We are what we eat - and what we invest in

How healthier food creates fertile opportunities for business innovation.

In the not-too-distant past a grocery shopper’s mission would involve selecting between two different types of bread – white or wholemeal.

Today, consumers know their pumpkin seed loaf from their ancient grain sourdough, are happy to peruse varieties of pita, cornbread and Turkish loaves, and wouldn’t think twice about paying a few dollars extra for some artisan gluten-free walnut, currant and fennel cobbs.

The diversity of the bakery aisles in average supermarkets nation-wide is just one example of the way food producers are responding to the widening tastes of shoppers.

While there is more than one factor at play behind the changes, a strong driver of new consumer demands in the food market has been the focus on healthier lifestyles – and particularly clean, organic food.

According to research by Morgan Stanley, sustainable food sourcing has broken free from its specialty retailer enclave and landed squarely in the mainstream marketplace. As shown by the bread example, conventional food retailers have responded accordingly. This has led to a rate of growth in the natural/organic food market that continues to outpace the overall growth rate of food industry salesi.

According to the 2017 Australian Organic Annual Report, Australia has the world’s largest percentage of organic land at 53%.

The strength of consumer interest in organic produce has also benefitted from a strong export market, which has supported established primary producers and also encouraged new organic business ventures. The volume of organic products exported from Australia in 2016 represented a growth rate of 17%ii.

The Australian Organic Annual Report is a biennial publication commissioned by Australian Organic that tracks trends in the Australian organic marketplaceiii.

According to the 2017 Report, Australia’s appetite for organic foods shows no signs of abating, with more than two out of three Australian households having purchased at least one organic product over the previous 12 month period.

“Australia’s organic industry is now valued at over $1.4 billion (excluding exports and organic raw and processed products), demonstrating consumption of certified organic food, cosmetics and household products continues to grow, following the global trend. By 2018, the total value is anticipated to exceed AU$2 billion, given the current growth trajectory,” the report states.

For information on sustainable investment opportunities please contact your Morgan Stanley Financial Adviser.

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