Coronavirus Raises Existential Question for Sector With US$3 Trillion Turnover Worldwide

RIO DE JANEIRO, BRAZIL – Since his near-death by Covid-19 earlier this year, UK Prime Minister Boris Johnson went on a mission to reduce his and his fellow citizen’s girth.

The relationship between obesity and more severe coronavirus cases helped inspire Johnson to relinquish his liberal stance in favor of state intervention in recent months. His government has now made a proposal to restrict junk food advertising, ban certain promotions of sugary and fatty foods, and force cafes and restaurants to display calorie labels on more products.

The increased control has given investors in the global food and beverage industry, which generates US$3 trillion worldwide, cause for concern. As the pandemic highlights the importance of a healthy diet, governments other than the UK may choose to enforce more measures against obesity, further changing the way soft drinks, breakfast cereals, chocolate bars, and ready-made meals manufacturers do business.

“We see that Covid could very well bolster healthier choices and regulations,” said David Czupryna, head of environmental and social development and governance at Paris-based Candriam, which manages some US$143 billion in assets.

“To place highly damaging products on the market is a very poor way to care for one’s customers. Authorities may very well decide to target companies that are the main culprits for unhealthy eating behavior.”

Czupryna says his asset management company sees health and obesity issues as “a very serious risk” for companies involved in the manufacture of fast-food and sugary beverages with the “size of their market shrinking due to regulations and a change in consumer behavior” in the near future.

“That’s why we incorporate this aspect so much in our analyses, which may lead us to refrain from investing in some companies and to prefer those that offer healthier and more nutritious food options,” he says.

As economies sink and unemployment reaches record levels, millions of people are trying to balance their budgets with the need for vital portions of fresh fruit, vegetables, and protein.

Some three billion people can not afford healthy, nutritious diets, and if the global increase in unhealthy diets and obesity is not addressed, related health costs will exceed US$1.3 trillion per year over the next decade, according to the United Nations.

Obesity has nearly tripled globally over the past four decades and has increased worldwide. Research shows that obese and overweight people are at greater risk of Covid-19 complications and death while being vulnerable to conditions such as diabetes, heart disease, strokes, and cancer.

Source: Bloomberg