed vegetable dishes)."

Ant it is all plant-based.

As we move into the middle of 2024, we are witnessing a remarkable transformation in Plant-based Innovation and the entire global food system. Shifts toward Plant-based Innovation, including plant-based foods, fermented proteins and cultivated meat and the technologies that support protein diversification along the supply chain, represent a unique investment opportunity given the attractive financials and price targets noted by analysts and VegTech? Invest Investment Officer, Dr. Sasha Goodman.

Indeed, the sector has a large addressable market to grow into. The legacy global meat protein market is an estimated $1.4 trillion in revenue annually, the dairy market $820 billion, eggs are $136 billion, leather $240 billion, and the silk market is valued at $18 billion.

Plant-based innovations are small portions of these markets, with plenty of room to expand and plenty of opportunity for investors. Seemingly, successful food entrepreneur Steve Ells agrees. Further, with the ability of Artificial Intelligence (AI) to lower costs of production, we expect even more price competitiveness due to lower input costs and increased efficiency. This means faster adoption for faster growth and faster returns.

The public companies that VegTech? Invest invests in through its ETF are strategically positioned to leverage these trends, especially as the sector progresses towards a sustainable economic model.

Beyond Price Parity: Supply Chain Efficiencies from Technology

Price competitiveness is a key economic driver that few companies can afford to ignore. As businesses are using AI technology at an increasing rate to find greater efficiency into their supply chains, it presents a particular advantage in the Plant-based Innovation sector. The reason is that certain plant-based ingredients offer not only sustainable advantages, health benefits, and lower climate emissions, but they already offer greater efficiency and lower prices due to their shorter supply chain and input needs than meat. Growing Plant-based protein is growing protein; whereas animals need crops that then convert to protein. Meat is by definition inefficient of time, natural resources, calories, protein and energy. AI serves to only exacerbate the natural efficiency of Plant-based Innovation.

As Holly Freishtat, Senior Director of Milken Institute's Feeding Change, stated on the Upside & Impact: Investing for Change podcast on the New York Stock Exchange platform, ETFCentral.com, "We're seeing that AI is changing a tremendous amount in our supply chain right now, creating some efficiencies that are really going to help."

KPMG reports that 50% of supply chain organizations (not just Plant-based Innovation) are investing in AI applications to support strategic planning, boosting efficiency and gross margins by an estimated 1 to 3 percent. When analyzing the sustainability and price of inputs, commodities like legumes and wheat typically have lower input costs per gram of protein in addition to the sustainability advantage over meats. Buyers will also find lower priced plant-based materials, such as Tencel, which is typically less expensive than mulberry silk. As technology allows companies to make use of alternative inputs to optimize their supply chain and reformulation, we believe Plant-based Innovation inputs will increasingly be the choice for both sustainability and price.

AI is already being used by the VegTech? Invest ETF companies to further optimize efficiencies of the already efficient products. For example, Ingredion uses its Canvass AI platform to eliminate waste, improve water usage, optimize energy consumption and reduce costs. Novozymes uses AI-powered predictive models in several aspects of its business, including research and development (R&D) and product innovation. Givaudan uses AI tools such as its Customer Foresight platforms to optimize food and flavor formulation aligned with market preferences, building on over two decades of data and research. International Flavors & Fragrances is using its Panoptic AI to anticipate consumer trends and prepare for them.

The Carrot and the Stick for Better Business Outcomes

As we progress through 2024 and beyond, the Plant-based Innovation sector is reaching an inflection point. Increasing efficiency through scaled advantages, equipment investments, and AI-driven supply chain improvements present substantial opportunities for growth in business-to-business operations and with consumers. We consider this, along with its inherent efficient qualities, one of the 'carrots' for the sector that allows for doing better business with better margins.

Then there are the sticks. Meat's impact on Climate Change, deforestation, biodiversity loss, pandemic risk, AntiMicrobial Resistance (AMR) and rising healthcare costs are just some of the sticks representing material negative impact to the legacy industry's bottom line. This serves to push for a swift shift in the food system away from only one kind of protein while encouraging protein diversification.

We think these two tailwinds together, both carrots and sticks pointing towards Plant-based Innovation, will be big. Synthesis Capital found the same after they surveyed analyst expectations for plant-based meat presented by Credit Suisse, Barclays, EY-Parthenon, Jeffries, and Boston Consulting Group. They found that growth of Plant-based Innovation could rise from around 1.4% of the market now to over 10% by 2030. VegTech? Invest seeks to capture this growth by investing, through its ETF, in the best-in-class public market companies that it believes are well-positioned to lead the transition.

In Conclusion, we believe the Plant-based Innovation sector is on the cusp of efficiency and pricing breakthroughs, marking an inflection point in its growth trajectory. We invite you to continue your investment journey in sustainable options, to explore the growth potential of this dynamic sector, and to reach out to us to discuss investment exposure in Plant-based Innovation.

For more information, visit https://VegTechInvest.com

Important: VegTech LLC is an SEC registered investment adviser subject to the Investment Advisers Act of 1940. VegTech provides this material for informational purposes only. The information is not intended to recommend any company or investment described herein, and it is not an offer or sale of any security, investment product, or investment advice. Offers of securities or investment advisory services may be made only pursuant to appropriate offering or other disclosure documents, and only after prospective investors have had the opportunity to discuss all matters concerning the prospective investment or engagement with their adviser and the issues of the securities. For more information, please contact us. It should be noted that past performance is not indicative of future results. Investing in securities involves risk, including the possibility of losing the principal.

This material may contain certain forward-looking statements, projections, and statements of opinion, including statements of financial market trends. Such information can typically be identified by the use of terms such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue," "believe," or comparable terminology. All projections, opinions, and forward-looking statements are based on information available to VegTech as of the date of this presentation and VegTech's current views and opinions, all of which are subject to change without notice. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in forward-looking statements. Additionally, information and views presented herein may be drawn from third-party or public sources, which are believed to be reliable but not guaranteed to be accurate or complete. Before making any investment decision, seek expert, professional advice and obtain information regarding the legal, fiscal, regulatory, and foreign currency requirements for any investment according to the laws of your home country or place of residence.

VegTech's strategies are actively managed and not intended to replicate the performance of any cited index. The performance and volatility of VegTech's investment strategies may differ materially from the performance and volatility of a cited index, and their holdings will differ significantly from the securities that comprise the index. You cannot invest directly in an index, which does not account for trading commissions and costs. VegTech LLC is located at 1842 Purdue Ave #103, Los Angeles CA 90025.