Food & Health – Benefiting from the trend towards a healthier lifestyle

Food & Health – Benefiting from the trend towards a healthier lifestyle

30-07-2014 | Insight

More and more people across the world are adopting an unhealthy lifestyle that could lead to health problems as they get older. Excessive consumption of certain foods and drinks is a big part of this problem, so food and beverage makers are under increasing pressure to respond to this issue. Those that fail to respond, run the risk of suffering falling revenues: Changes in the regulatory and taxation systems, lawsuits, and consumer pressure are all driving the need for companies to change. Those that respond to this issue effectively will maximize their chances of achieving a sustainable, reputable operating model over the longer term.

  • Peter van der Werf
    van der Werf
    Engagement Specialist

Consumption of sugar and high-fructose corn syrup (HFCS) has increased dramatically over the past few decades. The global average daily consumption of sugar and HFCS is now 70 grams (equivalent to 17 teaspoons) per person each day, up 46% over the past 30 years. This is equivalent to 280 calories per day. Consumption varies considerably from country to country. Near the top, we find Brazil, Argentina, Australia, and Mexico, all of which consume more than double the global average. But it is the US that consumes the most sugar, with an average figure of 40 teaspoons of sugar per person each day.

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates

Discussion on health risks of sugar consumption

On May 22, Robeco hosted a session with a leading expert on the health implications of sugar consumption, Dr. Robert Lustig, Professor of Pediatrics at the University of California, San Francisco and Director of the Weight Assessment for Teen and Child Health (WATCH) Program. Dr. Lustig has been conducting clinical research focusing on the regulation of energy balance by the central nervous system for the past two decades. 

He presented some of his research findings: 

  1. While medical research is yet to prove conclusively that sugar is the leading cause of obesity, Type 2 diabetes and metabolic syndrome (a disorder of energy use and storage), the balance of recent medical research is coalescing around this conclusion. 
  2. Genetic variations in insulin response are an important factorin how the body responds to sugar, and enable some people to tolerate more sugar than others. 
  3. The body handles liquid and solid "sugar calories" differently, even if the overall number of calories consumed is the same. Unsurprisingly, the debate has centered on soft drinks and the role they play in public health.

The cost to society of diabetes

Diabetes is having a significant impact on society due to the high cost of treating the growing number of sufferers. There is no cure for diabetes, and patients require lifetime treatment that is increasingly expensive due to complications that appear after 10 to 20 years of treatment. Dr. Lustig expects a third of US citizens to be diabetic by 2050, resulting in huge costs to American society.

Danone: a responsible product portfolio

People are becoming more and more aware of the long-term dangers of an unhealthy lifestyle. This trend is particularly apparent among better-educated members of society who are more mindful of the risks of developing Type 2 diabetes due to high sugar consumption. 

Some companies in our ‘Food & Health’ theme have a more responsible product portfolio than other companies in the peer group. Companies that could benefit include Nestlé and Danone. Danone is a food and beverages company that operates across four business lines: Fresh Dairy Products, Waters, Baby Nutrition and Medical Nutrition.

A successful dialogue with Danone on Food & Health

The aims of our ‘Food & Health’ engagement theme include encouraging companies to increase the number of healthy products in their product portfolios, and to market their products to children and other consumers responsibly. We also encourage companies to disclose their strategy on obesity and how they are reacting to the latest developments related to this issue. 

Our dialogue with Danone goes back to 2012, when we had an initial conference call with the company, which gave us a good overview of its marketing practices. The company has been fined by regulators for making unsubstantiated claims about the health benefits of its probiotics (foods containing certain micro-organisms) in the past, but now its marketing practices are industry-standard. 

Our research suggests that Danone has committed to responsible marketing to children by increasing the percentage of its advertising that is in line with the International Chamber of Commerce (ICC) code, which forbids marketing that promotes behavior incompatible with a healthy lifestyle. This code places heavy emphasis on a lack of physical exercise and excessive consumption of unhealthy products. 94% of Danone’s Fresh Dairy Products and Waters divisions’ total advertising spending now complies with the ICC Code. 

What’s more, the company and its subsidiaries have been developing educational material for children to promote a healthier lifestyle. In Belgium, for example, Danone has now rolled out its "Bon appétit, bouge ta santé" (Enjoy your meal, and move for health) program to all primary school children in the country. When the program started in 2011, it only reached a third of schools. 

Regarding the proportion of healthy products in its portfolio, we indicated in our earlier analysis that Danone had little room to improve as its portfolio already consisted mainly of healthy products. In retrospect, we recognize that Danone made significant business strategy decisions back in 2005 to leave behind its less healthy beer, sweets and sauces divisions and focus on four healthier strategies including low sugar products. It reports that in 2011, 45% of sales of newly launched products were of healthy options. 

We regard Danone’s disclosure of sales volumes of healthy products as leading practice compared to other companies in our ‘Food & Health’ peer group. And its efforts also resulted in Danone taking number 1 position in the 2013 Access to Nutrition Index (a ranking by an independent foundation based on companies’ contribution to addressing poor nutrition and related diseases). 

This quarter we closed our dialogue with Danone. Based on the company’s progress, we closed the 'Responsible marketing to children' objective and upgraded ‘Quantitative targets for healthier products’ to ‘positive progress’. With the changes the company has implemented, our success threshold has been met.

Subjects related to this article are:

Important legal information

The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.

The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.

Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult for a list of FINMA registered funds.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.

This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.

I Disagree