The intended Department of Health and Human Services nominee Robert F. Kennedy Jr. could push through policies that will provide a tailwind for some food and beverage stocks, despite the pressure the sector has seen since news of his potential appointment. “A knock-on effect of RFK could be expansion of an already strong trend toward healthy eating,” Wells Fargo equity analyst Edward Kelly wrote in a Monday note. “This could drive increased consumption of higher margin fresh, natural, and organic products.” Kennedy is a vaccine skeptic and he opposes artificial ingredients. These stances have recently led to a pull back in biotechnology stocks , while food and beverage stocks also came under pressure in recent days due to President-elect Donald Trump’s plans to nominate Kennedy to lead HHS, which oversees the Food and Drug Administration. Packaged food from companies including PepsiCo and Lamb Weston use artificial ingredients. Since Kennedy regularly denounces processed foods, there is concern that the companies will need to reformulate products to meet new standards. Shares of Pepsi have tumbled nearly 5% over the past week, while Lamb Weston shares are down about 7%. Bank of America analyst Bryan Spillane cited flavor and seasoning company McCormick as a possible beneficiary if Kennedy is confirmed, saying food and beverage manufacturers may turn to their spices to make up for a loss of artificial flavors. Shares of McCormick have ticked up more than 9% in 2024. Spillane also said that the company can benefit from its products making their way toward more visible sections of grocery stores, specifically closer to both protein and produce, if Kennedy makes good on his healthy eating campaign. MKC YTD mountain McCormick stock. To be sure, McCormick’s spices sometimes contain processed ingredients like sunflower oil and so-called natural flavors, a catch-all term, which under the FDA’s current guidelines , can include a wide range of ingredients used in trace amounts. Elsewhere, Wells Fargo listed grocers Kroger and Albertsons as stocks to watch as both have a large offering of fresh foods and are trading at a reasonable valuation. Both Kroger and Albertsons offer a wide array of products that are well positioned even as consumers face pesky inflation, which could be another tailwind, according to Kelly. He maintains an overweight rating on both stocks. KR ACI YTD mountain Bank of America lists both Kroger and Albertsons as potential beneficiaries under if RFK Jr. is confirmed to lead HHS. The analyst also pointed towards Sprouts Farmers Market as another potential beneficiary, but noted some skepticism over the stock’s pricey valuation. Sprouts’ stock has nearly tripled since the start of the year. Shares of Kroger have advanced more than 26% in 2024, while Albertsons stock has pulled back about 17%. The stocks have been impacted by uncertainty over their pending merger . Kroger agreed to purchase Albertsons in late 2022 for nearly $25 billion, but the combination has been heavily scrutinized by regulators . Investors hope that Trump’s promise of looser regulations will allow the deal to close .
