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This article is part of our Rising Stars Portfolios series.
Economist John Maynard Keynes coined the term "animal spirits" to describe the emotions that sway human actions. But in the 21st century, the phrase is taking on a whole new meaning. Consumers' increasing concern for the spirits of actual animals -- for the ways in which the critters they eat are raised and slaughtered -- has begun to drive a growing economic trend in the food industry.
Whole Foods Market (Nasdaq: WFMI ) has been a pioneer in the realm of food ethics for years. Back in 2007, it created an animal welfare labeling system for its meats, and it's since introduced color-coding to let shoppers know which of its fish are sustainably caught. Whole Foods also carries products friendly to vegetarians and vegans.
Today, Whole Foods' focus on the humane treatment of animals seems to be spreading to the mainstream. The McClatchy-Tribune news service recently reported that conventional grocers Safeway (NYSE: SWY ) and SUPERVALU (NYSE: SVU ) are also planning their own animal welfare labeling or in-store signs.
According to a 2009 poll, about 3% of adult Americans are vegetarians; that may not sound like much, until you realize that translates to 6 million to 8 million people. Meanwhile, there are lots of "flexitarians," or people who greatly limit their meat consumption, and are likely very interested in animal welfare standards for the infrequent occasions when they do consume meat.
Chicago food research firm Technomic says that more than half of consumers point to animal welfare as one of the most important social issues in the food business. The American Farm Bureau released survey results showing that 89% of consumers think companies that require farmers to step up animal care "are doing the right thing."
A brighter spotlight on the ugly, often brutal nature of factory farming can only help this new attitude. The documentary Food Inc. painted big agriculture companies like Monsanto (NYSE: MON ) , Tyson (NYSE: TSN ) , and Smithfield (NYSE: SFD ) in a poor light, giving each serious reputational hurdles to vault. Chipotle (NYSE: CMG ) helped publicize Food Inc., since its message complements Chipotle's own emphasis on acquiring natural and sustainably farmed food.
Whole Foods and Chipotle both belong in the universe of stocks that can be considered for my Rising Stars portfolio, which emphasizes socially responsible stocks. Both companies lead the market in accounting for multiple stakeholders in the course of their business, and they often exhibit progressive, forward-looking policies.
In other words, companies like Whole Foods and Chipotle have vision. And whether you're interested in socially responsible investing or not, you should already know that the most visionary companies can foster tremendous growth. Being ahead of the curve is often what a truly great investment's all about.