Obesity has tripled since 1975, with its growth accelerating over the last decade. More than 1.9 billion adults aged 18-plus are overweight, according to the World Health Organization – over 650 million of them obese. Yet, healthcare and lost economic productivity means obesity costs USD2 trillion a year globally – 2.8 per cent of the world's GDP.
The causes of obesity are complex: lifestyle changes, the amount we eat – and consuming processed foods. Most calories in standard US and UK diets come from ultra-processed foods, despite their consisting of high percentages of sugar, salt, and fat. But processed foods sell because they are cheap and convenient.
Although obesity is often considered a problem of high-income countries, demographic changes mean obesity rates are now rising in low- and middle-income countries too. Food & drink sales are growing almost five times faster in emerging markets than in developed economies.
In low-income countries, companies often promote these products as ways to alleviate hunger, but in some countries, obesity and under-nutrition have increased.
Globally, policymakers are introducing taxes or mandatory food-labelling schemes to curb consuming unhealthy foods. Consumption has fallen modestly, but with no appreciable change in obesity rates. However, taxes have been narrowly focused on sugar: the global food system, particularly commodity subsidies, makes it resistant to pressure from policymakers.
Agricultural subsidies in the top 21 food-producing countries cost almost USD500 billion a year, with sugar, corn, soy, dairy and wheat among the most heavily subsidised commodities – even though heavily-supported foods in developed economies form the basis of many ultra-processed foods.
While governments urge citizens to eat fruit, vegetables and whole grains, and to moderate their dairy consumption, agricultural subsidies are focused on the building blocks of processed foods.
Whether commodity subsidies are directly correlated with obesity misses the point: they encourage cultivation of dangerous crops at the expense of others.
Commodity subsidies may support a national interest, but at the expense of a rising obesity epidemic. Without a willingness to address the agricultural policies that have de-risked certain commodities, there is little chance that effective government action will reduce obesity rates globally – or substantially decrease sales of processed foods.
Companies use sugar, salt and fat because it makes food taste better. Studies have shown that we prefer sweet tastes from birth. Processed foods also offer higher profit margins and longer life-cycles.
People buy processed foods because of availability, price and convenience. But we don't grow enough minimally processed foods and there are not enough fruits and vegetables grown globally to supply the amount recommended by nutritionists.
Historically, food and beverage companies and their industry associations have shaped the popular discourse surrounding food, sponsoring studies that support their own case. But we are now in an era of greater transparency; publicity is making consumers more sceptical.
While countries that are net importers of agricultural products may impose taxes, the primary risk that food companies face is not from governments, but from the public. Consumers in both developing and emerging markets are beginning to turn away from products and brands that they perceive to be inauthentic and unhealthy.
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The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Tessie Petion
Equities: Stock ratings and basis for financial analysis
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