Are healthier sales targets too easy?

Nestlé joined the likes of Danone, Unilever, PepsiCo and Premier Foods in pledging to help shift consumption away from foods high in fat, sugar and salt (HFSS), which are driving up global obesity rates, and towards products that better support a healthy, balanced diet.

It felt like a bold statement of intent from the world’s biggest food supplier. But was it?

No sooner had Nestlé announced the target than critics were queueing up to pick holes in it. Specifically, the campaign group ShareAction pointed out Nestlé’s was an absolute sales growth target, meaning that if sales of less healthy products increase at a similar rate there will be no improvement in the overall impact of the food it sells on consumer diets.

Nestlé has also faced criticism for perceived sleight of hand by including within the target goods such as babyfoods and medical nutrition products, which are not covered by the Health Star Rating (HSR) – the nutrient profiling system the company has chosen for defining healthiness.

“Targets have to be set in the right way, otherwise it’s just a PR exercise”

 James Toop, CEO of Bite Back 2030

It has also included products such as coffee, for which HSR is generally deemed not appropriate, according to the system’s own guidelines.

On closer inspection, then, what has been framed as a transformational commitment to sell more nutritious products appeared, to some at least, to barely deviate from the status quo.

So how ambitious are the health targets of the fmcg giants? And are they measuring the right things and working towards the right goals?

The urgent need for action on obesity was made clear in a report published last month by the Tony Blair Institute for Global Change. It cited new estimates indicating the cost to the UK of obesity had soared to £98bn in 2021, up from the previous estimate of £58bn and equivalent to almost 4% of GDP.

In this context, the trend for food and drink manufacturers – and retailers – to set targets to sell healthier products has been welcomed by health campaigners. “It’s not going to be the one silver bullet that transforms child health and nutrition, but it’s a really important step in increasing transparency and driving companies… towards healthier products,” says James Toop, CEO of the NGO Bite Back 2030.

Still, Toop stresses “targets have to be set in the right way, otherwise it’s just a PR exercise”. He suggests the gold standard businesses should aspire to is a target that shifts sales from less healthy to healthier products and uses a government-endorsed nutrient profiling model to define healthiness.

Inconsistent measures

Some campaigners are unconvinced recent targets set by food manufacturers are up to the mark. “Despite lots of advocacy urging them to improve, they’re still far too reliant on sales from unhealthy products. They put forward misleading information and refuse to disclose meaningful, transparent data,” says Fran Bernhardt, commercial determinants co-ordinator at Sustain.

Indeed, scan a list of recent health commitments and the first thing that stands out is their inconsistency. The pledges target different performance metrics, while definitions of healthiness are based on a range of different nutrient profiling models and, in some cases, companies’ own internally developed criteria.

In practice, this makes the job of comparing relative levels of ambition nigh on impossible for stakeholders including consumers, investors and campaigners.

On paper, Danone’s target that at least 90% of its portfolio by sales volume will not be HFSS is the most ambitious of those published to date. In fact, Danone’s is not even a target – it has already reached the milestone and is now challenging itself to remain at or above this 90% level.

“It’s really important that there’s a consistent way of setting targets and defining ‘healthier’”

 James Toop, CEO of Bite Back 2030

Doing so involves “aligning everything from product strategy and innovation to processes and databases”, says Richard Hall, VP, general secretary for Danone UK&I. He points out the company has already invested significantly in reformulating products to make them healthier, noting that between 2015 and 2022 Danone removed 21% of the sugar content from its yoghurts.

The 10% of the portfolio that remains HFSS is largely made up of more indulgent yoghurt products, such as the Oykos brand, and Hall says there are no plans to make these HFSS compliant: “Part of our portfolio will have some indulgence, but it’s a very small part.”

Danone’s target sets a high numerical bar for rival suppliers to match, though its product portfolio, consisting largely of wellbeing brands such as Activia, Actimel and Alpro, has for some time been heavily skewed towards non-HFSS products. Therefore, it’s something of a moot point whether Danone’s commitment is more ambitious than PepsiCo’s target for half of snack sales to come from products that do not classify as HFSS (representing 30%) or from products sold in portions of 100 calories or less (20%).

Fragmented targets

PepsiCo, whose snack brands include Walkers, Doritos and Snack a Jacks, says a year on from making the commitment, 30% of sales already come from healthier alternatives and two-thirds of all new products launched in 2022 were not classified as HFSS. “We’ve been making changes to our portfolio over many years, but now is the time for even bolder action,” says Fiona Tomlin, chief marketing officer at PepsiCo.

However, Toop points out PepsiCo’s target is only for snacking “and is actually two fragmented targets without an overall HFSS sales target. While it could sound like half of snacking sales will be from healthier products, the reality looks like PepsiCo will still have 70% HFSS sales but just with 20% [of that total] sold in smaller portion sizes,” he says.

Premier Foods, which owns Mr Kipling and Sharwood’s, is also claiming progress against a target to ensure at least 50% of all its products are both non-HFSS and provide additional health or nutritional benefits by 2030. As of the end of the 2022/23 financial year, the proportion of products meeting the criteria, which includes products high in protein or fibre, was 43%. The company also has a target to more than double sales of products that meet high nutritional standards by 2030.

Toop again has some reservations. Regarding the sales growth target, he points out “growing healthier sales could mask equal or even higher sales of the unhealthy stuff”. However Holly Gabriel, who leads ShareAction’s consumer health campaign, suggests that, for a business selling products such as cakes, “the target by Premier Foods is one of the most ambitious we’ve seen”.

Like Danone and PepsiCo, Premier Foods has based its targets on the UK government’s nutrient profiling model, while other suppliers have created their own bespoke standards. Unilever, for example, has recently developed its ‘Unilever science-based nutrition criteria’ (USNC), against which 85% of its nutrition and ice cream servings will have to comply by 2028 versus a 2022 baseline of 75%.

Unilever has been one of the manufacturers directly targeted by ShareAction, which last year filed a shareholder proposal urging the company to disclose sales against government-endorsed health models and adopt ambitious targets to increase the share of sales from healthy foods.

Although the company has responded by setting the specific, time-bound target detailed above, Gabriel believes the commitment falls down by not using a government-endorsed nutrient profiling model and by focusing on serving sizes, which ShareAction says can easily be changed to make a product appear healthier than it is.

Unilever says it evaluated a number of externally endorsed nutrient profiling models and concluded its own criteria could have the most positive impact on public health.

Gabriel does praise Unilever as one of the more transparent companies in how it discloses current levels of healthy sales. Last year, Unilever published an assessment of its global nutrition and ice cream portfolio against six government-endorsed nutrient profiling models, as well as its own internal model. It plans to update the assessment annually. “If they’re saying using their model is the right way to shift their portfolio we’ll be able to see that through the data,” says Gabriel.

Nestlé has also started reporting the nutritional value of its products at a market level. In the UK, 42% of net sales were non-HFSS in 2022 versus 27% HFSS, with the remaining sales covered by specialised nutrition, petcare and other excluded products such as non-food items.

Yet Nestlé’s future target – to increase sales from more nutritious products by CHF20bn-25bn by 2030 (equivalent to around 50% growth) – has come under fire, with ShareAction noting the target is broadly in line with Nestlé’s current overall growth guidance of 4%-6% per year.

Nestlé UK&I’s head of public affairs, Doro Heinze, defends its ambition, claiming an absolute sales target is the best way to guide the business towards delivering more nutritious and affordable choices. “A relative increase in percentage sales may not necessarily mean we will increase the overall sales of more nutritious products; we could be achieving a higher proportion of sales while actually reducing the amount of nutritious products we are offering to people,” she says.

She also pushes back against criticism – including from Nestlé shareholder Legal & General Investment Management – over the inclusion of items such as baby foods and medical nutrition products in Nestlé’s target. Although these are not covered by some government-endorsed nutrient profiling models, and are explicitly excluded from the HSR system, Heinze says “it is our view they are still having a positive impact on health”.

Level playing field

Where campaigners and businesses generally agree is on the need for greater standardisation in how healthier food is defined – work that is currently being progressed by the global Access to Nutrition Initiative. Heinze says Nestlé “would really welcome a level playing field”, while Unilever last year called for the industry and stakeholders to work together to create an industry-wide standard nutrient profiling model.

Toop says when businesses set their own bespoke targets, it makes it harder to assess and compare progress across the sector. “It’s really important for consumers and investors that there is a consistent way of setting targets and defining ‘healthier’,” he adds.

The UK government looked all set to create that level playing field domestically when it launched its Food Data Transparency Partnership (FDTP) in last year’s food strategy. The plan was to make it mandatory for large businesses to publicly report against a consistent set of health metrics, but the FDTP has since been made voluntary and is now industry-led.

Toop describes the u-turn as “very disappointing” and is concerned many businesses simply won’t commit to a voluntary scheme.

In the absence of government leadership on health reporting and targets, fmcg suppliers have started drawing their own lines in the sand. So the debate over who is doing the most to tackle obesity is unlikely to be resolved any time soon.