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Junk Foods vs Healthy & Tasty

28 May 2015 in Trading Ideas

Is the formula of cheap, quick, and tasty winning the hearts and stomachs of today’s eaters? Or will healthy and tasty food items ultimately win out?

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YES, WE WANT FRIES WITH THAT

Whether it’s sugar-filled soft drinks or fat-laden burgers, people can’t seem to get enough of what’s bad for them. It’s convenient, it’s cheap, it tastes great, and in times when people are working more and making less, it’s no surprise that sales of junk foods have continued to rise.

Abroad, millions of newly minted middle-class consumers are discovering the joys of a Big Mac or pepperoni pizza. Emerging markets are the next frontier for these companies, and one American company, Yum Brands, already derives 40% of its profit from China alone.1 Put it all together and you may have an opportunity for investors looking to get a slice of the pie.

 

MOVE OVER, TOFU – HEALTHY FOOD NOW HAS FLAVOR

America may have invented the drive-thru, but these days, getting healthy is getting popular. But “good for you” isn’t good enough anymore. Encouraged by a new wave of cookbooks and celebrity chefs, consumers want it all: healthy food that also tastes great – from ten varieties of organic guacamole to farm-raised turkey bacon. And that’s a boon for high-end grocery stores and “fresh” restaurants, which have stocked their shelves and kitchens with an eye toward pleasing a more discerning palate.

 

STOCKS IN THE JUNK FOODS MOTIF

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(1) http://www.forbes.com/sites/afontevecchia/2012/06/08/yum-falls-hard-as-global-growth-stocks-suffer-chinese-slowdown/, August 6, 2012, (accessed Sept. 30, 2013).

  1. Ian
    5 Jun at 12:18 am

    Thoughts as to which category is more adept at identifying and responding to trends? My thought is that the operating model of ‘Healthy Tasty’ allows for a better response to changing consumer tastes, but they are also more susceptible to food and consumer trends and therefore have greater volatility and risk. Unfortunately, even as fads come and go, consumers continue to love and crave grease and Big Macs and sugary sodas.

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