Investing Never Tasted So Good ~ Denver Post

The announcement this week (7/7/16) of a buyout merger of Colorado’s own WhiteWave Foods by global dairy powerhouse Danone punctuates the relevance of our post last week titled, “Investing Never Tasted so Good.” The natural and organic food and agriculture industries are, along with renewable energies, among the fastest growing in the world, and with good reason: consumers are increasingly demanding solutions to problems like overuse of pesticides, herbicides and GMOs.

To read our coverage of the natural and organic food and beverage industries, see our blog post immediately below (published 6/28/16), and for our quick take on the Danone-WhiteWave merger, see the Denver Post article by Aldo Svaldi here:  http://www.denverpost.com/2016/07/07/whitewave-sale-high-water-mark-for-colorados-natural-food-industry/

Investing Never Tasted So Good

It wasn’t so long ago that the organic and natural foods movement was considered “fringe” at best – the domain of hippies and granola eaters. No more.

The Organic Trade Association reported in May that the U.S. organic industry posted new records in 2015, with total organic product sales hitting a new benchmark of $43.3 billion, up 11 percent from the previous year’s record level and far outstripping the overall food market’s growth rate of 3 percent.

The phenomenal growth in organic food sales is reflective of a larger transition to what we term the Next Economy – and it provides Green Alpha with some fantastic investing opportunities for our portfolios.

Publicly traded companies in the natural and organic foods category make up about 5.6% of the Green Alpha Next Economy Index (GANEX) at the time we’re publishing this blog post. The GANEX, established December 30, 2008, is the oldest broad-based, fossil fuel free market index in the U.S., providing investors with a critical benchmark of investment performance through different market cycles. The market cap-weighted index has approximately 90 securities, including some great investment opportunities in the organics food chain.

Natural Food Chain Slide updated with DAR

The growth in sustainable food and agriculture shows no signs of letting up. Green Alpha concluded in a recent White Paper, Natural and Organic Food: An Investment for the Next Economy:

Whether the future of agriculture is organic as we know it today or some evolved form of agriculture that is even more efficient with reduced impacts on people and planet (large-scale indoor agriculture is one possibility), there is a strong precedent for organic practices in some form being the dominant future method of producing edible calories. Investing in the leaders of organic innovation in food production, handling, distribution, and sales is a clear Next Economy solution to the risks inherent in conventional agriculture.

We believe, as a matter of principle, across sectors, that investing in the one-two punch of innovation that creates greater economic efficiencies while simultaneously reducing unique and systemic risks is the clearest path toward earning competitive long-term returns. The application of this thesis to topics as elemental as food and water is key to modeling a holistic Next Economy wherein we finally fit the human economy less destructively into the rest of earth’s systems, and thereby give ourselves greater chances of enduring and thriving indefinitely. 

To receive a copy of Natural and Organic Food: An Investment for the Next Economy, please email Betsy and she’d be happy to send it to you while we’re in the middle of updating how we share White Papers on our website: betsy@greenalphaadvisors.com 

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