Sugar-dependent industries could be facing leaner times
Food manufacturers could be facing their tobacco moment as growing consumer awareness on wellbeing turns towards commodities such as sugar, according to a global report by the Credit Suisse Research Institute.
The report highlighted the need for the food and beverage industry to tackle head on the focus on obesity by joining a diversification into new healthier products.
"The potential for a surge in negative public opinion and the looming threat of regulation and taxation are issues that the food and beverage industry clearly must address, though the extent to which they can do so without hurting their current business models is up for question," said the report's authors, Credit Suisse private banking's Giles Keating and investment banking's Stefano Natella.
"From the expansion of 'high-intensity' natural sweeteners to an increase in social responsibility messages from the beverage manufacturers, we see green shoots for dietary changes and social health advancement."
Australians are among the world's biggest sugar consumers, joining the US, Brazil and Argentina in taking in more than double the world's average of 17 teaspoons a day, the report said. The American Heart Association recommends six teaspoons of added sugar for women and nine for men.
Australia is also the world's third-largest raw sugar supplier, with production valued at $1.7 billion to $2 billion a year, according to Canegrowers, the peak body for Australian sugarcane growers.
"I think people don't understand that when they or their child drink one glass of sugary soft drink, it would be equivalent to watching your child put six scoops of sugar in a cup of tea, which none of us would tolerate," Public Health Association of Australia's chief executive Michael Moore said.
The Credit Suisse report surveyed general practitioners across the US, Europe and Asia and found 90 per cent believed the growth in type 2 diabetes and the current obesity epidemic were strongly linked to excess sugar consumption. The World Health Organisation projects diabetes will be the seventh-leading cause of death in 2030. The investment bank estimated the costs to the global healthcare system at $US470 billion ($488 billion).
Changing the amount of types of sugar in foods could be a challenge, given the "legendary ... extensive lobbying power of the sugar industry", the report stated.
Even so, Credit Suisse private banking's chief investment strategist for Australia, David McDonald, said food and beverage companies could adjust product ranges to meet changing consumer tastes and health concerns.
"If you are a tobacco producer, there wasn't a lot you could do, because that was what you made. Whereas if you are a Coca-Cola or a Nestle, you can say, 'Let's start promoting Diet Coke and things like that'," Mr McDonald said. By self-regulating and adjusting their range, companies could reduce the risk of government-imposed regulations and tax measures.
A shift in consumer tastes could affect sugar exporters such as Australia and hit sugar's price in the long term if demand falls, Mr McDonald said.