Profit Validation for a Fast Food Nation

Jeff Siegel

Updated July 6, 2005

Dear Wealth Daily reader:

So here’s the million dollar question…

Less than a decade ago, did you ever expect that one day you’d walk into a McDonalds and find illuminated ads for green salads, organic dressings and yogurt with fruit and granola?

Or better yet, back when you were taking the Pepsi challenge or deciding between the new coke and the old coke, did you ever think a third option from this multi-national behemoth would be a $3 mango, pineapple juice with green tea extract?

Yeah, neither did I.

But why not? The USDA projects the organic food market this year to top $20 billion, up from $9.5 billion in 2002, and less than $1 billion in 1990.

That’s incredible growth in anyone’s book. Personally, I call it a demographic mega-trend. It’s unstoppable.

So here we are today, with these very products being manufactured and sold by both McDonalds (MCD: NYSE) and the Coca-Cola Corporation (KO: NYSE). And these are only two of hundreds of examples of corporate giants staking their claim to the booming health food industry.

Believe me, if there wasn’t some serious money to be made, neither of these two companies would be in the game.

America’s continued obsession with health and wellness has been the catalyst for massive growth in this industry for over a decade now.

And I think it’s just getting started.

In fact, last Friday the makers of M&Ms, Snickers and Twix candy bars, Mars Inc. announced the launching of their newest business unit – Mars Nutrition for Health & Well-Being.

Here’s what Michael Mars, president of the new division had to say…
"Our unit’s mission is to be a trusted partner in healthy lifestyles, enabling consumers to look, perform and feel their best every day. We will bring great taste to products that are designed to provide real health benefits supported by sound nutrition science."
I love it!!!

According to Mars, Inc. their first new product will be a heart-healthy snack bar, and will be marketed with the tagline, "Be Good To Your Heart Everyday."

Now you know there’s money to be made when the same guys who make billions from their established line of junk food (and it’s oh so good!) start peddling health food!

Talk about a philosophical battle between yin and yang, culminating in an inevitable balance leading to increased profits.

Talk about a philosophical battle between yin and yang, culminating in an inevitable balance leading to increased profits.

Forgive me if you find my exploitation of Taoist philosophy vulgar. But this is exciting news!

Further validation of the profitability of the health food industry from companies like McDonalds, Coca-Cola and Mars will not only increase the value of this market as a whole…it will also further support the growth of all those burgeoning health food companies that I’ll be telling you about in the next few weeks.

Companies that are now trading at ridiculously low levels – but are positioned to more than double by the end of November.

Of course, not all of these companies are health food-related. But all are definitely a part of the new LOHAS marketplace which, mark my words, will be the most consistently profitable marketplace for the next 20 years!

Now I’ve been told by my colleagues that the term LOHAS is still relatively new, and that I shouldn’t assume everyone knows exactly what it is.

So let me quickly explain…

The LOHAS marketplace is perhaps one of the most lucrative in the U.S. right now (as well as globally). An acronym for Lifestyles of Health and Sustainability, this particular niche marketplace provides goods and services that appeal to consumers who value health, the environment, social justice, personal development and sustainable living.

Sound too touchy feely for you?

Well, before you write them off as dirt-worshipping tree huggers with a general disdain for wealth, driving a ’72 VW mini-bus and wearing 9 year old Birkenstocks to complement their hemp shirt and pants… let me introduce to you a group of consumers who may change your whole perspective.

Often referred to as Cultural Creatives, these LOHAS consumers represent approximately 30% of U.S. adults (roughly 63 million consumers).

And these are not 63 million underprivileged hippies, granolas and new age flakes.

In fact, these LOHAS consumers are primarily comprised of the always-influential Baby Boomers – with significant income. And they’re taking to this market like rich fish to overpriced mineral water.

Of course, given their age, you might assume that these Baby Boomers could easily age themselves right out of the market. But that’s definitely not the case here.

Because while the Baby Boomer impact on the LOHAS market is massive, and their purchasing power has certainly sustained its growth (at approximately 20% for the last 3 years), the most recent data from the Natural Marketing Institute on LOHAS consumers indicates that more than 45% of these consumers are 45 years old and younger. And 25% are under the age of 35.

But wait…it gets even better.

Research has also identified an additional 30 million adults, part of a group called Nomadics, (approximately 83 million consumers in total) who are indicating that they are leaning towards the LOHAS market, and therefore are currently or will most likely become purchasers of LOHAS products.

So let’s recap quickly –
63 million U.S. consumers right now.
Driven primarily by Baby-Boomers.
45% of non-Baby-Boomers under the age of 45 maintaining and continuing the strength of the market beyond the Baby-Boomers.
An additional 30 million consumers learning towards the LOHAS marketplace.
Worth $226.8 billion – and growing at approximately 20% per year.
Next week in the Green Chip Review, I’ll show you the five segments of this marketplace, their individual and combined worth…and why LOHAS consumers are willing to buy their products and services at price premiums of 50%…100%…even as much as 300% – and not even think twice!

Plus, I’ll also tell you about an aggressive young LOHAS company that could easily be worth 3 times what it’s worth now – in less than a year!

It’s growth strategies are mirroring those of natural food retailer, Whole Foods Markets (WFMI: NASDAQ)…which incidentally hit a record high today of $124.43.

Believe me, the meteoric rise in WFMI is just a precursor of things to come.

Until next week,

Jeff Siegel
Editor, Green Chip Stocks

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