Sometimes you find investment inspiration in odd places.
On May 25, I woke up to 2,000 angry protesters marching through the streets of Montreal.
One sign read, “Monsanto! Semeurs de Mort!”
Translation: “Monsanto! Sowers of Death!”
Another sign read, “Monsanto, terroriste!”
No translation needed.
This event was part of a global protest where over 2 million people across 52 countries rallied against the use of
genetically modified crops.
But I didn’t see protesters. I saw 2 million customers who care deeply about where their food comes from, the impact agriculture is having on the environment, and what they’re putting into their bodies.
And that spells a big opportunity for one big retailer.
Once the domain of hippies, organic food has now gone mainstream.
Consumers are increasingly engaged when they shop. They’re making decisions based on their values and awareness of environmental and health concerns.
That trend has created a growing demand for organic and natural food. Today, U.S. organic grocery sales exceed $30 billion annually and that figure is projected to double over the next decade.
Who’s poised to profit?
No longer is price the only factor when grocery shopping. Customers want to be ensured their food is organic, natural, and sustainable. They need a trusted grocer to ensure their food meets a higher standard.
Which is why consumers are turning to Whole Foods Market, Inc. (NASDAQ:WFM).
Whole Foods is a leader in supporting local and sustainable agriculture. Through its Whole Trade program, it looks to improve compensation and quality standards for its developing-world suppliers while reducing its own environmental impact.
For this service consumers are willing to pay a hefty premium which translates to the bottom line. Whole Foods Market, Inc. (NASDAQ:WFM)’ net margin is two to three times those of traditional supermarkets like The Kroger Co. (NYSE:KR) and Safeway Inc. (NYSE:SWY).
Enormous growth potential
Most investors still underestimate Whole Foods Market, Inc. (NASDAQ:WFM)’s growth potential.
Management is aiming to open 1,000 locations in the United States, triple its current store count. But recent developments suggest this target may be too low.
In the company’s most recent conference call, management hinted that they were seeing little cannibalization in what were once thought to be saturated markets like Boston.
Whole Foods Market, Inc. (NASDAQ:WFM) has also been successful opening smaller stores under 40,000 square feet. This model is helping the company penetrate mid-size markets where its traditional super-centers didn’t work.