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Investors in plant-based product maker Very Good Food Co. Inc. (VERY-X) are hoping the big market losses are behind them as the company plots a major expansion into more grocery stores across Canada and the United States.

The stock closed Thursday at $1.18, unchanged, on the TSX Venture Exchange after the Vancouver-based company said its chief financial officer, Kamini Hitkari, was leaving after 14 months on the job.

Earlier this week, the company reported record sales from its Black Friday and Cyber Monday e-commerce promotions, saying demand for plant-based Thanksgiving alternatives soared amid a widespread turkey shortage. The week-long online promotional campaign, which included its “Stuffed Beast” turkey alternative (made with ingredients like chickpeas, bread, celery and carrots), led to 5,795 orders across North America, an increase of 178 per cent compared with orders received for the same marketing initiative in 2020, the company said.

While the real-meat shortage and promotions helped, chief executive officer Mitchell Scott said more people are turning to plant-based alternatives for dietary and environmental reasons and he sees “a lot more growth ahead of us.”

The stock’s current price is a fraction of the record $9.50 it reached a year ago while trading on the Canadian Securities Exchange. The entire meat-alternative sector saw a run-up at the time amid enthusiasm over the growth in plant-based eating among consumers. Investors have also been paying closer attention to sustainable investments amid the pandemic.

Shares of the company, which makes plant-based meat and cheese products under brands The Very Good Butchers and The Very Good Cheese Co., went public on the CSE in June, 2020, at 25 cents a share. It then moved to the TSX Venture this past March and launched on the Nasdaq Stock Market in mid-October.

In an interview this week, Mr. Scott said the stock surged a year ago amid a lot of investment “hype” around meat alternative stocks in general, which has since subsided. For instance, shares of Beyond Meat Inc., a more established meat-alternative bellwether, are down nearly 50 per cent over the past year.

“We’re still trading at 10 to 12 times estimated sales,” Mr. Scott said. “So it’s not cheap by any means. But I think it has kind of come back down to earth a little bit.”

By comparison, Beyond Meat shares are trading at about 11 times sales, according to S&P Capital IQ estimates.

Mr. Scott said the company has also been raising capital to fund growth, which has likely weighed on its shares.

When the stock was soaring around $8 to $9, he said it was hard to raise money and gain analyst coverage “because the fundamentals weren’t there.” The company currently has no analyst coverage, but Mr. Scott said that is expected to change in the New Year.

The company’s goal now is to keep growing revenue “and we feel that if we deliver on those fundamentals then the share price will follow,” he said.

Very Good Food’s third-quarter revenue came in at $2.5-million, up from $1.4-million a year earlier. Its net loss rose to $13.7-million or 13 cents a share, compared with a loss of $4.5-million or 6 cents a year earlier, because of increased production and the building of infrastructure to boost sales.

The plant-based foods market could make up to 7.7 per cent of the global protein market by 2030, with a value of more than US$162-billion, up from US$29.4-billion in 2020, according to a recent Bloomberg Intelligence report.

Mr. Scott, who founded the company in 2016 with chef and chief research and development officer James Davison, said the company see an opportunity to become a leader in the premium plant-based meat category.

About 80 per cent of the company’s sales are online today and 20 per cent in physical stores, a mix he says the company is working to flip – off a much larger base – as it expands its product lineup and presence in grocery stores across North America. The company just started selling products in grocery stores in the U.S. a couple of months ago, Mr. Scott says.

Moez Mahrez, senior investment analyst at 5i Research Inc., says Very Good Food is “expanding quite nicely” and has the production capacity to fulfill increased demand.

Still, his concern is that it’s a small company that operates in an increasingly competitive environment and is burning through cash.

“Once they reach that point, where they have a good market position, I’d be more interested in them,” he says. “Just because their shares came down to where they were before doesn’t mean they’re a good investment yet. There’s potential there. It’s really just a ‘show me’ type of story now.”

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