Healthier lifestyles to drive food firms forward
If seems that the baby-boomers who swung to the rock-and-roll era refuse to lie down and die.
Gone are the pipe and slippers and phrase suggesting that 60 is the new 40 do tell a tale, researchers insist.
People are no longer prepared to accept that at 60 or 70 their lives have to be sedate and uninteresting and in lots of instances they are turning to new nutritional foods, exercise and other forms of relaxation to enhance their lives.
Without doubt, as disposable income rises, people are turning more to consumerism to enhance their sense of well-being.
And the food companies, as well as other segments of commercial life, have been quick to grasp that fact.
People are label-driven in a way that never was the case before and when it comes to food, the way the Atkins Diet grabbed international attention was a clear indicator that people are looking for answers, even if they are sometimes highly dubious.
When you cut to the chase, however, health and wellness have become the hallmark of food and drinks companies.
The range of products available that will lower your cholesterol or boost you immune system are staggering.
Drinks fill all sorts of vitamin deficits and supermarket shelves are becoming increasingly identified with products that offer not just nutrition but health and well-being as a by-product of what we drink and eat.
From any food group’s perspective they never had it so good. However, it is not always that easy.
Today’s trend can become tomorrow’s no go area.
Look at how quickly the Atkins Diet went out of fashion. It didn’t go quietly, however, and companies like IAWS and others, deeply involved in the carbohydrate end of the food chain, feared the backlash against anything containing flour might damage operations.
Atkins is interesting for two reasons. It showed how some consumers can be totally overtaken by an idea and how that idea can just as quickly die a death.
While the food market looks defined going forward, Atkins makes it clear there are no certainties.
To that extent the move by Glanbia into the nutritional end of the food market looks well judged.
In a new assessment of the business, Davy’s food analyst John O’Reilly suggests the group has got its strategy right. But he argues the nutritional strategy is not yet fully appreciated by the market and that when it is, that presumably will be reflected in the share price.
Within three years that division has the ability to represent 20% of operating profit and presumably if the group continues to buy into the sector further, that 20% can be grown to a significantly higher figure.
In the past two years the group has bought three strategic businesses that cater to this market.
These were Jortus (Germany), Pro-Fibe (England) and Seltzer in the US.
Glanbia at this stage has the technology to enhance protein; deliver ingredients used in sports and performance nutrition as well as in weight management and general health and wellness.
At about €3 per share, the group is on a rating a little over 12 times next year’s earnings, seen as undemanding given the potential the group is beginning to unlock. Profits climbed from €69.2 million before tax in 2005 to a projected €84m in the year to December 2007.
It’s been a while in the making but a sense of belief is starting to emerge that Glanbia has finally dealt with its past and is showing signs of sustainable growth thanks to its strategic involvement in the US hard cheese market and in the nutritional sector.
It may not be the next Kerry Group, but then again, who knows?
