No easy solution to obesity for food makers
significant returns as they meet growing demand for health foods,
claimed a report released by Merrill Lynch this week.
Food manufacturers who invest in healthier options will see significant returns as they meet growing demand for health foods, claimed a report released by Merrill Lynch this week.
The report, 'Obesity - No Easy Solution', estimated that food makers could make up to $1.5 billion from an increasing interest in low-sugar cereals, 'light' and trans-fat free foods. The trend will as a result boost demand the whole way along the chain, from healthy and natural food ingredients through to finished foods.
But analyst Leonard Teitelbaum noted that there is no 'easy' solution to obesity, and as a result, "multiple solutions combined will most likely make the greatest impact, and due to its very nature, we believe it will take a prolonged period of time until we see a marked change in obesity trends".
It added that the trend would not see the end of 'unhealthy' foods. "Consumers will still purchase the indulgent food items they like to eat because of the ultimate factor - taste," wrote Teitelbaum.
Merrill Lynch pointed to lighter products that had failed, as evidence of this factor.
The report grouped food companies according to the impact of a consumer shift towards healthier foods on their current portfolios. Multinationals including Campbell Soup, Dean Foods and Wrigley's, have less than 25 per cent of their revenue exposed to 'unhealthy' foods, but most leading US food makers, including Kraft Foods , ConAgra, General Mills, H.J. Heinz and Sara Lee have 25-75 per cent of their sales exposed to 'unhealthy' categories. Hershey stands at the furthest end of this spectrum.
Many of these companies have in recent months declared a new commitment to making foods with higher nutritional value. Kraft, one of the first to announce that it would reduce portion sizes and remove trans-fats, recently unveiled a new panel of nutrition experts. Merrill Lynch said such actions "add up to the right steps to change its portfolio".
The companies that can market the right variety of healthy, tasty foods and indulgent choices are most likely to benefit from changing consumer tastes, revealed the report.
"We feel comfortable suggesting that a 'buffet approach' to the obesity problem is a significant step forward,"Teitelbaum wrote. "The buffet approach we envision would be a complete line of products stretching from the indulgent to the basic, with many stops in between."
