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October 13th, 2011
12:01 AM ET

Healthier foods earn healthier profits

Foods that are good for the waistline are also good for the bottom line.  That’s the conclusion of a report out Thursday from the Hudson Institute, a non-partisan policy research organization.

The Hudson Institute’s Obesity Solutions Initiative found the food and beverage companies with the most “better for you” products grew faster, had higher profits and superior shareholder returns over the last five years.

Hank Cardello, a former food company executive and lead author, said the report was the first to look at profitability of healthier products in terms CEOs can understand.

“It’s always been a moral argument as opposed to a business argument why it makes sense to move in that direction,” Cardello said.

The report analyzed 15 of the largest food and beverage companies, including Coke, Pepsi, General Mills, Kellogg’s, General Mills, Nestle, Dannon, Nabisco and Campbell Soup.

On average, 38.6 percent of the sales were from foods and beverages deemed “better for you.” The remaining foods and beverages were classified as “traditional.”

Companies with above-average sales were compared with those below average. The companies that sold more “better for you” products reported almost double the profit margin and stock performance. “Better for you” products also accounted for almost three-quarters of sales growth.

But  Michele Simon, author of "Appetite for Profit: How the Food Industry Undermines Our Health and How to Fight Back," said the growth figures give a false impression.

“The higher growth is usually because these are newer products, which tend to do better in growth figures, so it’s somewhat misleading to even say ‘better for you’ products are growing faster when they may just be newer,” Simon said in an e-mail.

The report categorized  “better for you” products as “lite foods” such as Nestle’s Lean Cuisine, Coca-Cola Zero and Tropicana 50 and “good foods,” such as General Mills’ Cheerios, Dannon Yogurt and Campbell’s Tomato Soup.

“Traditional foods” included Kellogg’s Frosted Flakes, Hellmann’s Mayonnaise, Coke and Tropicana orange juice.

Marion Nestle, a New York University professor and author of "Food Politics," said “better for you” is a relative term.

“Just because it’s better for you doesn’t mean it’s good for you,” she said. “What people should really be eating is real foods, not packaged foods, from a nutritional standpoint.”

Cardello said he hopes the report, underwritten by the Robert Wood Johnson Foundation,  will prompt companies to place more emphasis on “better for you” foods and beverages and accelerate development of more nutritious products.

“I certainly think it gives ammunition to C suites and their boards to move in this direction,” said Cardello, director of the Obesity Solutions Initiative. “We’re not saying walk away from what you have. We’re just saying as a growth mechanism, this is very enticing.”

The mission of the Obesity Solutions Initiative is to come up with practical, market-based solutions to the world's obesity epidemic.

The Hudson Institute did not release rankings of how the individual companies fared in terms of sales of “better for you” versus “traditional” foods and beverages.


soundoff (158 Responses)
  1. Andrew

    Tell that to the fast food companies that seem to make huge profits by selling fatty foods. The health foods can't make those kinds of profits. I know CNN wants us to think that, but look around, your local McDonald's owner is making great profits wherever you live, the same can't be said for your local health food operator.

    October 13, 2011 at 09:28 | Report abuse | Reply
    • RedinAustin

      I agree. Those places market "Better for you" foods, that are really, only marginally better for you than their usual junk. It's all about the marketing, my friend.

      October 13, 2011 at 13:09 | Report abuse |
    • Galina L.

      I lost 35 lb on a low-carb-high-fat food. I cook my own food, At McDonald when I travel, I just eat things without a ban no french-fries. Our health-food store sells a lot of organic junk-food like organic macaroni-and-cheese and some vegetarian nonsense like soy burgers. I don't think that cheerios are fit for human consumption. Eggs are perfect for breakfast.

      October 13, 2011 at 17:59 | Report abuse |
    • The_Mick

      @Galena – I went from 236 to 188 lbs on a low-fat high-carb diet called "The Pritikin Promise" which was big in the 1980s. Your high-fat and my high-carb diet only worked because they supplied less Calories than we burned. That's the ONLY way weight is lost. Today, it's recognized that high-carb or high-fat diets are NOT healthy for the long term and they, like other fad diets, are scams to some extent. Getting exercise during weight loss is also important: otherwise you're losing about 77% fat and 23% important muscle tissue. I've lost 8 lbs since May bicycling 2-3 days/week and that loss is ALL fat because I've actually been building muscle while doing it. As it's getting colder I bought "Just Dance II" for my Wii to add an aerobic workout.

      October 13, 2011 at 18:29 | Report abuse |
    • Galina L

      Mick, I disagree.Unfortunately, I have been on different diets all my life despite being quite physically active, even had to have a foot surgery 2 years ago due to overuse injury. High-fat diet is the first diet that worked . My doctor told me I am the only one of his patients who didn't not regain 20 lb weight loss 4 years ago, it is now 35 lb. I remember being hungry and miserable on low-fat diets all the time.. Small wonder – there is no essential carbohydrate, there are essential fats and proteins.Look how emaciated Clinton looks. I am 50 years old, full of vitality, no wrinkles.. Each time I eat to satiety now,.If at the same time I consume less calories , as you said, even better – means the low-carb-high-fat diet prevents overeating.. Ha, profits for the companies who produce "lite" foods on the rise together with the obesity rates – sounds logical for me.

      October 14, 2011 at 07:59 | Report abuse |
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    October 13, 2011 at 09:29 | Report abuse | Reply
  3. DyeDiet

    This is encouraging news. With over 7000 additives, 9 ubiquitous colorants, sugar everywhere and now artificial sweeteners everywhere Americans doomed to go down in the long run. I call this the Dye Diet and therefore started an educational website where I expose Risk/Nutrition reviews for the popular foods and drinks. You can see what is BAD and why and what is GOOD and why. Biggest part of what we eat and drink is awful... However if you are EDUCATED you can select descent foods even at Walmart, easily. This would slush obesity, diabetes, cancers, Alzheimer's, ADHD, depression etc. in America.

    October 13, 2011 at 09:40 | Report abuse | Reply
  4. Louise

    It depends on what their definition is of "healthy" though. I would say any product with anything fake in it is junk food – the word "lite" on the label isn't enough to call it "better for you" in my books.

    Plus I'm also not comfortable with them using the word "traditional" for the other junk foods in the study. There is nothing at all "traditional" about these pretend foods. "Traditional" is vegetables, fruit, meat, nuts etc.

    October 13, 2011 at 11:37 | Report abuse | Reply
  5. Inciteful

    From the consumer's viewpoint, I have long said that, quite literally, I cannot afford to eat "healthy." I prefer "healthy" food products, but my wallet does not. Junk food is considerably more affordable, perhaps for a reason.

    October 13, 2011 at 12:02 | Report abuse | Reply
    • RedinAustin

      What you are referring to is pre-packaged, convience foods. Try buying ingredients and taking the time to make the food yourself. You don't have to buy organic, free-range, etc. etc. Just buy real/whole fruits and vegtables, dried beans and lentils, real oatmeal (not instant), whole chicken breasts that you de-bone and skin yourself, and such. You'll find your grocery bill does go down and you'll be eating better too. And believe me you have the time to do it. My husband and I can do this while both working full time jobs, having a 7 month old son, keeping our house and yard in shape, and doing volunteer work. It just takes a little planning.

      October 13, 2011 at 13:00 | Report abuse |
    • Alan

      When you take your medical bills into account it is way more expensive to eat junk food. You pay more now or you pay much more later.

      October 13, 2011 at 20:24 | Report abuse |
  6. Alan

    I think Marion Nestle got it right!

    "Marion Nestle, a New York University professor and author of "Food Politics," said “better for you” is a relative term.

    “Just because it’s better for you doesn’t mean it’s good for you,” she said. “What people should really be eating is real foods, not packaged foods, from a nutritional standpoint.”
    "

    October 13, 2011 at 20:31 | Report abuse | Reply
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    Is it realistic and fair to call overly processed items that are created in a laboratory, food? Apples, oranges, lettuce, or chicken wings are food. And to call these overly processed foods "better for you" is an absolute hypocrisy. "Better for you" than what? A spiral bound note book probably has more nutrients and fiber than most of the things that come in a box, freezer, or drive thru that are deemed “convenience” foods. And why are they considered convenient? Because in the manufacturing process (are we manufacturing engines, or cooking pizza?!) they've been stripped of most nutrients, and the fiber, so they can be easily heated and eaten up. Unfortunately though, as a result eating, those "edible food like substances" only makes the eater sick. And being sick isn't so convenient.

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