Organic food: From a superior nutritional standpoint, study finds, but investors fear inelastic demand

Dive brief:

• While scientists were skeptical of the nutritional difference between organic and non-organic foods, a group of nutritionists postulated that organic foods could be nutritionally superior, according to their review of more than 260 studies.
• Their results showed that organic meat and milk contained more nutrients than their non-organic counterparts, ranging from omega-3 fatty acids to vitamins and minerals, meaning that manufacturers could produce more functional products just by making sure. whether grown or raised organically.
• Organic meat also contained lower levels of two saturated fats that have been linked to a higher risk of cardiovascular disease, an issue that red meat producers in particular have been battling for years.

Dive overview:

Scientists and food industry players will be scrutinizing these results. In 2012, researchers at Stanford concluded that strong evidence suggesting that organic foods were more nutritious than conventional foods did not exist at that time.

Aside from the real nutritional benefits, organics appeal to environmentally and sustainability conscious consumers or the consumption of pesticides, hormones, antibiotics and other chemicals. Manufacturers large and small recognize these consumer demands, although small businesses have been leaders in this segment. Major manufacturers have responded by acquiring smaller organic food producers (General Mills and Annie’s, Hormel and Applegate) or by creating organic products, such as ConAgra’s recent introduction of new organic products made from Hunt’s tomatoes.

Analysts still wonder if biologics are worth investing in. Seeking Alpha concludes that while organic products may be healthier for the body, organic producers are not always as healthy for investment portfolios as food companies in general. Food is largely immune to stock market trends. People need to eat, so food stocks can be more reliable than other categories. However, organic food stocks do not always match this bill due to the increased elasticity of demand. – consumers have to eat, but they don’t have to eat organic. Even a strong player in the organic space like WhiteWave Foods has seen its shares plummet recently.

Analysts conclude that while traditional processed food companies will demonstrate greater consistency in stock prices, organic food producers will be more cyclical and may experience larger price swings.