Ahold Delhaize is a Dutch-headquartered food retailer. It was formed in 2016 following the merger of Ahold and Delhaize. Its main market is the US east coast (c60% of sales). Other core markets are the Netherlands (c20% of sales) and Belgium (c8% of sales). The company is expected to benefit from the long-term investment trends of better nutrition and food security.
The world’s population is growing by around 200,000 people per day. In the same manner, wealth creation and urbanization are leading to higher living standards and the consumption of more protein-rich food. This is particularly true for meat intake.
This, together with an ever-higher number of people wanting to access quality nutrition, is creating an imbalance. This imbalance can be solved in different manners:
– The use of artificial intelligence and high automation increase agricultural yield and are areas of growing importance, and
– The development of substitute sources of protein is clearly an alternative for the vulnerable global food system.
While both areas of interest include a large part of big data technologies and the Industrial Internet of Things (IIoT), it can be expected that producers that incorporate new technologies should grow faster than GDP. However, because of very fast-changing consumer sentiments, earnings variability will be low. Therefore, their present development stage is close to venture capital but is part of sustainable investing strategies.
In this environment, AD is well placed to continue to drive sales growth this year in both the US (very strong) and Europe (average). The business exposure to Eastern Europe is limited, but the impact of the conflict will be felt throughout the continent.