Though America still tops the charts in diabetes, the country is increasingly becoming concerned with the negative health effects of certain foods. As a result, the food industry has seen an influx in healthier food options, both from new companies as well as large manufacturers.
Given that health-conscious consumers are generally willing to pay more for healthier food, this segment of the industry typically experiences higher margins. The growth in health-conscious shopping as well as the higher margins associated with these products has fueled a surge in the industry over the past few years. The graph below, provided by IbisWorld depicts the profitability of various food groups:
As the media continues to highlight the benefits of eating healthy and as more and more American adopt this new lifestyle, manufacturers will continue to product healthier foods. Furthermore, with food commodity prices projected to be less volatile, the industry is projected to experience even higher margins. Most notable is the price of corn, which is an input in all 10 of the most profitable food industries. During the five years to 2018, the price of corn is anticipated to decline at an annualized rate of 2.6%.
Despite such high margins and growth projections, the industry experiences some risk. The primary drivers of risk include demand from retailers and the price of commodities.