the role of the food industry in obesity...
TRANSCRIPT
Better-For-You Foods “It’s Just Good Business”
October 13, 2011
High Obesity Rates Persist Despite Efforts to Reverse the Epidemic
Better-For-You Foods: "It's Just Good Business" www.hudson.org
The Project
• The first effort to examine whether there is a business case to be made for selling better-for-you (BFY) products
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Project Goals
• To determine if consumer packaged goods (CPG) food and beverage corporations that emphasize BFY products enjoy superior sales, financial and reputational benefits
• To accelerate CPG company conversion to lower-calorie, healthier product versions
• Ultimately to serve as an impetus to help reverse obesity rates among children and their families
Better-For-You Foods: "It's Just Good Business" www.hudson.org
The 15 Food & Beverage Companies Analyzed
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Objectives Categories Data Sources
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Conclusions
• Companies with higher than average sales of BFY products demonstrate superior:
• Sales growth • Operating profits • Returns to shareholders • Company reputation
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Product Portfolio Snapshot
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Product Categorizations
• “Lite” – No-/low-/reduced-calorie foods • “Good”
• Wholesome products • Traditional products made healthier • Perceived by consumers as healthier
• Better-for-You (BFY) = “Lite” + “Good” • Traditional – Non BFY products
NOT a set of new nutritional standards
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Example Brands by Category Kraft Foods PepsiCo Unilever
Lite Crystal Light Aquafina Breyer’s Light Maxwell House Pepsi Max Lipton Tea (unsweetened) Roarin’ Waters Tropicana 50 Slim-Fast
Good Boca Burgers Baked Lay’s Dijonnaise Oscar Mayer Lean Turkey
Quaker Oatmeal Lipton Dry Soups
Wheat Thins SoBe Life Water Ragu Old World Style
Traditional Oreos Doritos Klondike Bar Kraft Mayonnaise Pepsi Lipton RTD Teas Kraft Mac n Cheese Tropicana OJ Skippy Peanut Butter
Better-For-You Foods: "It's Just Good Business" www.hudson.org
BFY Products Comprise Almost 40% of Composite Company Sales
Lite Foods 19.3%
Good Foods 19.3%
Traditional Foods 61.4%
Total Better-For-You 38.6%
Better-For-You Foods: "It's Just Good Business" www.hudson.org
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
% o
f Sal
es
Above Avg. BFY
Below Avg. BFY
% of BFY Sales by Company
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Several Companies Making BFY Products a More Important Part of Their Portfolios
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Kellogg's Campbell's Danone Sara Lee Hormel General Mills
Chan
ge in
% B
FY
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Impact of BFY Products on Sales Growth
Better-For-You Foods: "It's Just Good Business" www.hudson.org
BFY Items Drove a Disproportionate Share of 5-Year Sales Growth
38.6%
71.8%
61.4%
28.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Percent of $ Sales Percent of $ Sales Growth
Share of Dollar Sales & Growth, 2007 - 2011
BFY Traditional
Source: Nielsen Food, Drug and Mass Merchandiser sales tracking
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Companies Growing Their BFY Products Faster Than Traditional Ones Exhibited Greater Overall Sales Gains
4.9%
2.2%
-1.5% -2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
% C
hang
e in
Dol
lar
Sale
s
Impact of BFY on Total Company Growth, 2007-2011
BFY Growth > TraditionalProducts (7 Companies)
Traditional Growth > BFYProducts (6 Companies)
Declines in Both (2Companies)
Source: Nielsen Food, Drug and Mass Merchandiser sales tracking
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Impact of BFY Products on Operating Profits
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Companies Emphasizing Better-for-you Products Recorded Superior Operating Profits
15.3%
9.5%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%18.0%
Latest 5 fiscal years
Average Operating Profit Margin
Above Average % Sales in BFY products (8companies)
% O
pera
ting
Pro
fit M
argi
n
Source: Nielsen Data & Company Annual Reports (Excludes beverage companies due to higher margin structure)
Better-For-You Foods: "It's Just Good Business" www.hudson.org
All Companies Emphasizing BFY Products Reported Operating Profits > 14%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
18.0%
% O
pera
ting
Pro
fit M
argi
n
Average Operating Profit Margin
Source: Nielsen Data & Company Annual Reports (latest 5 fiscal years) (Excludes beverage companies due to higher margin structure)
Better-For-You Foods: "It's Just Good Business" www.hudson.org
All Companies with Below Average % of BFY Sales Delivered Lower Returns
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Kraft Sara Lee ConAgra Hormel
% O
pera
ting
Pro
fit M
argi
n
Average Operating Profit Margin
Source: Nielsen Data & Company Annual Reports (latest 5 fiscal years) (Excludes beverage companies due to higher margin structure)
Better-For-You Foods: "It's Just Good Business" www.hudson.org
BFY–Operating Profit Link Also Holds for High Margin Soft Drink Companies
39.8%
25.6% 28.2%
16.9%
26.5%
14.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
% of Sales in BFY Products Average Operating Profit Margin
Coca-Cola
PepsiCo
Dr. Pepper
Source: Nielsen Data & Company Annual Reports (latest 5 fiscal years)
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Companies Emphasizing BFY Products Recorded Superior Operating Profit Growth
50.6%
21.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Latest 5 Fiscal Years
Growth in Operating Profits
BFY Growth > Traditional Products (7 Companies)
Traditional Growth > BFY Products (6 Companies)
% G
row
th in
Ope
rati
ng P
rofit
Source: Nielsen Data & Company Annual Reports
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Impact of BFY Products on Shareholder Returns
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Companies Emphasizing BFY Products Outperformed the S&P 500 Index by a Larger Margin
60.6
39.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Above Average % of Sales in BFY Below Average % of Sales in BFY
Poin
t Diff
eren
ce v
s. S
&P
Performance vs. S&P 500
Source: S&P Index daily figures; Yahoo Finance (latest 5 fiscal years)
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Companies with Stronger Better-for-you Portfolios Deliver Superior Total Returns to Investors
49.9%
34.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Tota
l Ret
urn
%
Total Return
Above Average % of Sales in BFY Below Average % of Sales in BFY
Source: Yahoo Finance, Ycharts and Annual Reports (Nestle & Danone); latest 5 fiscal years
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Impact of BFY Products on Reputation
Better-For-You Foods: "It's Just Good Business" www.hudson.org
BrandPowerTM
• BrandPowerTM metric is a proven predictor of market value for CPG and beverage companies
• Tracks 5 important success measures: • Reputation • Familiarity • Favorability • Management • Investment Potential
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Companies Focusing on Better-for-you Portfolios Exhibit Superior Reputation & Favorability Scores
69.5
53.2
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Above Average % of Sales in BFY Below Average BFY Portfolios
BrandPowerTM RATING
Source: CoreBrand BrandPowerTM ratings Data not available for Dr. Pepper, Danone and Smuckers. Coca-Cola and Unilever excluded as they are outliers: Coca-Cola rating = 84.6; Unilever = 9.9 .
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Case History
Better-For-You Foods: "It's Just Good Business" www.hudson.org
• 1994-2004 • Stripped out all non-food, plus beer and confectionary businesses
• 2007 • Sold Biscuit division to Kraft • Purchased Royal Numico
Company has revamped entire portfolio to focus entirely on better-for-you products
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Portfolio Profile
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Financial Performance Metrics % BFY Sales
Growth
Operating Profit Growth
Performance vs. S&P 500
Stock Price Appreciation
Danone 99.6% +6.9% +61.4% +94.9 +83.5%
15 Company Composite 38.6% +2.1% +34.9% +51.9 +43.5%
INDEX 258 329 176 183 192
Exceptional 5-year Performance
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Implications for Action• This study provides powerful evidence that investing in
developing and selling better-for-you products is good for business
• Food companies and analysts should adopt the % BFY metric to gauge improvements to product portfolios
• Public health officials and policymakers must be aware of and understand core food company goals in order to work more effectively with them to address the obesity epidemic.
Better-For-You Foods: "It's Just Good Business" www.hudson.org
Better-For-You Foods “It’s Just Good Business”
Nestlé Infant Nutrition
Rick Klauser Marketing Head, Nestlé Infant Nutrition
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Pregnancy Preschool
Our Mission: Our unwavering commitment to nourish a healthier generation, one baby at a time
The nutrition a child receives in the first five years can affect their health forever
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Start Healthy, Stay Healthy ™ is Gerber’s Commitment to Early Childhood Nutrition
SCIENCE Elevate the nutrition conversation through scientific leadership
PRODUCT INNOVATION
Integrate developmental and nutrition science
for advanced product design
EDUCATION Translate complex nutrition science for all stakeholders
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Start Healthy, Stay Healthy ™ : Science
2002 Key Findings • Lack of fruits and vegetables • Sweets introduced very early • Snacks are critical • Infant and Toddler dietary gaps
• Groundbreaking dietary survey of 3,000 infants & toddlers
• Snapshot of nutrient intakes and dietary patterns
• Fills an important information gap
• Published in 25+ peer-reviewed journal articles
2008 Key Findings • Improvements in breastfeeding and
introduction of sweets • Continuing lack of fruits and vegetables • Infant and Toddler dietary gaps • Preschooler data reveals similar issues to
Toddler
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Gerber Innovation:
Start Healthy, Stay Healthy ™ : Innovation
FITS Insight:
Lack of fruits and vegetables
Inadequate intake of essential fats/high sat fat
Whole grain gap
Too many sweets and 25% of calories from snacks
Lil’ Entrees – one serving of vegetables; cheese sauce made with squash
Graduates Grabbers - fruit puree in self-feeding package
Dairy products with healthier fats – Omega 3 from canola oil
Snacks and pasta made with whole grains
Healthier snack alternatives – such as Yogurt melts, fruit and whole grain products
Start Healthy, Stay Healthy ™ : Education
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Sharing with Research Community Informing Public Health Policy
Educating Health Professionals Customizing Resources for Families
Start Healthy, Stay Healthy ™ : Education
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Sharing with Research Community Informing Public Health Policy
Customizing Resources for Families Educating Health Professionals
Informing Public Health Policy
Start Healthy, Stay Healthy ™ : Education
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Customizing Resources for Families Educating Health Professionals
Sharing with Research Community
Start Healthy, Stay Healthy ™ : Education
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Educating Health Professionals
Sharing with Research Community Informing Public Health Policy
Customizing Resources for Families
Start Healthy, Stay Healthy ™ : Education
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Customizing Resources for Families
Sharing with Research Community Informing Public Health Policy
Educating Health Professionals
Interactive Nutrition Tool
• Generates nutritionally-appropriate menus – Interactive and
customizable by developmental stage
• Valued by consumers
– 600,000 gerber.com visits per month
– 60,000 Menu Planner downloads per month
Healthy Products Yield Healthy Profits
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9 out of 10 Moms say Gerber is their
“most trusted brand”
Strong Sales Results
TOTAL Gerber & Good Start
+10%
‘07 ‘08 ‘09 ‘10 ‘11
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General Mills Health Initiatives
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Susan Crockett, PhD, RD Vice President
Senior Technology Officer, Health & Nutrition
October 2011
General Mills Overview
•World’s 6th largest food company
•$14.9 billion in FY11 global net sales
•35,000 employees
•Marketed in more than 100 countries
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Our Strategy
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Deliver health to meet
consumer needs
Taste, Convenience, Nutrition
• Reduce limiters • Increase positives • Food groups of need
Address healthfulness of our total
portfolio
• Educate about exercise • Energy density & portion
control
Address energy balance —
calories eaten and calories
burned
General Mills’ Product Improvement Model
• Avoid taste compromise
• Maintain product safety, performance & functionality
• Inch down—help
consumers change
Stealth Health
• Must be appealing enough so consumers will buy it
• So product can stay on shelf
Sustainable in the Market
• Bell Institute dietary intake database
• Understand impact on diet & role of individual foods
• Authoritative nutrition guidance—informs product development
Research
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Cumulative* Achievement of GMI Sales Improved FY05-FY11 & F12-F16 Projection
Continuous Health Improvement
Key Drivers Nutritional Improvement FY05-FY11
Increasing Positives 34% Decreasing Limiters 66%
Focused on doing the right thing to make our products nutritionally better
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calorie/portion control
5% gluten 2%
sodium 32%
sugar 4% total fat/sat
fat 2%
trans fat 20%
fiber 5%
vitamins/minerals 11%
other* 2% whole grain
17%
*includes: serving veg/fruit, antioxidants, probiotic, protein, omega-3, GMI Better-for-You
*On a cumulative basis: products that have been nutritionally improved more than once are counted only one time
16% 21%
33% 40%
45%
60% 64% 67%
80% Over 600 products improved FY05-FY11
Whole Grain Conversion
• 95% of Americans are not getting the recommended amount of whole grains
• All Big G cereals provide at least 8 grams of whole grain per serving*
*48 grams recommended daily
Improving Yogurt
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Calcium & Vitamin D
• Yoplait is the only leading yogurt with a good source of vitamin D in every serving
• Original Yoplait NOW contains both 50% DV calcium & vitamin D
Sugar Reduction
• Over the years, Yoplait has steadily reduced sugar content of kids’ yogurts
• 20% sugar reduction in Yoplait Trix & Yoplait Kids products, with a corresponding decrease in calories
Sodium Reduction
Reduce sodium by 20% in Top 10 key product categories by 2015
• Canned Vegetables • Cereals • Dry Dinners • Frozen Pizza • Mexican Dinners
• Refrigerated Dough • Savory Snacks • Side Dishes • Soups • Variety Baking Mixes
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KEY
2007 Sugar level
2008 Sugar level
2009 Sugar level
2010 Sugar level
Goal Sugar level
13g
07
12g
08
11g
09
≤9g
Goal 10
10g
Commitment to further reduce sugar levels
Reducing Sugar in Cereal
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Fiber That Tastes Great!
Over $400 Million in Global Sales in 2011
Bell Institute of Health & Nutrition
Clinical Studies
Dietary Intake Research
Link to Existing Science
Government Nutrition Policy
Health Professional Education
Promote Science Based Decisions
Nutrition Science & Research External Education & Advocacy
WIC, Health Professionals, Foodservice
FREE nutrition education materials
CME Programs
Distributed 2+ million samples/materials
Bellinstitute.com
• In 2010, General Mills provided:
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*based on FY10 data and U.S. retail products;
½ cup = full serving of vegetables; 1 cup = serving of dairy; 16 grams = 1 WG serving
Improving Health in America
> 1 billion full servings of vegetables
~ 2.4 billion servings of low-fat / non-fat dairy
> 61.6 billion grams of fiber
~13.2 billion servings of Whole Grain
Summary
General Mills is dedicated to Nourishing Lives:
– By delivering healthy options in the products we create,
– By advancing public health via continuous improvement
– By setting aggressive goals for product improvement
– By making and measuring progress year over year
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Better-For-You Foods “It’s Just Good Business”