Credit Suisse Publishes Report on the Impact of Global Sugar Consumption

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Sep 11, 2013, 09:36 ET

NEW YORK, Sept. 11, 2013 /PRNewswire/ -- The Credit Suisse Research Institute today released a report entitled "Sugar: Consumption at a Crossroads." The report explores the medical, economic, consumer, corporate and public policy elements of global sugar consumption and the impact for investors as focus on this area intensifies.

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The fast growth of diabetes type II, metabolic syndrome, obesity and their related nutritional issues are arguably this century's primary social health concern. The report explores the impact of "sugar and sweeteners" on our diets and leverages the expertise of over 20 research analysts and industry experts to assess the impact on companies as the landscape of consumer preferences and public policy is potentially redrawn.

To provide new insights on the debate, the report includes a proprietary survey of general practitioners in the US, Europe and Asia. The survey found that 90 percent of the doctors surveyed believed that the sharp growth in type II diabetes and the current obesity epidemic are strongly linked to excess sugar consumption. "Although causality is difficult to prove in this area, with such a high percentage of doctors in our proprietary survey confident of this strong link, we cannot ignore the significance and the implications for society and our economy," says Stefano Natella, Co-Head of Securities Research & Analytics and an author of the study.

Among the potential public responses, taxation might be the most effective but also less likely with the exception of Mexico and some European countries. However, the risk of public intervention and increasing public awareness will force companies to adapt as consumers gradually move towards healthier options that utilize high-intensity natural sweeteners. This provides challenges and opportunities for both companies and investors.

"The scale and cost of the type II diabetes and obesity epidemic leaves little question as to the need for change. This change will bring new investment opportunities with winners and losers," said Giles Keating, Head of Research for Private Banking and Wealth Management. "This report provides investors with insight into an emerging megatrend that will help shape the evolution of the investment world."

Key findings in the report include:

Medical

Type II Diabetes is growing at 4% a year vs. obesity 1-2% with 370 million affected globally: 4.8 million people died of diabetes in 2012 versus 5.6 million for smoke related diseases. Resulting in a healthcare bill of $500 billion or over 10% of global healthcare spending.
The response to sugar intake is genetically individual and liquids and solids are handled differently by each person. As a result, beverages with high caloric content have played major role in the obesity epidemic and type II diabetes.
82% of the doctors surveyed in the US and Europe believe that sugar calories are handled differently by the body, compared to only 60% in Asia. On the question "is sugar addictive," 65% think this is the case.

Consumer

The US, Brazil, Argentina, Australia and Mexico, lead global sugar consumption at more than double the world average (17 teaspoons); ranging from 40 teaspoons for the US to 35 for Mexico. Significantly more than the American Heart Association recommendation of six teaspoons of added sugar a day for women and nine for men.
Added sugars now represent 17% of a normal US diet and 43% of added sugars come from sweetened beverages.
Among people with higher incomes and higher levels of education there is a trend towards "diet" soft drinks away from "full calorie" offerings. However, this trend appears to be slowing as amid growing concern related to artificial sweeteners.

Corporate

Several sectors will be affected by the likely changes in the pattern of sugar consumption: food and beverage companies, sugar producers, manufacturers of artificial and high-intensity natural sweeteners, and healthcare companies.
As a result, growth in sugar consumption is expected to slow with a potential impact on already quite depressed sugar prices.
The food and beverage industry is beginning to take steps towards "self-regulation," for example, launching food and beverages that use high-intensity natural sweeteners with zero or minimal caloric content.
Soft drink consumption may suffer somewhat in the short term but the beverage industry has the tools and marketing expertise necessary to embrace the change and better match consumer demand.
Ultimately, companies that develop or help develop high-intensity natural sweeteners are poised to be the primary beneficiaries of the change.

Public Policy

With few exceptions, regulators around the world have done very little to address the impact of excess sugar consumption.
As with alcohol and tobacco, higher taxation on drinks is the best option to reduce sugar intake and help fund the fast growing healthcare costs associated with diabetes type II and obesity.
The most likely initial path is increased spending on education and labeling. However, as we have seen in Mexico a more aggressive approach cannot be ruled unless "self-regulation" and softer policy action proves successful.

For a copy of the report, please click here: Credit Suisse Research Institute: Sugar Consumption at a crossroads

Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse is able to offer clients its expertise in the areas of private banking, investment banking and asset management from a single source. Credit Suisse provides specialist advisory services, comprehensive solutions and innovative products to companies, institutional clients and high net worth private clients worldwide, and also to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,300 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

SOURCE Credit Suisse AG