Healthier food means healthier profits for investors

Neil Brown, sustainable and responsible investment (SRI) fund manager at Alliance Trust Investments, writes why healthier food is an increasingly important sustainability theme.

The drive for healthier eating represents a significant investment opportunity. Regulatory and consumer pressures are building to try and reduce global obesity through reducing the quantity and improving the quality of the food we eat. This will fundamentally change the competitive landscape for a range of companies in our view, from retailers of packaged foods all the way down to the ingredient providers.

The issue is serious, growing and expensive. Some 35.7% of US adults were considered obese in 2009/10; the number of obese adults in Britain set to double by 2030; and obesity “costs [New York] $4 billion a year in healthcare costs”.

Returning our diets to quality food eaten in sensible portions would provide huge health gains to individuals, reduce the burdens on our healthcare budgets and of course, the real driver for any investor, deliver significant profits for the companies that get us there.

Global obesity was declared an epidemic by the World Health Organisation in 1997 and continues to draw a great deal of media attention. There are signs that this attention is evolving into action as regulations are now being drafted if not passed and consumer change is now widely forecast.

We are focusing on three key trends that we believe will experience above sector growth over the next 5-10 years: natural or ‘free from’; fortified or nutraceutical; and traceability and ethically or securely-sourced. We are looking for exposure to companies exploiting these trends and directly profiting from improving and lengthening the lives of consumers.

We added DSM, a Dutch-based company that provides solutions for nutrition, to our Sustainable Future European funds this quarter as we believe it stands to materially benefit from evolving their company into a specialist nutrition business.

Neil Brown is SRI fund manager at Alliance Trust Investments. This article originally appeared in the Alliance Trust SRI Hub.

Further reading:

The way you cut your meat reflects the way you live

We need to use Grandma as inspiration to bring sustainability back into food

Government should be ‘reinforcing a sense of urgency’ on sustainable food

World wasting up to half of global food

Global food system crisis