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Despite the outcry that Americans continue to get fatter and eat the wrong things, apparently there’s big money being made with better-for-you products.
Even with obesity on an upward trend, food and beverage companies with a higher percentage of their sales coming from better-for-you foods and beverages perform better financially. That’s according to a recent report from the Hudson Institute, which notes these companies record stronger sales growth, higher operating profits, superior shareholder returns and better company reputations than companies that sell fewer BFY products. During the five-year study period, BFY items – like yogurt, whole-grain cereal, diet soda and flavored water – drove more than 70 percent of sales growth.
Researchers examined 15 food and beverage companies – including General Mills, Nestle, Campbell Soup and Kellogg’s – selected because they make up the majority of the largest food and beverage purveyors.
“For the first time we now have concrete evidence demonstrating that it’s just good business to sell better-for-you products,” said Hank Cardello, lead author of the report and senior fellow and director of the Obesity Solutions Initiative at the Hudson Institute. “Companies’ bottom lines can benefit from selling these sorts of products.” Cardello is a former executive with Coca-Cola, General Mills, Anheuser-Busch and Cadbury-Schweppes.
In addition to the impact on sales growth, Cardello and colleagues found that, compared with companies with lower-than-average sales of BFY items, those with a higher percentage of BFY sales showed a 50 percent growth in operating profit, compared to about 20 percent growth for the other companies; and recorded reputation ratings that were more than 30 percent higher than those of companies with lower sales of BFY items.
So what does this mean for grocers? Well, these companies are only making money because you’re moving these products for them. So Cardello’s recipe for boosting financial success among CPG’ers playing in BFY ought to work for retailers, too: place more emphasis on selling BFY foods and beverages, and adopt the measurement of BFY sales as part of your annual assessment of company performance and progress.
To be sure, grocers are getting on board, either on their own or through partnerships with manufacturers or other organizations. The American Heart Association is expanding and improving its Heart-Check Food Certification Program to allow certification of more foods containing healthier fats, such as fish and nuts. GMA and FMI are making “Facts Up Front” the theme for the consumer education campaign backing the food and beverage industry’s front-of-pack nutrition labeling system that rolled out last January as Nutrition Keys. Grocery retailers are adopting their own shelf-tag programs, hiring full-time dietitians and scheduling health events to help educate and steer more shoppers toward healthy choices.
Assuming these efforts are as successful with the public as they appear to be on the balance sheet, the common-sense lessons of moderation and making better choices should eventually be reflected in the populace. I guess we’ll know that time has come when we stop hearing daily reports from the food police warning how this or that will kill you.
Hmmm … I’ll hold out hope, but not my breath.
Jim Dudlicek is senior editor of Progressive Grocer.