Massive consumer-goods companies are delving into an exciting and potentially lucrative new consumption trend: food and beverages with supposed health-enhancing or healing properties.
Meanwhile, Swiss giant Nestle plans to shell out $500 million over the next decade to make food and drinks with big-time health benefits. It hopes to develop products that could prevent or even treat diabetes, obesity, and Alzheimer's, among other maladies. Not so coincidentally, products like these also tend to command healthy margins.
Many consumers love the idea of "natural" products with major health benefits. Wouldn't it be gratifying to eat and drink oneself to wellness, instead of paying up for Big Pharma products to fix what ails you?
Still, the natural and alternative health category has plenty of risks. While it can feel good to believe you're consuming something that's benefitcial for you, many of these concoctions may not actually do anything beyond stimulating the placebo effect.
The FDA hasn't evaluated the health claims of many of these substances' effectiveness. Similarly, the FTC reprimanded Kellogg
These products could face brutal consumer backlash if science proves that some have no health benefits -- or actually hurt their users. While Coke, Nestle, and Pepsi's possible new growth channels look promising, they could also backfire, wasting a lot of shareholder capital on product duds that fall far short of the promise.
Are these companies on the right track for future growth, or are they making a major mistake that might be unhealthy for their shareholders? Sound off in the comment box below.
Coca-Cola is a Motley Fool Inside Value selection. Whole Foods is a Stock Advisor recommendation. Kellogg, Coca-Cola, and PepsiCo are Income Investor selections. Motley Fool Options has recommended a diagonal call position on PepsiCo. The Fool owns shares of Coca-Cola. Try any of our Foolish newsletter services free for 30 days
Alyce Lomax owns shares of Whole Foods Market. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool has a disclosure policy.