Thursday, May 8, 2014

Did Walmart Kill the Organic Food Names?

For a number of years, stocks along the entire organic/natural chain have commanded premium valuations versus conventional food peers, as organic foods in general have had higher price points and stronger sales growth.

On April 10th, 2014, Walmart announced a new partnership with privately held Wild Oats that will drive organic food product pricing to about parity with branded conventional food counterparts.

This may have resulted in understandable market pessimism for the players in the space (with the exception of SunOpta STKL, an ingredient supplier). Some were already trending down because of individual problems (ie BNNY) but it seems that in the last month or so since the announcement, every stock- producers and grocers- has weakened in the face of new highs in the staples ETF XLP.

No comments: