"Although it is always possible that unforeseen regulation could add pressure to these companies to do more, over the next five years we see positive growth stemming from current investments and initiatives," say authors of the Credit Suisse report, 'Obesity and Investment implications'. The World Health Organization (WHO) estimates that more than 1.6 billion adults are now overweight, in addition to the 400 million adults who are obese, with the total cost associated with overweight and obese individuals in the United States alone hovering around $117 billion. The consequent drive to curtail these figures is not only driving government initiatives worldwide to arrest the 'epidemic' but in parallel, has opened up opportunities for food and beverage players to tackle the fight against obesity via carefully positioned consumer products, and on the back of the burgeoning health and wellness phenomenon. "In the packaged foods space, the drive against obesity is a further acceleration of already existing trends toward health and nutrition, convenience and trading up to more premium items," states the report. Obesity is a function, suggest Credit Suisse, of both volume intake (calories consumed) and diet balance. Citing data from ERS, the US government's research service, analysts at Credit Suisse suggest in the report that in parts of the developed world, particularly in the US, the average caloric intake has moved sharply upward over the last 30 years, having been largely unchanged over the previous seven decades. This increase in calories consumed "has coincided with the increase in obesity, and we suggest it is the root cause of the problem." They further suggest that organic growth in the US food industry is broadly one per cent per annum from population growth; 0.8 per cent per annum from extra volume and calories; and 1 to 3 per cent per annum from mix and price. The challenge for the food manufacturers, if there is to be a backlash, must be to replace the 0.8 percent growth they have been achieving from sheer volume increase (calories) with a better performance from "mix", states the report. And with regards to obesity, they suggest "a better mix to mean a more healthy offering and range". Rating portfolios of food and beverage companies on how well positioned they are to capitalise on health and wellness trends, Credit Suisse "believe that Danone, Kellogg, and Nestlé have the best-positioned portfolios." According to the report, Danone is, arguably, the "healthiest" company in their field of vision, with a portfolio broadly split as follows: 58 per cent yoghurt, in which the group is the global market leader, 19 per cent beverages, principally water, 17 per cent baby food, where the group is a top two player in Europe and Asia; and 6 per cent clinical nutrition. "Yogurt is not only extremely versatile, it can boast an impressive array of functional health benefits; Danone has a number of blockbuster brands that target specific health issues such as Activia (digestion), Actimel (protection), or Vitalinea (weight management)," states the report. With its leadership position in cereal, Kellogg is one of the best-positioned companies to capture the growing trend toward health and wellness, they continue. "Kellogg has had a great deal of success with its Kashi brand, which has proved to be extendable beyond just cereal, into snacks. In its snack portfolio, Kellogg, like others, has rolled out organic whole grain items (even Pop-Tarts), 100-Calorie Packs, and low-fat and trans fat-free offerings." With regards to Swiss giant Nestle, for some years now, the firm has been moving its business toward health, writes the report. Acquisitions have been centered on furthering its interests in nutrition, such as Novartis's medical nutrition business, Gerber, and Jenny Craig. "There is some subjectivity about exactly how healthy one might define each of the businesses, but on our very broad-brush estimates, over 60 per cent of the portfolio might be described as either inherently healthy or better for you," reports Credit Suisse. According to Credit Suisse, three overriding trends have characterised the food industry for many years: health and nutrition; convenience and on-the-go; and trading up. In addition, there has been growth at the superpremium, or indulgency, end of the industry, "but that this is simply a form of trading up", they say. For the report authors, the drive against obesity "quite simply translates into an acceleration of these three trends." "Portfolios have been reformulated, repackaged, and repositioned to provide healthier options, be it low fat, low sodium, low carb, trans fat free, sugar free, reduced calorie, portion control, or whole grains," claims the report. In addition, partnerships and marketing agreements with diet plans and exercise regimens abound. In short, manufacturers have given consumers more options to choose what is in (or out) of their foods and more ways to improve their eating habits. "All these trends are part of a natural evolution of the food industry to shifts in consumer demand or requirements," states Credit Suisse. Enquiring whether packaged foods companies are benefiting or suffering as a result of these changes, the authors suggest that "on the one hand, it can be argued that the formulation changes and marketing restrictions are increasing the cost of doing business. But on the other hand, the costs are rising all around. So no single company wins or loses." They attest that the obesity concerns and the drive to increase awareness and to reverse the trend will "surely lead to a more health-conscious consumer. We have already seen a marked swing in consumption patterns of these foodstuffs, though defining exactly what is healthy and what is not, is always a debate". The trend received further affirmation recently with a study by AC Nielsen of "what's hot around the globe" that highlighted the growth rates globally by food category. According to Credit Suisse, the data covered 66 countries that collectively account for 75 per cent of the world's population and more than 90 per cent of its GDP. "The global growth of food and beverage categories measured was 4 per cent.What is notable among the food and beverage categories with top sales growth is the number of healthy items that dominate the list: yogurt, dairy, fish, and salads. Six of these categories had global sales of over US$1 billion and grew in double digits," states AC Nielsen.