A Guide to the Meat-Free and Organic Marketplace

For vegetarian, vegan, and health-conscious investors, it’s appealing to invest in companies that produce or sell meat substitutes, soy products, and organic products. And the fact that it’s a strong and growing sector of the global food market doesn’t hurt any, either.

Yet there is a downside, at least for purists. It turns out that many of those companies also produce and sell meat and non-organic products, and their veggie and organic brands are sometimes just a small portion of an overall portfolio of meat and nonorganic brands. And many of the smaller, entirely vegetarian, vegan, or organic companies are privately-held or family-owned, out of the reach of investors altogether.

So what’s a veggie investor to do? Well, purity aside, it makes some sense to invest in companies that have at least a portion of their business in soy and other veggie products. At the very least, it demonstrates a certain business acumen, since these products are strong sellers, and there seems to be a growing market for them. It also reveals a willingness to bet on nontraditional and non-mass-market foods, something that frankly can’t be said of all food manufacturers, marketers, and distributors.

Sometimes it’s a matter, in other words, of taking the good with the bad, the veggie burgers with the steaks.

With that in mind, here’s an overview of some companies that have dipped their feet into the world of meat-substitute and organic foods:

Archer Daniels Midland (NYSE: ADM)
Archer Daniels Midland is one of the largest processors of agricultural products, employing over 27,000 people worldwide. Founded in 1902, incorporated in 1923, and based in Decatur Illinois, Archer Daniels Midland is a giant in the world of agricultural processing, producing everything from oils to animal feed. It invented Textured Vegetable Protein (TVP) in 1967, and it continues to manufacture soy protein products under its NutriSoy Next label.

Dean Foods (NYSE: DF)
Dean Foods began as a dairy company, and the dairy industry is traditionally mature and subject to relatively slow growth, if any. Dean has expanded, however, into the organic dairy and soy business, with brands like Horizon Organic, which includes milk, yogurt, cheese, and other organic dairy products, and Silk Soymilk. Based in Dallas, Texas, Dean Foods has two main, reportable segments: its Dairy Group and WhiteWave Foods Company. Dean Foods has shown creativity in acquiring and developing organic and soy-based brands, and its products are strong competitors in this category.

Kellogg Company (NYSE: K)
This Battle Creek, Michigan-based giant of the cereal world manufacturers and markets ready-to-eat cereals and convenience foods, including cookies, crackers, cereal bars, and frozen waffles. It also has its hands in several competitive meat-substitute and soy brands, including Gardenburger, Morningstar Farms, and Worthington Foods.

Kraft (NYSE: KFT)
Kraft is one of those mega-companies that owns just about every kind of food product and brand imaginable, including Oscar Mayer, Ritz, Honey Maid, Planter’s, Kool-Aid, and many others – many not at all vegetarian, vegan, organic, or even remotely healthy. It also owns, however, the popular Boca brand, which includes veggie burgers, ground burger, meatless chili, “chicken” patties, and many other products. A diversified, ever-expanding, multinational corporation, Kraft is about as far from a small family company as you can get, but their Boca burgers are pretty good, nonetheless.

The Kroger Company (NYSE: KR)
If you’re in the market, literally, for soy or organic products, you can do worse than Cincinnati, Ohio-based Kroger. Founded in 1902, Kroger owns 2,474 grocery stores, and a number of other convenience, jewelry, and other types of stores. In short, it’s a large , mainstream chain, one that by no means focuses on the organic or veggie market. Its bigger grocery stores, however, have specialty departments, including a wide variety of organic, vegetarian, and ethnic produce and foods. And perhaps more to the point, The Kroger Company has posted solid gains over the years and seems to be maintaining its profitability in a competitive grocery market.

Tofutti Brands (AMEX: TOF)
Tofutti develops, produces, and markets Tofutti brand products, including a variety of non-dairy frozen desserts, spreads, and non-dairy cheeses. It’s a relatively small company, but its products are widely distributed in major grocery chains.

Whole Foods Market, Inc. (NASDQ: WFMI)
Whole Foods is a major player in the organic and natural foods marketplace, with over 270 stores in North America and the United Kingdom. Founded in 1980 as a single grocery store, and based in Austin, Texas, Whole Foods is a chain to be reckoned with, stocking a wide variety of natural, organic, and vegetarian products. With its 2007 acquisition of Wild Oats, Whole Foods has become a major purveyor of such products. Though its stock price has slipped in recent years, it has held its own in sales, suggesting that even in tough economic times, many consumers who want natural and organic products are willing to go the extra mile and pay the extra dollar to get them.

Vivian Wagner
Bourbon & Bayonets