Starbucks Adjusts to Meet Rising Food Standards

Starbucks Adjusts to Meet Rising Food Standards

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This week Starbucks (SBUX) agreed to stop using a color extract made from a tropical bug found in Mexico and South America. The red dye was used to color several food and drink items in the store, and is made from cochineal insects that were dried and crushed. The dye will be phased out by June and replaced by a tomato extract called lycopene, according to Bloomberg.

Over 6,500 people signed a petition to have the dye removed because it isn’t vegan, kosher, and consumers “don’t want crushed bugs in their designer drinks.” There is no safety or quality issues with the extract and is widely approved by the FDA, though the company decided to stop using it because “it did not exceed their customers’ expectations,” said spokesman Jim Olson.

Other health food focused companies have catered to the higher expectations, and recently, Annie’s Inc. (BNNY) launched a successful IPO. Whole Foods Market, Inc. (WFM) is also a company that holds itself to higher standards for the products that they sell, such as organic and other health foods. Their stock has returned over 22% year-to-date.

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The U.S. public has begun to hold higher standards for the food that they buy, increasing the amount of health foods that grocery stores carry, as well as the number of stores that consider themselves health food shops. The trend is running, and could provide healthy physical and financial returns.

Below is a list of grocery stocks that have seen institutional buying over the current quarter. Are the smart money thinking healthily?

List sorted by market cap.

Interactive Chart: Use the Compar-O-Matic to compare market caps for the stocks mentioned below:

“1. CompanhiaBrasileira de Distribuicao (CBD, Earnings, Analysts, Financials): Operates as a retailer of food products, clothing, home appliances, and other products through its chain of hypermarkets, supermarkets, specialized and department stores, convenience stores, and the Internet in Brazil. Market cap at $12.47B. Net institutional purchases in the current quarter at 9.1M shares, which represents about 9.73% of the company's float of 93.55M shares.


“2. SUPERVALU Inc. (SVU, Earnings, Analysts, Financials): Operates retail food stores in the United States. Market cap at $1.31B. Net institutional purchases in the current quarter at 21.1M shares, which represents about 10.04% of the company's float of 210.07M shares.


“3. Susser Holdings Corporation (SUSS, Earnings, Analysts, Financials): Operates convenience stores and distributes motor fuels in Texas, New Mexico, Oklahoma, and Louisiana. Market cap at $542.60M. Net institutional purchases in the current quarter at 3.2M shares, which represents about 22.19% of the company's float of 14.42M shares.



(Written by Danny Guttridge)


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