The UK government just enacted a regulation that prevents late-night advertising of junk food. The National Health Service (NHS) has begun to crack down on the promotion of unhealthy foods in an effort to reduce costs on national healthcare. Framing public health as a national struggle, the UK is setting a legislative precedent that may lead standing first-world governments in the same direction. The decision echoes a similar 2011 campaign to ban sugary drinks in New York City, and it bears further similarities to the Japanese government’s policies on promoting physical activity and overall health. Specialty and organic food stocks to watch include Else Nutrition Holdings Inc (TSXV:BABY) (OTCQX:BABYF), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Sprouts Farmers Market, Inc. (NASDAQ:SFM), Beyond Meat, Inc. (NASDAQ:BYND), and SunOpta Inc. (NASDAQ:STKL) (TSX:SOY).
Policy and Consumer Trends Drive Rapidly Growing Specialty Food Market
As consumer markets expand, specialty food companies are cropping up to fulfill the demand for alternative diets. These emerging markets go hand-in-hand with the growth of corporate messaging on environmental responsibility, as many consumers begin to associate meat consumption with environmental harm. Electric vehicles, renewable energy, and alternative foods paint a pattern of consumer responsibility that drives revenue in these companies. More and more segments of standard markets are being directed toward green marketing, including plant-based alternatives and organic foods.
One such company leading these efforts is Else Nutrition Holdings Inc (TSXV:BABY) (OTCQX:BABYF), a specialty foods company that focuses on non-soy plant-based alternatives to baby and toddler formula. Given the growing number of vegan and non-dairy consumers, Else Nutrition is looking to present an alternative to traditional dairy products that rely on environmentally harmful dairy farms. The specialty foods company is making serious inroads into the retail market with revenues to show for it.
Else Nutrition has continued expanding operations into physical retail locations with Huckleberry’s Natural Market in Washington, Idaho, Montana, and Oregon. The locations include placement within a standalone retail location as well as 15 department locations within Rosauers Grocery. Since then, Else Nutrition has captured more and more of the retail market, with Else Plant-Based Complete Nutrition for Toddlers now listed on 1000+ retail outlets and currently available for purchase in more than 700 retail outlets including Sprouts Farmers Market, Big-Y, Raley’s, Natural Grocers, AFS, Haggen, PCC, Mother’s Markets and many dozens of independent stores.
On top of that, Else Nutrition has also gained a significant online retail presence, with its plant-based protein shakes for kids reaching Amazon’s top positions as #1 and #2 best sellers in the platform’s Hot New Releases in the Baby & Toddler Formula Category within days of launch.
Soaring Revenues Amid Race to Secure Emerging Consumer Base
Leading organic and natural product company The Hain Celestial Group, Inc. (NASDAQ:HAIN) bolstered its presence in the organic milk-based and soy-based baby formula category when it acquired Earth’s Best in 2000 and continued to acquire other non-dairy beverage brands throughout the last two decades. Interestingly, however, the company has begun divesting its non-dairy beverage brands in recent months. The Hain Celestial Group, Inc. reportedly considered selling its Earth’s Best brand in January. Then in April 2021, the company completed the strategic sale of its Dream and Westsoy brands to SunOpta (NASDAQ:STKL) (TSX:SOY) for $33 million.
The acquisition of these brands makes sense for SunOpta, as the company has been producing approximately 50% of the Dream product portfolio for over a decade and currently produces the entire Westsoy portfolio. SunOpta, which is a leading healthy food and beverage company, has reported consecutive revenue growth, including record quarterly plant-based revenue of $119.5 million in Q1 2021, which represents a 12.4% increase QoQ and 47% jump year-over-year.
Specialty food company Sprouts Farmers Market, Inc. (NASDAQ:SFM) made headlines in June when it opened a new Orlando produce distribution center. Previous investor interest was generated when it was announced to present at the Deutsche Bank dbAccess 2021 Global Consumer Conference in late May. Sprouts Farmers Market offers a full range of alternative food products, including produce, meat, baked goods, dairy, frozen foods, beer and wine, vitamins, and natural body care products. The company has reported 10% sales growth in the specialty foods sector as it continues to expand operations.
Standing as a flagship company in the alternative meat market, Beyond Meat, Inc. (NASDAQ:BYND) has secured lucrative deals and significant press attention through its cooperation with popular US fast-food chains in plant-based meats. The most recent news to come from the meatless mogul is a partnership with DoorDash to offer limited edition grilling kits just in time for the 4th of July weekend.
Of these companies, Else Nutrition Holdings Inc (TSXV:BABY) (OTCQX:BABYF) has shown a willingness and ability to expand and create new markets for plant-based food alternatives with its dairy-free plant-based food and nutrition products for infants, toddlers, children, and adults.
For more information on Else Nutrition Holdings, please click here.
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