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Sales growth from lower-calorie products inspires companies to promote healthier options

By Elizabeth Crawford , 09-Mar-2015
Last updated on 09-Mar-2015 at 14:19 GMT2015-03-09T14:19:18Z

Sales growth from lower-calorie products

Research showing that 99% of sales growth from packaged food from 2008 to 2012 came from lower calorie foods is inspiring major manufacturers to more aggressively promote and launch healthier options, according to company executives and a health policy advocate. 

The analysis of sales data from 16 major food and beverage companies that participated in the Healthy Weight Commitment Foundation also revealed that companies that increased their lower calorie products during the five year period saw total sales climb $1.8 billion while companies that continued to market portfolios with the same or fewer number of low-calorie products saw sales decline between $500 million and $800 million, noted the lead researcher Hank Cardello, senior fellow and director of Hudson Institute’s Obesity Solutions Initiative.

These results , which were released in October 2014, show starkly that “what is good for public health is also good for business,” and companies “that don’t pay attention to this message are leaving money on the table,” Cardello said at the Partnership for a Healthier America Summit in Washington Feb. 26. 

Banking on this data and the prediction that the consumer shift to more nutritious products will continue to accelerate, the Coca-Cola Company, Mars Food and PepsiCo all are revamping their portfolios to reduce calories, saturated fat, sodium and sugar to help Americans eat healthier, companies executives said at the summit.

For example, PepsiCo aggressively shifted the focus of its beverage portfolio to include more low- and no-calorie drink sales, including juices and active hydration, said Richard Black, head of global nutrition for PepsiCo. He noted that these drinks make up 49% of PepsiCo’s beverage portfolio now compared to 24% in 1997, and the company plans to push the mix more so healthier drinks make up 60% of the beverage volume.

In addition, between 2006 and 2013, PepsiCo improved the nutritional profile of its products by reducing overall sodium by 3,900 metric tons, saturated fat by 2,100 metric tons and sugar by 402,000 metric tons, Black said.

Mars Food also is reformulating products to make them healthier, said Apu Mody, president of Mars Food North America. He noted the firm has committed to reducing sodium in its portfolio by 25%, which is a “fantastic initiative,” but also “very challenging.”

He explained the company achieved its 2012 and 2014 goals to reduce sodium to 750 mg per cup yield and 630 mg per cup yield respectively. But reducing sodium further is “getting difficult because many of the products that sit alongside us haven’t changed, so we are being compared” to full sodium products, which many consumers perceive as tasting better, he said.

He also noted that any sodium reform needs to be gradual and stealthy because consumers don’t want to taste the difference or perceive a difference in taste if they hear about a reformulation.

Labeling efforts

While sodium reduction is done on the sly, other elements related to the health of products are being labeled front and center, according to the executives.

Mars and Coca-Cola touted their front-of-pack labels to clearly communicate calorie counts in products.

The decision to do this at Mars “was, as you can imagine, hotly debated because our competitors weren't doing it,” said Mody. “But, it absolutely was the right thing to do and we needed to move in that direction.”

Coca-Cola also is adding the calorie information to vending machines, coolers and fountain drink equipment where its products are sold, said Caren Pasquale Seckler, VP of social commitment at the Coca-Cola Company.

Portion control

Both firms also are restricting the size of their products to encourage healthier eating, the executives said.

Mody noted Mars tries to limit portions to 250 calories because while some of its products are “treats,” they “should be enjoyed as such,” which is to say in small amounts.

Coca-Cola also is pushing the sale of its mini-cans and 8-ounce bottles as a way for consumers to limit consumption and at the same time increase profit margins, Seckler said. (Read more about the company’s strategy HERE .) 

Marketing strategy

In addition, both companies are hoping to improve public health through what they do and do not market.

For example, they each have longstanding policies not to market to children younger than 12 years, who might not be able to make healthy decisions.

To help older teenagers understand healthy choices, Coca-Cola, along with PepsiCo and the Dr Pepper/Snapple Group have volunteered to launch a consumer awareness campaign called Mixify that will teach teenagers about balancing what they eat, drink and do, Seckler said.

The campaign is part of a larger effort by the companies and other partners to reduce calories from beverages by 20% by 2025, Seckler said. She added this campaign also will include increased labeling efforts as well as marketing to create demand and interest for low and no calorie beverages, including water.

Reflecting on the progress, the executives agreed that industry efforts so far to improve consumer health are not perfect, but they are a start down the right track. 

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