Investopedia submits:
Investing in food may always seem like a win-win scenario. People must eat no matter what, and as populations grow, so must the food supply. Those are excellent reasons to invest in food-related stocks, but they are no guarantee that all food-related stocks will benefit. Consider Kroger (NYSE: KR), one of the largest supermarket chains in the country. At the beginning of 2009, many analysts would have suggested this stock. It’s a grocery store, and recession-hit consumers were embracing the savings of eating in versus dining. Thus went the reasoning that grocers will do well in this environment. Now, early in 2010, Kroger shares are down over 20%, significantly underperforming the market.
The Retailing Curse
What was forgotten about grocery stores is that they are in effect retailers and are vulnerable to the retailing curse: lots of competition and a wide array of substitutes. So, the result was lots of price competition, which ate into profits. Other grocers like Supervalu (NYSE: SVU) and Safeway (NYSE: SWY) also experienced share price declines in 2009. Costco (Nasdaq: COST), which runs a members-only chain of supermarkets, a slightly different model than traditional grocers, ended the year up nearly 10%.