5 Food Trends to Taste in 2013

by Alyssa Oursler | November 19, 2012 8:18 am

When you hear the term “consumer trends,” fashion is first to come to mind. For example, teen retailer Abercrombie & Fitch (NYSE:ANF[1]) looked outdated most of the year (until this week’s bump), while luxury line Michael Kors (NYSE:KORS[2]) took the runway — and Wall Street — by storm.

Food, on the other hand, often is seen as a staple — a steady necessity for consumers, far from the fickle world of style and seasons. But consumers still make and follow patterns when it comes to what they crave, which means the popularity of different foods comes and goes in waves.

As the New Year quickly approaches, some foods will soon find themselves tossed out as their tastes become so last year — and other consumables will rush to fill that void.

Let’s take a look at which companies could benefit from food trends expected to take hold in 2013:

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Penny-Pinchers Love Pizza

In a recent survey by Goldman Sachs[4], the general consensus from 2,000 consumers was that price is becoming an increasingly important factor when it comes to dining.

One classic penny-pinching solution? A good ol’ pizza pie.

This simple meal option also plays into the increased pace of consumers’ lifestyles; convenience is key. Dialing up a pizza after a long day of work is easy on the consumer and his or her wallet — undoubtedly part of the reason pizza stocks already have posted mouth-watering gains this year.

Shares of Papa John’s (NASDAQ:PZZA[5]), for one, have climbed more than 23% since January, while Domino’s (NYSE:DPZ[6]) isn’t far behind[7] with 17% gains — each more than doubling the S&P 500’s 7% improvement. Yum! Brands (NYSE:YUM[8]) — owner of the largest pizza franchise in the world, Pizza Hut — has posted nearly 20% returns YTD … though Taco Bell and KFC must share some of the credit.

Consumer sentiment seems to signal that the good times should keep on rollin’ in the new year, so make sure to order up a few pizza shares to go alongside your slices.

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‘Everyone Wants to Be Chipotle’ …

A recent report from restaurant consultant group Baum & Whiteman pointed out 17 hot food trends for 2013[9]. One observation was telling: “Everyone wants to be Chipotle (NYSE:CMG[10]).”

Chipotle’s recent stock woes aside, it’s true. As the report explained:

“Consumers are trading down like crazy, bypassing casual dinner-houses and leaping to fast-casual formats, sacrificing service but believing the food is still ‘fresh.’”

While that’s bad news for Darden Restaurants (NYSE:DRI[11]) and Ruby Tuesday (NYSE:RT[12]), it means fast-casual chains like Panera (NASDAQ:PNRA[13]) could continue to be popular[14].

Carrols Restaurant Group (NASDAQ:TAST[15]) also recently spun off its fast-casual chains, and the resulting company, Fiesta Restaurant Group (NASDAQ:FRGI[16]), has climbed around 30% since its debut in May. FRG owns Pollo Tropical, a Caribbean chicken quick-stop, along with Chipotle-like company Taco Cabana. The company also has lots of room for growth, with just more than 100 restaurants.

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… Except Chipotle

The report says that “Everyone wants to be Chipotle,” but also adds “even Chipotle.” Most evidence seems to disagree, though. While the fast-casual format might look promising, the craving for Chipotle’s taste in particular seems to be fading.

The aforementioned Goldman Sachs survey, for example, found that the Mexican grill has taken a step back in consumer surveys. While analysts recognized the drop might be a statistical anomaly, they also noted:

“This said, we are not entirely dismissive, as this fall-off in brand score did coincide with a meaningful change in the company’s same-store sales trajectory.”

There are plenty of other reasons not to take the consumer sentiment drop lightly, including recent comments from David Einhorn about the threat of Taco Bell[17] and the stock’s not-so-stellar recent performance.

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Bring on the Beverages

The consultant report also noted that beverage sales are a bright spot for fast-food restaurants, as snack-time beverage-only sales have been on the rise.

The “three big gorillas,” as the report calls them — McDonald’s (NYSE:MCD[18]), Starbucks (NASDAQ:SBUX[19]) and Dunkin Donuts (NASDAQ:DNKN[20]) — could easily feed off of this thirst. Starbucks in particular has been working to expand its beverage selection with the addition of teas and juice bars[21].

McDonald’s, which has had a rough 2012[22], could get back on track with some appealing beverage offerings; the mango pineapple smoothie[23] and other specialty beverages helped fuel its killer 2011 run[24]. If consumers are indeed thirsty for more of the same and McDonald’s concocts some new offerings, the Golden Arches could turn around this year’s slide.

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The Snack of the Year

Finally, creativity and innovation firm Sterling-Rice Group recently identified the top 10 food trends[25] poised to hit supermarkets. One of the most decisive: “Popcorn is THE snack of 2013.”

If that’s the case, it’s good news for brands like PepsiCo’s (NYSE:PEP[26]) Smart White Cheddar Popcorn, ConAgra’s (NYSE:CAG[27]) Orville Redenbacher’s or Diamond Foods’ (NASDAQ:DMND[28]) PopSecret.

Of course, these are all diversified food companies, so popcorn alone isn’t going to propel them to stellar gains. At the same time, a little extra popcorn-pop sure wouldn’t hurt. And if popcorn becomes the next yogurt — which food giants have been rushing to get into this year[29] — these companies will at least be ahead of the game.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

  1. ANF: http://studio-5.financialcontent.com/investplace/quote?Symbol=ANF
  2. KORS: http://studio-5.financialcontent.com/investplace/quote?Symbol=KORS
  3. Compare Brokers: https://investorplace.com/options-trading/broker-center/
  4. survey by Goldman Sachs: http://blogs.barrons.com/stockstowatchtoday/2012/11/12/restaurants-face-challenges-consider-pizza-but-not-chipotle-says-goldman/?mod=BOL_hpp_blog_stw
  5. PZZA: http://studio-5.financialcontent.com/investplace/quote?Symbol=PZZA
  6. DPZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=DPZ
  7. isn’t far behind: https://investorplace.com/2012/10/dominos-pizza-right-company-wrong-time/
  8. YUM: http://studio-5.financialcontent.com/investplace/quote?Symbol=YUM
  9. pointed out 17 hot food trends for 2013: http://www.baumwhiteman.com/2013trends.pdf
  10. CMG: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMG
  11. DRI: http://studio-5.financialcontent.com/investplace/quote?Symbol=DRI
  12. RT: http://studio-5.financialcontent.com/investplace/quote?Symbol=RT
  13. PNRA: http://studio-5.financialcontent.com/investplace/quote?Symbol=PNRA
  14. continue to be popular: https://investorplace.com/2012/08/panera-bread-could-continue-to-rise/
  15. TAST: http://studio-5.financialcontent.com/investplace/quote?Symbol=TAST
  16. FRGI: http://studio-5.financialcontent.com/investplace/quote?Symbol=FRGI
  17. threat of Taco Bell: https://investorplace.com/2012/10/before-laughing-at-einhorns-taco-bellchipotle-theory/
  18. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  19. SBUX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBUX
  20. DNKN: http://studio-5.financialcontent.com/investplace/quote?Symbol=DNKN
  21. juice bars: https://investorplace.com/2012/05/starbucks-juice-brand-positioned-for-growth/
  22. which has had a rough 2012: https://investorplace.com/2012/10/mcdonalds-hungry-for-new-offerings/
  23. mango pineapple smoothie: https://investorplace.com/2012/08/whats-with-mcdonalds-poor-july-sales/
  24. killer 2011 run: https://investorplace.com/2011/12/best-worst-dow-stocks-201/
  25. recently identified the top 10 food trends: http://www.progressivegrocer.com/top-stories/headlines/consumer-insights/id36610/top-10-food-trends-in-2013/
  26. PEP: http://studio-5.financialcontent.com/investplace/quote?Symbol=PEP
  27. CAG: http://studio-5.financialcontent.com/investplace/quote?Symbol=CAG
  28. DMND: http://studio-5.financialcontent.com/investplace/quote?Symbol=DMND
  29. rushing to get into this year: https://investorplace.com/2012/07/pepsicos-smart-but-late-bet-on-yogurt/

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