Food is big business. After all, everybody needs to eat, and Americans spend more than $1 trillion a year on food from grocery stores and restaurants.

For investors looking to get exposure to the food industry, there are many ways to do it. One way is through food exchange-traded funds (ETFs). There are restaurants, of course, but we won't be focusing on fast food or restaurant ETFs.

Two adults and a child wearing masks and grocery shopping.
Image source: Getty Images.

Instead, we'll discuss the ETFs that hold stocks such as packaged food companies, like Kraft Heinz (NYSE:KHC); agricultural suppliers, like Archer Daniels Midland (ADM -2.02%); food processors, like Tyson Foods (TSN 0.2%); and retailers, like Kroger (KR -0.28%).

The best way to gain exposure to the broad food industry is through a food ETF or a food and beverage ETF. Keep reading to see five of the best options in today's food industry.

Top 5 food ETFs to buy

Top Food ETFs
ETF Ticker Total Assets Expense Ratio Description
First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) $981.6 million 0.6% Tracks the Nasdaq U.S. Smart Food & Beverage Index
Invesco Dynamic Food & Beverage ETF (NYSEMKT:PBJ) $324.9 million 0.63% Tracks the Dynamic Food & Beverage Intellidex, holding 30 U.S. food and beverage companies.
VegTech Plant-Based Innovation & Climate ETF (NYSEMKT:EATV) $5.06 million 0.75% Invests in plant-based innovation companies making a positive impact on climate change matters.
VanEck Future of Food (NYSEMKT:YUMY) $3.64 million 0.69% Invests in companies focused on agri-food technology and innovation.
Global X AgTech & Food Innovation ETF (NASDAQ:KROP) $6.56 millon 0.5% Invests in companies that benefit from advances in the fields of agricultural technology and food innovation.

1. First Trust Nasdaq Food & Beverage ETF

As the largest food ETF, First Trust Nasdaq Food & Beverage ETF is a good place to start if you're looking to invest across the food industry.

The fund mostly focuses on packaged food companies but also offers exposure to agricultural suppliers. Of the 30 stocks it owns, its top three holdings are General Mills (GIS -0.17%), Mondelez (MDLZ -0.38%), and Coca-Cola (KO 0.07%). Those three stocks make up about a quarter of the fund, showing the company is a good bet for investors looking for safe, dividend-paying stocks fetching a premium in the current bear market.

The fund currently offers a dividend yield of 1.4%. It's fallen 4.6% over the last year, giving it a slight edge over the S&P 500.

2. Invesco Dynamic Food & Beverage ETF

The Invesco Dynamic Food & Beverage ETF offers a similar mix of companies as First Trust, making it another good choice for investors seeking broad exposure in the food and beverage industry.

Its top three holdings are General Mills, Hershey (HSY 0.75%), and Mondelez, but those stocks make up less than 16% of the fund, making it more diversified than First Trust and providing a more even balance among the stocks it owns.

The fund currently offers a dividend yield of 1.7% and is down 3% over the past year, mirroring First Trust ETF's performance and reflecting its focus on stable, safe stocks.

3. VegTech Plant-Based Innovation & Climate ETF

As the name implies, the VegTech Plant-Based Innovation & Climate ETF is focused on vegan stocks, mostly related to food and ingredients but also other industries, like cosmetics and textiles, which have historically used some animal products.

This is a relatively new ETF, founded on Dec. 28, 2021, and it's still small, with net assets of $5 million.

Its top five holdings are Lamb Weston (LW 0.69%), a packaged food company best known for frozen potatoes; Ingredion (INGR -0.75%), which makes sweeteners, starches, and other key food ingredients; e.l.f. Beauty (ELF -3.9%), a global cosmetics company certified by People for the Ethical Treatment of Animals (PETA) as animal test–free and vegan; Vita Coco (COCO -2.34%), a maker of coconut water; and Fresh Del Monte Produce (FDP -1.13%), known for produce, such as vegetables and bananas.

VegTech has underperformed the market over the last year as many of its holdings are growth stocks. However, as its top holdings show, the company is much more than just plant-based food stocks like Beyond Meat (BYND -2.35%).

4. VanEck Future of Food

As its name implies, the VanEck Future of Food ETF is focused on food technology and innovation.

A large, green farm machine.
Image source: Getty Images.

It's a new ETF founded in 2021, and its top five holdings include Ingredion; Corteva (CTVA -0.78%), an agriculture company known for making herbicides and insecticides; Deere & Co (DE 0.01%), the maker of tractors and other farm machinery; FMC Corp (FMC -1.14%), which sells crop-protection products, such as insecticides; and Nutrien (NTR -0.12%), which makes fertilizers.

As you can see, VanEck Future of Food is focused more on the agricultural end of the spectrum, though it also owns packaged food companies like Oatly, Nestle, Kellogg and Danone.

VanEck Future of Food offers a 1.4% dividend yield, and the fund is down 20% over the last year.

5. Global X AgTech & Food Innovation ETF

Global X AgTech & Food Innovation ETF is another relatively new food ETF that started in 2021. It differentiates itself from its peers by investing a substantial portion of the fund in Chinese companies.

Two of its five largest holdings come from China: Yuan Longping High-Tech Agriculture, which sells crop seeds and seedlings, and Cheng de Lolo, which makes healthy plant drinks and foods. The two stocks make up about 25% of the fund. The remaining stocks in the top five are Corteva, Nutrien, and Oatly, the oat milk producer.

Global X has not performed well over the last year as growth stocks like Oatly have tumbled. The ETF is down 28%, making it the worst performer of the five funds in the group.

Still, that could easily change, especially once growth stocks come back into vogue.

Related food ETF topics

Are food ETFs right for you?

ETFs offer a convenient way for investors to get exposure to dozens of different stocks with just one investment.

In the food industry, that covers a broad range of companies. The ETFs discussed above offer investors access to safe consumer packaged goods (CPG) companies or more innovative growth in agriculture and plant-based foods.

Given that range, almost any investor should be able to find a food ETF that meets their needs.

Although not all these funds will beat the market, you can rest assured that demand for food will continue and that food production and distribution will remain big business with ample opportunities for investors in the years ahead.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat and e.l.f. Beauty. The Motley Fool recommends Deere, Hershey, Kroger, and Nutrien and recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.