By Sammy Suzuki
People are gaining weight in most regions across the globe. Body
mass index, a measure of weight in relation to height, has been
rising in both developed and developing nations (
(click to enlarge)
It is unfortunate that emerging markets seem poised to inherit
the unwanted side effects of economic progress. Yet if they follow
the trends we've seen in the developed world, there will be
far-reaching implications for economies and markets. As a result,
we think investors should pay close attention to obesity as an
important indicator of consumer and health-related trends in
US Sets Obesity Trends
To understand why, look at the US. Average calorie consumption
in the US rose steadily from approximately 3,000 calories a day in
the early 1970s to 3,800 in 2006, according to UN statistics. About
two-thirds of Americans are overweight today, based on the World
Health Organization's definition.
It's clear that a modern lifestyle has led to greater
consumption of high-calorie foods and less physical activity. Fewer
Americans are engaged in physical work, and sedentary desk jobs are
China: From Famine to Feast
Today, China seems to be following American patterns. Rapid
urbanization and modernization have prompted a sharp decline in
physical activity-especially in the workplace. People are consuming
more processed and packaged foods-and more calories.
So, it's no surprise that obesity is on the rise. A study
reported that 11.4% of Chinese men were obese in 2009, compared
with 2.9% in 1993, and obesity is rising among women and children,
too. It's hard to imagine that only a generation ago, between 1958
and 1961, millions of Chinese died of famine.
Meanwhile, venues for physical exercise are limited in cities,
and online entertainment is booming. The average Chinese user now
spends about 20 hours a week online-more than double a decade
earlier. And China is already the world's largest market for online
Obesity is no longer just a developed-market malaise. Simply
put, when countries get richer, people consume more calories (
) and burn less energy. In developed countries, this trend has
typically continued for several decades before pressure has built
up within society to pursue a healthier lifestyle.
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Fast Food and Smartphone Games
Investors should take note. If the pattern follows that of
developed countries, we would expect to see increasing demand for
snacks, sodas, fast food and prepared meals in emerging markets
from Johannesburg to Jakarta. Identifying and investing in
emerging-market food manufacturers and fast-food franchises that
should do well in the future could be akin to investing in
) or Coca-Cola (
) 30 or 40 years ago. Today, the per-capita concentration of
fast-food chains in emerging markets is still less than one-tenth
of US levels.
Smartphones and gaming are also worth watching. As an
increasingly overweight adolescent generation starts to earn money,
we would expect spending on smartphone games to increase, and would
look for investment opportunities in companies poised to benefit
from this trend.
Diet Products and Diabetes Treatments
Meanwhile, medical companies and drugmakers that offer solutions
and treatments for obesity should also grow rapidly, in our view.
These could include companies that sell diet products or diabetes
treatments. China is already home to the largest number of
diabetics in the world-11.6% of the population today versus 1% in
1980, according to the
Journal of the American Medical Association
. In the US, 10.9% of the population suffers from diabetes, reports
the International Diabetes Federation ((IDF)).
Diabetes-related expenditure per person in China was $333 in
2013 compared to $1,436 worldwide and $9,800 in the US, IDF data
show. And the organization estimates that 54% of those living with
diabetes are undiagnosed.
Of course, it will be great news if developing countries don't
follow the US example and choose healthier lifestyles. But for now,
the evidence from China and elsewhere suggests that an obesity
epidemic is in the making, and that it has the potential to
influence key sectors across emerging markets.
Disclaimer: The views expressed herein do not constitute
research, investment advice or trade recommendations and do not
necessarily represent the views of all AllianceBernstein
AllianceBernstein Limited is authorized and regulated by the
Financial Conduct Authority in the United Kingdom.
Sammy Suzuki is a Portfolio Manager for Emerging Markets
Core Equities and the Director of Research for Emerging Markets
Value Equities at AllianceBernstein.
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