Safety and quality control have become increasingly important assets to the food industry and public opinion. According to Credit Suisse, poisoning scams due to poor food conditions can sink a company as well as an incentive to tighten quality control and an added lure to invest in companies specialized in this activity. In a market dominated by the uncertainties arising out of the war in Ukraine, inflation and rising rates, food security and quality control must be a constant that favors the business of companies dedicated to it. Besides, regulation and government concern about this issue is another factor in its favour. “The main driver of long-term structural growth in the food safety market is the tight regulatory environment. In the long term, this is very favorable for the industry as a whole,” says Patrick Kolb, fund manager at Credit Suisse.
The Swiss firm states that the global food security market will register a turnover of around $19.2 billion in 2021. And the market is expected to reach $33.4 billion by 2027, which would mean an average annual growth rate of 9.7%. ,
Kolb is responsible for the Credit Suisse Security Equity Fund, a fund domiciled in Luxembourg with assets of more than 2,900 million euros and in which about 20% of the assets are invested in the field of health security, of which companies dedicated to food security are part. In 2022, the vehicle loses more than 8%, but rents 14.5% per year over the past five years.
The fund’s core position with a 3.39% portfolio is Thermo Fisher Scientific, an American company dedicated to manufacturing allergen detection kits. With a market capitalization of $230.00 million, the action falls about 10% in the year, but retains the majority recommendation of 87% of total purchases, as agreed by Bloomberg.
One of the fund’s most notable positions, with a portfolio exceeding 3%, is for Mettler-Toledo, also from the United States, which is the largest provider of weighing equipment for use in laboratory, industrial and food retail applications. . The 66% consensus recommends keeping the price, which is down 20% over the year.
The food industry currently faces the challenge of rising production costs – with continued increases in energy and raw material prices – but the class of companies specializing in food quality and safety has the advantage of pricing power, as credits Highlighted by Suisse. “In an environment with rising production costs, we believe that companies with higher pricing power will handle these difficult times better,” explains Kolb.