Dive Brief:
- While scientists have been skeptical about whether organic foods are nutritionally different from non-organic foods, a group of nutritionists posit that organic foods could be nutritionally superior, according to their review of more than 260 studies.
- Their findings 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 manufacturers could be producing more functional products just by ensuring they are organically grown or raised.
- Organic meat also contained lower levels of two saturated fats that have been linked to higher risk of cardiovascular disease, an issue red meat producers in particular have battled for years.
Dive Insight:
Scientists and food industry players will scrutinize these findings. In 2012, Stanford researchers concluded that strong evidence to suggest organic foods were more nutritious than conventional foods didn't exist at that point.
Setting aside whether actual nutritional benefits exist, organic products appeal to consumers who are concerned about the environment and sustainability or about consuming pesticides, hormones, antibiotics, and other chemicals. Manufacturers both large and small recognize these consumer demands, though smaller companies have been leaders in this segment. Major manufacturers have responded by acquiring smaller organic foods producers (General Mills and Annie's, Hormel and Applegate) or by creating organic products, such as ConAgra's recent introduction of new organic Hunt's tomato products.
Analysts still question whether organic products are worth investing. 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 immune to a large degree to stock market trends. People need to eat, so food stocks can be more reliable than other categories. However, organic food stocks don't always fit that bill due to increased elasticity of demand — consumers have to eat, but they don't have to eat organic. Even a strong performer in the organic space like WhiteWave Foods has seen its stock tumble recently.
Analysts conclude that while traditional processed foods companies will demonstrate better stock price consistency, organic foods producers will be more cyclical and could incur wider price swings, so it's all about trading preferences in terms of which types of food stocks to invest in.