Is the Food Business Ready for Transformation?

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by: Idris Mootee

The food business is ready for a transformation. According to WHO, 1.6 billion adults are overweight with 400 million clinically obese. It is estimated that more than 155 million school age children are overweight. This is a global problem and the industry is not doing enough to deal with this.

According to Patrick Cescau , CEO of Unilever,” it is puzzling – with the benefit of hindsight –why a large part of the food industry took its eye off the’ nutritional’ ball during the 1990’s. Unfortunately, while we were focused on issues of taste, convenience and value, consumers were getting fat, unfit and progressively unhealthier…It is important to acknowledge that the issues we face as a European food industry are partly an outcome of our own success.

In current economic markets, food makers are quietly changing their recipes on candy, dairy products and other top-selling lines, adding fillers and substituting cheaper ingredients to cut costs amid the commodities boom. They are putting their energy in squeezing cost out of these already low priced products. This is going the opposite direction the industry should be going. Hershey Co. is substituting vegetable oil for a portion of the cocoa butter traditionally used in some of its chocolates. Spice maker McCormick & Co. is now supplying food companies with cheaper spices and new flavor blends, such as Mexican oregano instead of pricier Mediterranean oregano, and garlic concentrate instead of heavier (and costlier to ship) garlic cloves. General Mills is also trying to reduce the number of spice and ingredient pouches in boxes of Hamburger Helper — and by halving the number of pasta shapes used in the product line — the company has trimmed manufacturing costs 10%. Don’t expect these savings will be passed on to consumers.

Expect prices of these products to go up. Even McDonald’s is testing less expensive ways to make its $1 double cheeseburger; already, some restaurants are selling the burger with one slice of cheese instead of two. Ketchup giant H.J. Heinz Co. has been breeding sweeter tomatoes in an effort to reduce the amount of high-cost corn syrup in its ketchup. The sweeter tomatoes aren’t yet being used in its product lines. What does this all mean?

Are we getting healthier food or better tasting food? Or we need to adjust our expectation to take what they offer us. Food companies have a moral obligation in additional to maximizing shareholder return. They need to have integrated concern about obesity and other health issues into their core business strategy. Every one of these food giants needs a radical transformation by revisiting its whole portfolio and market only products that are in line with FDA/EU nutrition standards. There is a third bottom line for these companies. Fast food is part of many everyday’s life. The typical American now consumes approximately three hamburgers and four orders of French fries every week and many of those Americans consuming fast food are children. This much consumption of such unhealthy food causes health problems. Fast food is not proper nutrition in any sense. I hope to see a radical transformation of the fast food industry.

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