PA Future sat down with Daniel Babington, portfolio manager at TAM Asset Management, to speak about the health and nutrition sector and how to balance the needs for both environment and humanity.
“We have to bring society along with us and cannot let pro-environmental practices be at the detriment of society”, Babington said, as he pushes for more education about what foods are good for the environment, versus what foods are good for society.
Further, Babington acknowledged the government also has a role to play to enable healthier diets to be accessible to all, irrespective of wealth, and expects the sector to gain more traction in the future as investors – and wider society – acknowledge the importance of a healthy lifestyle.
Firstly, can you tell me more about your research in the health and nutrition sector and why you are passionate about this field?
One thing that unites us all across the world is we have to eat food. When I heard roughly two out of three adults in the US are overweight or obese, I started doing some research. The first book I read was called Ultra Processed People by Chris van Tulleken. This book gave me insight that food is not just calories, protein, carbohydrates and fats, but that there are other things we need to consider, such as the level of processing.
Ultra-processed food is something that has five or more ingredients with at least one of which you’d never find in your kitchen. This includes different types of emulsifiers or highly processed rapeseed oil – chemicals and additives you wouldn’t recognise. The reason food manufacturers put these ingredients in foods is to make more money by cutting ingredient costs or getting you to eat more. There are a lot of chemicals designed to override your fullness cues, yet there is very little nutrition in these foods. This leads to the problem of overeating.
There are nine companies that run our food system. These companies own the vast majority of brands you see in the supermarket. So, although we think there is freedom of choice between buying Fanta and Coca Cola, both brands are owned by the same people. This leads to problems with media control. For example, a lot of the research carried out on these products is funded by these very companies. For example, in 2022, The National Library of Medicine revealed nine out of 15 members of the UK Nutrition Advisory Board received funding from enterprise food providers.
Another fascinating book that deepened this interest was Deep Nutrition by Catherine Shanahan. This introduced me to the concept that our appearance – particularly our height – is determined by the food we eat. The average human height has been decreasing every decade – this is known as the study of epigenetics. This is a scientific discovery around how the food we eat can affect our DNA, and additionally, the traditional genetic mechanism of inheritance. Weston Price’s studies on indigenous people were groundbreaking here. The Maasai people have been extensively studied; they have a hunter gatherer lifestyle, are very tall, have incredibly chiselled jawlines and perfectly straight teeth.
The obesity statistics around the world only reaffirm how broken the food system is and why education is key to overcome these alarming figures.
Last month, 88% of shareholders voted against the resolution that challenged Nestlé, the well-known chocolate brand, to reduce its impact on people’s health. ShareAction is continuing to engage with the company, urging them to set KPIs and timebound targets to increase the percentage of sales derived from ‘healthier products’. What are your thoughts on this and what action do you think should be taken to address our reliance on ‘unhealthy’ food manufacturers?
The problem with ShareAction challenging Nestlé is the company is targeting unhealthy foods, such as chocolate, but people still want their free choice.
My take would be two-fold. First, increasing education about the ingredients in processed foods is important. People have free will to choose what they want to eat, but educating people that these foods contain unrecognisable ingredients that can harm their health, or even potentially lead to diseases.
Second, I would target Nestlé’s healthier products. Out of every water bottle brand – which ought to be a healthy item – Nestlé’s plastic bottles have the most microplastics that seep into the water of any brand. Microplastics have been linked with inflammation, cardiovascular disease, and even promotes the growth of cancer cells, according to research by The National Library of Medicine.
Nestlé’s protein bars are another good example of a reductionist way of perceiving food. These bars may have 20 grams of protein, however, this protein is made up of sugar and the lowest quality protein because it is cheap for the company to produce.
Where are the challenges and opportunities of investing in the health and nutrition sector?
The main challenge is the information gap between what people think is healthy and what actually is healthy. Just because a packet says the product is approved by the government, this does not necessarily mean it is healthy.
Another challenge is what investors are told is good for the environment within food funds does not necessarily talk about which foods are good for people. Going on a plant-based diet may reduce carbon emissions, but there are also many nutrients you cannot access on this diet as easily. It is important we are getting the vitamins and minerals that our body requires to function.
Societal issues have been left on the table as many more investors prioritise the issues that arise from climate change. We have to bring society along with us and cannot let pro-environmental practices be at the detriment of society.
Where do you see the health and nutrition sector developing over the next few years? Does it have a bright future? Is there interest in the sector?
Interest is definitely increasing. From ShareAction’s recent movement, the investment community are talking more about processed foods. On TikTok, Eddie Abbew educates his three million followers about health and nutrition and is getting through to people, especially children.
I hope it is not too late. Around 90% of the foods that exist now didn’t exist hundreds of years ago, and also, 90% of diseases that didn’t exist 100 years ago exist now. There is a lot of emerging science coming out and people need to be curious and ask questions. People are starting to start to wake up to the idea that what we are told may not be what is true.
For example, companies have done incredible work to eradicate hunger and reach Sustainable Development Goal 2. However, mass-produced, cheaper foods are being increasingly linked to obesity, yet many people cannot afford the healthy alternatives.
So, although education is key, alienation is something that must also be avoided. You cannot tell the population they must spend their whole income to be healthy. The government has a role to play here so healthier diets are in reach for all people, irrespective of wealth. For example, in helping to subsidise farm-based products or local produce, or put rulings on large food producers that restrict the amount of ingredients in products or introduce mandatory testing.
Going forward, TAM has seen investment interests in the obesity drug, GLP-1, in the last year. This shows that when an investment community jumps onto the effect these drugs are going to have, the stocks go through the roof. There could be an opportunity as people wean off ultra-processed foods and purchase outside well-known food brands.
