Obesity is a ‘global sustainability megatrend’ likely to take decades to address – but it could also provide opportunities for investors looking to support those industries aiming to be part of the solution, including parts of the food industry, according to a new report.
The report, from Bank of America Merrill Lynch, is called “Globesity – The Global Fight Against Obesity”. It says that 50-60% of the world’s population is on track to be obese within the next 30 years, following a more than doubling of the obese population over the past 30 years, reaching 500m people today, with a further 1.4bn people overweight, according to the World Health Organization.
The report identifies the food industry and the commercial weight loss, diet management and nutrition industry as two areas with big potential for investors. Although the food industry repeatedly has been identified as part of the obesity problem – by offering cheap, palatable, energy dense foods through improved distribution systems, for example – the report acknowledges that the food industry is responding to the issue of obesity.
Health and wellness
“We believe that a number of stocks are well placed to benefit from the theme of healthier food as a means of fighting global obesity,” the report said.
Food companies with health and wellness-centered product portfolios were particularly well-placed, it said, and the focus on health and wellness could include naturally healthy foods, fortified or functional, better for you, or organic foods, or fresh produce and juices. Meanwhile, firms positioning themselves as offering better for you foods through reformulation to reduce saturated fat, sugar and sodium may also benefit from this strategy.
It suggests that the way food companies position themselves and their actions in relation to the obesity crisis could make them attractive or unattractive to investors, as the world struggles with “potentially overwhelming” obesity-related medical costs.
Weight loss industry
As for the diet management sector, the report cites figures suggesting about 108m US adults are likely to go on a diet during 2012.
“Many stocks have exposure to weight loss, diet management and nutrition as a means of fighting global obesity through their involvement in areas such as: commercial weight loss center chains, dietary and weight management supplements, meal replacement products, multi-level marketers that sell weight management products, nutrition, and the VMS [vitamin and mineral supplements] industry, among others,” it said.
Other areas that may be interesting in terms of obesity treatment include sports equipment and apparel, which the report calls “a longer-term play” as doctors urge obese patients to increase physical activity, and pharmaceuticals and health care.
More information on the report is available online here .