Monday 27 February 2017

Nutritional food makers will profit from healthy buying trend

Food

Peter Flanagan

Peter Flanagan

AN OECD report on global food trends may spell trouble for Aryzta but would boost the likes of Kerry and Glanbia, according to NCB Stockbrokers.

The report focuses on the role of the major food companies in regulating the sale and advertising of unhealthy foods and highlights the claim that self-regulation by the food companies is half as effective as formal regulatory measures imposed by governments.

In a note to investors, NCB's food analyst Darren Greenfield said the consumer shift from buying what are perceived as unhealthy foods to fresh produce and healthy foodstuffs was likely to have a significant effect on the Irish food sector.

"The companies set to benefit from this trend are those with exposure to the health, wellness and nutritionals sector such as Kerry Group, which helps food manufacturers reduce the fat and salt content of foods while maintaining taste and texture, and Glanbia, which we estimate generates 50-60pc of its earnings before interest, tax and amortization from nutritional products.

"Also, Tate & Lyle could benefit from increased demand for Sucralose, its zero calorie sweetener.

"Aryzta generates 35pc of revenues from sweet baked and morning goods. There could also be a shift to consumption of more healthy foods such as fruit and vegetables, in which case we would expect Fyffes and Total Produce to benefit," he said.

Greenfield went on to predict a significant drop in agri-commodity prices, citing higher taxes and the economic downturn in the developed world.

Irish Independent

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