The Indexes can be a valuable tool for investors to inform their investment research and engagement with the F&B industry.
The industry faces serious nutrition-related risks:
Market/category risks: Consumers in both emerging and developed markets are moving away from less healthy products and demanding a greater range of healthier options. Companies face loss of revenues and market share. “The global carbonated soft drinks (CSD) industry is likely to be the key loser from a decline in sugar consumption. So far mid-calorie products and sweetener innovation in the CSDs industry have generally failed. The outlook for food producers is dependent on how companies choose to develop their product ranges. Those that proactively adapt their portfolios should fare best.” (Morgan Stanley 2015)
Financial risks: Companies’ returns could fall if they do not address nutrition issues proactively and effectively. “Our current estimates suggest that should regulatory pressure and consumer pressure continue at current rates .. the impact on EPS could range between 3 – 25%, depending on exposure to sugar.” (Schroders, 2017).
Legal risks: Governments may increasingly lodge suits to reclaim the costs of healthcare related to poor diets. For example, in the US 16 states have brought lawsuits claiming companies are responsible for increased medical expenditure (Bernstein 2017). Commentators have suggested that companies may in future also face consumer class-action lawsuits.
Regulatory risks: A wide range of policies, regulations, taxes and other measures have already been introduced and others are expected, aimed at reducing consumer exposure to, and consumption of, less healthy foods and beverages while encouraging consumption of healthier products. Examples include revised daily reference intakes or similar guidelines, measures to restrict advertising of less healthy products to children, regulations on the use of health and nutrition claims, stronger food labelling requirements, sugar taxes, fat taxes and other fiscal policies.
Reputational risks: Public and media awareness of poor diets and unhealthy foods is now widespread. F&B manufacturers are targets of scrutiny and criticism by consumer advocacy groups and consumers which can damage brand and corporate reputations, potentially undermining their revenues.
On the other hand, investments in nutrition also have potential to contribute positively to F&B companies’ financial performance. It is therefore important for investors to assess how F&B manufacturers are capitalising on nutrition-related business opportunities, such as:
To date, more than 60 investment firms have signed the Access to Nutrition Index Investor Statement. These investors recognize that health and nutrition are among the most important drivers of future growth in the food and beverage sector and that those manufacturers that are most effective in anticipating and responding to these factors will be better positioned to deliver superior and more sustained financial performance over time.
To read more about ATNF Investor Signatories please go to the Investor Signatory section on ATNF’s website.
The Access to Nutrition Index rates food and beverage manufacturers´ nutrition-related policies, practices and disclosures worldwide on a recurring basis.
Access to Nutrition Foundation
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