The gluten factor

Multi-asset investments head David Coombs (reluctantly) joins the gluten-free crowd, leading him to take a longer look at food-testing labs and sugary food producers.

Many years ago, my 6-foot 4-inch, 15-stone best friend decided he would become a pescatarian. There was no clearly defined reason.

I gave him so much stick, especially because it was so tricky to cater for him at the many (foggy) barbecues held at our local rugby club. Given this was Guernsey in the 1980s, we were not known for culinary flair.

It’s fair to say I was rather dismissive of the whole dietary needs issue.

Imagine my chagrin when last year I was diagnosed with a gluten intolerance. Cue significant research into replacement necessities like cheesecake and beer. I have never been so interested in food labels. Much mirth among my friends, needless to say.

I thought food intolerances affected only a small minority of the population. Of course, there are the additional slightly mad celebrities and trendies who dabble in gluten, dairy, pleasure (delete as appropriate) free diets. They are giving us all a bad name. However, it would appear the number of people with food intolerances – or indeed better diagnosis of them – is increasing significantly.

It has spawned a new industry.

I am not looking to invest in gluten-free naan bread or peanut-free nut snacks but instead in food testing and labelling. Clearly, as consumers become more sensitive to what’s in their food, the importance of robust processes for detecting contamination and comprehensive ingredient lists grows. In some cases, the consequences of getting it wrong can cause serious injury or death. Will food retailers and producers be comfortable taking on that risk or will they want third-party affirmation of standards in an increasing litigious world? Remember Tesco horse burgers?

Now, being gluten-free is quite trendy these days, particularly as a way of losing weight. This is another area than needs close attention. Obesity has become a significant problem in the UK that is draining the nation’s resources via the NHS. According to the health service’s latest figures, 68% of UK men are obese and 58% of women. Even worse for this trend, one in every three 10-year-olds is overweight.

How long before we see serious political intervention? I suspect not long.

Taxes on consumers and producers of unhealthy food and drink are likely to be introduced. Governments may slap restrictions on advertising and could enforce warnings on higher-fat content foods and horrible pictures on packaging, much like we have seen with cigarettes. You can read more on this from Rathbone Greenbank Investments, our specialist ethical and sustainable investment unit, here.

As always, there will be winners and losers. We are looking for opportunities in the healthy food area, but unfortunately we are yet to find any reasonable candidates. In the meantime, we are reviewing threats to some of the world’s biggest producers of foods and sugary drinks, many of which are household names.

The UK isn’t the only Western nation with an obesity problem either; the US and EU will be looking to tackle this as well. I think this is the beginning of a long-term trend. I believe higher levels of diabetes will eventually capture the attention of the masses, forcing a structural shift in attitudes to obesity and unhealthy diets.

We have talked a lot about market disruptors in recent blogs. Usually, these take the form of new technologies and the businesses that develop them. However, the sheer scale of the global obesity crisis could be just as great a disruptor, this time on what we eat and drink. The effects on those producers could be extraordinary.

And as for my pescatarian friend, he lasted 10 years without eating red meat. Unfortunately he substituted that protein with carbs and sweets: by the end of it he had put on 5 stone.



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