The Growing Organics Market Presents a Natural Investment Opportunity

Jun 24, 2019 12:15 PM ET

by Nick Cherney CFA, Senior Vice President, Janus Henderson 

As Americans become more aware of the environmental and health benefits of organics, we are presented with an opportunity to align our investments with our lifestyle choices – by investing in the companies and agricultural operations that are driving organic innovation and bringing natural products to the marketplace.

“More and more, we’re seeing that people want to put their money into things they know and are passionate about,” says Nick Cherney, Senior Vice President and Head of Exchange Traded Products at Janus Henderson.

Through thematic investing, investors are able to take part in transformative forces that could permanently alter our lives and behaviors, creating opportunities shaped by meaningful change. Janus Henderson’s The Organics ETF provides investors with the opportunity to invest in organic farming operations and companies globally that provide the organic food, beverages and cosmetics we use in our everyday lives.

Organic Goods are a Sustainable Global Trend

With many Americans focused on living healthier and more natural lifestyles, organic foods and products are moving into the mainstream. By 2014, 85 percent of Americans were already buyers of organic products, according to a Consumer Reports survey, with nearly half (45 percent) doing so at least once per month. As a result, the U.S. organics industry increased nearly thirteen-fold, from $3.6 billion in 1997 to more than $45 billion in 2017. (And now over $50 billion).

Demand for organics is growing internationally as well. The U.S. exported roughly $550 million worth of organics in 2016, up from $412 million in 2011, and the global organic food market is projected to achieve a compound annual growth rate of 16 percent through 2020.

But the organics market isn’t limited to food – it also includes personal care goods, including cosmetics, hair and skin care products. The global organic personal care industry is expected to reach almost $16 billion in revenue by 2020. Skin care alone may see a compound annual growth rate of 9.8 percent from 2014 to 2020. 

The Market is Booming for Organic Farmers

The increasing global demand for organic products is creating a noticeable shift in supply, offering a clear opportunity to invest in organic farming.

Certified organic farming has been expanding in the United States for years, particularly for fruits, vegetables, dairy and poultry. Farmers with certified organic operations use production practices with environmental benefits such as water management practices, no-till, habitat maintenance for beneficial insects and biological pest control. Generally, organic operations are required to consistently demonstrate that they are protecting natural resources, conserving biodiversity and using only approved substances.

The environmental benefits of organic agriculture have become increasingly apparent to consumers and farmers alike. As of April 2017, there were more than 24,000 certified organic farming operations in the United States and over 3,000 farms transitioning to organic products. As organic agriculture continues to grow exponentially, it is clear that we’ve only just begun to scratch the surface of organic farming and markets. 

Read Nick's full article with on the Organic Industry and Investing in it, here - 




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