Can the Profit Motive End Obesity?

More

A new report from the Hudson Institute finally proves that packaged food and beverage companies that sell better-for-you products enjoy greater sales increases and returns

BFYFoods-Post.jpg

Last week, we at the Hudson Institute issued a study titled "Better-for-you Foods: It's Just Good Business." For the first time, we now have evidence that packaged food and beverage companies selling a higher percentage of better-for-you (BFY) products enjoy greater sales increases, operating profits, investor returns, and reputation scores.

Among the key findings were:

  • BFY foods and beverages now account for just under 40 percent of sales in grocery, drug, and mass merchandisers
  • BFY products contributed over 70 percent of sales growth in the last 5 years
  • Companies that grew their BFY products more than their traditional ones delivered 2 1/2 times the operating profit growth
  • Returns to shareholders were 1 1/2 times higher for companies selling above-average levels of BFY products.

Our analysis intentionally did not define products according to tight nutritional standards. We developed our BFY descriptor by examining the full spectrum of classifications from nutritionists, food industry analysts, and, perhaps most importantly, consumer perceptions of which products were healthier. When we were done, a pragmatic measure of products that are both lower in calories and healthier than more traditional versions emerged.

We believe this approach offers a better way to jump-start a mass reduction in the calories sold. If companies embrace this message and increase the percentage of BFY products in their portfolios from today's 40 to 50 percent, that's $10 billion more a year in lower-calorie, healthier foods. Yes, all these products would not be "healthy" according to strict nutritional standards, but the increase in sales would go a long way toward reducing the number of calories bought each year. And obesity is a calorie issue.

To engage the food industry constructively, it's necessary to understand their goals and needs. This does not mean kowtowing to their every demand. But as any good negotiator knows, you have to know where the other side is coming from in order to effect movement. And what is paramount for a company's success, if not its survival, is growth -- sales growth, market-share growth, and profit growth. When these go up, the people a company is accountable to -- the shareholders -- are happy and retain their investments in the company.

The results from this study set a foundation to align the needs of both food corporations and the public health community. These findings provide ammunition for food and beverage executives to justify moving more aggressively into better-for-you foods given the potential to improve sales and financial performance. And they offer public health advocates and policymakers insights as to how to construct proposals that can better motivate food marketers to adopt change.

So we are now confronted with a choice: rigidly insisting on being right, that every food be perfect (and thus generating fierce resistance from industry) or adopting a more pragmatic pathway that gives businesses a way to both make money and do some heavy lifting to help reduce childhood and adult obesity in this country.

The win-win approach advanced by the Hudson study opens the door to significant tangible progress toward improving our food supply in a way that also improves bottom lines. Without the two working in concert, reaching a workable solution to obesity is doomed to failure.

The choice is staring us in the face.

Image: Preto Perola/Shutterstock.

Jump to comments
Presented by

Hank Cardello is the author of Stuffed. He is a former executive with Coca-Cola, General Mills, Nabisco, and Cadbury-Schweppes, and now serves as senior fellow and director of the Obesity Solutions Initiative at the Hudson Institute. More

Hank Cardello is the author of Stuffed: An Insider's Look at Who's (Really) Making America Fat. He is a former food industry executive with Coca-Cola, General Mills, Nabisco, and Cadbury-Schweppes, and now serves as senior fellow and director of the Obesity Solutions Initiative at the Hudson Institute.

Get Today's Top Stories in Your Inbox (preview)

What's the Number One Thing We Could Do to Improve City Life?

A group of journalists, professors, and non-profit leaders predict the future of livable, walkable cities


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Health

From This Author

Just In