2015 was the year when the abstract theme of the "Asian food boom" really worked in favour of specific businesses on the ASX. The theory goes that as populations urbanise and also become more wealthy, the demand for higher value foods and drink will grow alongside them.
Australia is one of a handful of countries uniquely positioned to benefit from this theme, as it enjoys a perception among these consumers that it is a producer of clean, high quality and untainted food and drink.
The story of Blackmores Limited (ASX: BKL) and its rise from $30 to above $200 is one that even non-investors are now familiar with, while infant formula makers also enjoyed an incredibly lucrative year.
So what are some other businesses that are leveraged to the growing middle class of Asia and their seemingly insatiable desire for Australian food products?
Australian Agricultural Company Ltd (ASX: AAC) is one example of a stock that directly benefits from the proven trend that shows that as populations become wealthier, the demand for meat products grows. Australian Agricultural Co is based on the Northern Territory, and is an exporter to Asian markets, primarily of high-quality beef products. Interestingly, it also stands to benefit from predicted drought conditions, as decreased supply has the effect of raising prices.
Another company benefitting from an extended period of drought is Select Harvests Limited (ASX: SHV). Select Harvests is one of the largest almond producers in the world, with the majority of growers located in California, which has been plagued by drought in recent years.
This has seen the average price per kilogram of almonds grown by Select Harvests boom, which has also allowed the company to reinvest the greater profits in initiatives that increase crop yields.
Select Harvests is also likely to benefit from the increasing uptake of almond milk as a lactose alternative in Western markets, a trend that will likely be replicated in Asian markets as the rate of lactose intolerance per capita is generally higher in those countries.
Still on the theme of nuts, Webster Limited (ASX: WBA) is a grower of walnuts. While not benefitting from the same pricing boom that has affected almonds, walnut prices worldwide have increased over the past year, and are predicted to continue to do so. In addition, Webster has an interesting asset in terms of its water rights from the Murray-Darling system, which increase in value when conditions are dry.
In much the way that mining services stocks were a more stable way to gain exposure to the mining boom than investing in pure play miners, Ridley Corporation Ltd (ASX: RIC) is a way to invest in agriculture and food without being exposed to actual products.
Ridley is in the business of supplying feedstock to farmers and companies across the nation. Put simply, as more animals are reared to meet increasing demand, the amount of food required to feed them grows as well. For this reason, Ridley could be a stable long-term play on increased agricultural output from Australia.
Finally, moving to the fruit and vegetable space, Costa Group Holdings Ltd (ASX: CGC) is a company that allows investors to own a part of the dominant berry, tomato, citrus and mushroom supplier to the nation's supermarkets. Costa is an interesting company in that it has attempted to mitigate the typical weather related risk that come with investing in agriculture through technology.
As a result, the majority of Costa's crops are grown in greenhouses, or using innovative farming techniques that limit or eliminate the risk of storms, wild winds and drought. The company has an interesting opportunity to licence this intellectual property to growers in other regions of the world to help improve crop yields, which would open up an attractive new revenue stream for it.
Of the stocks in the list above, Costa and Ridley are the best placed from a business strategy point of view, while Select Harvests has the most leverage to rising prices due to the adverse conditions affecting the majority of its competitors.
