Report: Healthier products drive healthier profits
Oct. 14, 2011
by Eric Schroeder
WASHINGTON — Companies that offer food and beverages with “better-for-you” attributes perform better financially than companies that don’t, according to a new report from the Hudson Institute, a policy research organization. The Robert Wood Johnson Foundation also provided support for the report, “Better-For-You Foods: It’s Just Good Business.”
As part of the study, which was conducted during the five years spanning 2007 to 2011, researchers looked at sales and other financial metrics for 15 major national and international food and beverage companies, including General Mills, Inc.; Nestle S.A.; Campbell Soup Co.; and Kellogg Co.
“Better-for-you” products were classified as no-, low- and reduced-calorie items, such as flavored waters or diet sodas, as well as products perceived to be healthier, such as yogurts and whole grain cereals. The study found “better-for-you” items drove more than 70% of sales growth during the period despite making up only about 40% of total sales.
“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.”
The Hudson Institute said it assessed whether or not sales of “better-for-you” foods and beverages affected several key business performance measures, including operating income, share price appreciation, return to shareholders, company reputation and favorability rankings.
According to the study’s findings, in addition to the impact on sales growth the survey found that companies with a higher percentage of “better-for-you” sales:
showed a 50% growth in operating profit, as compared with just over 20% growth for other companies;
outperformed the S&P 500 Index by 60 points on average, compared with about 40 points for the other companies;
delivered returns to their shareholders that were 15 percentage points higher than those generated by companies with lower sales of “better-for-you” items; and
recorded reputation rankings that were more than 30% higher than those of companies with lower sales of “better-for-you” items.
“We hope this report inspires companies to do more to create and sell truly healthy products,” said James S. Marks, M.D., M.P.H., senior vice-president and director of the Health Group at the Robert Wood Johnson Foundation. “We still have a way to go, but we believe we can have healthy companies and a healthier country. We need both.”
For the full report visit www.obesity-solutions.org.