Sugar in 2019: Current state of play

Sugar has become an increasingly important driver of the food and beverage industry since we first explored the topic in 2015. The health impacts are clearly worrying, which is translating into increased regulatory attention and consumer awareness of sugar content. Many companies have responded by reformulating products and raising advertising spend, but financial pressures on the sector are growing. We expect the issue to continue moving up social and political agendas, handing an advantage to those companies that have taken earlier steps to adapt to a more sugar-constrained industry.

The risks to companies and investors are clear. The rewards for successfully navigating growing challenges and the costs of inaction will both be huge. The pick-up in restructuring and activism in the sector underlines a growing recognition of the sugar issue by major companies in the sector. We don’t think those risks are reflected in a food and beverage sector that continues to enjoy valuations 35–40% higher than companies in the tobacco sector or the global equity market as a whole1.