Consumer trend towards healthier products: Food and beverage manufacturers should make healthier products more affordable

The challenge in India is no longer focused on food availability but on accessibility to safe and healthy foods and diets.

food and beverage manufacturers food availablity
Increasing the access and affordability of food products is and will remain a top priority for India

By Inge Kauer

With nutrition issues increasingly occupying the headlines in India, the need for innovative and multi-sectoral action is greater than ever. According to the 2016 United Nations World Cities Report, India will have 7 megacities by 2030. Urbanization puts pressure on food systems, threatens food security, and adds to nutrition challenges. Thus, increasing the access and affordability of food products is and will remain a top priority for India.

Results from the India 2015-16 National Family Health Survey (NFHS-4) reveal that approximately 21% of women and 19% of men are now overweight or obese, an alarming increase in the prevalence compared to the previous survey (12.6%). In addition, a recent World Bank study estimates foodborne diseases cost India approximately $28 billion (Rs1,78,100 crore) every year.

The challenge in India is no longer focused on food availability but on accessibility to safe and healthy foods and diets. To address these challenges, inevitably, food and beverage manufacturers in India play a key role. Consumers, as well as investors, are becoming more aware of these risks and opportunities.

The Indian food and beverage market is the sixth-largest in the world, with retail contributing 70 per cent of the sales. The Indian food retail market is expected to reach USD 894.98 billion by 2020. In the coming years, leveraging the power of this market will be vital for tackling the mounting and acute nutrition issues we are facing globally and in the Indian context.

Benchmarking is increasingly being recognized as an innovative method of holding the private sector to account and leveraging its power in a positive and productive way that is beneficial to all stakeholders involved.

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In recent years various organizations have been established that are driving change by tracking the private sector’s efforts to tackle global issues. The Corporate Human Rights Benchmark, for example, harnesses the competitive nature of markets to drive better human rights performance, while the Access to Nutrition Initiative (ATNI) ranks the largest food and beverage companies in the world on their efforts to tackle obesity, diet-related chronic diseases and undernutrition at the local and global levels.

Many of these organizations have acknowledged the important role investors need to play in changing private sector behaviour and have developed ways of engaging this group in their work. Investors are uniquely placed to influence company behaviour and should be encouraged to incorporate the results from such Indexes into their responsible ownership activities and investment analysis. Utilizing the power that this group can act as an innovative solution to the nutrition crisis that we currently face.

The risks associated with neglecting to take action are plentiful. In both emerging and developed markets, there is a general trend among consumers away from less healthy products, towards a greater demand for healthier options, consequently, there are market risks associated with failing to take action on nutrition. Indian consumers are among the highest group to seek out responsible products whenever possible (95%).

Additionally, Indian consumers are optimistic about the CSR impacts, being the most likely consumer group to believe their purchases are making a difference. Companies face a loss of revenues and market share if they do not facilitate this trend and invest more in making nutritious products that are both healthy and affordable.

A wide range of policies, regulations, taxes and other measures, aimed at reducing consumer exposure to, and consumption of healthier products, have already been introduced and others are expected. Companies must take responsibility and be compliant with these measures.

Failure to act on nutrition can also result in a company’s reputation being tarnished. Public and media awareness of the risks associated with poor diets and unhealthy foods is now widespread.

Food and beverage manufacturers are increasingly becoming targets of scrutiny and criticism by consumers and advocacy groups which can damage a brand and corporate reputations, which could in turn potentially undermine their revenues. It is in the interest of companies’ reputation to have policies in place that promote good nutrition.

The World Bank group in 2018 concluded investors increasingly are combining ESG and impact considerations, for instance by measuring the impact of their fixed income and other portfolios on targeted ESG outcomes or more broadly against the Sustainable Development Goals (SDGs). Thus, strengthening risk management and contributing to more stable financial returns.

The rapid urbanization of India, alongside the prevailing nutrition challenges, means that investing in nutrition is more important than ever; it has crucial benefits for the health of consumers but also contributes to sound businesses and stable returns for investors.

(The author is Executive Director, Access To Nutrition Initiative. Views expressed are personal.)

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