Nutrition Industry Stocks Rebound Significantly in 2009


After enduring a forgettable 2008, recovery was the name of the game for nutrition industry stocks in 2009. Despite staggering 37% losses in 2008, the NBJ Price Index was able to make up all the lost ground—and then some—as it posted gains of 48% in 2009. The year-end market cap totaled just $13.7 billion in 2008; in 2009, the market cap nearly hit the $23 billion mark—adding almost $10 billion dollars to a fledgling market.

Fittingly, retailers were the first to see rebounds on Wall Street, as they also endured the steepest declines in 2008. NBJ’s retail and distribution segment—which was led by the 2009 stock performances of Whole Foods Market and United Natural Foods, Inc. (UNFI)—followed up 2008’s 72% loss with a 92% increase in 2009. Whole Foods’ turnaround was an impressive feat for a company that began the year trading at under $10 per share. By the end of 2009, WFMI shares had risen 191% and closed at $27.45. The company’s market cap is now approaching $4 billion after last year’s close of $1.3 billion. UNFI grew its share price by exactly 50% in 2009 and increased its market cap by nearly $400 million. It’s also worth noting that Vitamin Shoppe and Vitacost.com both filed successful initial public offerings in 2009, which raised a collective $280 million (but are not included in NBJ’s 2009 Price Index).

In the multi-level/network marketing segment, publicly traded companies were given a boost by an increase in distributors and subsequent sales gains. Medifast—a 2008 NBJ stock performance award winner and one of the only companies to post positive growth in 2008—followed up its solid 2008 performance with an impressive 2009 that saw the company increase its share price by more than 400%. The weight-loss meal specialist increased its market cap by nearly $400 million and shares closed the year trading at $30.58—compared to last year’s close of $5.52. Herbalife and Nu Skin Enterprises also had very impressive years, growing their respective share prices by 87% and 158%. Nu Skin is one of NBJ’s 2009 stock performance award winners, and used its new patented ageLOC technology to drive more than $1.3 billion in global sales and increasing its market cap by $556 million.

Publicly traded supplement manufacturers and marketers returned a mixed bag in 2009, with four companies posting gains, three posting losses and one coming in flat. NBTY grew its share price by 178% in 2009, which was good enough to earn the company a 2009 NBJ stock performance award. In the fiscal second quarter the company’s wholesale division saw revenue increases of 35% and net sales increased 12%. Analysts such as RBC Capital upgraded the stock from “Sector Perform” to “Outperform” status, and NBTY’s share price shot up 34% over a five day period. Shares were trading at $43.54 by year’s end. Martek Biosciences endured a $374 million hit to its market cap in 2009 and saw its share price devalued by 37%. None of the other supplement companies tracked by NBJ had a market cap of more than $220 million.

The natural beverage segment saw an increase of 65% in 2009. This was driven primarily by Green Mountain Coffee Roasters, whose stock was trading at a hefty $81.47 per share to close the year. Hansen Natural saw increases of 15% on the year and the two companies combined market cap topped the $7 billion mark. Whole Foods is the only company tracked by NBJ with a larger market cap than Green Mountain and Hansen.

The natural foods segment was the only segment to decline in 2009, with four of the five companies in the segment posting Wall-Street losses in 2009. Lifeway Foods—known for its organic kefir—was the lone bright spot in the segment: The company’s stock experienced gains of 32% and a market cap increase of $50 million. The Hain Celestial Group took an 11% hit on its share price in 2009, while Smart Balance could not keep up with its 2008 pace and backtracked 12%.

In total, five of the six NBJ-tracked segments posted positive growth in 2009. Dropping off the NBJ Price Index in 2009 were Monterey Pasta and Organic to GoFood Corp., which were both delisted. NBJ subscribers can read more about NBJ’s three stock performance award winners in the upcoming Awards and Executive Review issue, which publishes later this month. Subscribe to NBJ or download a free sample issue via the NBJ Website.

Related NBJ Links:
NBJ Video Interview: PCGA’s Janica Lane Dishes on Nutrition Industry Investment
From Vitamin Shoppe IPO to NCN V, Investment Landscape Looking Brighter for Nutrition Firms
Nutrition Investors Start 2010 with ‘Guarded Optimism’

Related Functional Ingredients Magazine links:
Stocks of Two Natural Products Companies Make the Top 20 List


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