Consumer Sector Ideas

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Food and Beverage sector -- >>> 10 Stocks for Foodies: Public Companies Making 'Artisanal' Goods


By Jonah Loeb
Aug 22, 2012



http://www.minyanville.com/sectors/consumer/articles/food-stock-public-food-companies-consumer/8/22/2012/id/43280?camp=syndication&medium=portals&from=yahoo



In a world where everything is local and handmade, who are the real winners (and losers) when it comes to marrying quality and profitability?


MINYANVILLE ORIGINAL If menus are anything to go by, the best thing to be in the food industry right now is an artisan chef. America’s health food obsession has led to words like “artisan,” “gourmet,” and “organic” getting tossed around with such frequency that they’ve ceased to mean what they once did. In the midst of faux-artisan breakfast sandwiches from places like Starbucks (SBUX) and the garlic-butter-gourmet options from Domino’s (DPZ), a few publicly-traded companies are still churning out the good stuff…more or less. A handful of brands have managed to keep their heads up and continue producing high-quality food and drink, and the financial bump that public trading gives them has allowed little companies to compete handily with the big names. When big numbers get thrown around, though, companies cut corners, and consumers and watchdog organizations are constantly on the lookout for brands that cry "artisan" when their products are merely ordinary.

Chipotle

Chipotle Mexican Grill (CMG) has been perhaps the greatest financial success story of all the let’s-do-this-right restaurants. Steve Ells’ burrito empire has become one of the loudest voices in support of organic farming and anti-antibiotic legislation. While not quite a foodie paradise (any restaurant with over 1,200 locations is hardly going to appeal to those heavily invested in their own culinary hipsterdom), the Denver-based chain gets points for making real food out of real ingredients and exploring ways in which sustainable farming can yield real money. Before its recent well-publicized drop, Chipotle stock had been rising and rising in recent years. As America's love of burritos and its desire to eat healthy both increase, it could come back even stronger.

Panera

Another big-name chain with foodie roots is Panera Bread (PNRA), the ubiquitous St. Louis-based sandwich shop that has been recognized as the healthiest fast-casual restaurant in the country. Panera’s shares have returned 230% since 2007, and it’s the best-performing growth stock in the restaurant industry. The company that shares its chickens with Chipotle is actually outperforming them in most major categories while retaining its commitment to quality ingredients. Is the 17-year-old kid making your panini really an artisan, though? Plenty of its Yelp reviews compare Panera Bread favorably with Subway and Quiznos, but setting the bar high that ain't.

Whole Foods

When foodies cook at home, chances are Whole Foods (WFM) is where they get their ingredients. Probably the biggest company in this industry that still has a unified face, Whole Foods has made headlines by outperforming über-chains Safeway (SWY) and Supervalu (SVU) while standing firm in its support for farms that treat workers fairly. Its claim to foodiness (it’s a word now) is a strong one, and this might be the best place to get your tomatoes if farmers' markets make you nervous. Then again, some organic-farming hardliners have come out boldly against Whole Foods' admitted practice of sometimes selling genetically modified produce, so purists may prefer the mom-and-pop natural food store on the corner, or an actual farmers' market.

Innovative Food, Artisanal Brands, Hain Celestial

When there’s as much demand as there is now for natural, organic foods, the industry’s going to start getting bigger than its devotees would like it to be. Innovative Food Holdings (IVFH), Artisanal Brands Inc. (AHFP), and Hain Celestial Group (HAIN) are snapping up artisan and organic food companies like whole-wheat hotcakes, to the chagrin of foodies. Gourmet blogs grumbled when Artisanal Brands purchased Artisanal Cheese LLC recently; Real Filling claimed outright that “when you’re buying artisanal foods from a publicly traded company, something is wrong.” As the organic food business continues to boom (whatever that means for the quality of the products themselves), profits will continue to rise. Hain, which has its fingers in perhaps the most pies, exceeded analyst expectations in the third quarter, posting a profit increase of 43.7% over the previous year.

Crumbs

Manhattan-based cupcake shop Crumbs Bake Shop, Inc. (CRMB) has only been around since 2003. But in those nine years, it has become the biggest cupcake retailer in the United States and gone public with a market value of over $50 million. According to its Yelp reviews, though, Crumbs has suffered a big drop in quality since its IPO, and its lovingly-crafted confections have gotten sweeter and less subtle as the chain has expanded. "Since Crumbs has gone public, and more stores have opened on the island, the quality has gone down," writes Taryn from New York. Hell hath no fury like an unsatisfied cupcake aficionado.

Annie's

Annie’s Inc. (BNNY) has been a staple on Whole Foods shelves for some time now, offering organic macaroni & cheese and various other natural foods of the kind that appeals both to college kids and yuppie moms. When it went public in December 2011, its IPO price was $19 per share -- but these days, it generally hovers around $40. With its powdered cheese and sometimes salty aftertaste, nobody would ever call this “craft” mac & cheese, but they wouldn’t call it Kraft, either.

Reed's, Jones Soda

On the hipster-approved side of things, we have Los Angeles-based Reed’s (REED) and Seattle-based Jones Soda Co. (JSDA), two publicly-traded small-cap companies that make truly artisan sodas. It’s almost unbelievable that these companies could be public, given that Jones flies in the face of soft-drink convention by using cane sugar in all of its products. Reed’s has even won awards at the wonderfully-named International Fancy Food & Confection Show. After Reed's bid to buy Jones Soda broke down, the companies have endured slightly different fortunes: Reed's has posted the best second-quarter numbers in their company's history, while Jones is struggling to hover around $0.36 per share.

Craft Brew Alliance

The flagship of all publicly traded craft food and beverage companies, Portland, Oregon's Craft Brew Alliance, Inc. (BREW) is doing very well. It has a snazzy new ticker (an improvement on its previous stock symbol, HOOK, which was a reference to Redhook Ale Brewery) and a good share of the west coast’s craft beer market, a consistently growing industry that has enchanted much of the drunk-but-sophisticated Millennial generation. The consummate hipster company in a competitive market, Craft Brew Alliance has carved out a niche (along with Boston Beer Co. (SAM)) that can serve as a beacon of hope for companies trying to maintain quality in the years following their IPO.


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