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With The Advent Of Organic Foods, Which Company Will Stand On Top?

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Beginning in the 1990's, America was going through quite a number of changes: from innovations in technology, new fashion styles and even our waistlines. In 1992, we were introduced to the Food Guide Pyramid and obesity was becoming more of a concern. In hopes of becoming a healthier nation, America has been experiencing a secular trend in which people are eating healthier . In recent years, organic food products have increased in popularity with the goal of contributing toward a healthier lifestyle. Such products include those provided by Annie's (UNKNOWN: BNNY.DL  ) , Whole Foods Market (NASDAQ: WFM  ) and United Natural Foods, (NASDAQ: UNFI  ) .

Benefits of Organic
Organic products do provide a variety of benefits: they contain fewer pesticides, are rich in antioxidants (or vitamins A, C and E, all of which play very important roles in our body), organically raised animals are not given any type of hormone or antibiotics, and produce is usually much fresher than ones grown conventionally. For these reasons and more, consumers sure are picking up on this green, organic bandwagon in attempts to becoming healthier.

Annie's, who's mission is, "to cultivate a healthier and happier world by spreading goodness through nourishing foods, honest words and conduct that is considerate and forever kind to the planet", is based entirely on providing organic products. Such products include snacks like crackers, frozen prepackaged meals, pastas, salad dressings and even condiments.

Not only is organic trendy in the eyes of consumers, but also in the market. Over the past four years, Annie's has seen its revenue rise by 77% from $96 million to $170 million. Net income has performed even better, rising by 93% from $6 million to $11.6 million. As of its most recent year, the company's net profit margin stood at 6.8%.

United Natural Foods
United Natural, who's mission is "to exceed the needs and expectations of all our stakeholders: our customers, associates, natural and specialty products consumers, suppliers, shareholders, communities, the environment and the planet" is considerably larger. Over the past four years, revenue at the company jumped by 61% from $3.8 billion to $6.1 billion.

Just as was the case with Annie's, net income for United Natural outpaced the growth of its revenue. From 2010 to 2013, net income rose by 82% from $59.2 million to almost $108 million. This jump caused the company's net profit margin to rise from 1.6% to 1.8% as management was able to reduce costs relative to sales.

Whole Foods Market
With only 347 locations within the U.S, Whole Foods Market intends to expand to 1,200 locations, and with this, may help our expanding waistlines. Although small now compared to larger stores like Wal-Mart, this healthful organization has very impressive numbers. Over the past four years, revenue at Whole Foods has risen by 43% from $9 billion to $12.9 billion.

Similarly, the retailer has seen its net income rise considerably. Between 2010 and 2013, net income at the company rose 124% from $246 million to $551 million. As a result of this increase, the company's net profit margin rose from 2.7% to 4.3%, making it not just the largest but also the most profitable of the three.

Source: MSN Money

Foolish Takeaway
Companies such as Annie's, Whole Foods, and United Natural all have goals focused on providing healthier options. Of these options to choose from, it would appear that Whole Foods is the largest of the bunch and, as such, provides the greatest economic moat.

This means that the company may be an excellent pick for investors who are interested in a nice combination of growth and stability, but for those who want something a little more exciting, Annie's might be a better pick. On top of having attractive growth, the company also had the largest net profit margin of the bunch and, because of its size, might grant investors the greatest opportunity for growth.

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Related Tickers

10/21/2014 7:59 PM
BNNY.DL $0.00 Down +0.00 +0.00%
Annie's CAPS Rating: ****
UNFI $39.85 Up +0.64 +1.63%
United Natural Foo… CAPS Rating: ****
WFM $28.45 Up +0.44 +1.57%
Whole Foods Market CAPS Rating: ****