Access to Nutrition Index (ATNI) Overview for Investors
February 2012
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• Nutrition is a major global macro trend
driving structural changes and growth
opportunities in the F&B sector
• The future prospects of F&B companies
are closely linked to their response to
reducing malnutrition (both obesity and
undernutrition)
• ATNI believes that companies that
perform well on nutrition will be more
successful in the future – better placed
to address risks, exploit opportunities
• The private sector can play an important
role in reducing malnutrition, along with
other stakeholders
Nutrition and industry
• ATNI aims to reduce malnutrition and
improve health by encouraging F & B
companies to make continual and
sustained improvements in their nutrition
practices
• ATNI will assess major F&B companies’
performance on nutrition on an ongoing
basis, providing companies, investors and
stakeholders with in-depth, consistent
information not currently available
• ATNI is engaging investors in F&B
companies to help them understand
nutrition issues and assess companies’
performance on this material, long-term
strategic issue
ATNI approach
Context and approach
Nutrition: a critical global issue
Major macro trend • Critical in both developed and emerging markets, some of which face a double
burden of malnutrition
• Driving structural changes and growth opportunities in the F&B industry
Key public health issue• ‘Nutrition is a foundation for health and development. Better nutrition means stronger
immune systems, less illness and better health for people of all ages.‟ (World Heath
Organisation)
• Essential to achieving two of the six of the Millennium Development Goals
Undernutrition:
• Affects almost 1 billion people and accounts for 11% of global burden of
disease; kills 3.5 million children under five each year (The Lancet); results in
the loss of 2 - 3% of countries’ GDP (Copenhagen Consensus)
Obesity and diet-related chronic diseases:
• By 2015 there will be 2.3 billion overweight adults in the world with more than
700 million of them classified as obese
• 41 countries currently have at least one million people who are considered
obese
• Public health budgets are increasingly feeling the strain, with obesity-related
costs accounting for 2-7% of total health costs in wealthier nations (World
Heath Organisation)
Increasing priority of international policy makers• Tackling obesity and undernutrition is a key focus of international policy makers and
governments; significant future financial burden on public purse and impact on
people’s life chances and productivity
“„The simple fact is that
there can be no real
growth without healthy
populations. No
sustainable development
without tackling disease
and malnutrition. No
international security
without assisting crisis-
ridden countries. And no
hope for the spread of
freedom, democracy and
human dignity unless we
treat health as a basic
human right.‟
Source: Gro Harlem
Brundtland
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Regulatory risk
• Stimulated by concerns over obesity, many countries, states and cities worldwide are considering, or have
already introduced, regulations controlling F&B manufacturers’ activities and fiscal measures like ‘fat taxes’ which
increase companies’ costs and restrict their reach.
Corporate reputation/brand risk
• As media coverage of diet-related diseases increases, F&B companies are often portrayed in a poor light and as
‘part of the problem’. F&B companies that do not take action to reduce transfats, fat, salt and sugar and introduce
healthier products risk their products’ brand values and corporate reputations. Those that do take action have the
opportunity to be seen as the ‘consumers’ friend’ – the company on which consumers can trust to look after their
health.
Market /revenues/share price risk
• Consumers in developed markets, concerned about their weight and diet-related diseases, have started to
change their eating habits, switching spending away from perceived unhealthy products and moving towards
healthier options. Between 2002 – 2008, healthier packaged foods grew by 6% a year, compared to 3% a year
for overall packaged food growth. (Bernstein Research, 2011)
• Companies are seeing whole categories affected and are changing their market strategies by, for example,
acquiring companies that produce ‘healthier’ products or expanding into new healthier product categories.
Litigation risk
• Some companies have already faced litigation for the foods they sell, and how (e.g., McDonald’s and Kellogg’s).
No lawsuit has yet succeeded, but the risk remains. (Stern, 2010, CBS MoneyWatch.com)
• Commentators as far back as 2002 referred to obesity as ‘the next tobacco’ – inferring that governments may at
some point in the future sue companies to recover some of the public costs of treating obesity and related
diseases stemming from food choices and lifestyles. The comparisons continue. (Brownell & Warner, 2009)
Investment case for nutrition: risks
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Emerging markets: Economic growth + population growth +
double burden = revenue growth opportunities
• Globally, 3.7 billion have incomes of less than $8 per day and spend about 50% of their
income on food (est. USD1.3 trillion) (Global Agenda Council for Food Security). As their
income grows, they are likely to increasingly buy packaged foods, representing a large,
untapped market opportunity for companies. Major investors are looking for product
innovation and market penetration from leading food companies.
• A selection of 50 of the top F&B players (including global and regional companies) have
an average penetration of 16 countries and presence in an average of three
categories. A group of developing market players have extensive presence in emerging
markets including Grupo Bimbo, Arcor, Ulker, UniPresident and Indofoods. (McKinsey &
Co for ATNI)
• Consumers are increasingly aware of nutrition issues and seeking specialised
products, especially in Asia, which is driving fortified product sales. (Frost and Sullivan,
2009)
• Companies that are on the front-foot on this agenda are able to capitalise on positioning
themselves as ‘nutrition’ companies and win brand loyalty, market penetration, and
future growth.
• By participating in public-private partnerships to address nutritional deficiencies in-
country, companies can build good relationships and reputations with governments that
may pay dividends in future, in terms of access to markets and preferential treatment.
Investment case for nutrition: opportunities
“PepsiCo (Overweight):
Top pick: The market is
focused on short-term
2011 guidance risk and is
under-appreciating
long-term positives.
Our 7.5% five-year profit
CAGR forecast is well ahead
of the 4% rate the market is
pricing in, driven by
underappreciated growth
potential in emerging
markets and nutrition,
as well as margin expansion
potential illustrated by our
bottom-up analysis.”
Morgan Stanley, 4 Jan 2011
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Mature markets: Innovation in nutrition = revenue growth
opportunities
• Developed markets are mature; hard for companies to increase profits, gain
market share. Introducing (or acquiring) new ‘healthy’ categories or products
may help them grow in these tough markets.
• Health and wellness-focused products are expanding rapidly, with 8 out of 10
of the fastest growing F&B categories inextricably linked to health, e.g. probiotic
drinks: 13%; frozen fruit: 12%; dairy/dairy sub-drinks: 11%. (Dexia Asset
Management, March 2009)
• Healthier foods provide F&B manufacturers with the opportunity to improve
gross margins, including by premium pricing, lowering COGS through
reformulation and reducing packaging size while maintaining a similar retail
price, thus increasing price per volume unit. (Dexia, ibid)
• The top ten new F&B products launched in the US in 2006-7 were products
that help consumers meet their dietary, disease-fighting and weight goals,
without sacrificing taste: Campbell’s Reduced Sodium Soup ($101 million);
Bird’s Eye Steam Fresh Frozen Vegetables ($87 million); Vault/Vault Zero
Regular and Diet Drinks ($70 million). (Dexia, ibid)
• Companies recognise increasing demand for healthier products and are
building new product offerings. Companies are pursuing opportunities to
fortify foods and develop functional foods as well as nutraceuticals – expected
to be worth $175 billion worldwide. (Financial Times, October 2/3, 2010)
Investment case for nutrition: opportunities
“A recent study by Professor
John Speakman at Aberdeen
University showed that
physical activity among the UK
population has not changed
significantly over the past 25
years. But the average calorie
content of the food we buy has
increased markedly, by 12 per
cent per person.
If the fundamental problem is
simply that we eat too much
fattening food … then the most
effective solution is for
manufacturers to make
healthier products …”
The Financial Times, “Big
Food Eyes Profits and PR in
Smaller Waistlines,” October
2/3, 2010
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• ATNI builds on over a decade of experience in rating companies on a
range of environmental, social and governance issues
• 32 initiatives evaluated in designing ATNI to learn from best practice;
continued tracking of existing and new initiatives
Precedents
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Expert Group
Provides advice on
methodology for assessing
companies
Global Stakeholder Network
Widest possible network of stakeholders involved in public consultation on
Index methodology
Funders
Advisors
Management
Independent Advisory
Panel
Provides strategic advice on
stakeholder engagement,
institutional considerations and
financial sustainability
ATNI Project Team
GAIN staff and advisors drive
development and day-to-day
activities
Governance and management
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Scope
Malnutrition coverage:Undernutrition through obesity
Core Index:25 of the world’s largest food and beverage
companies (may include privately held
companies)
Type of company:Multinational corporations and regional companies
Stage of supply chain:Food and beverage manufacturers only
(Upstream, retailers, and food service companies potentially included in the future)
IndiaMexico
South Africa
3 Spotlight Indexes:10 of the largest companies
by F&B revenue in each
market
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200920052000 2008 20101981
International Code
of Marketing of
Breast-milk
Substitutes
2001 2002 2003 2004 20072006
WHO
Strategy for Infant
and Young Child
Feeding
WHO/FAO
Guidelines on food
fortification with
micronutrients
WHO
Special Session
on Children
World Bank
Repositioning Nutrition as
Central to Development
Harvard University
Business action to fight
micronutrient deficiency
The Lancet
Series on
malnutrition
Copenhagen
Consensus
JPMorgan
Obesity:
Reshaping
the food
industry
Insight
Investment/
JPMorgan
The Proof of the
Pudding
Insight Investment/IBLF
A Recipe for Success
ATNI
Synopsis ReportWHO
Reducing Risks,
Promoting
Healthy Life
WHO
Global Strategy on
Diet, Physical Activity
and Health WHO
Recommendations
for Marketing Food
to ChildrenCity University
Analysis of 25 F&B
companies
MDGs
Includes 4
linked to
malnutrition
Foundations of methodology
2011
MIYCN Working
Group
Using the Code of
Marketing of Breast-
milk Substitutes to
Guide the Marketing
of Complementary
Foods to Protect
Optimal Infant
Feeding Practices
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Evaluating the level to which commitment to nutrition is
embedded in core strategy and backed by financial /
human resources
Evaluating the extent of companies’ implementation of
commitments through advertising, nutrition education,
promotion of physical activity and engagement with
policymakers
Assessment of nutritional appropriateness, affordability and
accessibility of representative selection of companies’
product portfolios in Spotlight countries
Nutrition governance
Influencing consumer choice and
behavior
Formulating and delivering
appropriate, affordable, accessible
products
Scores will also be available for each company by
category
Composite score for each
company
ODRCD1
score
Undernutrition
score
Methodology structure
PRODUCT PROFILE
(Spotlight Indexes only)
Evaluating the extent of companies’ implementation of
commitments through R+D, product formulation and labeling,
pricing, and distribution
CORPORATE PROFILE
(Core & Spotlight Indexes)
1 Obesity and Diet-Related Chronic Diseases11
Methodology: Corporate Profile structure
Category Description Criteria
Section 1: Nutrition governance
A Corporate strategy, management and governance A1: Corporate nutrition strategy
A2: Nutrition governance and management systems
A3: External advice
A4: Quality of reporting
Section 2: Formulating and delivering appropriate, affordable, accessible products
B Formulating appropriate products B1: R&D
B2: New product development
B3: Reformulating existing products
B4: Nutrient profiling system
C Product pricing, marketing and distribution C1: Product pricing
C2: Product marketing
C3: Product distribution
Section 3: Influencing consumer choice and behaviour
D Responsible marketing policies, compliance and
spending
D1: Responsible marketing policy: all consumers
D2: Auditing and compliance with policy: all consumers
D3: Advertising spending: all consumers
D4: Responsible marketing policy: children
D5: Auditing and compliance with policy: children
D6: Advertising spending (children) and policy impact
D7: BMS marketing policy (only for BMS module)
E Supporting healthy diets and active lifestyles E1: Staff health & wellness
E2: Supporting consumer-orientated healthy eating and active lifestyle
programmes
F Product labelling and use of health and nutrition
claims
F1. Product labelling
F2. Health and nutrition claims
G Influencing governments and policymakers, and
stakeholder engagement
G1: Lobbying and influencing governments and policymakers
G2: Stakeholder engagement
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Company research process
Complete methodology Desk-based analysisEngagement
meetings
• Extensive
consultation with
funders, Expert
Group and
Independent Advisory
Panel
• Online public
stakeholder
consultation held in
November 2011
• Pilot test of
methodology on
subset of companies
• Review of
companies’ websites,
annual/CSR reports,
and third-party
reports/analysis
• This process
generates the
companies’ initial
scores
• Each company will
be approached for a
meeting to discuss
initial analysis and
score
• Information not
available via desk
research will be
requested from
companies
• Information provided
by companies during
meetings to be
incorporated into
analysis
• Companies to be
provided with final
draft analysis for
input/comment and
to fill remaining
information gaps
• Final score and
rating generated
Verification /
finalization
*
* Please see disclaimer on page 17
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Next steps and long-term proposition
Finalize design
ATNI I (2012)
ATNI II (2014)
ATNI III (2016)
ATNI IV (2018)
• Complete methodology development
• Research conducted to build ranking
• Institutional home established (outside of GAIN)
• First Index ready for launch in late 2012
• ATNI II published in 2014 and on a regular basis thereafter
• Impact regularly monitored against metrics
• Methodology evolves over time to incorporate advances in practice,
new evidence, policies, guidelines, standards, etc.
For more information, please visit www.accesstonutrition.org
Investors: a critical ATNI constituency
Investors are critical stakeholders
Clear strategy for working with
investors
Sign investor statement
Investor perspective factored inMajor ESG investor brands and regional investors in US,
Europe, Asia, Africa, Latin America were consulted
during 2009 research and continue to be consulted
ATNI would strongly welcome suggestions from
investors re activities and project outputs that investors
would find valuable
ATNI aims to make outputs as valuable as possible to
both mainstream investors and Sustainable and
Responsible Investors
ATNI will launch an investor statement in the coming
weeks to garner investor support
ATNI has drawn on the experience of project consultants
and lessons learned from similar initiatives, and
investors are represented on ATNI advisory groups
(GEPF, SAM, F&C, BCAM)
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What investors can do in 2012
Facilitate engagement with
companies
Provide suggestions
Encourage companies to participate in face-to-face
meetings with Index research team
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