SUGAR TAXES & NUTRITION – AN INVESTMENT PERSPECTIVE Nutrition is a key investment theme The UK Sugar tax, announced in March, is not unprecedented in a global context Investors should look to shifting market dynamics, as well as short-term share price impacts Rose Beale Responsible Investment Analyst Interest in nutrition as an investment theme is increasing. The issue is increasingly prominent on a global stage: around a third of people are suffering malnutrition, which includes obesity as 1 well as micronutrient deficiency. Other factors catalysing investment interest include the counter-balancing trends towards ‘healthier’ food and beverages, and enhanced government scrutiny on the issue. In light of the sugar levy announced in the UK budget, we review similar French and Mexican measures, drawing on the work of researchers and national health bodies. Drawing on our wider work on the theme, we also explore some of the possible implications, and potential opportunities, that it provokes. The UK: The sugar tax will be levied on producers and importers of soft drinks that contain added sugar. It will be implemented in 2018, leaving time for companies to adjust their product mix. There will be two bands: one for total sugar content above 5 grams per 100 millilitres, and 2 a higher band for drinks with more than 8 grams per 100 millilitres. The Office for Budget Responsibility thus predicts material price rises on high-sugar products: as much as 80% on a two-litre bottle of own-brand cola. France: The UK tax is not unprecedented in a European context. As early as January 2012, France imposed a tax on drinks with added sugar and sweeteners (€7.16 per hl). It is levied on French manufacturers, importers and outlets serving prepared drinks with added sugar or 3 sweeteners. Following the introduction of the tax carbonate volumes immediately began to 4 decline, falling c.2% in 2012, 2013 and 2014, having grown by c.2% the previous 3 years. Other high sugar categories, juice and concentrates, continued growing at roughly the same 5 rate as that prior to 2012, but declined in 2014 due to consumer trends. Mexico: Similarly, Mexico imposed an excise duty in 2014 on sweetened beverages of MXN$1.00 per Litre, which fell on carbonates, juices and energy drinks containing sugar, but 1
International Food Policy Research Institute, Global Nutrition Report 2015. HM Treasury, Budget 2016, March 2016. 3 World Health Organization,. Using Price Policies to Promote Healthier Diets, 2015. 4 Bank of America Merrill Lynch, Thematic Investing, 18 March 2016. 5 Bank of America Merrill Lynch, Thematic Investing, 18 March 2016. 2
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