A new report from the Hudson Institute, a nonpartisan policy research organization, claims companies producing better-for-you (BFY) foods will have healthier bottom lines. To make its case, the organization analyzed Nielsen sales data from grocery stores, drug stores and mass merchandisers; financial metrics, such as operating income, share price appreciation and return to shareholders; and company reputation and favorability rankings.
According to the findings, not only will the practice of selling BFY foods improve sales, but it will also increase operating profits and returns to shareholders. Most of all, it will change a company’s reputation—for the better. “In short,” the organization said, “sound strategic planning with a commitment to growing sales of better-for-you foods is just good business.”
Looking at obesity alone, as the Hudson Institute report did, the medical cost for adults is $147 billion a year, while lost productivity costs businesses an estimated $73 billion a year. There have been countless efforts on many levels to stem the rising tide of obesity and its related health complications, but clearly they have not been enough.
A logical (and profitable) solution, however, is selling more BFY foods. “Consumer packaged good (CPG) companies [can] improve the key performance metrics demanded by their shareholders and Wall Street, while also providing more nutritious foods and beverages for parents and children,” the report said.
This issue’s guest author, Julian Mellentin, also takes a look at the better-for-you foods segment in his annual functional foods update. He too believes in the “Big Business” potential of healthy foods, and that if you deliver on some key criteria—e.g., naturalness, convenience, etc.—you will not only sell products, but you could also demand premium prices for them.
“The good news for our industry is that companies whose products match up to the key trends are continuing to enjoy surprising growth. With economic doldrums as a constant backdrop in most Western countries, consumers are becoming more price-conscious and eager for a bargain,” he said. “But value for money is not just about price.”
Mr. Mellentin also argues that the term “functional” foods has no meaning for consumers and instead prefers to call them “healthy” foods. I think he’s right when it comes to consumers, but I still believe the term has relevance within the industry.
If you think about it, there are plenty of industry terms consumers don’t understand, which is why marketers make so much money. Their job is to take everything we’ve learned on the industry level and boil it down to the consumer level. And at the end of the day, consumers don’t necessarily need to speak our language; they just need a good reason to buy our products. But regardless of whether you are talking “functional” foods, “healthy” foods or “better-for-you” foods, it is obvious, at least in my mind, that offering these types of products is both a moral AND economic imperative.