At a glance
- The Make America Healthy Again (MAHA) commission has reframed childhood chronic disease as a systems-level challenge, connecting ultra-processed foods (UPFs), environmental exposures and overmedicalisation.
- Food companies face increasing regulatory pressure globally, with policy action shifting beyond traditional nutrient profiling (fat, salt, sugar) to focus on ingredients, additives and processing methods that impact gut health.
- Companies with strong health-aligned portfolios and scientific capabilities are better positioned to navigate the transformation, while those heavily reliant on ultra-processed foods face material risks.
- For investors, this creates significant opportunities in prevention, reformulation and gut health innovation, alongside portfolio risks for companies slow to adapt.
Introduction
The global food system is undergoing a profound transformation, driven by escalating chronic disease rates, growing awareness of the link between diet and health outcomes, and mounting regulatory pressure. This transition is reshaping the competitive landscape for food producers, retailers and their suppliers, creating both material risks and substantial opportunities.
high policy alignment.
The 2025 Make America Healthy Again (MAHA) commission represents a turning point in how health authorities view the relationship between food systems and public health. By connecting ultra-processed foods (UPFs) with rising rates of childhood chronic disease, the assessment has accelerated the regulatory momentum already building in global markets.
The economic implications of this transformation are substantial. Foods with functional benefits such as fibre and vitamins, as well as low fat, salt and sugar, are consistently growing two- to three-times faster than traditional food categories. This highlights a fundamental shift in consumer preferences and is aligned to the changing regulatory standards.
Forward-thinking companies are positioning themselves ahead of this transformation, while others face mounting challenges as their business models come under pressure. Our analysis identifies clear divergence in strategic approaches and capabilities.
Global regulatory convergence
While MAHA may be grabbing headlines in the US, it represents just one node in a comprehensive global regulatory web already transforming food systems worldwide. This policy convergence across major markets can be seen in a range of measures (Figure 1). For investors, this convergence signals that health transformation isn’t dependent on any single initiative – it represents a fundamental shift in how food systems are governed globally.
Figure 1: Global initiatives to transform food systems
Front-of-package warnings
Chile’s pioneering black stop-sign warnings, first introduced in 2016.
Australia’s Health Star Rating uses a star scale based on a nutrient profiling algorithm that accounts for both risk and positive nutrients. It has driven significant reformulation activity, with many products improving their nutritional profile.
Singapore’s Healthier Choice Symbol is a voluntary front-of-pack logo that takes a positive reinforcement approach, with manufacturers reporting sales increases for certified products. The program includes tiered nutrition guidelines and is integrated with public procurement standards.
Other planned labelling programmes, such as Canada’s pending implementation of nutrition symbols and the EU’s work towards a harmonised labelling system as part of its Farm to Fork Strategy. The US Food and Drug Administration has also proposed its own front-of-package nutrition label.
Marketing and formulation controls
The UK’s advertising restrictions and restaurant calorie labelling; the EU’s Digital Services Act, which limits child-targeted food marketing; and widespread initiatives phasing out synthetic colours and additives all demonstrate this trend.
Comprehensive policy approaches
Embodied by China’s National Nutrition Plan, which combines consumer education, specific nutrient targets and school-based interventions, integrating nutrition into broader health system reform.
Cross-border momentum
Numerous countries have implemented sugar taxes or marketing restrictions, creating a clear trajectory regardless of any single country’s political shifts.
Despite these global approaches, we view developments in the US as a key catalyst. As well as the MAHA report on children’s health, published in September 2025, other key developments to monitor will be the US Food and Drug Administration (FDA) and the US Department of Agriculture’s formal UPF definition, and the FDA’s front-of-pack guidelines, expected in 2028. This staggered implementation creates a predictable roadmap for company adaptation and could help mitigate the current scientific uncertainty around UPF classification.
There are, however, material risks to this pathway. Implementation delays and policy reversals can result from changes in political attitudes or leadership, while regulatory fragmentation – with different standards applied across markets – can create complexity and increase costs for global manufacturers.
Ultra-processed foods and regulatory risk
For investors, this shift in regulation is increasing pressure on companies that rely heavily on UPFs, while creating growth opportunities for those focused on clean label, additive-free and naturally preserved products.
The impending revision to the Dietary Guidelines for Americans represents a critical near-term catalyst, with the potential to impact those companies whose revenues depend on federal assistance programs. In addition, the FDA’s Generally Recognised As Safe (GRAS) designation, which previously let companies self-certify ingredient safety without formal review, will come to an end under the MAHA initiative. New ingredients will now require FDA oversight. This reflects growing concern over how additives affect the gut microbiome and health. For investors, GRAS reform could mark a turning point, driving demand for scientifically validated ingredients and reshaping the food system.
The consumer as a catalyst
While regulatory pressure creates compliance imperatives, consumer behaviour is also driving market transformation via several trends:
- Health-conscious Generation Z: Survey data has shown younger consumers placing a higher priority on health and accounting for a higher proportion of wellness spending 2.This includes approaching food through a health-first lens, actively seeking foods that contribute to physical wellbeing.
- Digital health integration: The use of continuous glucose monitors, fitness trackers and nutrition apps are creating much greater awareness of food impacts on gut and metabolic health.
- Post-pandemic prioritisation: Consumers have become more focused on immune health and metabolic resilience, driving demand for foods with high-quality ingredients and additional health benefits.
- GLP-1 weight management: The use of GLP-1 medications continues to increase, with approximately 1.5 million people using them in the UK alone. Consumers using these medications experience altered taste preferences and reduced cravings for high-sugar, high-fat foods.
Consumer price sensitivity presents a risk to this shift, as affordability remains a barrier to widespread adoption of healthier foods. For retailers and manufacturers, however, these preferences create natural demand for products that are health-oriented while maintaining taste and satisfaction.
Retailers are uniquely positioned to shape and respond to these healthier choices, serving as gatekeepers between producers and consumers. Tesco3, for example, has demonstrated leadership in this area by banning controversial additives from its own label offerings, going beyond the regulatory requirements.
Gut microbiome and science-based nutrition
For both regulators and consumers, the gut microbiome has emerged as a focal point connecting diet, health and disease prevention. Research increasingly suggests that gut health influences not only digestive function but also immune response, metabolic health and cognitive performance. UPFs may disrupt the gut microbiome through multiple mechanisms – from artificial additives that alter microbial composition to highly refined ingredients that bypass important digestive processes.
Companies are responding by applying scientific advances in the areas of nutrition and protein development. The success of microbiome-based medicines, shown by recent FDA approvals for treatments of C. difficile infections, demonstrates the commercial potential of this approach. Leading companies are also investing in proprietary technology in fermentation, biotics and protein concentration, supported by clinical validation programs that allow scientific understanding to be transformed into marketable products with defensible health claims.
In light of these challenges, a business like Danone could be considered well placed because a high percentage of its product range meets health ratings and the company has made significant investments in medical nutrition. In comparison, Kraft Heinz could face headwinds as fewer of its products meet Access to Nutrition initiative (ATNi) ‘healthier’ criteria, revealing a company optimised for today’s margins, not tomorrow’s regulatory landscape.
Food system transformation – thesis in practice
Global Equities
There are companies well-positioned to be both a beneficiary of, and solution to, our food system’s transformation. Kerry Group*, the speciality ingredients company, is a prime example. While the ingredient industry has historically enabled UPF production, companies like Kerry now provide the technical expertise necessary to reformulate these products into healthier alternatives. As such they stand to benefit from increasing global demand for health-oriented and sustainably produced foods.
Food manufacturers increasingly depend on specialised ingredient suppliers to navigate the complex science of maintaining taste, texture and shelf-life while improving nutritional profiles. This requires significant R&D investment and technical sophistication that most food companies cannot develop in-house, supporting demand growth for Kerry’s specialty food ingredients. This puts the business in a strong position to capture value from the roughly $15 billion reformulation marketing opportunity, offering potential for strong market outperformance.
Unhealthy diets are a key cause of chronic diseases and, in turn, deaths globally. As a world leader in sustainable taste and nutrition solutions, Kerry is in a strong position to influence its customers across the food industry. It can do this by creating healthier and more sustainable food, and through its ‘Beyond the Horizon’ strategy, which is focused on helping customers overcome key challenges as they move across the sustainable nutrition spectrum.
*The mention of specific businesses is not a recommendation.
Our engagement approach
Responding to these regulatory and consumer trends, we are engaging with food producers, processors and retailers to encourage proactive management of the transition towards healthier food. Our key focus areas include:
- Portfolio health assessment: We encourage companies to disclose the percentage of their product ranges that meet recognised nutrition standards.
- Additive reduction strategies: We encourage the reduced use of controversial additives that may impact gut health and metabolic function.
- Regulatory preparedness: We assess companies’ scenario planning through structured discussion.
We prioritise engagement with companies that have material exposure to transition risks but lack disclosure around their management approach. For example, our engagement has long advocated for major retailers to disclose their healthy food sales. We are therefore pleased with Tesco’s proactive policy engagement on this issue and the UK government’s recent decision to introduce mandatory healthy food sales reporting for all large companies in the food sector by the end of this parliament.
Looking forward: Reimagining food systems
The food system transformation represents a fundamental shift in our approach to nourishment, disease and illness prevention, and wellbeing, as both regulators and consumers demand higher standards. Companies that use credible science and design food products to support long-term health – especially by helping prevent chronic conditions – are well-positioned to lead the next wave of health-driven value creation.
For investors, this transition not only creates opportunities in overlooked innovation, but also potential risks in legacy exposure. We believe companies that successfully navigate this evolution will command premium valuations, while those that resist change face an increasingly challenging landscape.
