Food in (Investing) Focus in 2025

With both sides of the political spectrum attacking the FDA recently at the hearing, pre-determinedly entitled, "What is the FDA Doing to Reduce the Diabetes and Obesity Epidemics in America and Take on the Green of the Food and Beverage Industry?" and the upcoming administration talking about a food upheaval, it seems the world at large is catching up with the idea that the global food supply system isn't working for us anymore.

Innovation is needed and it is needed fast.

As sector experts in investing in food systems transformation, at VegTech? Invest we have been talking about the growth opportunity along the food innovation supply chain for three years (we turn three this month!).

This is a sector, represented by our ETF, that offers high growth companies still at low growth prices. One of the reasons for this, we believe, is that the market has been so heavily focused on AI that it has not yet priced in the opportunity for expansion in the food industry.

Further, with Goldman Sachs predicting that the S&P 500, heavily weighted by the AI-centric Magnificent 7, will be producing only 3% returns in the future, where are the big returns going to come from?

Enter investing in food systems transformation. Now is a great time for investing in healthy, sustainable, food innovation.

Let's take a look at some of the drivers behind a focus on food and the global need for large-scale innovation.

1. The food system is filled with processed food like hot dogs, deli meats, breakfast sausages and bacon. These foods are Class 1 carcinogens according to the World Health Organization.
2. Foods high in saturated fast and low in or devoid of fiber such as burgers, steaks, grounds, pork, etc., as well as chips, snacks, cookies and more contribute to heart disease, diabetes, colorectal cancer, and obesity.
3. These life-crippling, lifestyle diseases come with equally crippling healthcare costs. Indeed $1.1T was spent on chronic diseases in 2016, according to the Milken Institute, representing a $3.71 in loss of GDP, per the chart below.

4. The food system lacks transparency. From Ag Gag laws prohibiting the consumer from knowing what is in their meat and fake organic and humane labeling to misleading misinformation campaigns, the average consumer doesn't have access to clear information about their food. Confused by the barrage and told to focus on protein while ignoring fiber, the average person is at a loss for what is best for their body.

5. The food system is extremely destructive to planetary health, as well as human health. It is responsible for approximately one-third of the climbing temperatures driving Climate Change and is a leading cause of both bio-diversity loss and deforestation, according to the United Nations Environment Programme.

6. The food system, based on animal proteins, is so natural-resource intensive that it is bumping up against its limits for having enough land to produce enough food for a growing global population. Below we see that 80% of the agricultural land used for grazing and growing crops for industrialized livestock results in a conversion to only 17% of our calories.

Otherwise stated, in a bizarre twist, the inefficiency of the food system is the reason that increasingly we don't have enough food on a global scale.

With both sides of the political aisle now focused on this, how might this scrutiny over human and planetary health play out in the marketplace?

Innovative companies in the food and materials sector, what we call VegTech? companies, are creating scalable, global solutions to render the food supply system more nutritious, prolific, resilient and less resource intensive and damaging. These companies are garnering government support and encouragement, and the Department of Defense is now spending approximately 20% of its R&D dollars on food innovation.

VegTech? companies like Novonesis are creating healthy, functional protein, enzymes, and microbes bringing the food system into the 21st century for taste and health.

Ingredion is producing diversified proteins such as chickpea, faba bean and pea protein isolates that allow for less damaging and regenerative farming while diversifying the protein stream for resilience and diversity.

Givaudan is working on making these diversified proteins taste great, while also investing in novel innovations around the future of food.

As you look for potentially outsized returns and the next sector that has high-potential growth and impact for your portfolio, we invite you to invest in our food and materials systems ETF.

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

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