How does one cash in on the capsicum craze?
March 26, 2013 1:40 PM Subscribe
Supposing one wanted to cash in on the growing popularity of hot sauce, chiles, hot peppers etc...where should one look to invest? Which companies selling peppers, hot sauces and other fiery foods are publicly traded? Aside from stocks, how else might one invest in the pepper market?
May I ask, what growing popularity? Is there any tangible data to back this idea up? Everything I've ever read says that investing on hunches, or "impressions" of market movement, is a terrible idea; and my experience has backed that up.
posted by IAmBroom at 6:43 PM on March 26, 2013 [3 favorites]
posted by IAmBroom at 6:43 PM on March 26, 2013 [3 favorites]
I think they've been at about the same level of "craze" since 1982 or so. And most operators seem to be small-time cottage industries, not publicly traded.
posted by Miko at 7:50 PM on March 26, 2013 [1 favorite]
posted by Miko at 7:50 PM on March 26, 2013 [1 favorite]
I agree with IAmBroom. Don't trade on hunches or hobbies. Have some concrete data to back up your idea and be objective.
But, just supposing that you had thoroughly researched this trade idea, and you were convinced that companies selling spicy food were going to outperform, how would you express it? It's an interesting question.
The problem you will run into is isolating this "pepper exposure" from broader market conditions; for example, if you buy CMG (Chipotle Mexican Grill) stock, very little of that exposure is going to be directly related to demand for spicy food in particular. Most of the economic factors influencing their stock price - how much extra money do people have to eat out, how much does it cost to buy the burrito ingredients - are going to be the same ones that influence the price of stocks like YUM or DRI, for example.
If you do manage to find some publicly traded company whose entire business is chile peppers or hot sauce, it'd probably be some illiquid name you'd best stay far away from.
To my knowledge, there are no chili pepper futures that a US retail investor could trade (although fun fact, they do apparently trade chili pepper futures in India). But even if you were to trade the futures, you then have to worry about all sorts of other stuff unrelated to your original thesis like droughts, overproduction, etc.
So to summarize, I don't think trading stocks is the best way to invest in spicy food. If you really had conviction, maybe you could make some calls to some small-time hot sauce makers and talk about investing in their business, but that's something I have zero knowledge of.
posted by pravit at 8:11 PM on March 26, 2013
But, just supposing that you had thoroughly researched this trade idea, and you were convinced that companies selling spicy food were going to outperform, how would you express it? It's an interesting question.
The problem you will run into is isolating this "pepper exposure" from broader market conditions; for example, if you buy CMG (Chipotle Mexican Grill) stock, very little of that exposure is going to be directly related to demand for spicy food in particular. Most of the economic factors influencing their stock price - how much extra money do people have to eat out, how much does it cost to buy the burrito ingredients - are going to be the same ones that influence the price of stocks like YUM or DRI, for example.
If you do manage to find some publicly traded company whose entire business is chile peppers or hot sauce, it'd probably be some illiquid name you'd best stay far away from.
To my knowledge, there are no chili pepper futures that a US retail investor could trade (although fun fact, they do apparently trade chili pepper futures in India). But even if you were to trade the futures, you then have to worry about all sorts of other stuff unrelated to your original thesis like droughts, overproduction, etc.
So to summarize, I don't think trading stocks is the best way to invest in spicy food. If you really had conviction, maybe you could make some calls to some small-time hot sauce makers and talk about investing in their business, but that's something I have zero knowledge of.
posted by pravit at 8:11 PM on March 26, 2013
To pravit's last point, there are some small hot pepper-related companies on Kickstarter.
posted by Miko at 8:27 PM on March 26, 2013
posted by Miko at 8:27 PM on March 26, 2013
I tend to think that if this was something you could reasonably pull off, you wouldn't be asking about it here.
I invested in individual stocks for a span of about 6-7 years. In that time, I only had one that I would, with the benefit of hindsight, consider to be an excellent investment. I made the investment based on a gut feeling, which happened to be informed by something that had occupied a good portion of my attention over the previous ~15 years of my young life. I also almost passed on it, until my wife encouraged me to do it.
A couple more I'd consider decent investments. These investments were made on similar gut feelings about companies that I was a customer of, that were both headquartered locally, and hence well reported on in the local news. A few more of my investments I'd consider mediocre, and a number just plain sucked. In general, the poor investments were further outside of my area of expertise and general knowledge that any of the better investments.
I haven't invested in individual stocks in years. I stopped because I realized that while there would be occasions, every 4-5 years, where I might end up knowing a great deal about a promising stock, it would take a lot of work to stay properly informed about even a handful of them, and even more to screen and identify other good investments. Most importantly, I wasn't investing enough money for all that effort to provide a reasonable return on my time and money.
In your case, I'd tend to agree with Miko that your investment thesis is based on a poor understanding of food market trends. I am not as interested in food as I once was (being interested in food is too trendy), but hot food craze was already well underway at least years ago. Furthermore, it is probably best understood as a subset of a much larger trend that has been playing out for at least a half-century: the broadening of the American palette, and the rise of a domestic food culture. This is, itself, fed by other trends, like immigration.
I also agree with Miko and pravit's assessment that the only thing even beginning to resemble a spicy-food pure-play is likely to be a company that isn't publicly traded. This is a very rough guess, but you'd probably need to be able to invest at least $75-100K in a single company, and to have a reasonable chance of success, you'd want to invest in a portfolio of companies, which means that you'd need to have hundreds of thousands of dollars to invest AND be able to wait years to get at any of it, AND be able to loose most or all of it without meeting financial ruin.
For less money, but more of your time, you might be able to start a company that manufactures and markets hot sauce, etc, etc.
If you want to keep pursuing this as a learning experience, I'd suggest that you'd learn more if you tried to dig up likely investment candidates yourself. You need to go far beyond asking strangers on Ask Mefi. You might start by going to some supermarkets and specialty stores and looking at the labels on the backs of all the relevant products, then researching the companies. Are any of them publicly held. If so, look at their financial reports. How broad or narrow is their business, etc, etc.
posted by Good Brain at 11:24 PM on March 26, 2013 [1 favorite]
I invested in individual stocks for a span of about 6-7 years. In that time, I only had one that I would, with the benefit of hindsight, consider to be an excellent investment. I made the investment based on a gut feeling, which happened to be informed by something that had occupied a good portion of my attention over the previous ~15 years of my young life. I also almost passed on it, until my wife encouraged me to do it.
A couple more I'd consider decent investments. These investments were made on similar gut feelings about companies that I was a customer of, that were both headquartered locally, and hence well reported on in the local news. A few more of my investments I'd consider mediocre, and a number just plain sucked. In general, the poor investments were further outside of my area of expertise and general knowledge that any of the better investments.
I haven't invested in individual stocks in years. I stopped because I realized that while there would be occasions, every 4-5 years, where I might end up knowing a great deal about a promising stock, it would take a lot of work to stay properly informed about even a handful of them, and even more to screen and identify other good investments. Most importantly, I wasn't investing enough money for all that effort to provide a reasonable return on my time and money.
In your case, I'd tend to agree with Miko that your investment thesis is based on a poor understanding of food market trends. I am not as interested in food as I once was (being interested in food is too trendy), but hot food craze was already well underway at least years ago. Furthermore, it is probably best understood as a subset of a much larger trend that has been playing out for at least a half-century: the broadening of the American palette, and the rise of a domestic food culture. This is, itself, fed by other trends, like immigration.
I also agree with Miko and pravit's assessment that the only thing even beginning to resemble a spicy-food pure-play is likely to be a company that isn't publicly traded. This is a very rough guess, but you'd probably need to be able to invest at least $75-100K in a single company, and to have a reasonable chance of success, you'd want to invest in a portfolio of companies, which means that you'd need to have hundreds of thousands of dollars to invest AND be able to wait years to get at any of it, AND be able to loose most or all of it without meeting financial ruin.
For less money, but more of your time, you might be able to start a company that manufactures and markets hot sauce, etc, etc.
If you want to keep pursuing this as a learning experience, I'd suggest that you'd learn more if you tried to dig up likely investment candidates yourself. You need to go far beyond asking strangers on Ask Mefi. You might start by going to some supermarkets and specialty stores and looking at the labels on the backs of all the relevant products, then researching the companies. Are any of them publicly held. If so, look at their financial reports. How broad or narrow is their business, etc, etc.
posted by Good Brain at 11:24 PM on March 26, 2013 [1 favorite]
You are years behind the zeitgeist here. Specialty shops selling nothing but endless types of hot sauces opened up, conducted trade, and went under quite a few years back.
If you Google 'upcoming food trends,' you can read page after page of...well, nonsense, and a bunch of things that are actual Things. One person noted for his Mexican cookbooks claims that jalapenos are fading and habaneros are on their way up, and one site claims "the Korean chile paste gochujang" is getting big. And that is it for mentions of pepper. There's no 'craze.'
posted by kmennie at 7:27 AM on March 27, 2013 [1 favorite]
If you Google 'upcoming food trends,' you can read page after page of...well, nonsense, and a bunch of things that are actual Things. One person noted for his Mexican cookbooks claims that jalapenos are fading and habaneros are on their way up, and one site claims "the Korean chile paste gochujang" is getting big. And that is it for mentions of pepper. There's no 'craze.'
posted by kmennie at 7:27 AM on March 27, 2013 [1 favorite]
Buy or start a farm.
posted by TheRedArmy at 1:11 PM on March 27, 2013
posted by TheRedArmy at 1:11 PM on March 27, 2013
This thread is closed to new comments.
posted by Ideefixe at 2:24 PM on March 26, 2013