Six of the 16 companies - Ferrero, Suntory, Mondelēz, Unilever, Coca-Cola and Nestlé – derive 80% or more of their sales from products that score less than 3.5 stars in the Health Star Rating System, the data from Access to Nutrition Initiative (ATNI) showed.
There was little progress in moving towards healthier sales compared to 2019 levels at many of the largest F&B companies. Kellogg, Unilever, Coca-Cola, Mondelēz, Suntory and Ferrero all saw stagnant or negative trends, the report noted.
“The average healthiness of product portfolios by some of the largest manufacturers selling in the UK remains concerning, with a mean Health Star Rating of 2.2 out of 5 stars. Poor diets remain the biggest risk factor for preventable ill health in the UK and consumers need easier access to affordable, healthy diets to fight this,” Inge Kauer, Executive Director of the Access to Nutrition Initiative, said.
ATNI analysed the nutritional quality of more than 4,000 products, which account for around half of all branded packaged food and beverage products sold in the country. The research was funded by investment campaign group ShareAction.
Is bad food bad business?
The companies that showed little or no progress towards healthier sales are highly exposed to categories like ice cream and confectionery. So, do these numbers simply show that some categories are inherently unhealthy?
Not according to Louisa Hughes, Engagement Manager at ShareAction. It’s more a question of short-term profits than anything else, she suggested. “At present, we’re flooded by opportunities and incentives to consume more, and especially more of the less healthy products. Many companies prioritise the sale of highly processed products with little nutritional value because, in the short term, these can be more profitable,” she told FoodNavigator.
In the longer-term, however, Hughes insisted that high exposure to unhealthy sales represents a business risk, not least because the grave public health implications of poor diets have attracted regulatory attention in the UK.
ShareAction highlighted the role that the food environment plays in dietary choices and suggested that ‘many families simply can’t afford to provide their children with healthy options’ because ‘food producers prioritise the manufacture of low-cost, highly processed products’.
The most recent Global Burden of Disease report found that poor diets were responsible for 22% of all deaths among adults in 2017, with cardiovascular disease (CVD) as the leading cause, followed by cancers and diabetes.
The UK’s National Food Strategy revealed the UK is now the third most overweight country in the G7, with almost three in ten of its adult population obese. By 2050, the annual cost of obesity is expected to rise to £9.7 billion for the National Health Service and nearly £50 billion for society as a whole.
The recently published National Food Strategy set an objective to reduce national consumption of high fat, salt and sugar foods by 25% by 2032. Last year the government approved new HFSS rules that will impose media and promotional restrictions on 'unhealthy' products.
Volume promotions, such as buy-one-get-one-frees and two-for-one deals, will no longer be allowed for these items. A ban will come into force on HFSS products being placed in secondary promotional locations in stores, such as end of aisle displays, store entrances and checkouts. Marketing of HFSS SKUs will no longer be permitted in digital and pre-watershed TV.
These changes will place £1.1bn in sales at risk per year, according to estimates from insight provider IRI. “These new rules will lead to a huge change in how UK retailers will operate. I’ve heard it described as the most influence the government has on what we eat since post-war rationing,” IRI Strategic Consultant Joe Harriman observed.
Over-exposure to unhealthy categories therefore places big food manufacturers at risk, Hughes argued. “We understand that some product categories are inherently less healthy, however, with upcoming regulation directed at these products, they pose an increasing risk to businesses that rely too heavily on the sale of these products. The upcoming restrictions will mean that selling less healthy products becomes more difficult.”
Risk mitigation efforts could include increasing marketing spend on their healthier options, reformulating less healthy products, or looking at expanding their portfolio to contain healthier options, Hughes suggested. “We’re encouraging companies to set longer-term strategies that account for regulatory and other trends and will increasingly make unhealthy product portfolios less viable.”
Set targets and report on results, industry urged
ShareAction wants large listed food companies to begin reporting on the percentage of their sales that are linked to HFSS food and set reduction targets. The responsible investment NGO has already led a successful campaign, pressuring UK retailer Tesco to adopt similar reporting standards. It suggested food makers should expect 'robust engagement' on the issue in the run up to the 2022 AGM season.
“With investors, we’re calling on food manufacturers to disclose their proportion of healthier sales and to set targets to increase this proportion,” Hughes explained.
She pointed out that there is a significant lag between the progress companies are making on other ESG goals, particularly linked to environmental responsibility, and those related to the health profile of their own portfolios.
“Although these companies may score well in other areas of sustainability and governance, they continue to have product portfolios dominated by less healthy products and rely on the majority of their food and drink sales coming from these.
“This leaves them exposed to greater risks from upcoming regulation and poorly placed to capitalise on increasing consumer demand for healthier options. Where health is prioritised, it’s entirely possible for companies like Unilever to improve their product portfolio and percentage of healthier sales through a range of methods including reformulation, new product development, pricing and promotional strategies.”
While Unilever saw a reduction in the percentage of products meeting the ‘healthy threshold’ between 2019 and 2021 – down from 17% of sales to 16% of sales – the company has outlined plans to prioritise products that deliver ‘positive nutrition’ as part of its Future Foods strategy.
Announcing the strategy last year, Unilever pointed to a 110 calorie-cap on children’s ice cream and said it has lowered the salt, sugar and calories in a ‘growing number of products’, including a 30% sugar reduction in Lipton Ice Tea. By 2022, Unilever wants to extend reductions so that 85% of its foods will help ensure consumers do not intake more than 5g of salt per day, by 2022. And 95% of its ice creams will not contain more than 22g of sugar, and 250 kcal per serving, by 2025.
Unilever also intends to double the number of products that deliver positive nutritional value by 2025 through ‘impactful amounts’ of vegetables, fruit, proteins or micronutrients such as zinc, iron, omega-3 and iodine.
However, Unilever does not detail the overall proportion of its portfolio that currently meet these standards -- one of ShareAction's key demands.
Areas of improvement: PepsiCo and Danone see portfolio shift
The ATNI research did report an overall improvement in the proportion of healthier sales. Compared to 2019, 2021 unhealthy sales declined seven percent from 78%.
Nevertheless, the researchers noted, progress was largely down to ‘big improvements from just a few of the largest companies’. Danone increased their proportion of healthy sales from 46% to 77% and PepsiCo from 26% to 50%.
“Danone’s mean HSR improved the most by 0.7 stars (from 3.3 to 4.0),” ATNI Program Manager Babs Ates told us. “This improvement was driven by changes in the dairy product mix, and by a larger proportion of total UK sales deriving from dairy products compared to the previous iteration.”
PepsiCo picked up the award for ‘most improved’ portfolio, Ates continued. “The company that improved the most in the overall ranking was PepsiCo, moving up three places. Compared to the previous assessment, the mean HSR for its ‘Savoury snacks’ and ‘Carbonates’ categories improved due to changes in the product mix (e.g., new healthier snacks varieties in the UK portfolio).”