Evidenced by the implementation of the tax – and its increase one year on, we believe that sugar – globally – has become an increasingly important driver of the food and beverage industry and that there are key catalysts that could result in Big Food becoming the next Big Tobacco, potentially resulting in lower sales growth, higher costs and large scale litigation.
Sugar consumption and its contribution to a wide range of health problems, such as diabetes, high blood pressure and obesity (which collectively are known as metabolic syndrome), are central to this risk.
Below we take a look at the risks, how the industry is responding and why investors and the investment industry should be incorporating this risk into investment processes.
Sugar risk are on the rise. We believe that trends such as the implementation of sugar taxes, regulations regarding advertising and selling practices, and ongoing changes in consumer tastes will continue to create headwinds for the food and beverages sector. Food companies now face greater pressure to reformulate and innovate to protect future earnings.