Analysts play down concerns of backlash against Irish food firms in wake of study

Industry analysts have played down concerns about a possible backlash against Irish food companies in the wake of a high-level study linking processed foods to cancer.

The study, which linked rising cancer rates globally to the increased consumption of ultra-processed foods such as fizzy drinks, packaged bread, cereal and processed meats, coincided with 1.5 per cent fall in Greencore shares.

However, shares in the other main Irish food companies - Aryzta, Kerry and Glanbia - all rose despite investor concern that the findings may dampen demand for their products.

"The study doesn't help the public perception of any [FOOD]company's product given its broad-range findings," Investec's food analyst Ian Hunter said.

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However, he drew a distinction between Kerry and Glanbia, which mainly produce ingredients for the food industry, and Greencore and Aryzta, which supply retailers directly.

“The companies producing food directly for retail are likely to be under the most scrutiny from such a study,” he said.

Several other analysts said similar studies in the past had failed to change consumer behaviour. In particular, they cited a 2015 World Health Organisation (WHO) study linking red meat to cancer, which received widespread media coverage but had litle impact on red meat consumption levels.

"I can't see this being a big focus for investors," Merrion anaylst Darren McKinley said.

He noted that the market’s focus at the moment was “ very much” on Aryzta’s balance sheet and the performance of its troubled US arm, while for Greencore the current sterling/dollar trend and its impact on the company’s bottom line was the prime focus of analysts.

“So while structural consumer trend changes may impact long term, it’s unlikely to be a focus in the short term,” he said.

A Greencore spokeswoman said the company had a policy of not commenting on share price changes.

Study results

The study suggested “ultra-processed foods” such as fizzy drinks, packaged bread and cake, cereal and processed meats could increase the risk of cancer.

It highlighted that processed foods make up to 50 per cent of the average person's diet in some developed countries and could be contributing to rising cancer levels, researchers working in Brazil and France found.

Teams from the Sorbonne in Paris and the University of Sao Paulo found that a 10 per cent increase in ultra-processed food intake was associated with a 12 per cent increased risk of overall cancer. The research also indicated an 11 per cent increase in the risk of breast cancer. The findings, published in the British Medical Journal, were based on a survey of 104,980 healthy French adults with an average age of 43, measuring their intake of 3,300 different food items.

– Additional reporting by PA