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Food, Health and Climate Change

Food, health and climate change. The investment story.

Our food system is broken. Agriculture and food production account for 20% of greenhouse gas emissions and are set to reach 30% by 2050.1 Yet even with this hit to the planet, we can’t provide everyone with a healthy diet. Undernourishment affects some 10% and overweight 40%, leading to debilitating health conditions.2 But people’s health is also affected by other factors. For example, less than half the global population has access to essential health services and one in four will be affected by mental health issues or substance abuse at some point in their lives.

While none of this is new, Covid-19 has highlighted the links between food, health and climate change, accelerating an existing shift towards a more sustainable approach and boosting demand for capital.

Investors looking to be part of this trend should focus on three key areas moving at pace:

  • Alternative low-emission foods such as non-dairy milk, plant-based meat alternatives and laboratory-grown meat
  • Smart agriculture to raise yields with fewer inputs
  • Innovative storage and packaging that cut waste and nutrient and water loss
Fill up on alternative foods - plant icon

Fill up on alternative foods

Investment is taking off - by 2050 the low-emission alternative meat and dairy market could be worth $1.4 trillion, against $14 billion today.3 We see opportunity in companies producing plant-based food but many people will continue to eat meat, meaning companies working on cultivated varieties also have good potential.

Timescales are medium to long-term and regulation, as always, is key. Singapore is ahead of the pack, the first to approve alternative meat (Eat Just’s chicken nuggets). The Middle East and Hong Kong look likely to follow.

But it’s not all about start-ups. Big food producers and ingredients companies are also interesting. Most of the former have plant-based lines in their portfolios, while the latter play a vital role in the supply chain and help companies adapt to consumer demand.

Be smart in agriculture - grain icon

Be smart in agriculture

This is sci-fi farming. Drones, intelligent sensors, AI, autonomous machinery and smart irrigation will help lift yields 70% by 2050.4 Companies with solutions that help farmers make real-time decisions and target inputs to maximum effect are set for growth. The upside is good - these and other technologies could add $500 billion to global GDP by 2030.5 However, there are lots of small, unscaled companies and not all will be winners.

Think innovative storage - archive icon

Think innovative storage

More than 30% of food produced is never eaten.6 Consider companies with innovative packaging and storage that reduces waste. New materials such as Apeel’s edible, tasteless coating for food minimizes water loss and oxidation, reducing the need for cool storage – a game-changer in less developed countries. Meanwhile smart labels reduce waste by monitoring the freshness of the product, delivering data to suppliers, shops and consumers via phone apps. Worth $5.4 billion in 2017, we agree this market could hit $13.7 billion by 2023.7

Opportunities to explore:

  • Look for plant-based producers offering clear health benefits and innovators working with regulators on new ways to grow meat.
  • Focus on smart agriculture solutions that increase yields and reduce inputs and emissions with local production.
  • Investigate companies with innovative materials that reduce nutrient and water loss and dynamic ways to monitor freshness.
  • Assess healthcare innovations that focus on improving nutrition and diet and keep an eye open for new government action.

This does not constitute an offer or a recommendation to buy or sell any interest or any investment.

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Footnotes

1 "The global food system", p. 17 (Credit Suisse), June 2021
2 "The global food system", p. 6 & 9 (Credit Suisse), June 2021
3 "The global food system", p. 60 (Credit Suisse), June 2021
4 "The global food system", p. 4 (Credit Suisse), June 2021
5 "The global food system", p. 67 (Credit Suisse), June 2021
6 "The global food system", p. 33 (Credit Suisse), June 2021
7 " Smart Labels Market Overview" (Allied Market Research), July 2017

Source: Credit Suisse, unless otherwise noted.

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