Obesity has become a global phenomenon. Billions of people are now seriously overweight and the economic cost is estimated at $2 trillion a year, similar to smoking.  As the dangers of overeating become clearer, businesses from food producers to app developers have jumped on the bandwagon, offering consumers the chance to change their eating habits and lifestyles. But supposedly healthy food does not always provoke weight loss  - so which companies are really helping consumers to become leaner and which will win out in the fight against fat?​

VIEWPOINT

Among the more ghoulish symbols of the obesity epidemic, Goliath Casket stands out – a firm that crafts coffins for the heaviest corpses. The US manufacturer has been doing a roaring trade since the mid-1980s in super-sized burial receptacles, which can contain a body weighing up to 72 stone (more than 450kg.) 

While the US is seen as the heartland of the bulging waistline, obesity is an increasingly global problem. More than 2.1 billion people – approaching a third of the world’s population – are overweight or obese, based on the World Health Organization figures. That is equivalent to about four times the European Union’s 500 million population. 

The new vice

Overeating is now responsible for around 5 per cent of all global deaths, imposing an economic cost of around $2 trillion a year, similar to the impact of smoking, armed violence or terrorism, according to an analysis by the McKinsey Global Institute. Nor is this any longer just a rich-world problem. Clothing sizes are rising along with household incomes in the likes of China and Mexico too. 

“This is a major challenge for the food industry. Big food firms risk being vilified rather like tobacco companies were in past decades,” says Dr Alan Russell, director of the Disruptive Health Technology Institute at Carnegie Mellon University.  

 

 VIEWPOINT

Shrink the world

Consumer fightback

Consumers are already fighting back. Many display a growing preference for what they perceive as healthier foods, driving a transformation in the food industry, as companies battle to offer more wholesome alternatives to traditional treats. And with consumer tastes changing fast, international giants face a rising insurgency from smaller rivals, many of which are growing at a rapid rate.

“There is a race to find the top emerging brands in healthy natural foods,” says Erin Lash, a food industry expert at US research firm Morningstar. “Aside from the possibility of strong sales growth, early investors in such companies can expect heavy bidding from large food companies that want to revive revenue growth, which in many cases has been stagnant for years.” 

All natural ingredients

The giants of the industry have even been setting up internal venture capital funds to sniff out the next big brands. In June last year, Kellogg joined this search with a fund called eighteen94 capital. A similar vehicle by General Mills, called 301 INC, has focused heavily on increasing exposure to healthy food-makers, taking stakes in cottage cheese maker Good Culture, plant-based food-maker Beyond Meat and kale chips brand Rhythm Superfoods.

But while the fastest-growing upstarts have usually been focused on producing food with natural and healthy ingredients, they have rarely promoted weight loss. One of the fastest-growing food firms in the UK, for example, is Heck Food, a sausage and burger maker that has achieved sales growth of around 170 per cent over the past three years. The gourmet range promotes its use of natural ingredients but, while these are leaner than traditional alternatives, the firm has not focused its marketing on calorie restriction. Similarly, Bulk Powders, with sales growth of 78 per cent over the past three years, produces the whey protein powders beloved of weight lifters, along with nut butters. Its all-natural peanut butter may be healthy in moderation but, at around 46 per cent fat, would not be recommended for those aiming to slim down.

Diet: a dirty word

And despite the growing prevalence of obesity, diet has become a dirty word in the food industry. Most diet or light products have been having a tough time. Lean Cuisine, owned by the Swiss titan Nestlé, the world’s largest food and drink company by revenue, has only recently pulled out of a multi-year sales slump, with revenue declining in double digits annually. Jeff Hamilton, president of Nestlé foods division, appears to have helped reinvigorate the line by shifting the focus away from low fat and low calorie, to stress products that are high-protein, gluten-free and free from genetically modified organisms. A new comfort selection even includes such staples as meatloaf and mashed potatoes. 

Meanwhile, General Mills faces fast-declining sales of Yoplait Light, the low-fat yogurt once beloved of dieters. 

“The focus is no longer on weight loss,” says Lash. “Calorie counting is out of vogue. There is a perception that calorie-restricted diets don’t work.” Instead, consumers are hungry for products that are natural, organic and perceived to be healthy in a broader sense. 

Top-line expansion

The svelte and muscular Tom Bilyeu, the young co-founder of protein bar manufacturer Quest Nutrition, grew up in a morbidly obese family. Quest has achieved sales growth of 57,000 per cent in just three years and Bilyeu says that one of his missions was to create a product that would help people trim their waistlines. 

But while protein bars can help gym rats put on muscle as part of a balanced diet, no nutritionist would argue that they will promote weight loss for those whose health club memberships go unused. And many do, with the US National Public radio reporting that gyms typically lose around half their members every year, while even among members, non-attendance rates are often high. Adding extra protein to the diets of such gym shirkers will lead to further bulking up in all the wrong ways. 

Among consumers, however, natural ingredients trump weight loss, it seems. 

“People are gravitating towards products where they recognise and understand the ingredients on the labels, even if that means higher calories,” says Lash. US chocolate titan Hershey, for example, has been moving away from the use of the intimidatingly polysyllabic emulsifier polyglycerol polyricinoleate, or PGPR, which helps chocolate flow into moulds. But the transition required extra cocoa butter, which boosted the calorie count of its bars. 

Tech to the rescue

Russell believes that consumer technology may have a bigger part to play in fighting the rising tide of obesity. “Companies producing apps that promote healthy decisions don’t have a vested interest in you eating more,” he observes. “Instead, they try to help people stay on track with their broader health goals.” 

There are now more than 150,000 health-related applications in the Apple store, many of which are focused on nutrition. And a study by BCC Research forecasts that the mobile health industry will be worth $21.5 billion by 2018. 

Treat the problem

Inevitably perhaps, businesses involved in treatment rather than prevention are likely to remain among the biggest beneficiaries from obesity. Type 2 diabetes, for example, is linked to weight gain and is on track to surge by 19 per cent in Europe between 2015 and 2040, according to the Inter-national Diabetes Federation. Over the same period, the disease is expected to soar by around 40 per cent in the western Pacific, including China. As a result, companies that produce insulin used to control diabetes are expected to deliver robust revenue gains over the coming decades. Firms involved in kidney dialysis also offer potential for strong growth, along with companies that produce special equipment for overweight hospital patients, such as beds and trolleys able to handle the morbidly obese. Other common side-effects of obesity include high cholesterol, obstructive sleep apnoea, cancer and musculoskeletal disorders such as osteoarthritis. Such health problems could prove magnets for enterprising businesses. 

Meanwhile, back in Indiana, Goliath Casket will almost certainly continue to flourish as it caters to the needs of the US’ larger citizens  

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Kindly rethink

Snack bar maker KIND, which uses real ingredients, has come under fire from the US Food and Drug Administration (FDA) for using the term healthy on its packaging, despite the high fat content of the nuts used in its products. KIND has petitioned the FDA to update its guidelines, contending that the healthy fats used in almonds shouldn’t count against it. (The FDA has said it is re-evaluating its standards.) 

“KIND bars are not about dieting; they are about incorpor- ating whole foods, such as nuts and grains, with some sugar and chocolate thrown in,” says Marion Nestle, a professor of nutrition, food studies and public health at New York University. “Are they really healthy? Well, that depends on everything else you eat.” 

Companies are thus responding to consumer preferences. Natural or organic ingredients won’t lead to weight loss, all other things being equal. They will, however, fatten corporate revenue growth. Within the cereal market, for example, granola has come to be seen as a healthy alternative for breakfast, spawning numerous fast-growing start-ups. In fact, granola can be a nutritional false friend, with some containing more sugar than regular fizzy drinks and more fat than a serving of fries. 

More or less?

The bottom line is that smart food companies may be able to generate revenue growth by chiming with the zeitgeist but they are highly unlikely to offer a solution to the rising obesity epidemic.

“Obesity is about calorie balance and particular foods don’t help unless they encourage people to eat less in general,” says Nestle. “Some evidence suggests that diet or healthy foods delude people into thinking they are eating less and they make up for the deficit and then some. All food companies want people to eat more of their products, not less.” 

Whatever the impact on waistlines, innovative food companies are blossoming, with the ‘health-conscious’ market expected to continue growing at a rapid rate, as operators benefit from mistaken public assumptions about healthy food and weight loss.

“Ultimately, the evidence suggests that while consumers say they want healthier alternatives, they are unwilling to sacrifice taste,” says Lash. “The health-food market looks set to continue to grow fast even if it doesn’t always help people to get slimmer.” 

Overeating is now responsible for around 5 per cent of all global deaths, imposing an economic cost of around $2 trillion 
a year”​

Among the more ghoulish symbols of the obesity epidemic, Goliath Casket stands out – a firm that crafts coffins for the heaviest corpses. The US manufacturer has been doing a roaring trade since the mid-1980s in super-sized burial receptacles, which can contain a body weighing up to 72 stone (more than 450kg.) 

While the US is seen as the heartland of the bulging waistline, obesity is an increasingly global problem. More than 2.1 billion people – approaching a third of the world’s population – are overweight or obese, based on the World Health Organization figures. That is equivalent to about four times the European Union’s 500 million population. 

The new vice

Overeating is now responsible for around 5 per cent of all global deaths, imposing an economic cost of around $2 trillion a year, similar to the impact of smoking, armed violence or terrorism, according to an analysis by the McKinsey Global Institute. Nor is this any longer just a rich-world problem. Clothing sizes are rising along with household incomes in the likes of China and Mexico too. 

“This is a major challenge for the food industry. Big food firms risk being vilified rather like tobacco companies were in past decades,” says Dr Alan Russell, director of the Disruptive Health Technology Institute at Carnegie Mellon University.  

Obesity has become a global phenomenon. Billions of people are now seriously overweight and the economic cost is estimated at $2 trillion a year, similar to smoking.  As the dangers of overeating become clearer, businesses from food producers to app developers have jumped on the bandwagon, offering consumers the chance to change their eating habits and lifestyles. But supposedly healthy food does not always provoke weight loss  - so which companies are really helping consumers to become leaner and which will win out in the fight against fat?​​

There are now more than 150,000 health-related applications in the Apple store, with forecasts suggesting the mobile health industry will be worth $21.5 billion by 2018”​

Some evidence suggests that diet or healthy foods delude people into thinking they are eating less and they make up for the deficit and then some. All food companies want people to eat more of their products, not less”​

Businesses involved in treatment rather than prevention are likely to remain among the biggest beneficiaries from obesity”​

Consumer fightback

Consumers are already fighting back. Many display a growing preference for what they perceive as healthier foods, driving a transformation in the food industry, as companies battle to offer more wholesome alternatives to traditional treats. And with consumer tastes changing fast, international giants face a rising insurgency from smaller rivals, many of which are growing at a rapid rate.

“There is a race to find the top emerging brands in healthy natural foods,” says Erin Lash, a food industry expert at US research firm Morningstar. “Aside from the possibility of strong sales growth, early investors in such companies can expect heavy bidding from large food companies that want to revive revenue growth, which in many cases has been stagnant for years.” 

All natural ingredients

The giants of the industry have even been setting up internal venture capital funds to sniff out the next big brands. In June last year, Kellogg joined this search with a fund called eighteen94 capital. A similar vehicle by General Mills, called 301 INC, has focused heavily on increasing exposure to healthy food-makers, taking stakes in cottage cheese maker Good Culture, plant-based food-maker Beyond Meat and kale chips brand Rhythm Superfoods.

But while the fastest-growing upstarts have usually been focused on producing food with natural and healthy ingredients, they have rarely promoted weight loss. One of the fastest-growing food firms in the UK, for example, is Heck Food, a sausage and burger maker that has achieved sales growth of around 170 per cent over the past three years. The gourmet range promotes its use of natural ingredients but, while these are leaner than traditional alternatives, the firm has not focused its marketing on calorie restriction. Similarly, Bulk Powders, with sales growth of 78 per cent over the past three years, produces the whey protein powders beloved of weight lifters, along with nut butters. Its all-natural peanut butter may be healthy in moderation but, at around 46 per cent fat, would not be recommended for those aiming to slim down.

Diet: a dirty word

And despite the growing prevalence of obesity, diet has become a dirty word in the food industry. Most diet or light products have been having a tough time. Lean Cuisine, owned by the Swiss titan Nestlé, the world’s largest food and drink company by revenue, has only recently pulled out of a multi-year sales slump, with revenue declining in double digits annually. Jeff Hamilton, president of Nestlé foods division, appears to have helped reinvigorate the line by shifting the focus away from low fat and low calorie, to stress products that are high-protein, gluten-free and free from genetically modified organisms. A new comfort selection even includes such staples as meatloaf and mashed potatoes. 

Meanwhile, General Mills faces fast-declining sales of Yoplait Light, the low-fat yogurt once beloved of dieters. 

“The focus is no longer on weight loss,” says Lash. “Calorie counting is out of vogue. There is a perception that calorie-restricted diets don’t work.” Instead, consumers are hungry for products that are natural, organic and perceived to be healthy in a broader sense. 

Top-line expansion

The svelte and muscular Tom Bilyeu, the young co-founder of protein bar manufacturer Quest Nutrition, grew up in a morbidly obese family. Quest has achieved sales growth of 57,000 per cent in just three years and Bilyeu says that one of his missions was to create a product that would help people trim their waistlines. 

But while protein bars can help gym rats put on muscle as part of a balanced diet, no nutritionist would argue that they will promote weight loss for those whose health club memberships go unused. And many do, with the US National Public radio reporting that gyms typically lose around half their members every year, while even among members, non-attendance rates are often high. Adding extra protein to the diets of such gym shirkers will lead to further bulking up in all the wrong ways. 

Among consumers, however, natural ingredients trump weight loss, it seems. 

“People are gravitating towards products where they recognise and understand the ingredients on the labels, even if that means higher calories,” says Lash. US chocolate titan Hershey, for example, has been moving away from the use of the intimidatingly polysyllabic emulsifier polyglycerol polyricinoleate, or PGPR, which helps chocolate flow into moulds. But the transition required extra cocoa butter, which boosted the calorie count of its bars. 

There are now more than 150,000 health-related applications in the Apple store, with forecasts suggesting the mobile health industry will be worth $21.5 billion by 2018”​

Some evidence suggests that diet or healthy foods delude people into thinking they are eating less and they make up for the deficit and then some. All food companies want people to eat more of their products, not less”​

Kindly rethink

Snack bar maker KIND, which uses real ingredients, has come under fire from the US Food and Drug Administration (FDA) for using the term healthy on its packaging, despite the high fat content of the nuts used in its products. KIND has petitioned the FDA to update its guidelines, contending that the healthy fats used in almonds shouldn’t count against it. (The FDA has said it is re-evaluating its standards.) 

“KIND bars are not about dieting; they are about incorpor- ating whole foods, such as nuts and grains, with some sugar and chocolate thrown in,” says Marion Nestle, a professor of nutrition, food studies and public health at New York University. “Are they really healthy? Well, that depends on everything else you eat.” 

Companies are thus responding to consumer preferences. Natural or organic ingredients won’t lead to weight loss, all other things being equal. They will, however, fatten corporate revenue growth. Within the cereal market, for example, granola has come to be seen as a healthy alternative for breakfast, spawning numerous fast-growing start-ups. In fact, granola can be a nutritional false friend, with some containing more sugar than regular fizzy drinks and more fat than a serving of fries. 

More or less?

The bottom line is that smart food companies may be able to generate revenue growth by chiming with the zeitgeist but they are highly unlikely to offer a solution to the rising obesity epidemic.

“Obesity is about calorie balance and particular foods don’t help unless they encourage people to eat less in general,” says Nestle. “Some evidence suggests that diet or healthy foods delude people into thinking they are eating less and they make up for the deficit and then some. All food companies want people to eat more of their products, not less.” 

Whatever the impact on waistlines, innovative food companies are blossoming, with the ‘health-conscious’ market expected to continue growing at a rapid rate, as operators benefit from mistaken public assumptions about healthy food and weight loss.

“Ultimately, the evidence suggests that while consumers say they want healthier alternatives, they are unwilling to sacrifice taste,” says Lash. “The health-food market looks set to continue to grow fast even if it doesn’t always help people to get slimmer.” 

Despite the growing prevalence of obesity, diet has become a dirty word in the food industry”​

Overeating is now responsible for around 5 per cent of all global deaths, imposing an economic cost of around $2 trillion a year”​

Tech to the rescue

Russell believes that consumer technology may have a bigger part to play in fighting the rising tide of obesity. “Companies producing apps that promote healthy decisions don’t have a vested interest in you eating more,” he observes. “Instead, they try to help people stay on track with their broader health goals.” 

There are now more than 150,000 health-related applications in the Apple store, many of which are focused on nutrition. And a study by BCC Research forecasts that the mobile health industry will be worth $21.5 billion by 2018. 

Treat the problem

Inevitably perhaps, businesses involved in treatment rather than prevention are likely to remain among the biggest beneficiaries from obesity. Type 2 diabetes, for example, is linked to weight gain and is on track to surge by 19 per cent in Europe between 2015 and 2040, according to the Inter-national Diabetes Federation. Over the same period, the disease is expected to soar by around 40 per cent in the western Pacific, including China. As a result, companies that produce insulin used to control diabetes are expected to deliver robust revenue gains over the coming decades. Firms involved in kidney dialysis also offer potential for strong growth, along with companies that produce special equipment for overweight hospital patients, such as beds and trolleys able to handle the morbidly obese. Other common side-effects of obesity include high cholesterol, obstructive sleep apnoea, cancer and musculoskeletal disorders such as osteoarthritis. Such health problems could prove magnets for enterprising businesses. 

Meanwhile, back in Indiana, Goliath Casket will almost certainly continue to flourish as it caters to the needs of the US’ larger citizens  

Back to articles

Despite the growing prevalence of obesity, diet has become a dirty word in the food industry”​

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Bridgepoint  |  The Point  |  May 2017  |  Issue 31