Healthier foods drive healthier profits, report suggests

17-Oct-2011 - Last updated on 18-Oct-2011 at 12:48 GMT

‘Better-for-you’ foods and beverages may also be better for the bottom line, according to a new report from policy research organization the Hudson Institute.

The report, which also received funding from the Robert Wood Johnson Foundation, examined the financial results and product offerings of 15 major food and beverage companies over the past five years, including Nestlé, Kraft, Sara Lee, Hormel, Coca-Cola, General Mills and Heinz. The researchers classified ‘better-for-you’ foods as those with no-, low- or reduced-calories, as well as products that are generally perceived as healthy, such as whole grain cereals and yogurts.

It found that better-for-you foods drove a disproportionately higher share of sales growth than traditional foods – accounting for about 40% of sales but about 70% of sales growth during the period from 2007 to 2011. It also found that companies with the highest sales of such foods tended to have better operating profits, operating profit growth and shareholder returns.

“For the first time we now have concrete evidence demonstrating that it’s just good business to sell better-for-you products,” said Hank Cardello, lead author of the report and senior fellow and director of the Obesity Solutions Initiative at the Hudson Institute. “Companies’ bottom lines can benefit from selling these sorts of products.”

Cardello is also a former executive with Coca-Cola, General Mills, Anheuser-Busch and Cadbury-Schweppes.

The authors suggested that food and beverage companies should include measurements developed in the study in their own financial performance and progress reports.

“Proof that bottom lines can benefit when companies have a greater percentage of sales from BFY [better-for-you] foods could accelerate progress toward the development and marketing of more nutritious foods,” the report said.

The researchers said that they were prompted to carry out the study as there was little research available that had attempted to assess whether there was a link between offering healthy foods and beverages and financial results.

Senior vice president and director of the Health Group at the Robert Wood Johnson Foundation James Marks said: “We hope this report inspires companies to do more to create and sell truly healthy products. We still have a way to go, but we believe we can have healthy companies and a healthier country. We need both.”