The Position Makers

at first glance i knew i had to share:

market potential! but where’s the $$ flowing to? naturally, we need to examine how the dollar is being spent: (click on image for a full screen version)

monsanto (MON) and the like will reap the most here since most food in the US is made from corn. (a good “layman’s” synopsis of this is the omnivore’s dilemma.)

but when people are buying the food, what locations get the lion’s share of business?

i’m not going to make any recommendations for specific picks, but this industry is def’ going to be a stalwart against recessionary pressure. meaning, micki-d’s will probably continue to do well (as will all the others) considering how people are going out more and more. people who have been in a positive feed loop (no pun!) for going out over the course of years (myself included!), have also been slowly losing their cooking skillz (if they ever had them!)

as far as i’m aware, the graphs don’t reflect what the forward trend will be as the studies are based on “an age-representative sample”. meaning, we don’t get a break down of the specific age groups that spend money on eating out. what i suspect is that as the people get older (and die), a younger generation of pre-disposed “eating out’ers” will be spending a higher proportion of their earnings on dining out, so the trend of in-house cooking will probably continue down, further expanding out the market potential for prepared meals. (note: this could just be viewed as a “natural” course for a highly capitalized, division-of-labor-is-king society.)

these charts are from a few sources:

here and here

special thanks to adria for showing me the initial charts and discussing her initial analysis w/ me!!! disclaimer is that adria doesn’t come from an investment perspective but a diet & nutrition research perspective. i’m the one w/ stock-colored spectacles

what she pointed out was that even though the price of food is continually going down, eventually this trend will stop as energy costs rise and food production, shipping, and prep eat more of the dollar %’s, baring of course, new technological developments such as the turn of the 20th century discovery of manufacturing artificial nitrogen.

here’s a specific quote adria passed me:

The Consumer Price Index (CPI) for all food is forecast to increase 3.5 to 4.5 percent in 2007 as retailers pass on higher commodity and energy costs to consumers in the form of moderately higher retail prices.

and here’s a clip from our conversation:

Adria Mooney: (quoting study) Americans’ consumption of fruits and vegetables falls short of recommended levels. Low-income households, however, consume even lower amounts than other households. On average, low-income households spent $3.59 per capita per week on fruits and vegetables in 2000 while higher income households spent $5.02—a statistically significant difference. Findings also suggest that low-income households will allocate an additional dollar of income to other food or nonfood items, other than fruits and vegetables, such as meats, clothing, or housing, deemed more essential to the household.
Adria Mooney: (further quoting of studies) ERS’s loss-adjusted annual per capita food supply series suggests that average daily calorie consumption in the United States in 2000 was 12 percent, or roughly 300 calories, above the 1985 level. Of that increase, grains (mainly refined grains) accounted for 46 percent, added fats 24 percent, added sugars 23 percent, fruits and vegetables 8 percent, and the meat and dairy groups together declined 1 percent. Per capita availability of total dietary fat, after remaining steady from 1985 to 1999, jumped 6 percent in 2000. American diets are also low in whole grains and other nutritious foods.

Adria Mooney: it’s so obvious why we are all fat!!!!!

depends on which end of the shareholder stick you’re on (the beaten or the beater) but this looks like a fairly dangerous trend for society.

that being said, think there will be a growth in chain related health food? such as wholefoods (WFMI)?

i have to admit thinking that at first glance there should be a huge market potential for healthy, fast food. but, i have to fall back on my recognition that we’re “just human” so we’ll tend toward the decadent side of life and irrational behavior. (meaning, eat crap and a lot of it!)

speaking of irrational behavior and directly related to people eating out:

this economist article discusses the big-business boom of remodeling kitchens. (as the french fondly refer to as “une cuisine américaine”) with all the money rushing into remodeling kitchens, i seriously have to wonder wtf for? there’s no reason to have a pimped out kitchen if nobody cooks in it. lol. gotta love human behavior.