Losing pounds is making some companies a fat profit
The obesity epidemic is fuelling a global market that could be worth £1 trillio from gastric bands, gyms and diet bars within four years.23-07-2008
'The global obesity "epidemic" will have a material impact on global business strategy over the next decade,' say analysts at Credit Suisse in their report on the investment implications. 'A greater awareness about its costs is not only changing society but infiltrating the business world in healthcare and other major industries,' the report says. It claims the companies best placed to benefit from the development are those devising products that either help people to lead 'healthier' lives - examples include Coca-Cola's Coke Zero launch and the Nintendo Wii - or that treat the symptoms of obesity. Not surprisingly, analysts see the greatest opportunity for food and drink manufacturers, with rising sales of diet colas and low-fat snacks expected to fuel market growth of 9.3 per cent a year, creating a consumer goods category worth $1.4 trillion by 2012. Credit Suisse suggests that companies such as Danone, with its focus on yoghurts, and Kellogg's are well-placed but suggests that the likes of Heinz, with its large frozen meals business, and confectioner Cadbury could suffer. However, Datamonitor analyst Matthew Adams points out that companies may have to break with a past in which they have pursued relentless volume growth, a strategy, it is argued, that has contributed to obesity rates. He suggests companies may opt to cash in on the consumer trend to move upmarket, where customers pay more for food or drink of a perceived higher quality. 'There will always be an opportunity with diet colas, but there is an issue that the taste is not quite as good and the consumer feels that they have compromised,' he says. Adams cites the growth of brands such as Innocent and Copella, which make healthy drinks, and suggests that firms may choose to buy brands that have captured the imagination of consumers or, alternatively, play to their heritage. 'Cadbury has the option of reminding consumers that its chocolate is a quality, indulgent product,' he says.
