Food for Thought

When I was a rebellious teenager (and a vegetarian), I somehow got my hands on a book called Animal Liberation by Peter Singer. Unfortunately, I don't recall actually reading the whole thing (nor did I remain a vegetarian for long, after seeing how few appealing options were available then at the college dining hall), but I do recall it had what seemed at the time to be pretty a radical philosophy that mainstream society would reject. (And when you're a rebellious teenager, those are the best books to carry around.)

Little did I realize that 20 years later, such ideas would be gaining in momentum -- or that the name Peter Singer would crop up again in relation to possibly big trends in business. Between reading The Way We Eat: Why Our Food Choices Matter, co-authored by Singer and Jim Mason, and noticing increasing media attention being paid to the concept of food and ethics, I can't help but wonder whether big changes are coming when it comes to all things (and companies) food-related.

An ethics earthquake?
Demand for organic products, a component of food ethics, has undoubtedly been on the rise over the years. You can gather that's the case from the fact that Whole Foods Market (Nasdaq: WFMI  ) and Wild Oats (Nasdaq: OATS  ) exist. That same burgeoning demand explains why you find organic products in conventional grocers like Safeway (NYSE: SWY  ) . And of course, Wal-Mart's (NYSE: WMT  ) high-profile entry into what had been previously known as a premium-priced space really proved the point.

In 2005, the organic industry grew 17% to $14.6 billion, with the food portion growing 16.2% to $13.8 billion. Since 1998, the organic food industry has produced a double-digit annual growth rate, between 15% and 20%.

There are several reasons why many people want to go organic. Not least of them is the idea that organic farming is sustainable and environmentally friendly. The desire for organic products goes hand in hand with green lifestyles. Meanwhile, some people merely want to avoid genetically modified crops, artificial growth hormone, additives, or pesticides in their diets, or are looking for higher-quality fare.

Going beyond the environmental considerations is animal welfare. Convincing average Americans that a vegan diet would be better for the world might be a bit farfetched, but the cat's out of the bag when it comes to the unpleasant business of factory farming. Reading about the inhumane treatment common in factory farms is certainly enough to make some people wonder if low-priced meat is worth all that squalor and misery.

As much as organic diehards might bust on "big business," corporations can be powerful instruments of change. That's why Whole Foods Market's standards for animal treatment may prove to be brilliant if more people seek meat from alternative sources, where animals are allowed a comfortable life before they're dinner.

Chipotle (NYSE: CMG  ) seeks to provide "Food With Integrity," including organic ingredients as much as possible. A good deal of its meat (all of its pork, half of its chicken, and one-third of its beef) is "naturally raised," meaning the animals are fed vegetarian feed and not given hormones or antibiotics, according to a September Fortune article. Chipotle claims it makes the food taste better, and given the chain's success, customers seem to agree.

And get this: McDonald's (NYSE: MCD  ) may not bubble to the top of the list in most people's minds for having an animal-compassionate stance, but it has been able to use its clout with suppliers to enact some progress in animal welfare; for example, it uses eggs from free-range hens in the U.K., and it is credited with making a major difference in the way some of its suppliers handle animal welfare. McDonald's has created Animal Welfare Guiding Principles, has policy in place on limiting the use of antibiotics in its poultry, and runs a CSR (corporate social responsibility) blog called Open for Discussion that solicits comments from the public.

An ethical cost/benefit analysis
True, it probably takes a certain degree of comfort and affluence for consumers to ponder ethical dining in the first place. However, while plenty of people don't give a hoot (or simply struggle to pay for food to begin with), it seems the number of people who do care is growing. I recently wrote about a study that found that some consumers take many more variables than simply price or convenience into consideration when making purchasing decisions. These issues include many of the related components that make up the idea of corporate social responsibility.

And while many Americans are attracted to the siren song of low prices, others argue that a low price tag may be misleading. In just one example, Wal-Mart critics argue that its "falling prices" are deceptive if you weigh some of the retailer's hidden costs to people and communities.

Of course, Singer's and Mason's The Way We Eat also pointed out that the food ethics concept is hardly cut and dried. For example, some say that increased demand for organic goods has led some providers to become eerily similar to their industrialized counterparts. Dean Foods (NYSE: DF  ) has faced such flak from critics concerning its Horizon brand. Meanwhile, conscientious choices themselves can be tricky. For example, is it really more ethical to only "eat local" when poor farmers in developing nations could benefit greatly from selling their produce to better their situations? True, shipping foods long distances can be bad for the environment, but one can also take into consideration the differences between shipping by sea, rail, or truck. These are among many puzzling questions, and obviously the answers reflect each individual's personal opinion.

Fad ... or the future?
Sure, thinking the plate is a reflection of ethics may prove to be a passing consumer fancy, not a mainstream sea change in opinion. Last fall, AdAge wondered if maybe the organic movement is just a fad, judging by the failure of many well-known brands' organic counterparts. I couldn't help but reject that idea, because to real proponents of the movement, it's much, much more than just a marketing slogan that can be slapped on a box of mac and cheese. Authenticity counts when there's a philosophy attached, and that's why I think this is a trend that will continue -- unlike, say, low-carb dieting, which did reach fad proportions with consumers, after which they quickly grew tired of it and moved on.

Food ethics is a complicated issue (I do recommend Singer's book for a fair and reasoned exploration of the arguments), and I only think that people should do as they will. But seeing consumers become more aware of how their purchasing decisions influence themselves and the world around them, for good and for ill, can only be a good thing, in my book. It's one of the beauties of the market.

After all, the market reacts to demand. Given these recent trends and the mainstream dissemination of such philosophies, it stands to reason that some companies enjoy increased opportunities when they meet such demand. Whole Foods Market has long seen the importance in these principles -- in fact, it was a pioneer in spreading awareness, and that's why I think it will continue to benefit. Corporations like Wal-Mart and McDonald's obviously see opportunity (or maybe concern), or they wouldn't address issues like organics, environmental sustainability, or animal welfare at all.

Furthermore, if this trend continues, companies that stubbornly defend old ways and methods that more and more people find unpleasant, unethical, wasteful, or unsustainable will have to seriously rethink their practices. (It's arguable the writing's on the wall already.) Otherwise, they'll face serious risks to continued growth as the increasing number of conscientious consumers vote with their feet -- and their wallets.

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Whole Foods Market is a Motley Fool Stock Advisor recommendation. Wal-Mart has been recommended for Motley Fool Inside Value. Just click on the name to take either newsletter for a 30-day free spin.

Alyce Lomax owns shares of Whole Foods Market. The Fool's disclosure policy carried a copy of Steal This Book during its rebellious teenage years.


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