Big Society Capital, together with the Guy's & St Thomas' Charity and the Food Foundation have today (19th November) released a new report: Healthy Returns: Opportunities for market-based solutions to childhood obesity.
This report explores opportunities for investors and funders to help address the prevalence of childhood obesity in urban, deprived communities through impact investment.
Investors have the opportunity to help meet the demand among low-income families earning less than £20,000 who are seeking convenient, affordable and healthy food options that don’t compromise on taste. Today, families are forced to sacrifice at least one element, and nutritional value is often the first to go. With the food spend of this group estimated at £6.5 billion last year , there is a sizeable market-opportunity for ‘challenger’ food brands to step in.
In America, impact investment is already helping to lead the way in affordable convenience-food. California based FreshWorks is a loan and grant program providing financing to food enterprises who are increasing access to affordable, healthy food in low-income communities. FreshWorks raised £125 million loan fund from institutional investors including: JP Morgan Chase, Citi Community Capital, Morgan Stanley and Bank of America alongside £20.4 million of grants and other lending and £120.5 million of new markets tax credits .
This blended finance package helped FreshWorks achieve significant impact through increased access to healthy fresh food for more than 800,000 Californians, creating or retaining more than 1,900 jobs and generating hundreds of millions of dollars in economic impact ,. For the debt investors, they received healthy returns between 4-7% .
Stephen Muers, Head of Strategy and Market Development at Big Society Capital, said:
“With the rate of childhood obesity continuing to rise, and those living in more deprived areas being disproportionately affected, the opportunity to achieve social impact through investment is clear. However, despite a growing number of social entrepreneurs focused in this area, there are very few investors able to support these businesses to increase their scale and reach sustainability.
“This is where we felt Big Society Capital could make a difference – by helping to support challenger businesses to scale with social investment and specialist support.
“We look forward to working with Guy’s and St Thomas’ Charity and others to help tackle this pressing social issue.”
Sarah Hickey, Childhood Obesity Programme Director at Guy’s and St Thomas’ Charity, said:
“Research shows that our food environments today are making it difficult for families to eat well, particularly those living in urban and deprived areas. Our ten-year childhood obesity programme is looking to change food environments for the better, starting by understanding the opportunities and barriers to families accessing healthier diets.
The unique combination of data in this report has helped us understand what families on lower incomes eat and where they buy food, and how trends are changing. We’ll be using this insight to design the support infrastructure that helps the emerging ‘good food’ challenger brand sector to grow sustainably, and hope that other philanthropists and investors will join us in this mission.”
Anna Taylor, Chief Executive, The Food Foundation said:
“This report reveals that the amount of unhealthy food consumed in the UK is similar right across the income spectrum, but children in poorer households are eating even less fruit and vegetables than their wealthier counterparts.
“We show there are genuine market opportunities for affordable, appealing and convenient healthy food options. We do need policy measures to tackle childhood obesity, but market-based approaches offer an exciting chance to also develop financially sustainable solutions to the biggest public health challenge of our time.”