EU Companies Doing More than US to Prevent Obesity
July 27, 2008
European-based food groups are edging ahead of their US rivals in addressing health and wellness concerns relating to their businesses, says to a recent report from Insight Investment and JPMorgan. The report looked at the effectiveness of 10 of the world’s leading listed companies in their efforts to address current consumer health challenges, like obesity.
Obesity is a considered a worldwide epidemic by the World Health Organization. According to their estimates, there are 1.7 billion overweight and obese people globally, including 135 million in the EU alone. Economic consequences of this epidemic are significant. Obesity currently accounts for up to 7% of the EU’s health care costs. In the US, total costs of obesity-related illness like diabetes, cardiovascular disease and cancer, reached $117 billion in 2000.
“The world’s ten largest listed food companies have an enormous reach and influence over consumers around the world, from Manchester to Mumbai,” says Rachel Crossley, Director, Investor Responsibility, Insight Investment. “That influence is both direct, in terms of the nutritional content of the foods they offer, and more indirect, in terms of their advertising, broader communications and general positioning.”
Crossley says that food companies can play an important role in improving the diets and health issues of consumers. While some companies have made changes in the face of potential legal regulations, others have taken initiatives inspired by consumer concern. These days, more and more consumers are shifting spending practices to include healthier food items, and some companies are starting to adapt their products accordingly.
The 10 companies reviewed were Danone, Unilever, Nestlé, Kellogg, Cadbury Schweppes, Kraft, Heinz, PepsiCo, Coca Cola and Premier Foods. Danone, Unilever and Nestlé topped the list for their efforts to both formulate and implement policies that spoke to current consumer health concerns. Kelloggs, Kraft, Cadbury and PepsiCo performed well in some areas but lagged in others. Coca Cola, Premier and Heinz received lower scores.
“The leading companies take a comprehensive approach to health and wellness issues, and have integrated a commitment to addressing obesity and related health issues into their core business strategy,” says Crossley. “They are also taking a global approach to these issues, whereas other companies were only taking action in their home markets.”
Danone topped the list for having a comprehensive policy for addressing health issues, for providing excellent labeling and consumer information, and for making progress in reformulating many of their less-healthy products. Cadbury, for their part, had made headway in addressing health and wellness issues. However, they had not made as much progress in reformulating their products to meet higher nutritional standards as some of the other companies – perhaps because this is somewhat of a challenge given their product portfolio.
Unilever came in second thanks to their valiant efforts to begin to reformulate 27,000 products within their portfolio, and for their establishment of responsible marketing efforts, especially in regard to children. Meanwhile, Nestlé was doing a good job of educating consumers and encouraging active lifestyles – among other things.
The best performing American company in the survey was Kellogg. Kellogg came in fourth for their clear consumer messages, but they couldn’t score higher due to a lack of communication (on health topics and relating strategies) with stakeholders and investors. The lowest performing European company in the survey was Premier Foods – one of the smaller companies reviewed. Premier Foods had only just started to address health and wellness issues at the time of this review.
Many of the companies reviewed had recently turned to acquisitions as a way to provide healthier products to their consumers. Unilever acquired Slim Fast in 2000, Nestlé acquired Jenny Craig in 2006 and Danone acquired Numico in 2007. Some companies, like Kraft, Kellogg, Heinz and Coca-Cola, had set up advisory panels to discuss health issues.
Interestingly, none of the companies reviewed had set clear targets to guide their commitments relating to health and wellness, and few had adopted corresponding marketing policies. Also, most provided little or no analysis on the risks to their businesses perceived from the detrimental effects of health issues like obesity on an ongoing basis.
While European companies tended to be more engaged with the international debate on these matters, US companies tended to focus their efforts domestically. European companies reformulated products with WHO and EU guidance and nutrition standards. US companies made commitments to reduce specific ingredients, like sugar, fat, and salt, in their products.
“European public understanding of, and concern for, obesity and related health issues seems to be more advanced. Therefore, there seems to be a greater willingness on the part of European companies to accept responsibility for improving the situation than from those in the US, where responsibility to act is seen as lying principally with the consumer,” says Crossley.
Crossley recommends that all companies, regardless of score, work to set better nutrition standards for all key nutrients, and then be prepared to report on their progress annually. Healthy alternatives, she says, should be offered in as many ranges as possible and in all markets. And, best-practice marketing strategies should be adopted across the board.
“We would like to see all companies demonstrating a commitment to addressing obesity and related issues in all markets,” says Crossley.