High inflation, the ongoing geopolitical issues, and the extended COVID-19 lockdowns in China have been weighing heavily on investor sentiment lately. Rising energy prices, transportation costs, and supply chain disruptions have been pushing food prices higher. However, the stable demand for packaged food products should allow companies in this space to pass on rising input costs to the customers. Also, rapid digitalization of operations and new product launches should drive the industry’s growth.
Investor interest in this consumer defensive industry is evident from the First Trust Nasdaq Food & Beverage ETF’s (FTXG) 4.6% gains over the past three months versus the SPDR S&P 500 Trust ETF’s (SPY) 6.6% loss. The global packaged food market is expected to grow at a 6.3% CAGR to $4.26 trillion by 2026.
