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SUGAR - Credit Suiss Report
SUGAR - Credit Suiss Report
SUGAR - Credit Suiss Report
Research Institute
Thought leadership from Credit Suisse Research
and the world’s foremost experts
Sugar
Consumption at
a crossroads
SUGAR_2 SUGAR_3
Contents Introduction
03 Introduction The global obesity epidemic and related nutritional issues are
arguably this century’s primary social health concern. With
04 Composition, consumption and
breakthroughs in the field of medicine, huge leaps in cancer
consequences
research and diseases such as smallpox and polio largely erad-
06 Medical research
icated, people around the globe are, on average, living much
longer and healthier than they were decades ago. The focus
16 The world sweetener market on well-being has shifted from disease to diet. The whole con-
18 Sugar cept of healthy living is a key pillar of our Credit Suisse Mega-
trends framework – themes we consider crucial in the evolu-
20 High-fructose corn syrup (HFCS)
tion of the investment world. In this report, we specifically
21 High-intensity/artificial explore the impact of “sugar and sweeteners” on our diets.
sweeteners (HIS) Although medical research is yet to prove conclusively that
sugar is in fact the leading cause of obesity, diabetes type II or
22 The consumers
metabolic syndrome, we compare and contrast various studies
26 Public policy initiatives on its metabolic effects and nutritional impact. Alongside this,
we question some of the accepted wisdom as to what is per-
32 Corporates: Self-regulation ceived as “good” and “bad” when it comes to sugar consump-
and opportunities tion, namely as to whether a calorie consumed is the same
regardless of where it is derived from – sugar, fats, or protein –
41 References
and whether solid foods are “nutritionally different” to liquids.
43 Bibliography Naturally, recent focus here – medical, media and regulatory
– has intensified on certain products, with soft drinks being the
43 Imprint / Disclaimer common denominator for all three. Within the population, we
are already seeing a gradual reduction in the consumption of
sugar and a switch to an alternative “diet” or “low-fat” products,
particularly among the most highly educated. Demands for
regulation, or taxation to limit consumption, are growing. Yet
governments and health officials have so far taken a mixed
stance on the matter.
The potential for a surge in negative public opinion and the
looming threat of regulation and taxation are issues that the
food and beverage industry clearly must address, though the
extent to which they can do so without hurting their current
coverphoto: istockphoto.com/AngiePhotos, photo: istockphoto.com/beemore
Composition, consumption
and consequences
There can be no doubt that the global each gram of sugar). Yet, consumption ages is interpreted and processed dif- correlation between obesity and soda more worrisome is that these numbers artificial sweeteners – particularly
obesity epidemic has been at the cen- varies considerably from country to ferently by our body from energy that is consumption across many populations are growing at a rate of 4% a year, Aspartame, whose application was
ter of a major debate involving medical country. At the top, we find the USA, obtained through solid foods, even if is convincing and is a particular risk much faster than for obesity (1%–2%). rejected six times by the Food and
research, healthcare professionals, Brazil, Argentina, Australia and Mexico, the overall quantity of calories con- factor for childhood obesity. Mexico, By 2020, the annual cost to the Drug Administration (FDA).
insurance companies and society at all at more than double the world aver- sumed is the same. Sugar by itself is a for example, ranks second in the world healthcare system globally will reach
large. More recently, research has age; ranging from 40 teaspoons for the poor source of calories as it provides in adult obesity, first in diabetes type II USD 700 billion and the people 9. In the process of self-regulating
shown that a significant number of USA to 35 for Mexico. At the other little nutritional value. Not surprisingly, – which is the leading cause of death affected will be close to 500 million. and educating the public to take
chronic diseases, including coronary end, we find China with 7 teaspoons. the public debate has centered on soft in the country – and fourth in infantile Recent events would indicate that local advantage of healthier choices, the
heart diseases, metabolic syndrome, If you exclude children less than four drinks and the role they have played in obesity.2 and national authorities around the beverage manufacturing industry has
and diabetes type II strongly correlate years old, you can add another this issue. It also ranks second globally in globe are beginning to take action, one advantage: in most cases, it
with weight gain. The future costs of 5%–10% to the numbers above. added sugar consumption per person with varying degrees of success. Inter- already provides a healthier alternative
dealing with all these diseases are put- 5. The medical profession has many and second in the amount of soft drinks ventions include anti-soda advertising of the fully caloric version (which is not
ting further pressure on the private and 2. While medical research is yet to times pointed to the link between sugar consumed per person, with 95% of campaigns, tax levies, removal of the case for the tobacco and alcohol
public sectors’ finances alike. prove conclusively that sugar is the and the diseases we mentioned above, soft drinks consumed (excluding water) vending machines in schools and regu- industry. We believe the next step in
While these diseases might result leading cause of obesity, diabetes type but definitive causality has been difficult being full-calorie. lation of portion size. However, as “self-regulation” will be to launch food
from the combined effect of several II and metabolic syndrome, the balance to prove, as experiments involve a large Mayor Bloomberg discovered in New and beverages that use natural sweet-
factors, recent focus – medical, media of recent medical research studies are number of individuals under direction to 7. Regulators, governments and public York, when his attempt to limit cup eners with zero or minimal caloric con-
and regulatory – has converged on the coalescing around this conclusion. follow a controlled diet for several officials have done little so far to coun- sizes was defeated in court, the com- tent. The experiment of Coca-Cola
role played by sugar consumption, with Advances in understanding the nega- months or years. Yet, our proprietary teract concerns, with very few notable bined lobby of the sugar industry – Life in Argentina (sweetened with half
soft drinks being the common denomi- tive effects of refined carbohydrates on survey of general practitioners in the exceptions. Yet, we estimate that the which is a huge employer and there- Stevia and half sugar leading to a
nator for all three. Opinions on the blood sugar regulation and cholesterol, USA, Europe and Asia shows that annual costs to the healthcare system fore has significant voting power and 50% reduction in calories) is an exam-
effects of sugar range from those who and the metabolic impacts of fructose, close to 90% of participants support due to the global obesity epidemic are that of the food and beverage manu- ple of what we expect to see over the
maintain that it is toxic to those who are undermining the traditional view these conclusions. In addition, there is in excess of USD 600 billion. But obe- facturers – makes things much more next few years.
say that it is a natural product and per- that all calories are the same. not a single study showing that added sity, as bad as it is, is not the most difficult. After balancing arguments in
fectly healthy at current levels of con- sugar is good for you, which would be worrisome issue. favor and against, we believe that taxa- 10. Bringing all this together, we
sumption. While the parties on both 3. Genetic variations in insulin expected if the impact of sugar or Diabetes type II is now affecting tion would be the best approach and believe that the “noise” on sugar and
sides of the debate continue to dis- response are an important factor and HFCS was truly neutral. close to 370 million people worldwide, will provide the best outcome: reducing its effects on our health will increase
agree on a number of important issues, allow some people to tolerate more with one in ten US adults affected by consumption while helping the public rather than decrease. Even well
there are several areas where there are sugar than others. Even so, a scientific 6. Consumers are increasingly aware it. The costs to the global healthcare sector deal with the growing social and regarded and independent bodies like
few doubts. statement issued by the American of this debate. Within the population, system are a staggering USD 470 bil- medical costs. the World Health Organization (WHO)
Heart Association in 2009 1 recom- we are already seeing signs of reduc- lion according to the most recent esti- have to catch up. In all its reports on
1. The consumption of added sugar mends that women take no more than tion in the consumption of sugar, par- mates from the International Diabetes 8. Against growing negative public diabetes, the WHO barely mentions
(sugar not contained in natural products six teaspoons of added sugar a day ticularly among the most highly edu- Federation, and represent over 10% of opinion and the threat of regulation or sugar as either a cause or as part of
like fruit or milk) or high-fructose corn and men no more than nine. To put this cated. Public opinion asking for some all healthcare costs. In the USA alone, taxation, the food and beverage indus- the treatment (i.e. reducing sugar
syrup (HFCS) has increased dramati- in context, a regular can of soda has regulation or taxation to limit consump- the healthcare costs tied to diabetes try is beginning to take steps toward intake). So the most likely outcome
cally over the last few decades. Added eight teaspoons of sugar, as does a tion is growing. type II are estimated at USD 140 bil- “self-regulation” and pro-active media over the next 5–10 years will be a sig-
sugar is now ubiquitous in processed one cup serving of low-fat granola. Sugar-sweetened beverages, which lion, compared to USD 90 billion for campaigns. The beverage industry has nificant reduction in sugar consumption
foods, both as a flavor enhancer and Based on the figures above, current are concentrated sources of sugar, are tobacco-related healthcare costs. Even also for some time recognized the and a marked increase in the role
preservative. The world daily average intake of added sugars is well above becoming a main focus of consumers. need to diversify into healthier prod- played by high-intensity natural sweet-
consumption of sugar and HFCS these “recommended” levels in several In the USA, 31% of sugar supply is 1
Circulation, Journal of the American Heart Associa- ucts, including fruit juices, sports eners in food and beverages. Soft
per person is now 70 grams (or 17 developed and developing countries. absorbed by the beverage industry. tion (August 2009) – http://circ.ahajournals.org/ drinks, bottled water and diet soda. drink consumption might suffer some-
content/120/11/1011.full.pdf
teaspoons) per day, up 46% since As the sugar is in a solution, it is easily However, many of these products are what in the short term, as it will take
30 years ago (when it was 48 grams 4. Liquid and solid “sugar calories” are and completely ingested, giving a large 2
Data are based on measurements rather than also coming under scrutiny; either as some time for companies to success-
self-reported height and weight. OECD Health
per day). This is the equivalent of handled differently by the body. The injection of calories without the conse- Data 2011 – http://www.oecd.org/els/health-
sugar in a healthier guise (fruit juices) fully establish a new line of “healthier”
280 calories per day (four calories for energy that is obtained through bever- quential satiation of appetite. The systems/49105858.pdf or for the inferred disadvantages of alternatives.
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Medical
research
Medical research has made significant
progress, particularly in understanding the
way we process calories. Causality linking
excess sugar consumption to obesity,
diabetes type II and metabolic syndrome
is difficult to prove; but for the doctors
we surveyed the link is very strong.
There are also a number of factors where the debate tose and 42% glucose (in HFCS 55) or 42% fruc- Our review of the latest literature and our conver- Figure 1
on medical research in this area is ongoing. Let us tose and 53% glucose (in HFCS 42). HFCS does sations with experts in the field lead us to believe Major sources of added sugar in the American diet
start with the basics and focus on three important have some important commercial advantages over that, in general, the biological impact of fructose is Source: Johnson et al, Circulation, 2009: 120:1011-1020. Food groups that contribute more than 5% of the
facts that allow us to better understand some of the table sugar, and is considerably cheaper, meaning it essentially identical to that of glucose at the con- added sugars to the American diet are listed in decreasing order.
consequences of “excess” sugar and HFCS intake: is now regularly used as the main sweetener in bev- centrations at which these nutrients are generally
Food categories Contribution to added sugar intake
obesity, diabetes type II and metabolic syndrome: erages. The temporal relationship between an consumed. The American Medical Association has (% of total added sugar consumed)
increase in HFCS consumption (especially in sweet- weighed in on the debate and concluded that it
1. Fructose and glucose are essentially same ened beverages) and the increase in obesity has does not believe there to be any difference Regular soft drinks 33.0
also elevated the focus on the potentially unique role between HFCS and sucrose when it comes to Sugars and candy 16.1
Fructose, also called fruit sugar, is one of three that fructose may play in weight gain. causing or aggravating conditions such as obesity
Cakes, cookies, pies 12.9
photo: istockphoto.com/Maksud_kr
monosaccharides (along with glucose and galac- There have been a number of studies looking or diabetes type II.
tose) that are absorbed during digestion. Fructose is for differences in how the body metabolizes fruc- Fruit drinks (fruitades and fruit punch) 9.7
mainly ingested in one of two forms, either sucrose tose compared to glucose. Unfortunately, many 2. Liquids and solids are handled differently Dairy desserts and milk products (ice cream sweetened yogurt, 8.6
(table sugar) or high-fructose corn syrup (also called have been very short-term or carried out at levels by the body and sweetened milk)
high-fructose maize syrup, glucose fructose syrup or much higher than the concentrations at which
Other grains (cinnamon toast and honey-nut waffles) 5.8
glucose/fructose). Sucrose consists of equal parts either nutrient is typically ingested. In addition, it is Much of the recent focus in the debate around
fructose and glucose. High-fructose corn syrup rare for either substance to be consumed in isola- added sugars has focused on the sugars that come
(HFCS), on the other hand, usually has 55% fruc- tion in the typical human diet. from sweetened beverages. This is partially
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Similarly, Mattes et al 2 demonstrated that ingest- sugar-sweetened drinks, along with the evidence those that helped humans survive challenging 3
Neel, James. ‘Diabetes Mellitus: “A ‘Thrifty’ Genotype Rendered
Detrimental by ‘Progress’?”– Am J Hum Genet. (December 1962)
ing a beverage did not impact the amount of calo- that these calories are processed in a different way times where there were frequent famines. The
ries that were ingested during a subsequent meal or to calories from solid foods, has contributed to the environment that many of us now live in has plen-
4
Johnson, Rachel., et al. “Dietary Sugars Intake and Cardiovascular
Health” – Circulation 2009, 120:1011–1020 (August 2009)
in the 24-hour period after the beverage was con- scrutiny that sugar-sweetened beverages are now tiful amounts of food available year round, but the 5
Qi, Q., et Al. “Sugar-Sweetened Beverages and Genetic
sumed. When a solid food was given, however, the under for potentially contributing to the increase in genes may still be focused on conserving energy Risk of Obesity” – New England Journal of Medicine 367:
number of calories that were ingested in the follow- overweight and obese individuals. These sugars whenever possible and, in that way, can lead to 15: 1387–1396 (September 2012)
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The individualized response to sugar consumption tions. On the other hand, perhaps those who pos- 5. Is there a “fat switch?” Figure 3
contributes significantly to the debate about how sess a genetic predisposition to developing these US calorie consumption growth over the 20th century
much government or health authorities should tax or conditions (or someone who is already overweight or The general view is still that obesity is due to peo- Source: USDA, Credit Suisse Research
restrict access to foods or drinks with added sugars. obese) should be further restricted from consuming ple ingesting more calories than they burn. More
4200 Balance better vs worse
One of the reasons that supporters cite the need for sugary foods or have to pay greater prices for these provocative research led by Richard Johnson from
these measures is the significant economic impact foods. Obviously, individualized regulations or taxes the University of Colorado 8 now suggests that it
that obesity and other medical conditions have on such as these would be difficult to implement, add- may not be as simple as that. Johnson suggests 4000
society as a whole. It could be argued that a person ing uncertainty about how regulations and taxes that weight gain may be driven by activation of a
at lower risk for developing any complications from should be used against sugary foods in general. “fat switch” that increases the rate of fat storage 3800
ingesting sugar should be able to avoid any restric- and that can drive weight gain. The trigger of this
tions and avoid paying any taxes since it is less likely 4. The obesity link switch could be the ingestion of sugar (and in par-
3600
that they will develop the associated medical condi- ticular fructose), although carbohydrates may trig-
Globally, 35% of adults are considered overweight ger this switch as well.
and 12% of all adults are obese 6. The rates of obe- This theory is based in part on some of the 3400
sity increased from 5% for men and 8% for women genetic factors behind obesity that were discussed
Figure 2 in 1980 to 10% of men and 14% of women in earlier and the fact that certain genes may have 3200
Prevalence of obesity among adults, 2009 2008. It is now estimated that 7 205 million men been naturally selected over time as genes that
Source: OECD Health Data 2011; national sources for non-OECD countries.
and 297 million women over the age of 20 are were favorable to helping people survive periods of
3000
obese, or more than half a billion adults worldwide. famine. These genes act as a switch that is acti-
1909 1917 1925 1933 1941 1949 1957 1965 1973 1981 1989 1997 2005
India There are a number of major health implications vated when the body ingests sugar or carbohydrates
Indonesia from the rise in the number of people who are over- and leads to the more rapid production of fat. US calories consumption/per day
China weight and/or obese in both the developed world Johnson and colleagues argue that the body is
Korea and emerging markets. The landmark Global Bur- especially sensitive to fructose (as opposed to
Japan den of Disease report published at the end 2012 other sugars and carbohydrates) and that the Figure 4
Switzerland highlighted obesity as a more significant health cri- ingestion of fructose may have a more pronounced Per capita sugar consumption 1996–97 and 2010–11
Norway sis globally than hunger and/or malnourishment impact on the “fat switch” and the production of fat. Source: Sucden
Italy and as the leading global cause of disabilities. The Our review of the literature leaves us intrigued by
Sweden 60 Annual kg per capita
five primary conditions that are linked to increases the fat switch theory although we admit that as of
France
in body mass index are high blood pressure, high now the science and data are inconclusive.
Netherlands
cholesterol, coronary heart disease, stroke and dia- 50
Austria
betes type II. Beyond these major conditions, being 6. The diabetes link
Poland
overweight and/or obese also increases the risk of 40
Denmark
numerous other disorders including osteoarthritis, The suspicion that increased consumption of sugar
Israel
gout, nonalcoholic fatty liver disease, gallstones leads to diabetes has been highlighted by several
Belgium 30
and cancer. doctors since the 1800s. Sir Frederick Banting,
Brazil
Along with the health implications of the increase who received the Nobel Prize in 1922 for his dis-
Germany
Turkey
in the number of people who are overweight and/or covery of insulin, linked the sharp increase of dia- 20
Portugal
obese, there are also significant economic impacts. betes in the USA, to the sharp increase in sugar
Spain
The direct cost of managing obesity-related condi- consumption. Haven Emerson, the Commissioner 10
Slovenia
tions has been estimated to be around USD 190 of Health for New York City in 1924 wrote a paper
OECD billion in the USA alone. There are also indirect entitled “The Sweet Death” and he too linked the
0
Slovak Republic costs related to issues such as increased absentee- consumption of sugar to the sharp increase in dia-
North AmericaSouth America Europe Asia Africa Oceania
Czech Republic ism, increased disability and increased premature betes among the wealthier New Yorkers. While
Estonia mortality that have been estimated to add as much causality on a scientific basis requires more than 1996 –1997 2010 –2011
South Africa as USD 66 billion in additional costs in the USA. suspicions, the amount of data linking the sugar
Greece In parallel with the increase in obesity, there has consumption and diabetes has grown exponentially.
Hungary also been a dramatic rise in the total amount of The debate flared up again earlier this year fol- diabetes, independent of a variety of dietary, social
Russian Fed. calories being consumed each day. The number of lowing the publication of a study by Basu et al 9 that and economic factors (Figure 6). As with any pop-
Iceland calories needed for the average male according to examined the potential impact of sugar on causing ulation-based analysis such as this one, there are
Finland the UK NHS (National Health Service) is 2500, diabetes, independent of other factors, including limitations in the strength of the conclusions that
Luxembourg though the US authorities recommend 2700. What overweight and obesity. This group found that for can be made from the study. It does add one more
Ireland is generally agreed is that sugar should account for every 150 kcal/person/day increase in sugar avail- piece of possible evidence on the side of the argu-
United Kingdom no more than 10% of caloric intake. ability there was a 1.1% increased prevalence of ment that there is something specific to sugar that
Canada Actual consumption is now significantly ahead of drives the development of conditions such as dia-
Australia this in virtually every market, peaking at 3700 per
6
OECD Health Data 2011 betes, beyond just the calories sugar contains and
Chile head per day in the USA. The emerging markets 7
World Health Organization, Obesity Health Observatory (http:// the weight gain and obesity that the added calories
New Zealand have generally low per capita consumptions and the www.who.int/gho/ncd/risk_factors/obesity_text/en/) may cause.
Mexico developed world generally higher. 8
Johnson, Rachel., et al. “Dietary Sugars Intake and Cardiovascular The Basu study did a commendable job of
United States Health” – Circulation 2009, 120:1011–1020 (August 2009)
So is it just sugar that has led to an obesity epi- attempting to control for other factors that may
0 10 20 30 40 demic? No, but sugar has been a major contributor, 9
Basu S, Yoffe P, Hills N, Lustig RH (2013): “The Relationship of contribute to weight gain and obesity. It is essen-
% of adult population Sugar to Population-Level Diabetes Prevalence: An Econometric
beyond the simple amount of calories it added to Analysis of Repeated Cross-Sectional Data”; PLoS ONE 8(2):
tially impossible for a study to completely isolate
Self-reported data Measured data our diet. e57873. doi:10.1371/journal.pone.0057873 sugar for a long enough period of time to allow for
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Estimated prevalence and healthcare costs of adults with diabetes Metabolic syndrome is made Withdrawal from caffeine can cause
Source: UnitedHealth Group Modeling, 2010 (http://www.unitedhealthgroup.com/hrm/unh_workingpaper5.pdf) up of a group of five metabolic symptoms similar to those seen with
risk factors other addictive drugs
Prevalence in adult Health costs attributable Source: National Heart, Lung, and Blood Institute Source: American Psychiatric Association
population to diabetes (in USD bn)
Metabolic risk factors Symptoms of caffeine withdrawal
2007 2010 2020 2007 2010 2011–20
(estimate) (estimate) (estimate) (projection) Large waistline/abdominal obesity Headaches
People with prediabetes 26.3 % 28.4 % 36.8 % 27 34 585 High triglycerides Fatigue
Low HDL (“good”) cholesterol Anxiety
People with undiagnosed diabetes 2.9 % 3.1 % 4.1 % 12 15 253
High blood pressure Irritability
People with type I diabetes 0.2 % 0.2 % 0.2 % 4 5 73
High fasting blood sugar Depressed mood
People with type II diabetes 7.6 % 8.2 % 10.8 % 110 140 2,439
Difficulty concentrating
Total 37.0 % 39.9 % 51.9 % 153 194 3,351
fully convincing results to be generated either in tose may play a particular role are metabolic syn- their use or consumption of the substance, (3) use generate the same dopamine release and pleasure
support of or against sugar. One point that we find drome and nonalcoholic fatty liver disease (NAFLD). the substance compulsively, and (4) continue to response. What is sometimes left out of the sugar
interesting, however, is that there are no studies Some of the opinions connecting fructose in par- use it despite the harm it is causing. discussion is the fact that caffeine is often in the
that have been published (to our knowledge) that ticular to metabolic syndrome and nonalcoholic fatty Sugar may not pose the clear addictive charac- same food and beverages that have significant
suggest sugar has a protective benefit, while there liver disease are driven by the temporal association teristics of illicit drugs such as cocaine and heroin, amounts of added sugar. Energy drinks, carbonated
are a number of studies (including the Basu study) between the rise in fructose consumption (as part of but to us it does meet the criteria for being a poten- beverages and chocolates are just some of the
that at least partially implicate sugar. If sugar truly sugar and as part of high-fructose corn syrup) and tially addictive substance. It is clear that a prefer- examples of substances that have caffeine included
has no specific impact on the body when consid- the rise of these conditions, but there is some bio- ence for sweet taste is innate in many people, with with added sugars. Caffeine also does not pose the
ered in isolation from other factors, one would logical rationale behind these concerns as well. sweeteners increasing the pleasure that people same risk of addiction as some other drugs but it
assume that random chance would lead to some The metabolic syndrome is a constellation of obtain out of eating. The consumption of sweet does stimulate the central nervous system, leads to
studies showing sugar to be beneficial, while others five different risk factors, each leading to an tasting foods and drinks has been shown to trigger positive feedback loops and can cause withdrawal
show harmful effects and others show no effects. increased risk of heart disease, diabetes and the release of the chemical dopamine in the basal symptoms when it is discontinued (Figure 8). Given
stroke (Figure 7). Various studies on small-size ganglia portion of the brain, the same response that caffeine and sugar are often ingested together,
7. The metabolic syndrome link test samples have shown that fructose consump- that the brain has to stimulation by sexual arousal, it is sometimes difficult to isolate the impact of one
tion, but not glucose consumption, can increase narcotics and other pleasurable stimuli. Most peo- substance as opposed to the other. Regardless, an
While it does appear that fructose and glucose are visceral adipose tissue, increase triglyceride levels ple can also attest, at least anecdotally, to people addiction, or at least a mild-to-moderate depen-
handled in an essentially equivalent manner in the and lower HDL cholesterol levels. Other studies developing cravings for and compulsively consum- dence, does seem to occur in some people to one
body, there may be some conditions in the body have shown that fructose consumption may ing certain sweet foods and drinks, even when they or both substances, contributing to people ingesting
where fructose may have a greater detrimental increase liver enzymes, suggesting potentially are not necessarily hungry or thirsty. In addition, more of the substance than they know they should.
impact than glucose. Two specific conditions that altered hepatic function and a possible rationale many (if not most) people who are overweight or
have been highlighted in the literature where fruc- behind the development of NAFLD. obese continue to eat sugary substances even if 9. Is there a threshold sugar intake level we
Unfortunately, most of these studies have been they realize that it is contributing to their calorie have crossed?
Figure 6 relatively small studies of short duration so the data intake and weight gain.
Increased sugar availability has been associated with are not conclusive one way or the other. In addition, The more formal scientific data supporting the Most of the focus around sugar intake has assumed
increased diabetes prevalence the fact that fructose is almost always ingested view that sugar is addictive is somewhat limited and that there is a linear dose response to increased
Source: Basu et al, PLoS ONE 8(2): e57873.
with glucose may make it difficult to ever have con- based mainly on animal studies. Studies on labora- sugar consumption. As the consumption of sugar
clusive evidence of the isolated impact that either tory rats have shown that rats can develop cravings has increased (along with the consumption of other
Change in diabetes prevalence (%)
nutrient is having in the body. for sugar water. They also binge on sugar water calories) there has been an increase in various med-
10 There are a couple of questions still being and show signs of withdrawal when the sugar water ical conditions. However, newer data suggest that a
debated without full agreement, but that are key to is withheld. Rats have also been shown to develop linear dose response may be too simplistic. 10 11
understanding the implications for consumer, sugar a tolerance to sugary substances. Over time, rats There may be a threshold level in the body below
companies, and food and beverage manufacturers. that have been fed a sugary diet have a reduction which sugars are without harm. Should this be sup-
5
in the number of dopamine receptors in their brain, ported by additional studies, then it could impact
8. Is sugar as addictive as caffeine? leading to them needing to ingest more sugar to how future dietary guidelines are written. It may
achieve the same amount of dopamine release and also help explain why the prevalence of certain con-
Some of the most vocal critics of the sugar industry pleasure response. ditions continues to rise even if the rate of con-
0
have expressed concerns that not only is sugar Studies of this sort are more difficult to conduct sumption of soft drinks and some other sugar-
toxic, but it may contain some addictive properties in humans. However, studies using functional brain sweetened beverages may have leveled off.
that lead people to desire more and more sugar imaging techniques such as functional magnetic
-5
over time. Addiction is a powerful term and, from a resonance imaging (MRI) scans and positron emis- 10
Johnson, RK, et al. AHA Scientific Statement: Dietary
medical perspective, requires some specific criteria sion tomography (PET) scans have shown that Sugars Intake and Cardiovascular Health. Circulation 2009;
120: 1011–1020.
to be met. Specifically, in order for someone to be obese individuals tend to have fewer dopamine
-200 -100 0 100 200 300 11
Rennie KL, Livingstone BE. Associations between dietary
addicted to a substance, they must (1) have crav- receptors in their basal ganglia, suggesting that added sugar intake and micronutrient intake: a systematic review.
Change in sugar availability (kcal/person/day) ings for the substance, (2) be unable to control they may also need to eat more sweet foods to British Journal of Nutrition. 2007; 97: 832–841.
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Figure 10
US 82 % US 56%
EU 90% EU 52%
Figure 11
Global average
Asia Pacific
Europe
USA
0% 20 % 40 % 60 % 80 % 100 %
Figure 12
Global average
Asia Pacific
Europe
0% 20 % 40 % 60 % 80 % 100 %
Figure 9 While research has yet to prove direct causality increased sugar consumption is linked to the devel-
Would you say sugar consumption is linked to the between excess sugar consumption and obesity, opment of obesity, compared to 85% in Europe Definitely not Probably not Maybe Probably yes Definitely yes
development of…? diabetes type II or metabolic syndrome, the medical and 94% in Asia. The same question regarding dia-
Source: Credit Suisse Equity Reserarch Nutrition Survey, 2013
profession is regularly confronting these issues in betes type II shows that 96% of the doctors we
their day-to-day practice. It is interesting to observe surveyed in the USA believe there is a link with Figure 13
Obesity Type II Diabetes Non-Alcoholic/ what doctors think of these issues. With this in increased sugar consumption versus 92% in Do you believe sugar is addictive?
Yes/Definitely yes Fatty Liver mind, we conducted a proprietary survey of 152 Europe and 86% in Asia. Source: Credit Suisse Equity Research Nutrition Survey, 2013
doctors in the USA, Europe and Asia. The results Finally, we asked the survey participants if they
US 98 % US 96% US 78%
are quite startling. thought that the government or health authorities
Global average
photo: istockphoto.com/skynesher
While most doctors do not appear to have much should be doing more to reduce sugar and HFCS
EU 85% EU 92% EU 73% specialized knowledge or training about nutrition consumption. Eighty-two percent of the doctors Asia Pacific
(and more specifically sugar or HFCS), 82% of the answered yes in the USA, 90% in Europe and
Europe
doctors in the USA and Europe think that sugar 86% in Asia. It is also interesting to notice that
Asia 74% Asia 86% Asia 70%
calories are handled differently by the body, com- when we asked whether they believed the govern- USA
pared to only 60% in Asia. On the question “is ment or the health authorities are likely to do more
0% 20 % 40 % 60 % 80 % 100 %
Global 86% Global 91% Global 74% sugar addictive,” 65% think this is the case. There to reduce the consumption of sugar and HFCS,
is more: 98% of the doctors in the USA think that only 57% responded yes. Definitely not Probably not Maybe Probably yes Definitely yes
SUGAR_16 SUGAR_17
The world
sweetener market
Sugar accounts for over 80% of the sweetener market. Growth
has been basically in line with global population growth (2%), but
“free market” prices have suffered from excess supply. Among
high-intensity sweeteners, the fastest-growing segment is natural
sweeteners, while artificial sweeteners are under increased
scrutiny due to potentially negative “health effects.”
We have probed into the latest medical research on production – particularly in Brazil – than might other-
the effects of sugar and HFCS. In order to better wise be thought. This means that, although there are
assess the potential implications of this research several producers globally, the key is to understand
for consumers and corporations, we need to ana- what is happening in Brazil in particular, and to a less
lyze the main features of the global sweeteners extent in India, Thailand and China.
industry (sugar, HFCS and other sweeteners). The market for high-intensity sweeteners, both
The global sweetener market is estimated to be natural and artificial, is completely open, but the
around 190 million tons of “white sugar equivalent,” products are the most heavily regulated among
and is unsurprisingly dominated by sugar. Each of sweeteners. These regulations vary from country to
the major groups (high-intensity/artificial sweeten- country. A high-intensity sweetener cleared in one
ers, sugar, and high-fructose corn syrup) has been country may be banned in another. The artificial
growing at a similar rate of circa 2% per annum, sweetener industry’s profile on health is somewhat
though the most recent numbers have natural high- colored and many still see some of these products in
intensity sweeteners growing rather faster. a bad light. This is not the case for natural HIS, the
Sugar is one of the most important agricultural largest portion of which is made of polyols (sugar
commodities traded internationally. The annual value alcohols)
of world trade exceeds USD 24 billion. However Finally, the market for HFCS is similar in size to
most sugar (71%) is consumed in the country of ori- that of HIS, but is concentrated in three major mar-
gin, so the global trade (imports/exports) totals kets: USA, China and Japan. The principal require-
around 60 million tons, and Brazil accounts for 25–30 ment for HFCS to flourish is government support.
million tons of this. As the world market is a smaller HFCS can only truly become established where it is
market, it is thus rather more sensitive to changes in allowed and where there is enough supply of starch.
Figure 14 Figure 15
1 % natural 4.0%
7% sweeteners
3.5%
HFCS
10 %
3.0%
HIS
2.5%
photo: istockphoto.com/photosoup
2.0 %
1.5%
82 % 1.0%
Sugar
0.5%
0.0%
HIS Sugar HFCS Natural
sweeteners
SUGAR_18 SUGAR_19
Sugar 12
35 -10 000
Figure 16
World sugar production local production through various mechanisms mix should continue moving toward ethanol produc- Average retail prices of sugar (USD/lb.)
Source: FO Licht
including support prices, import restrictions, pro- tion as a consequence of recent government incen- Source: Company data, Credit Suisse estimates
6 % Thailand duction quota, etc. Examples include the US Farm tives (and these incentives should continue because
Act, the European Union Sugar Regime, or the of trade deficits caused by gasoline imports). Our 1.40 USD per lb
8 % China
Chinese government’s controls on imports. Put long-term price assumption USD 20 cents/lb (from 1.20
simply, the complexity of the infrastructure sur- 2014–15 onwards) is based on the level needed to
rounding sugar is significant. Thus, the traded mar- remunerate the cost of capital for this type of proj- 1.00
40 % Others 9 % EU
ket (or the “world market”) is only 55–60 million ect in Brazil. On the other hand, demand could be 0.80
tons, and is sometimes referred to as the residual weaker and keep prices around the current level.
photo: istockphoto.com/pailoolom
market (where the sugar that is not a part of the Consensus points to demand growing around 2% 0.60
special agreements is bought and sold). The larg- per year, very much in line with the 2% increase 0.40
est producer of sugar by some distance is Brazil seen over the past ten years. However, as we will
15 % India (22% of world production), followed by India see later, consumption in developing countries is 0.20
Japan
Denmark
France
Australia
Germany
Sweeden
UK
Mexico
Canada
Italy
Spain
USA
Brazil
China
Russia
India
please refer to “LatAm Sugar & Ethanol - More Challenges
Than Opportunities in Brazil’s Sugar & Ethanol Sector”,
growth as concerns about the “medical” effects of
22 % Brazil Credit Suisse IB Equity Research, 29 July 2013. sugar gain further momentum.
SUGAR_20 SUGAR_21
High-fructose corn syrup production Global production of HFCS High-intensity sweetener volume HIS value shares (of global USD
by country Source: FO Licht shares (WSE) 1.2 billion market)
Source: FO Licht Source: ISO Source: ISO
14 000
2 % Others 1 % Neotame
3 % South Korea
4 % Turkey 12 000 2 % Neotame 7 % AceK
4 % Stevia 8 % Natural HIS
5 % EU
10 000
7 % AceK
6 % Japan
8 000
The consumers
Added sugars now represent 17% of a normal US diet and we
estimate that 43% of added sugars come from sweetened beverages.
As public awareness of the potential negative effects of excess sugar
consumption has increased, consumers have been favoring “diet” soft
drinks over the “full-calorie” offerings. This is particularly true among
people with higher income and higher education.
While the largest contributor to the increase in cal- diet as a whole, we estimate that sugars in their
ories has been the consumption of grains, fats and different forms represent 38% of the typical intake.
oils, the consumption of sugar and sweeteners has Consumers “like” all sugar types, but we are now
also increased, but at a somewhat slower rate than beginning to see a shift in attitude when focusing
overall calories. on added sugars and HFCS. Sugar in fruit for
Added sugar now represents 17% of a typical example is still perceived as good, but added sugar
US diet for a normal person, but if we evaluate the and HFCS may not be.
Is 17% a “healthy” level? According to the World
Health Organization, the recommended dietary
Figure 25 allowance is 2900 calories for men (aged 19–50)
US per capita daily calorie consumption in 2010 and 2200 for women. In practice, many countries
Source: United States Department of Agriculture Economic Research Service
are way above these guidelines. Furthermore the
World Health Organization recommends that added
sugars should contribute no more than 10% of the
210 (8 %) total caloric intake. This would imply that the total
255 (10 %)
added sugar calories in the average diet should be
no more than 290 for men and 220 for women.
Many countries are clearly ahead of this level by a
444 (17 %) 616 (23 %) significant margin.
dded fats and oils and
A It should be noted that added sugar is consumed
photo: istockphoto.com/asiseeit
Figure 26 ketchup, pizza and cereals to a full array of bever- Here, the debate is centered around introducing Figure 29
Caloric intake of sweeteners by country ages. Note that 4.2 grams of sugar make up a taxes on full-caloric drinks as a part of the new Diet soda consumption (as a % of total soda
Source: USDA-ERS, Conadesuca, OECD, Credit Suisse Research
“teaspoon.” We are, therefore, referring to a large budget, increased advertisement by food and bev- consumption) vs. relative educational standard
number of teaspoons in most cases. Yet the main erage manufacturers, attempting healthier posi- Source: Euromonitor, Nielsen XAOC, Credit Suisse estimates
800
focus for consumers regarding the potential health tions of their brands, and increased “educational”
35 % Diet soda consumption, as a % of total soda consumption
700 issues tied to sugar has been on beverages and advertisement by health officials and consumer
600 particularly soft drinks. Why? organizations. Norway
30 % Belgium
500 Sweetened beverages are now delivering an A few months ago, Coca-Cola launched a sim- United Kingdom
increasingly greater percentage of the sugars that ple but subtle campaign promoting Coke as a Denmark
R2 0.4166
400 25 %
are ingested in an average diet. Between 1955 source of “needed” calories or – if you want to take Switzerland
300 Hong Kong, China Australia
and 2000, the consumption of soft drinks in a different view – being completely transparent Canada New Zealand
Germany
20 % Finland Netherlands
200 the USA increased from about ten gallons/person about the caloric content of a coke bottle. The France Israel USA
Japan Ireland
100 to 54 gallons/person and then declined by around response to the ad was swift. The Alianza para La Singapore Spain
15%
0 20% until 2012, but with an equivalent increase Salud Alimentaria (Alliance for Healthy Foods) Argentina
in the consumption of fruit juices and bottled launched an ad showing the amount of sugar in a Austria
Bangladesh
China
Africa
India
Developing World
Indonesia
World
Japan
Pakistan
Korea
Turkey
Iran
Egypt
Developed World
Saudi Arabia
Thaïland
Uruguay
Algeria
Europe
South Africa
Russian Federation
Chile
Ukraine
Malaysia
Latin America
Canada
Mexico
Argentina
Australia
Brazil
United States
10 %
water. According to the USDA, the beverage bottle of soda (“would you drink twelve spoons of Chile
Czech Republic
Hungary Sweden
Morocco Greece
industry now accounts for 31% of total sweetener sugar?”) and linking sugar in soft drinks to diabetes Colombia Brazil Mexico Poland Italy
5% South Portugal
deliveries and we estimate that 43% of added (“the drink is sweet, but diabetes is not”). Another Indonesia Saudi ArabiaAfrica Romania Slovakia
United Arab Emirates
Turkey Bulgaria
Calories from sugar Calories from HFCS sugars in a normal US diet come from sweetened association – El Poder de el Consumidor – Egypt Philippines Malaysia South Korea
Peru Russia
0% China Venezuela Ukraine
beverages. denounced the ad by Coke as misleading and dan- India Thailand
0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
A similar stabilizing trend can be seen in most gerous and demanded its withdrawal. A similar
Figure 27 other developed markets, while consumption is still advertisement in the UK, showing a bottle of Coke UN Education Index
Sugar per serving in various foods and beverages on the rise in emerging markets. Why are we see- with the message “139 happy calories to spend on
Source: SummerTomato.com
ing stabilization or even a decline in some devel- extra happy activities” had to be withdrawn after
oped countries? Information is key. There is a the UK advertising supervisory body ruled that the Figure 30
Starbucks caffe vanilla frappuccino
(16 oz/450 ml)
growing perception – not completely wrong as we advertisement was misleading. Correlation between diet Coca-Cola drink consumption
Odwalla Super Food (450 ml bottle) discussed – that caloric soft drinks have been In this more contentious environment, Coca- and median income by region
California Pizza Kitchen Thai chicken salad responsible for some of the health issues men- Cola Femsa, the largest coke distributor in Mexico Source: Nielsen, http://www.census.gov/people/
Sprinkles Cupcake red velvet tioned before. This perception is stronger among and Coke’s largest independent bottler globally,
55 % % diet Coca-Cola CSD vs Coca Cola CSD
Coca-Cola (20 oz/570 ml) people of higher education or higher income. has moved quickly to address directly health and
Vitamin Water (20 oz/570 ml) wellness issues. In its 2012 Sustainability Report, 50 % New England
Yoplait original yogurt The consumers’ options the company mentions the “Let’s Play” program, West North Central
Tropicana 100% orange juice 45 %
(8 oz/225 ml) which was originally developed in Costa Rica, and East North Central
Subway 6" sweet onion teriyaki chicken So what is likely to happen? Four main things: is now being rolled out in Argentina, Colombia, 40 % Middle Atlantic
South Atlantic
Godiva 2 truffles 1. As long-term trends in consumption are set by Guatemala, Nicaragua and Panama. This is a 35% Mountain Pacific
Starbucks caffè latte grande
(16 oz/450 ml) those with higher education and higher income, we project of technical and didactic training, aimed at East South Central
West South Central
Ben & Jerry's vanilla ice cream expect the world to gradually move away from full- school age children, focused mainly on issues of 30 %
Crunchy Nut/Frosties/Froot Loops cereal calorie soft drinks to the diet versions of the same physical activity and enhancing students’ psycho- 25 %
Luna Bar berry almond drinks, when available. metric skills.
Krispy Kreme original glazed doughnut 20 %
2. In the USA and Europe, the diet or zero version Another interesting fact that shows the growing
0 10 20 30 40 50 60 70 30 35 40 45 50 55 60 65
of the soft drink peaked around mid-2000 and concern of consumers about full-calorie drinks
Sugar per serving (g) then declined gradually in line with the full-calorie can be found in their willingness to support gov- Median income USD ’000
version. This reflects a growing concern with artifi- ernment regulation (including taxation) of sugar
cial sweeteners, particularly in Europe. We expect and HFCS-sweetened beverages. In California,
Figure 28 this to be the case in other markets, but as we 68% of the people polled were in favor of taxing Figure 31
Sweetener deliveries to the USA beverage industry discuss in the company section, we expect soft- full-calorie soft drinks if the revenues were used Diet soda consumption relative to the % of the population
as a percentage of total sweetener deliveries drink manufacturers to make attempts at substitut- to support school nutrition and physical activity with a bachelor’s degree or more
Source: Sugar and Sweeteners Outlook (SSS-M-293), USDA Economic Research Service, 2013
ing artificial sweeteners with natural ones, as the programs. In a 2010 poll run in the State of New Source: Nielsen, http://www.census.gov/people/
taste profile of the latter improves. Consumers will York, 58% of the people interviewed supported a
37.0 percentage 55 % % diet Coca-Cola CSD vs Coca Cola CSD
determine the success or failure of these newer soft-drink tax, with a peak of 76% in New York
36.0 versions. The key is acceptance of new tastes or City. However, a 2012 pool of 592 people across New England
50 %
35.0 delivering the same taste with fewer calories. the USA revealed that 64% did not support a West North Central
45 %
34.0 3. We expect consumer associations to be a lot 20% tax on sodas. East North Central
33.0 more proactive in raising potential health issues and Perhaps more interesting was that support for 40 % Middle Atlantic
South Atlantic
32.0 monitor advertisement and availability, particularly the tax was highest among those underweight or Pacific
35% Mountain
31.0 for children. This applies to soft drinks sweetened normal weight, those with the highest income East South Central
West South Central
30.0 with sugar, HFCS or HIS. (greater than USD 65,000/annum) and those 30 %
29.0 4. Growing public support for regulation and poten- with a higher education level. There was also a 25 %
28.0 tially taxation. significant racial divide, with 39% of non-Hispanic
20 %
27.0 whites supporting the tax versus 24% of black-
15 20 25 30 35 40
Mexico is a good example of what we can expect Americans. We were unable to find similar polls in
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
on a more global scale in the next couple of years. either Europe or Asia. % of population with bachelor’s degree or more
SUGAR_26
Against mounting evidence of the negative impact problems related to dietary caloric increase and the
of sugar and HFCS on obesity, diabetes type II, excess sugar we are now consuming. Calories,
metabolic syndrome or rising levels of uric acid including those derived from sugar, are present
and cardiovascular disease, the reaction of regula- across a wide array of products. Sugar exists not
tors around the world has been limited to incre- only in soft drinks and fruit juices, but also in sauces
mental taxes (mostly on soft drinks), stricter (even the most talented Italian chefs add a little
guidelines on labeling, bans on distribution of a sugar to a tomato sauce), bread, pasta, rice, ham
few sugary products in public buildings and and so forth.
schools, limits on the size of drink packages, small The clearest “targets” in controlling dietary sugar
changes in the official dietary guidelines and some consumption have been the beverage companies.
educational advertisement. We would argue that these companies have played
Several issues have constrained, and will con- the most prominent role in increasing the amount of
tinue to limit the response of regulators, health offi- sugar present in our diets through recent history.
cials and governments. Yet time is ticking by and Combined with our body’s inability to recognize liquid
the related healthcare costs are rising fast. While calories and feel satiated, this has led to some of the
there is not one single action that will reverse the negative health outcomes we mentioned before.
global epidemic of obesity, diabetes, etc., we 2. Lobbying in this area has been quite fierce. At
believe that public opinion on this issue is gaining the top, stands the “global sugar lobby,” often
momentum. This will force regulators to do some- regarded as the most powerful commodity lobby
thing and drive companies, or at least the largest behind that dedicated to preserving the interests
ones, to self-regulate and take concrete actions to of the oil industry. With governments promoting
reduce the amount of added sugar in their products. artificially high prices for sugar, and implementing
quotas to protect the labor bases devoted to sugar
Regulatory attempts: A limited response beet and sugar cane (equivalent to government
subsidies), there is little interest to reduce sugar
photo: istockphoto.com/lisegagne
Why have regulators been so slow in reacting? consumption among those in charge of agricul-
Three main motives emerge: (1) The “culprits” span tural policies.
across several businesses, and many of which are While health officials would justifiably support
impractical to regulate, (2) there has been consis- measures aimed at reducing the availability of
tently strong lobbying from the affected parties, and sugar, one could argue that the votes available to
(3) there is the lack of a proper legal framework (at politicians supporting sugar-reducing actions are
least in the USA) to confront such a complex issue. fewer and far between than those supporting the
1. There is no “one-size-fits-all” solution to the farmers. As a side note, the general consensus has
SUGAR_28 SUGAR_29
which was then also applied to zero calorie soft the German border, the less soft drinks they pur- or from state to state, we argue that this would be
drinks flavored with artificial sweeteners. The tax chased domestically. the most effective way of dealing with the related
has had the desired effect, with the carbonated This shows that a cohesive action is much concerns. Effectiveness here is measured simply
soft drink market dropping by 5% in volume last needed. So where is the European Union on all as the overall reduction in consumption of added
year (according to market researcher Canadean). this? The European Union is in some ways behind sugar. Taxing at the right level should theoretically
However, this could be attributed more to psycho- the curve and, by our accounts, focusing solely on achieve this, and academic studies have shown it
logical effects than financial ones. Fundamentally, it two issues: labeling and artificial sweeteners. With to work. After all, price is an important determinant
is bad PR to have your industry taxed for health regard to labeling, all companies will be required to of food choices and diet. Theoretically, all foods
SUGAR_30 SUGAR_31
Figure 32 containing added sugar should be targeted in an lent, in reality, to increasing the price of a can by Figure 34
Cigarette consumption and excise tax rate in South Africa, attempt to reduce daily intake; however, soft drinks 20%. We see only positive implications if health is Percentage of obese population by income and race – USA
1980–2006 could effectively bear the brunt of any financial levy. the main consideration. Source: CDC/NCHS, National Health and Nutrition Survey, Credit Suisse analysis
2000
be argued that they are a major contributor – if not than the theoretical 20% (one-to-one price elastic-
35%
the largest – to the current epidemic of obesity, dia- ity), as most larger beverage manufacturers have a 40 %
30 % betes and metabolic syndrome and, at the same lower- or zero-sugar content offering with a similar
1500 time, they are clearly easier to regulate and tax flavor. We would also expect the impact to be higher
25% 30 %
from a social perspective. Soft drinks are not on soft drinks than juices, based simply on the per-
20 % essential to our diet as are bread, pasta or rice. ception that juices are “healthier” and a substitute
1000
Water is always a viable alternative. In addition, the (albeit a poor one) for eating the real fruit. 20 %
15%
beverage industry accounts for one third of all The tax is likely to be a regressive one (e.g.
500 10 % added sugars in our diet. affecting more people at lower income levels). 10 %
5% So, if the sole objective is to reduce the con- However, this might be positive not negative, as the
sumption of full-calorie soft drinks, one does not poorer and less educated seem to be affected the
0 0% 0%
need to reinvent the wheel. Tobacco and alcohol most on relative basis by obesity and metabolic
1980 1985 1990 1995 2000 2006 US population Non-hisp. white Non-hisp. black Mexican
provide relevant test cases, and unequivocally show syndrome. Figure 34 shows that, within the lower
Consumption Excise tax rate that, in both cases, taxation has been able to affect income segment, 26% of non-hispanic blacks and Higher income Medium income Low income
consumption on the downside. 43% of hispanics in the USA are obese versus a
In the case of tobacco, several studies sponsored 20% national average. So a hefty excise tax is
Figure 33 by the WHO would suggest that a 10% increase in likely to impact more those segments of the popu- Figure 35
US price elasticity estimates, by food and beverage taxes leads to a 4% drop in consumption in high- lation where the problem is more acute. Annual global soda consumption versus GDP per capita
category, 1938–2007 income countries and 8% in low-income countries. A tax of this nature should provide soft-drink and Source: Euromonitor, Nielsen XAOC, Credit Suisse estimates
Corporates:
Self-regulation
and opportunities
Several sectors will be impacted by the increased focus on the health
effects of excess sugar consumption: food and beverage companies,
sugar producers, manufacturers of artificial and natural sweeteners
and healthcare companies. We expect sugar consumption to decline
with an impact on sugar prices. The beverage industry has the tools
and marketing experience to embrace change and provide new
offerings to better match consumer wishes. Natural sweeteners
should be the main beneficiaries.
Lastly, we wish to focus our analysis on the impact from the same negative image as the beverage
on corporates: we can divide this into five groups: industry, they are more difficult to regulate and
(1) food and beverage companies, (2) the sugar they are less affected by the biomedical issues
industry (sugar cane, beet sugar and HFCS), (3) linked to sugary beverages. We expect the industry
HIS (artificial sweeteners), (4) natural sweeteners, to gradually substitute sugar or HFCS with natural
and (5) the healthcare Industry, sweeteners.
We believe that the implications of our analysis 3. The sugar industry is likely to be negatively
for the beverage industry and the natural-sweet- affected, but it will take some time. As the aware-
ener industry will drive the outlook for the other four ness of the medical risk tied to excess consumption
sectors: of added sugars increases worldwide, and as the
1. We expect companies in the beverage industry availability of natural sweeteners increases, we
(mostly soft drinks) to react to the growing public expect sugar consumption to grow below the
concern and the threat of taxes on sugary drinks by growth rate of the global population. We should see
moving as fast as they can to self-regulate and this happen first in developed countries (2–5 years)
change tack. We will look at self-regulation in and then gradually extend to developing countries
detail, but the most attractive option to achieve this (10 years). If just the beverage industry in the USA
will be to develop soft drinks that leverage natural were to stop using sugar or HFCS and use natural
sweeteners to reduce the overall caloric content or or artificial sweeteners, demand for sugar would
replace artificial sweeteners. If properly managed, drop by 30%.
we think these changes should have a neutral 4. The healthcare industry should benefit from
effect on the beverage industry, be negative for increased awareness, which in turn should lead to
artificial sweeteners and very positive for natural a reduction in the growth rate for obesity, diabetes
photo: istockphoto.com/pjohnson1
sweeteners. The key issue is taste. Natural sweet- type II and metabolic syndrome. We are still far
eners need to be able to deliver a taste profile that away from this in many regards, so that, in the
is as pleasant as the full sugary drink or the one short term, this clearly means increased costs for
that uses artificial sweetener – something that the the healthcare system. However, if sugar con-
manufacturers have found very difficult over the sumption is curtailed, pharma and biotech compa-
past few decades. nies closely tied to the treatment of diabetes type II
2. We think the impact on companies in the food should – on a longer-term basis – see a reduction
industry should be minimal as they do not suffer in the potential number of addressable patients.
SUGAR_34 SUGAR_35
Taxes on soft drinks in Latin America Sugar content of popular beverages – teaspoons per serving
Source: Credit Suisse Equity Research, Fomento Economico Mexicano, S.A.B., Form 20-F 2007
Let us go into more detail and focus first on the Source: California Center for Public Health 2011 study, Credit Suisse Research
beverage industry. We believe that few countries
VAT Excise rate Excise taxes will implement taxes on soft drinks at the level we Fanta Orange
rate as % of sales suggest. Some countries already have taxes on
(estimated) Mountain Dew
soft drinks, but at lower levels (see Figure 36 for
Mexico 16 % Latin America). Mexico might be a game changer
Fresh Orange Juice
Guatemala 12 % 0.18 cents local currency per liter 2.9 % in this area and become the first of the large soft- Pepsi Classic
Costa Rica 13 % 22.53 local currency per 250 ml 13.8 % drink consumer markets to impose a significant Coca Cola Classic
Nicaragua 15 % 9 % consumption, 1% gross income 9.4 % excise tax on full-calorie soft drinks as part of the
Red Bull Energy Drink
new government’s budget later this year.
Panama 0 % 5 % depending of cost of good, 7.5 %
10 % selective products In our view, however, the most likely outcome is Starbucks Frappuccino Vanilla
2.0 %
• Promote the marketing of “diet” drinks more than smoke-free cigarettes (only now, decades later, are we turn our attention to the USA, which is a coun-
full-calorie drinks. we seeing the emergence of electric cigarette try where soft drinks are fully available in every
4.0 % • Gradually reduce the calorie content of the full technology). Beer brewers experimented with zero- state. We can see that the level of sugary versus
calorie version (although previous attempts to alcohol beers, but with very little success. Guinness “diet” soft drinks varies across the country, with a
6.0 % change traditional formulas, such as with “New launched 0% Kaliber in 1986 as an upmarket alter- clear pattern emerging. Using census data for edu-
Coke” have been known to backfire). native to other alcohol-free lager brands, and it is cation and average income, we note there is a
8.0 %
• Improve and make more visible the labeling of now generally the only such product widely avail- remarkable correlation between the penetration of
Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13
the sugar content of drinks; in some countries able in most markets. Clearly, we are still quite the diet version and the level of education and
Regular Diet there is still no obligation to do so. some distance away from a zero-alcohol wine or a income. In other words, the higher the income and
• Replace sugar and artificial, intense sweeteners zero-alcohol whisky. With this in mind, soft-drink education level of the consumer, the higher the
with natural, low- or zero-calorie sweeteners. companies have a real chance to take a proactive penetration of the “healthier” version of cola. We
Figure 38 • Expand portfolios to offer alternative drinks (fruit approach at making the right changes and come can conclude that better access to information may
Full-calorie versus diet carbonated-drink consumption – juices, vitamin waters, energy drinks or simply out on the winning side. be a focal point in “controlling” the situation.
by region smaller sizes – as they have recently announced Generalizing this hypothesis elsewhere, one
Source: Beverage-Digest, Canadean
with the new 25 cl “slimline” cans in the UK). What can change and what is likely to could assume similar interpretations as in the USA.
• Launch public initiatives and campaigns to foster change? There is one caveat, however. The availability of the
2012 Full calorie share Diet share of a healthier and more active way of life. In other diet version of any given cola may, traditionally, not
of consumption consumption If we evaluate the world as a whole, it becomes be as extensive as it is in the USA, which goes
words, take an active role in promoting a healthier
Asia 96.9 % 3.1 % lifestyle and educating people about diet choices. clear there is ample scope to improve the current some way to explain why emerging-market con-
Eastern Europe 96.7 % 3.3 % situation, particularly in emerging markets, and sumption of “diet” cola only accounts for 5% of the
Southern Africa 95.8 % 4.2 % Soft-drink companies are likely to continue lobbying most notably in Mexico, by offering and proactively total, versus a considerably higher 28% in the
against taxation of soft drinks through special-pur- marketing the “diet” version. western world. Regional sugar lobbies may also
MENA 95.2 % 4.8 %
pose and fully funded groups (e.g. Americans Is it just a coincidence that Mexico ranks No. 3 play a role in governmental support for one over the
Latin America 93.0 % 7.0 % Against Food Taxes), but will have to be careful to in per-capita-soda-consumption and No. 2 in global other, as most colas will use the locally available
Western Europe 75.5 % 24.5 % not do so openly. The tone of the latest press obesity rates, and at the same time sugary soft “sugars” to sweeten their beverages. Not surpris-
North America 69.0 % 31.0 % release from the Coca-Cola Company shows a drinks representing 95% of total soft-drink con- ingly, in Mexico, the sugar in the full-calorie coke is
remarkable change – from ignoring the media link- sumed nationally? We do not think so. In this area, derived from cane sugar (true for most of Latin
Australasia 64.7 % 35.3 %
ing obesity and diabetes to soft-drink consumption as we said before, showing causality is incremen- America), while, in the USA, the sugar is provided
Worldwide 85.9 % 14.1 %
to taking steps to present Coca-Cola as being well tally problematic, but assuming that all factors are by the corn industry in the form of HFCS.
SUGAR_36 SUGAR_37
Figure 40 Fruit juices and others Tough times ahead for artificial sweeteners Figure 42
Beverage product portfolios – corporates are expanding Global product launches including Sucralose as an
their product portfolios As mentioned, one of the responses of the soft- A big debate has unfolded, particularly in the Euro- ingredient
Source: Beverages Digest Factbook 2013, Credit Suisse Research
drink industry to the growing public concern about pean community, on the use of artificial sweeten- Source: Mintel
soft drinks has been to enlarge portfolios, expand- ers. The word “artificial” plays a key role here, and
100 % 3000
ing into bottled water, fruit juices and sport drinks. the main focus of the examination has been Aspar-
90 % Water (both tap and bottled) has gained a signifi- tame. While there is no conclusive proof that +11%
Soft drinks, 24 2500
80 % Soft drinks, 29 -480 bps cant share of total consumers’ liquid intake, while Aspartame is dangerous to people’s health, there +6 %
+9 %
70 %
carbonated soft drinks have lost 480 basis points have been numerous, conflicting recommendations +21%
2000
Tap water, 21 over the last ten years. as to the maximum recommended daily limit.
60 % Tap water, 17 +11%
We have largely omitted fruit juices from our As we mentioned, in the USA, the FDA turned 1500
50 %
Bottled water, 8 Bottled water, 12 analysis here, but in the spirit of an exhaustive down the use of Aspartame as a sweetener six
40 % study, we should draw attention to some key points. consecutive times, before finally approving it. The 1000
Beer, 12 Beer, 11
30 %
As can be seen in Figure 39, natural fruit juices and European community had initially agreed to a rec-
Milk, 11 Milk, 10 fruit juices derived from concentrate do not fare ommended international standard of 40 mg per kg 500
20 %
much better than full-calorie sodas when looking at of bodyweight, but French authorities have sug-
10 % Other (*), 2002, 22 Other (*), 2012, 22 this issue from a health perspective. gested they would want this reduced further to a 0
0% Yet there are certain discernible differences. maximum of 5–10 mg per kg of body weight. 2008 2009 2010 2011 2012
2002 2012 The body reacts differently to fruit juices than sug- There are only a few medical studies on this
ary sodas, both in terms of physiology and the topic, and ultimately no reliable conclusions. The
“satiation effect” we mentioned earlier (which combination of a growing negative public opinion on
Figure 41 works better with fruit juices). In addition, fruit artificial sweeteners and new discoveries in the field Figure 43
Artificial sweeteners juices contain other nutrients/vitamins that might of natural sweeteners should lead to a gradual Examples of natural sweeteners
Source: Prairie Moon Company
be beneficial to our body. However, the impact of decline in the use of Aspartame and other Source: Credit Suisse Consumer Staples Research
too much juice consumption is not vastly different artificial sweeteners. Companies like Tate and Lyle
Sweetener Sweetness Manu Regulatory / than when too many cans of full-calorie soda are that have been at the center of the sweeteners mar- Natural Commercial Sweetness Company Calories
relative to facturer FDA categorisation Ingredient product
ingested. Yet the outcry is far less than that of ket are moving fast to develop new products
sugar
sodas. Why? in the area of natural sweeteners and to partner with Stevia Truvia 10–15 times Cargill 0
Acesulfame potassium 200 x Nutrinova FDA approved 1988 > sugar
First and foremost, fruit juices are perceived as beverage and food companies to reduce the level of
Alitame 2,000 x Pfizer FDA approval pending “natural” products, and there has undoubtedly been sugar in their products without impacting the taste. Monkfruit Nectresse/ 150–300 times Tate and Lyle 0
Aspartame 160–200 x NutraSweet FDA approved 1981 a trend over the past decade to favor natural and Purefruit > sugar
Aspartame- 350 x Twinsweet FDA approved organic products in our diets. But make no mistake. The “sweet spot”: Natural sweeteners Oubli Brazzein/ 1000 times Cargill and Natur 0
acesulfame-salt Our forefathers did not drink fruit juices (certainly Csweet > sugar Research
Cyclamate 30 x Abbott FDA banned 1969, not in the quantity that we do) – they simply ate the Soft-drink companies are working hard to introduce Xylitol in corn Xylitol 15–30 times 24 companies 40 %
Pending re-approval fruit. While eating the fruit may lead to ingesting natural non-caloric or low-calorie natural sweeten- fibers, birch > sugar in China, Canada < sugar
wood and USA
Dulcin 250 x Not applicable FDA banned 1950 roughly the same amount of sugar, the body fully ers, into their product offerings. The main concern
“notices” the calorie intake when eating the fruit so far, however, has been that natural sweeteners Oats Oatsweet same as sugar Oat Tech 15 %–20 %
Neohesperidine 1,500 x Nutrafur FDA no classification
< sugar
dihydrochalcone and, as a result, substitutes these calories for other simply do not taste the same as sugar, and in some
Neotame 8,000 x NutraSweet FDA approved 2002 food-derived calories, not simply adding to them. cases leave a bitter after-taste. Coke is trialing Ste-
P-4000 4,000 x Not applicable FDA banned 1950 Also, natural fruits are rich in vitamin C, antioxi- via in Sprite in France and has recently launched a
dants, flavonols and other substances that combat new version of coke called “Coca Cola Life” in
Saccharin 300 x Multiple FDA approved 1958
the metabolic effects of fructose. Some of these Argentina that is sweetened with 50% sugar and
Sucralose 600 x Tate & Lyle FDA approved 1998
benefits disappear in the “juice” version of the fruit. 50% Stevia. Coca Cola Life has 50% less calories
As several fruit-juice brands are ultimately owned than the full-calorie Coke version. The word “natu-
by the large soda manufacturers, there is hope that ral” is key in the development and adoption of a
the same remedial actions we cited above will be new generation of sweeteners by the food and bev-
applied to fruit juices as well. While substituting the erage industry. Stevia derived from the Stevia plant
“natural sugar” in fruit juices with natural non-caloric is already available; Nectresse derived from Monk
sweeteners, such as Stevia or Monk Fruit may fruit is also now available both industrially and as
sound “unnatural,” this would be consistent and table sugar. Xylitol or “alcohol sugar,” which occurs
likely to happen, albeit at a much slower pace. naturally in some fruit, vegetables, mushrooms and
Beyond juices, it would be a little excessive to cereals is used both in sport drinks and certain
list each and every commercial foodstuff containing foods. The latest natural sweetener is a new prod-
added sugar. Few are aware that, in a single serv- uct called Brazzein or Cweet which is derived from
ing of Prego’s tomato sauce, there are 10 grams of an African plant, the Oubli (Pentadiplandra brazz-
sugar (almost three spoons in total). Although this eana). We expect more to come in the near future
is not quite the level seen in fruit juices (where a as the race for a natural, non-caloric sweetener
500 ml orange juice can contain over 50 grams of (that is widely accepted by the public) is heating up.
sugar), it should nevertheless be considered incre-
mental. In due course, we would expect these
companies to gradually follow the lead of the soft-
drink manufacturers.
SUGAR_38
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Sep. 2011
Dec. 2011
Mar. 2010
Jun. 2010
Sep. 2010
Dec. 2010
Mar. 2012
Jun. 2012
Sep. 2012
Dec. 2012
Mar. 2013
the next 3–5 years and a discreet substitution of
Aspartame or Acesulfame Potassium will take a managed care as a means of reducing costs. Con- As costs have escalated, programs that can reduce
place initially in the “diet” sodas (consumers are trolling and managing the growth in obesity and or bend the cost curve have become increasingly
more willing to try something different provided it diabetes are key elements of this effort. Similar important. The challenge is to demonstrate the
Figure 45 ensures zero calories). More gradually, these issues apply to the rest of the world. In most coun- return on investment (ROI) from an employer’s per-
Dr Pepper 10-calorie hits 7% of total Dr Pepper volumes, switches will take place as a way to reduce the tries, the growing costs for the healthcare system spective from investing in health and wellness pro-
but falls back to 3% in under a year caloric content of the full-calorie drinks. will be an added burden to public sector finances grams. As health plans work further to collect and
Source: Based on AC Nielsen data XAOC
When that occurs, we expect big labels to heavily and ultimately to the tax payer. synthesize data, we will have a clearer picture. If
highlight the reduced calorie content version of the So what are managed-care companies doing to results show positive ROIs, health and wellness
9%
new drink, as Pepsi did with Pepsi Next, or more help contain the costs to the system? Managed care programs may become increasingly more impor-
8% Dr Pepper 10 as % Dr P
recently Dr Pepper with its 10 calorie versions of has developed plans that for the most part offer tant. The healthcare reform may accelerate this
7% 7Up 10 as % 7Up total
Sunkist, 7-Up and A&W root beer. As Figures 44 health and wellness programs to individuals and cor- trend as more uninsured people gain access to
6% A&W 10 as % A&W total
and 45 show, the limitation of many of these new, porate clients. The key words here are “prevention” coverage, thus increasing healthcare costs.
5% low-calorie drinks is that the encouraging initial cus- and “proper treatment.” A large portion of the world More broadly, the focus on lower costs and
4% tomer response and uptake can soon be followed by population is in a pre-diabetic stage: over 60 million individual/employer engagement in healthcare is a
3% a steady decline in consumption. Patrons are ready people in the USA and over 400 million globally. significant opportunity for managed care in the
2% and willing to try new products, but soon fall back on Proper diagnostics and then intervention could longer term. If managed care is viewed as part of
1% old favorites. Public awareness of the negative reduce the number of “new diabetics” drastically and the solution, we see an incremental business
0% health effects tied to sugar consumption and significantly reduce the costs to the healthcare sys- opportunity (sharing the savings with government,
improved taste profiles could change this trend. tem. The same applies to a certain extent to people privates and corporations). However, given the
Jan. 2011
Apr. 2011
Jul. 2011
Oct. 2011
Jan. 2009
Apr. 2009
Jul. 2009
Oct. 2009
Jan. 2010
Apr. 2010
Jul. 2010
Oct. 2010
Jan. 2012
Apr. 2012
Jul. 2012
Oct. 2012
Jan. 2013
Companies have now an added incentive to make a that already have diabetes. In both cases, reduction significant changes impacting health insurers in
major change in not just marketing, but also in their in the level of consumption of sugar would benefit 2014 with healthcare reform, we think this par-
overall product strategy. the affected individuals and the system. As we dis- ticular theme is overshadowed by the uncertainty/
cussed, education, taxation, proper labeling and a potential disruption of next year’s events and it is
Figure 46 Potentially positive: US managed care wider use of new natural sweeteners could help to therefore not necessarily priced into the managed-
Prevalence of diabetes and prediabetes in the US adult improve the current situation and reverse this trend. care stocks.
population 2007–20 Increasing prevalence of diabetes and other health
Source: UnitedHealth Group Modeling, 2010 (http://www.unitedhealthgroup.com/hrm/unh_workingpaper5.pdf)
issues has put significant pressure on the US
health system, which today spends nearly USD Figure 47
60 % Percent of adult population
3 trillion annually on healthcare costs. Some num- Estimated savings opportunities for initiatives to address obesity, pre-diabetes,
bers might help place this in a proper context. diabetes in US adults, by public payers, 2011–20
50 % Obesity alone accounts for 20% (or USD 190 Source: UnitedHealth Group Modeling, 2010 (http://www.unitedhealthgroup.com/hrm/unh_workingpaper5.pdf)
billion) of US national health expenditures and dia-
40 % betes and metabolic syndrome account for a similar Expected net health care cost savings by payer,
2011–20 (in USD bn)
figure (though there might be some double-count-
ing). So 30%–40% of healthcare expenditures in Federal State Total % system Health
30 % public savings system
the USA go to help address issues that are closely
tied to the excess consumption of sugar. Diabetes People without diabetes — lifestyle intervention 23 1 24 53 % 45
20 % (recommended weight loss)
is the fastest growing: 15% of US adults or close
photo: istockphoto.com/fatchoi
to 40 million are expected to be diabetic by 2020 People with prediabetes — intensive lifestyle intervention 61 3 64 61 % 105
like the Diabetes Prevention Plan
10 % compared to 12% now.
As we move forward, there is greater pressure People with diabetes — improved medication adherence 21 1 22 63% 34
(Asheville & ten cities)
0% under the US healthcare reform to control the
unsustainable healthcare cost trend with a focus on People with diabetes — intensive lifestyle intervention 53 2 55 62 % 88
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
(Look Ahead)
chronic conditions. Large employers, individuals,
All initiatives (net of interactions) 144 6 150 60 % 250
Diabetes Prediabetes Combined state and federal governments have all looked to
SUGAR_40 SUGAR_41
Figure 48
Brand name Therapeutic category Peak year Peak sales (USD bn) there are many companies that have invested sig- Sucrose, High-Fructose Corn Syrup, and James M. Rippe and Theodore J. April 24, Economic aspects of tobacco use and taxation C. Godfrey, A. Maynard 1988
Fructose, Their Metabolism and Potential Angelopolous 2013 policy
Lipitor Cholesterol 2006 13.7 nificant resources in developing drugs to treat obe- Health Effects: What Do We Really Know?
Institute of Alcohol Studies and tax Institute of Alcohol Studies 2003
Plavix Anticoagulant 2011 9.9 sity, as well as drugs to treat some of the complica- Energy and Fructose From Beverages Sweet- George A. Bray April 24,
ened With Sugar or High-Fructose Corn 2013 The Public Health and Economic Benefits of Kelly D. Brownell, Ph.D., Thomas 2009
Humira Autoimmune 2012 9.3 tions from obesity, such as type II diabetes, high Syrup Pose a Health Risk for Some People Taxing Sugar-Sweetened Beverages Farley, M.D., M.P.H., Walter C.
Willett, Md.D., Dr.P.H, Barry M.
Remicade Autoimmune 2012 8.2 cholesterol and high blood pressure. Five of the 20 Dietary fructose consumption among US chil- Vos MB, Kimmons JE, Gillespie C, 2008 Popkin, Ph.D,, Frank J. Chaloupka,
Seretide Respiratory 2011 8.1 most successful drugs of all time, in fact, are drugs dren and adults: the Third National Health Welsh J, Blanck HM Ph.D, Joseph W. Thompson, M.D.,
M.P.H, David S. Ludwig, M.D., Ph.D
and Nutrition Examination Survey
Crestor Cholesterol 2011 6.6 generally had a limited impact on weight loss or The Extraordinary Science of Addictive Junk Michael Moss February Ounces of Prevention – The Public Policy Kelly D. Brownell, Ph.D. 4/30/2009
Food 20, 3013 Case for Taxes on Sugared Beverages Thomas R. Frieden, M.D., M.P.H.
Lantus Diabetes 2012 6.4 have had significant side effects that overshad-
Fructose: Is It Bad For Our Health? George A. Bray, MD Boyd Professor March 2008 Consumption of high-fructose corn syrup in GA Bray, SJ Nielsen, BM Popkin 2004
Herceptin Oncology 2012 6.3 owed any efficacy that patients experienced. In A commentary prepared for a joint ILSI North LSU System beverages may play a role in the epidemic
of obesity
Losec Antiulcerants 2000 6.3 fact, many of the drugs that were previously America/USDA Workshop: State-of-the-
Science on Dietary Sweeteners Containing
Obesity and Cardiovascular disease risk: KJ Melanson, KJ McInnis, JM Rippe 2001
Avastin Oncology 2010 6.2 approved have since been withdrawn from the mar- Fructose
research update G Blackburn, PF Wilson
Diovan High blood pressure 2010 6.1 ket due to some of these safety concerns (Figure The Relationship of Sugar to Population-Level Sanja Basu, Paula Yoffe, Nancy February
American Medical Association. Report of the http://www.ama-assn.org/ama1/ Accessed
Diabetes Prevalence: An Econometric Analysis Hills, Robert H. Lustig 27, 2013
Seroquel Central nervous system 2011 5.8 49). While some newer agents have recently of Repeated Cross-Sectional Data
Council on Science and Public Health pub/upload/mm/467/csaplu2a07.
doc
March 24,
2010
Figure 49 better sugar control has been shown to limit A decreased mitochondrial DNA content is TF Gianotti, S Sookoian, G 2008
Point-of-purchase price and education JP Block, A Chandra, KD McManus, 2010 related to insulin resistance in adolescents. Dieuzeide
Summary of approval dates some of the long-term complications of the dis- intervention to reduce consumption of sugary WC Willett
soft drinks Fuel metabolism in starvation GF Cahill Jr. 2006
Source: Company data, Credit Suisse analysis
ease, such as heart disease, kidney disease,
Estimating the potential of taxes on sugar T Andreyeva, FJ Chaloypka, KD 2011 A casual role for uric acid in fructose-induced T Nakagawa, H Hu, S Zharikov 2006
neurological problems and visual disorders. There sweetened beverages to reduce consumption Brownell metabolic syndrome
Medications Company Year approved Current status have been a number of different classes of drugs and generate revenue
The roles of dopamine and related compounds AB Barron, E Sovik, JL Cornish 2010
Fenfluramine Warner-Lambert 1973 Withdrawn in USA, EU developed for diabetes over the past several Global Status Report on Alcohol World Health Organization 2004 in reward-seeking behavior across animal phyla
Department of Mental Health and
Dexfenfluramine Warner-Lambert 1996 Withdrawn in USA, EU decades, ranging from injectable products (such Substance Abuse
Potential role of sugar (fructose) in the
epidemic of hypertension, obesity and the
RJ Johnson, MS Segal, Y Sautin 2007
Phentermine VarioUSA 1959 Marketed in USA, as insulin and GLP-1 receptor agonists) to oral Effects of beverage alcohol price and tax levels Alexander C. Wagenaar, Matthew J. 2009 metabolic syndrome, diabetes, kidney disease
on drinking: a meta-analysis of 1003 estimates Salois, Kelli A. Komro and cardiovascular disease
withdrawn in EU medications (such as biguanides and DPP-4 from 112 studies
Patterns and Trends in Carbohydrate J Yudkin 1964
Meridia/Reductil Abbott 1997 Withdrawn in USA, EU inhibitors, Figure 50). Many of these classes The Medical Device Excise Tax – Over before Daniel B. Kramer, M.D., Aaron S. May 9, Consumption and Their Relation to Disease.
Xenical Roche 1998 Marketed in USA, EU include drugs that have generated multi-billion It Begins? Kesselheim, M.D., J.D., M.P.H. 2013 The Proceedings of the Nutrition Society
alli GSK 2007 Marketed in USA, EU dollars in sales. Limiting “Sugary Drinks” to Reduce Obesity – Wendy K. Mariner, J.D., M.P.H., April 3, Evolutionary and historical changes in dietary
carbohydrates.
J Yudkin 1967
Who Decides? George J. Annas, J.D., M.P.H. 2013
Accomplia/Zimulti Sanofi Aventis 2006 Withdrawn in USA, EU Beyond drugs, healthcare companies have also Sugar and disease J Yudkin 1972
Improving Obesity Prevention at the Local Sara N. Belch, Ph.D. May 9,
Qsymia VivUSA 2012 Marketed in USA invested in other innovations to attempt to respond Level – Emerging Opportunities Lainie Rutkow, J.D., Ph.D., M.P.H 2013 Substantial decline in sugar-sweetened L Shi, J van Meijgaard 2010
to the obesity epidemic and the dramatic rise in beverage consumption among California’s
Belviq Arena 2012 Marketed in USA Portion Sizes and Beyond – Government’s Jennifer L. Pomeranz, J.D., M.P.H., October 11,
children adolescents
the number of patients with diabetes. Some have Legal Authority to Regulate Food-Industry Kelly D. Brownell, Ph.D, 2012
Contrave Orexigen Practices Excess fruit juice consumption by preschool- BA Dennison, HL Rockwell, SL 1997
focused on developing inhalers or automated aged children is associated with short stature Baker
Empatic Orexigen In clinical development What Do Government Agencies Consider in David M. Klurfeld April 25,
pumps that allow for potentially easier or more the Debate Over Added Sugars? 2013
and obesity
liraglutide 3 mg Novo Nordisk convenient dispensing of insulin. Other companies Sugar-sweetened beverages and incidence of JR Palmer, DA Boggs, S Krishnan, 2008
Intake of added sugars and selected nutrients BP Marriott, L Oslo, L Hadden, 2010
type 2 diabetes mellitus in African American FB hu, M Singer, L Rosenberg
have focused on more invasive approaches such in the United States P Connor, National Health and
Nutrition Examination Survey
women.
as the development of adjustable gastric bands (NHANES) Sugar content of popular sweetened beverages EE Ventura, JN Davis, MO goran 2011
based on objective laboratory analysis: focus
Figure 50 that wrap around part of the stomach and attempt Effect of fructose on body weight in controlled JL Sievenpiper, RJ de Souza, A 2012
on fructose content
feeding trials: a systematic review and meta- Mirrahimi, ME YU, AJ Carleton, J
Diabetes classes of drugs developed for diabetes to slow (and ultimately reduce) the amount of food analysis Beyene, L Chiavaroli, M Di Buono, Comparison of free fructose and glucose to LG Sanchez-Lozada, W Mu, C 2010
Al Jenkins, LA Leiter
Source: Company data, Credit Suisse analysis
a person consumes during meals. sucrose in the ability to cause fatty liver Roncal
While we do not anticipate a rapid reduction in The effects of fructose intake on serum uric
acid vary among controlled dietary trials
DD Wang, JL Sievenpiper, RJ de
Souza, L Chiavaroli, V Ha, AI Cozma
2012 Dr. Atkin’s New Diet Revolution Dr. R. Atkins 1998
Diabetes class Administration Examples (brand name) the rates of obesity or type II diabetes, if changes A Mirrahimi, Me Yu, AJ Carleton, Pasture nonstructural carbohydrates and AC Longland, BM Byrd 2006
M Di Buono equine laminitis
Insulin Injectable Lantus, Humalog, Novolog in sugar consumption were to materially impact
The Toxic Truth about Sugar RH Lustig, LA Schmidt, CD Brindis 2012 Relation between consumption of sugar- DS Ludwig, KE Peterson, SL 2001
GLP-1 Analog Injectable Byetta, Victoza, Bydureon the incidence or prevalence of these conditions, sweetened drinks and childhood obesity: a Gortmaker
Food price and diet and health outcomes: 20 KJ Duffey, P. Gordon-Larsen, JM 2010 prospective, observational analysis
Sulfonylurea Oral Glucotrol, Amaryl the addressable market for these companies years of the CARDIA Study Shikany, D Guilkey, DR Jacobs, BM
Biguanide Oral Glucophage might not be as large as projected. The compa- Popkin Jr. Comparison of the Atkins, Zone, Ornish and
LEARN diets for change in weight and related
CD Gardner, A Kiazand, S Alhassan 2007
nies that have focused significant research and Could targeted food taxes improve health? Oliver Mytton, Alastair Gray, Mike 5/10/2013 risk factors among overweight premenopausal
Thiazolidinediones Oral Actos, Avandia Rayner, Harry Rutter women: the A TO Z Weight Loss Study: a
development expenses on these areas may not randomized trial
DPP-4 Inhibitor Oral Januvia, Onglyza, Tradjenta Cigarette smoking by socio-economic group, J Townsend, P Roderick, J Cooper 1994
see the return on their investment that they initially sex, and age: effects of price income and Straight talk about high-fructose corn syrup: JS White 2008
SGLT2 Inhibitor Oral Invokana publicity what it is and what it ain’t.
expected.
SUGAR_42 SUGAR_43
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