With all the handwringing over rising obesity rates, food and beverage companies have been nailed for constantly pitching foods that offer dubious nutrition at best and dangerous at worst. The dilemma for many of these companies is that as publicly-owned corporations, their first responsibility is to their shareholders. And mass-produced food is both cheap to make and offers high profit margins. Add consumers’ perceptions that low-salt, low-fat, and low-sugar food options have no taste, and the argument that healthful food means a healthy bottom line is often a tough case to make.
Not anymore. A new study that the Hudson Institute recently issued suggests that by offering good healthy foods, companies can do well by doing good. Behind the analysis of a bevy of metrics, Hudson Institute’s researchers concluded that companies with a higher percentage of product sales in the better-for-you (BFY) category perform better financially than their competitors who do not.
The study’s analysis of 15 leading food and beverage companies reveals several key findings, including:
- BFY foods were behind a huge share of food companies’ sales growth the last five years.
- Between 2007 and 2011, BFY foods were behind 40 percent of sales but sparked 70 percent of the growth in sales–more than conventional food and beverage products.
- BFY foods trigger higher operating profits.
- Since 2007, companies that had a high percentage of BFY foods collectively outperformed the S&P 500 index.
- No surprise here: companies that offer healthful alternatives benefit from enhanced brand and corporate reputations in the market place.
The definition of BFY foods will rankle some food advocates. According to Katherine Hobson of the Wall Street Journal, such products include beverages like diet sodas and flavored waters. For breakfast, yogurt and whole grain cereals (which often include a high does of sugar to make them taste good) make the list. Lunch could include a sandwich with Oscar Mayer Lean Turkey and Nabisco Wheat Thins. Dinner menus offer Unilever’s Lipton Dry Soup and end with a dessert of Breyer’s Light Ice Cream. If you eat between meals, 100-calorie snack packs are considered a healthful food, too (is anyone really satisfied with just one snack pack?). Of course the key word here is better, not healthy.
So better, healthy, and healthful are matters of perception, not fact. After all, PepsiCo’s CEO Indra Nooyi commented months ago that “Doritos are not bad for you.” She is right. They are not if you eat a serving here and there. The reality is that whether we eat a bowl of cereal or flavored yogurt, few of us actually eat a “serving size.” And many companies use ingredients that are disappointing to consumers that want companies to offer products that are healthier for people and the planet.
The lessons of this study, and its convergence with the growing appreciation for local and sustainable food options, is that come companies will change their ways and offer better food and beverage choices. Another lesson is that marketing often wins. Social media tools and activist stakeholder organizations will push them towards more accountability to the public.