The term ‘green consumerism’ can be quite broad, but in relation to food, most consumers equate it to organically-grown produce free of chemicals, artificial ingredients and genetically modified organisms (GMOs). 
Over the past decade, the ‘healthy’ food category has almost doubled in size, with future growth set to accelerate to $1trn over the next few years.
The benefits of organic farming
While the market for healthy food is enormous, the percentage of organic farmland is only inching up and amounts to less than 10 per cent of total farmland in Europe and a meagre 1 per cent in the US. Organic farming is not a matter of simply turning off the chemical sprayers. Farmers must learn to manage soil nutrients without fertiliser and tackle weeds and insects without herbicides and insecticides. It is a steep learning curve.
Organic systems are generally competitive with conventional yields only after a five-year transition period, but once implemented, organic techniques are superior to conventional farming – with an estimated 45 per cent less energy and 40 per cent less carbon emissions, while building rather than depleting soil health.
To optimise production and help farmers commercially, big brands are getting involved. PureCircle produces the natural sweetener Stevia – the stevia plant is about 40 times sweeter than sugar, requires less growing space and can be harvested up to four times per year, providing a steadier income for farmers. In addition, as a leading producer of chocolate products, Mondelez has partnered with the governments and farming communities in Ghana and Cote D’Ivoire to achieve zero de-forestation rates in both countries. This is a significant goal, as Ghana and Cote D’Ivoire make up 60 per cent of the world’s cocoa supply.
Paying a premium for ‘clean labels’
Ingredients are also critical in consumer perception of healthy food, with younger consumers willing to pay a premium for healthy and sustainable ‘clean label’ food, which avoids artificial additives. Among the global leaders in clean food ingredients and flavours is Kerry Group. Kerry is known for partnering with customers to produce food solutions, including a cultured celery product that provides natural texture while maintaining fresh taste over the shelf life of meat products.
American group International Flavors and Fragrances also benefits from the healthy food megatrend. The company supplies flavours and fragrances to the food industry and recently acquired Frutarom, a specialty provider of spices and fruit ingredients.
Another company, Symrise, offers taste solutions in food products and is targeting 100 per cent sustainably sourced key ingredients by 2020. This is an ambitious goal, given Symrise has operations in 40 countries and more than 5,000 suppliers around the world. By keeping the supply chain under tight control, ingredients providers can maintain quality and ensure suppliers adhere to sustainable practices. From an economic perspective, strong backwardly-integrated relationships with suppliers helps minimise resource use and lowers production costs. Backward integration can also build strong foundations for future relationships.
Capitalising on Amazon’s reach
Finally, with the acquisition of sustainable food-focused retailer Whole Foods in 2017, Amazon sent shivers down the spine of traditional food retailers. If Amazon could revolutionise the way people shop for books, why not broccoli and eggs?
Today, Amazon counts more than 300 million active users – a powerful forum for prioritising green consumerism. In Amazon’s virtual grocery store, users can choose which features their food should have. A search for ‘organic’ and ‘GMO-free’ reduces the number of food items from thousands to a modest 149, signalling potential significant growth in this area.
The future success of food producers will depend, in part, on properly labelling products on the virtual Amazon shelf. A trillion-dollar opportunity may very well wait for those that do.
Hilde Jenssen is fundamentals equity team product manager at Nordea Asset Management. The views expressed above are her own and should not be taken as investment advice.