As the 2016 Global Panel Report on Food Systems and Diets noted, average households in nearly all countries in the world acquire the majority of their food from the market (as opposed to growing it or receiving it in kind). Most of these purchases are of packaged foods. In addition, we know that the sales of processed foods (which has a strong overlap to packaged foods) are flat in high-income countries (but with a switch within the static sales towards products lower in sugar, salt and fat) while increasing in middle-income countries (and I would guess, low-income countries, although we have no data on that).
So there is a big business opportunity in packaged foods in low and middle-income countries, but is there also a nutrition opportunity? Given the trends in developing country markets (more food purchases from the market and a growing purchases of packaged foods), the answer is surely yes.
The format of the side-meeting included the introduction of 4 new packaged food products with nutritious food aspirations from 4 companies. The participants were then asked whether, based on what they had heard, they thought the foods were nutritious, environmentally and socially sustainable, with a viable business model. To do this participants tested the products, asked questions about 4 dimensions of performance–health, social, environmental and business–and gave the product a highly subjective summary score from 1-8 on each dimension.
Some companies have made substantial changes to their products’ profiles (e.g. towards lower sugar, higher fibre) over the past 5-10 years—and we saw some interesting data from Nesquik/Nestle. Small but frequent and persistent changes can add up to big changes. They are not transformational in a big bang sense, but they are a reaction to a transformation in consumer preferences or government regulation. Interestingly it is very difficult to track these changes over time as the databases are not public and it is difficult to find public info on food product labels from 5 or 10 years ago. (Although it is easy enough to track if the formulations are different in different geographies.)
How much effort should big food companies put into reformulating existing core products versus introducing new “healthier” products? The latter are less likely to upset consumers “stop tampering with our favourite foods!” but are at risk of small sales/termination, or of simply replacing an equally healthy natural option with a more expensive processed and packaged product (e.g. if froosh replaced an apple in a lunchbox). The answer to this portfolio balance issue is obviously context and outcome specific, but it is clear that some companies are struggling with this question.
Are the companies that are providing business-to-business (B2B) products (like DSM with ModuMax) the ones that are going to help the whole system change given their massive indirect consumer reach via their business customers? How much effort should system changers invest in the B2B companies vis a vis the companies that sell direct to consumers? Again, context specific.
Packaged food companies need to be aware of the narrative: processed foods=unhealthy foods. Processed foods can provide nutrition, convenience, safety and affordability if those are the key design criteria guiding the processing. Don’t blame the technology; rather blame the bigger incentives that drive companies towards unhealthy processed foods (weak incentives—carrots and sticks– from some governments combined with weak consumer demand for nutritious foods in many contexts, together with unscrupulous behaviour from some businesses).
The completion of the 4-dimension assessment (health, business, environmental, social) was not easy in the absence of data (preferably independently verified data). In addition, just exactly what the social dimension means was not clear—is this where affordability comes in or is this about the working conditions in the supply chains, both, or is it about something else?
Finally, it is important to note that all the company representatives in the room (about a quarter of the participants) emphasised the need for nutritious foods to lead with flavour. If a more nutritious food is not tastier and more delicious than the less nutritious variants or brands, then it is highly unlikely to be a market success. Those of us in the public sector need to embrace this idea—typically we just focus on acceptability and palatability of nutritious foods.
That is why GAIN is exploring the development of a relationship with Firmenich to begin to focus on flavour issues in nutritious foods.
And the scores? Wildly different among the 4 assessing groups! Delicious.