'Better For You' Foods May Be Better For Company Profits
Originally published on Thu October 13, 2011 3:28 pm
Processed foods that are low in calories, salt, fat or sugar are too expensive. And we won't buy them if we think they won't taste good — or so the conventional wisdom goes.
But a unique economics analysis published today says companies making foods that help keep us in shape can help keep them in shape, too. In fact, "better for you" products drove more than 70 percent of food company sales growth in the last five years, according to the analysis.
"The bottom line is, it's the first time we've been able to prove that the food industry players can do well by doing the right thing," Hank Cardello, director of the Hudson Institute's Obesity Solutions Initiative, who led the study, tells The Salt.
The report shows that companies that make more of these kinds of foods (think Coke Zero, Quaker Oats, and Lean Cuisine) also see better operating profits, better shareholder returns, and are more popular with consumers than those who invest less.
Cardello, a former food executive with top food and beverage companies like Coca-Cola and General Mills, says it's time to start speaking in terms of language that businesses understand — i.e. profits — so they can help tackle the universal goal to "pull calories off the street."
"The higher growth is usually because these are newer products, which tend to do better in growth figures, so it's somewhat misleading to even say 'better for you' products are growing faster when they may just be newer," she says.
Cardello admits that some people may have concerns about how the Institute defines "better for you" foods. For example, the category includes light and low calorie products, including controversial vitamin water, as well as low-salt and low-fat foods, but excluded sports drinks.
He says the group took a pragmatic look at food - it's not as stringent as nutrition guidelines, nor is it as loose as the companies would have liked.
"Like any good negotiation, we've managed to make all parties moderately dissatisfied," Cardello says.
Food activists argue that processed food companies contribute to the obesity problem more than they help. And most of us know what we should eat, it's just doing it. But the messages we get are mixed.
The government recently announced it would pull back on voluntary guidelines to limit food marketing to kids. At the same time, First Lady Michelle Obama's Let's Move initiative has pretty much embraced large processed food sellers like Wal-Mart who promise more fruits and vegetables and stores in lower-income neighborhoods.
Cardello says it's time to stop demonizing food companies. "Let's find a way to align the goals," he says.
The Robert Wood Johnson Foundation helped fund the Hudson report.