In the first of these two articles we summarised some of the consumer trends that are fuelling the growth of health and wellness segments across many categories. In this second article we’ll examine what is happening in some of the categories and isn’t happening in others. The intention here is not to evaluate the performance of those categories but to highlight where opportunities may be.
The Obesity Crisis and why it is important for your Industry
Kiwis are getting fatter. Whether measured purely in terms of weight versus height, Body Mass Index, waist to hip ratios or percentage fat content, we are getting bigger. On average the population in total is putting on about 500 grams per annum. This has serious consequences for us as individuals, as families, as tax-payers and as businesses focused on food and the sale of it. Reliance on the health system and pharmaceuticals to maintain health in the face of increased weight puts a huge strain on private and public resources. The Government is committed to various programs to encourage the population to take weight management more seriously. They are also open to various interventions to manage the activities of food marketers, particularly for products high in fat, sugar or salt. The targeted or ‘Ground Zero’ products are fast foods, soft drinks, snack foods, sweets and treats, chocolate, ice cream, pies and pastries, all fried foods and all other foods rich in fats and sugars eg baked goods. You will no doubt be aware that guidelines have already been issued to schools instructing them to manage their offering according to a scaled ranking of “Everyday, Sometimes and Occasionally”. An “Occasional” ranking is the death knell for a product as it is officially recognised as not suitable for in-school consumption. Worse still, the “ESO” system enables government to classify products outside school without risk ie Ministries of Health and Education as well as the Prime Minister all endorse the system. With great cunning and stealth it provides a very practical platform for future decisions regarding food advertising, food taxation and food labelling legislation. If you have not already woken up to this, this may be your final wake-up call.
A Living Hell for Food Marketers
Over the last year or so I have written many articles and given many presentations on this topic so don’t wish to bore you with repetition. Putting it quite bluntly, it is possible that food marketers within the next decade will not be able to freely market products deemed unhealthy by officially sanctioned watchdog groups. A product that tastes good and is thus popular with its market but is not deemed to have positive nutritional benefits may be:
Banned from schools
Banned from advertising during popular programming eg prime time
Banned from popular sponsorship opportunities
Monitored on the internet and other electronic media
Taxed according to the amount of sugar, fat or salt
Unless companies prepare for these possibilities their revenues are going to suffer.
So we are witnessing the convergence of three very important factors:
- The increasing consumer demand for products that will assist health and wellness given the increasingly hectic and stressful pace of life.
- The increasing consumer dependence on products largely or fully pre-made and / or pre-cooked ie convenience eating and all the good and bad effects that flow from that.
- The Government’s need to control the supply and consumption of excessive fat, sugar and salt and their desire to improve consumption of vegetables, fruit and lean proteins.
- Life isn’t going to get easier or less stressful. Leisure time during the working week is going to become increasingly scarce. Convenience will grow as a driver of value.
- Raising families will continue to be hard. House prices will keep rising. People will work hard to try to get ahead. People will eat more pre-made foods and Fast Food.
- Some people will be more aware of the ingredients and additives in food and their effects on health. While still eating foods that are tasty and convenient they will demand better range and quality of convenience foods and fast foods.
- Cooking skills will continue to decline. People will demand total balanced meal solutions, not just products. Eating out of home will overtake eating at home.
- As life gets more stressful and challenging the need for indulgence and reward will grow. People will reward themselves daily.
- As our roads get busier and air quality worsens and crime increases, people will feel even less inclined to walk, cycle or run alone in the outdoors. Gym memberships may increase. Actual physical activity overall may fall.
- Pharmaceuticals and medical interventions will become increasingly important in managing weight and overall appearance.
- The Public Health System will be severely burdened. Government will seek to influence the food supply and tax products deemed to be ‘non-compliant’.
- The smart companies will produce products and manage their portfolios to address the consumer need and avoid Government legislation.
- Those companies that don’t evolve will be forced to defend their every move.
A Few Interesting Facts
Currently, 32% of fizzy drinks bought in NZ supermarkets are sugar free – up from just 20% in 2000.
The fastest growing beverage segments are non sugar sweetened or not sweetened at all ie diet drinks and bottled water
Seventy five per cent of Kiwi grocery shoppers use the Heart Foundation Tick to choose healthier food
Currently the Tick is on nearly 1,000 food products in over 50 food categories, from everyday foods like cereal, bread, milk and lean meat to occasional foods like pies, ice-cream and chicken nuggets.
The Tick Programme has been operating in New Zealand for 10 years and in 2006 it set even tougher nutrition guidelines, in one year eliminating 266 tonnes of trans fat from Tick margarines and spreads. In partnership with two leading children’s dairy food brands it shed 68 tonnes of total fat and 49 tonnes of saturated fat and also removed 33 tonnes of salt from breads, cereals and margarines. McDonald’s healthier options in recent years including sliced apple, yoghurt, pasta and hot rolls are credited with rejuvenating sales in what has been a slow growth environment for fast food operators
So why are we getting fatter?
Health and Wellness is a product of a small number of factors:
- Overall lifestyle ie how we spend our time, where we spend it, fresh air, tobacco, alcohol etc
- Physical activity ie getting sufficient amounts of physical exercise whether it be passive eg housework and gardening or active eg walking, swimming etc.
- Diet ie what we eat and how much we eat
- And these factors are primarily driven by the choices we make which are greatly influenced by:
- supply factors ie what is readily available,
- family and community factors eg personal safety, culture etc and
- environmental factors ie the society we live in and its norms.
The Food Industry can only really be held accountable for supply factors and what we do about them that influences demand. So how are we doing?
A Quick Tour of the Aisles
We know that a diet rich in leafy (and colourful) vegetables, lean proteins, unrefined grains and fruit is good for us. We also know that overuse of salty, sugary or fatty treats increases our risk of diabetes and cardiovascular complications. We also know that the trolley-share of processed foods relative to unprocessed is rising in response to consumer demand for convenience and taste. The quality of food in the market overall is extremely high with kiwis totally spoiled for choice of meats, fish and fresh produce. But the growth segments are in the fridges, freezers and centre aisles. So what’s happening there? If you’re a shopper looking to please your family while still eating healthily from today’s supermarket, how well are you being served?
Great variety of product, heaps of diet, low-sweetened and unsweetened options, competitively priced. Well done to an industry that has taken a leadership role in the whole obesity issue.
A huge variety of products but generally speaking I was impressed with products like soups, baked beans, canned fruits which have managed to bring salt, sugar and fat levels down quite considerably in recent years.
Kiwis love bread and it shows. We eat it for breakfast, lunch and dinner so its great to see the variety. Plain white sliced is still number one but even there we are given high fibre options at a very affordable price.
Generally speaking dairy is really good for us. Even Blue Top milk is only 3.3% fat and there is a huge range of lighter options. Some challenges in the treat areas with sugar and of course cheese which we all love is not great for the waistline.
Snacking and Confectionery
Lots of variety, typically high in sugar, fat or salt, difficult to find products that are clearly targeting the health dollar. Industry still wrestling with the issues.
A bit like snacking. There are products that are much less fattening than others but even the most benign of biscuits is 10% to 15% fat and 20% or more sugar. That’s not far behind the good old kiwi mince pie.
Breakfast “the most important meal of the day” has copped a lot of flak from both the Greens and Consumers Institute in recent years. I’m always surprised by the very high sugar levels in our cereals. With one or two very well known exceptions the picture still remains pretty questionable. Even products which give the appearance of being healthier are fairly high in kilo joules
This is an area that really needs work. Many kiwis live on products from the freezer. Bang ‘em in the oven or microwave and ‘bing’ dinner’s served. Fairly typical to find pizzas, processed meats, precooked foods with fat in excess of 20% and very generous portions of salt and sugar. One or two manufacturers doing a lot of work here, the rest need to catch up.
Healthier Products, Strategies for Success
Time for a reality check. Nobody here is suggesting that manufacturers are doing anything wrong by supplying the market with the products that people clearly demand, purchase and enjoy. What I am suggesting, as is our government and the entire medial fraternity, is that shoppers need your help to reduce the total calories consumed. As they are eating more processed foods there is an implicit trust in what you, the manufacturer, puts in the food. Most shoppers don’t read labels and many can’t understand the nutrition information even when they do. But the desire for lighter options is growing and the need for lighter options in the diet is growing even faster. You can help your customers to make choices that are good for them and in the long run good for you too. I’m not suggesting you do all of them. I’m asking you to think about slight and steady modifications over time. I’m asking you to think about launching lower-kilojoule line extensions or alternatives. Here are some strategies you might consider.
If your product is 20% fat, how can you get it down to 15% or 10% over the next one to two years. Can you reduce saturated fats or trans-fats? Is it as simple as speeding up cook times or increasing water or other binders? Do you care enough to invest in a lower-fat alternative? Lower fat propositions are very marketable.
New Zealanders love sugar and most of us are getting way too much of it. There are many tasty alternatives and they’re not all artificial. Are there other products you can use to boost flavour while you wind the sugar back over time. Can you substitute sugar with another attribute eg fizziness or acidity?
Generally speaking we don’t eat enough fruit. Adding fruit to a product increases the flavour and reduces dependency on other fillers. Dried fruit can give a product more mouth feel while fruit pulp or fruit juice can reduce the need for sugars, malts and honey.
Unrefined grains are really good for us. Whole grains, rice and oats are associated with wellbeing and are digested slowly providing sustained energy. They are excellent at filling out a product and reducing fat levels per 100g.
The simplest method of filling up while losing weight is to eat more vegetables. Similarly pies, plated meals, canned products benefit from vegetables two ways. They reduce your cost of goods while also reducing kilojoules.
The right cuts of meat, chicken or fish can greatly enhance the value of a product while simultaneously reducing the fat. Even vegetable protein is now very applicable across a broad range of products.
We love our salt so it’s a difficult one to take out of the diet but there are good alternatives available from your ingredients specialists. Simple answer with salt is to leave it to the consumer to add. They do anyway so why don’t you save yourself a few cents and cut it back over time. If you compensate with increased savoury characteristics over time then you can introduce a ‘reduced salt’ claim when you’re ready.
This is a case of the ‘blindingly obvious’. If you have a product range that is delivering around 1200 kilojoules then you can reduce the weight to reduce the kilojoules. Then you can make a ‘less than 1000 kilojoules’ claim on your range.
Flakier, Puffier, More Air
If you’re worried about losing size, then just reduce the weight and maintain the size by increasing the levels of air in your product. Often this leads to smoother mouth feel. It also increases your factory yields and thence profitability.
Ultimately the consumer is generally driven by taste. Particularly when snacking. You can reduce a lot of fat, sugar and salt in a product as long as you don’t sacrifice flavour. A great example of this is the chewing gum segment which grew as the flavours gained intensity despite going sugar-free. Your ingredients supplier can help you a lot with this challenge.
Obesity is on the increase and while half the market is healthy and making healthy choices the other half needs help. This does present many challenges and opportunities for the food industry. There is no doubt that external factors will also create greater pressure for industry. I suggest that every company review its current offering in an honest effort at self-assessment and identify where it can make positive changes. Then start. Every small change does make a difference. But keep going, don’t stop. The nation’s health depends on it.
Rob Bree was previously executive director of the Food Industry Group and represented the industry’s efforts to confront the issues associated with obesity in New Zealand. Rob can be contacted via firstname.lastname@example.org