The sugar content of food and drinks played an unseen role in the Covid-19 death toll, says engagement specialist Peter van der Werf.
He says food companies need to accelerate plans to take sugar out of their products, as it is a major cause of obesity and diabetes, which has made people more vulnerable to dying from the coronavirus.
Research by the UK’s National Health Service shows that one-third of the people who died from Covid-19 had either Type 1 or Type 2 diabetes, a condition in which the body can’t make its own insulin, requiring lifelong treatment.1
The coronavirus is known to more adversely affect people with underlying health conditions as it causes the immune system to go haywire, leading to a higher death toll among diabetics, along with the elderly and infirm. More than 400 million people in the world now have diabetes, or one in ten of the adult population, while one-third of all US adults are obese.2
Aside from the health issues, the negative impact on the performance of a company using sugar in its processes can be significant. The costs associated with obesity include increased health care expenses, decreased productivity and premature deaths. Because of this, food and beverage companies face regulatory, reputational, legal and market risks.
Examples include governments in both high- and lower-income countries that are introducing a sugar tax, or are restricting advertising of less-healthy products to children. Regulation is increasing over the use of health and nutrition claims, while food labelling requirements are being strengthened. Ultimately, companies that do not adjust to changing dietary preferences may lose market share, revenues and profits.
“Sugar has contributed strongly to the current global obesity crisis, and to the onset of diabetes, given its presence in almost all packaged food or drinks,” says Van der Werf, who focuses on engagement with the sector.
“The economic costs of obesity are clear; USD 2 trillion annually, or nearly 3% of global GDP. It is estimated that obesity, along with smoking and armed violence, is one of the top three social burdens induced by humans.”
“Sugar has a direct link with one-third of the Covid-19 fatalities as these were associated with diabetes. In the US, researchers found that people with diabetes who contracted Covid-19 were twice as likely to die within a week than non-diabetic patients.”
Robeco is concluding a three-year engagement program with eight companies in the food and beverage industry that aimed to encourage them to use less sugar in their products.
“The engagement called on them to speed up product reformulation and innovation to ensure a successful business model in the long run, and all eight companies have made good progress with this,” Van der Werf says. “This has led to a 10% drop in the sugar content on average.”
“But when it comes to communicating this, many companies initially opted for ‘stealth reformulation’ – by only mentioning on the back of the packet that the product’s sugar content has been reduced. This is due to the negative reaction that their consumers often give to prominent announcements of sugar reduction, resulting in a sharp drop in sales.”
“We also remain concerned about the large volumes of sugar that are still sold to consumers as part of processed foods, especially as this pertains to some of the flagship legacy products that remain a very important cornerstone of their product portfolios.”
Innovation has proved key in producing more nutritious foods that are increasingly demanded by a more health-conscious society, he says. The companies that don’t reformulate face a backlash for the ‘social risks of sugar’ in the same way that tobacco eventually became socially unacceptable to the mass market.
“Not all companies under engagement have made the level of progress on innovation management that we expect from the food industry,” Van der Werf says. “The leading companies have made larger shifts in strategy towards healthy product categories, which we think provides the best future-proof strategy when it comes to minimizing the social risk of sugar.”
“Other companies indicated that in general, having healthy attributes are an important consideration for any new product launch. However, some remain heavily vested in high-sugar carbonated soft drinks, or are expanding into energy drinks with a high sugar content. Or they are continuing to focus on highly processed food products which in most cases need sugar to make them palatable for consumers.”
With a much greater focus on the fragility of human health brought about by the coronavirus pandemic, Van der Werf says this may now accelerate moves to lower the sugar content of food and drinks.
“The Covid-19 pandemic has further strengthened our view that obesity is an important global health risk with a significant economic impact,” he says.
“The food industry will be held accountable for its future role in marketing high-sugar products for consumers who are not able to make dietary choices that prevent obesity. This obesity risk therefore continues to be a long-term overhang for the industry.”
Also read: food sustainability
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor. Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States.
This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.