Last updated: April 25, 2014 11:23 am

Sugar: Drastic measures

Food and drink companies are resisting stricter regulation in emerging economies that threatens to slash profits

Weighty issue: a 14-year-old who weighs 141kg gets a check-up at the Children’s Hospital in Mexico City

Beads of sweat glisten on the burly shoeshiner’s brow as he works at his stand in a busy square outside a Mexico City metro station. “I love soda,” says Raúl Valverde. “It just tastes so much better than water. I used to drink 600ml to 1 litre a day.”

But after finding himself overweight and 40 years old, Mr Valverde has decided to go on a diet. This means no more fizzy drinks. “Being overweight is uncomfortable and is going to have an impact on my health, though fortunately I’m not diabetic – not yet.”

For multinational food and drink producers, Mr Valverde’s weight, and that of millions of people like him, has become a pressing problem. Mexico vies with the US as the country with the world’s fattest population. It is also the second-largest consumer of carbonated drinks per capita.

To combat its obesity crisis, the Mexican government this year became one of a handful worldwide – and the biggest emerging market – to slap a tax on full-calorie soft drinks.

Emerging economies such as Mexico are the fastest-growing source of demand for many of the big food and drinks companies. If other emerging markets, in which advertising restrictions and regulations typically have been less onerous than in mature markets, follow Mexico’s lead, it could deprive them of growth opportunities as they face intensifying pressure from health authorities in developed markets.

Another big step to curb sugar consumption was taken last month by the World Health Organisation, which sets global nutrition standards. It halved its recommended daily sugar intake in new draft guidelines put out to consultation.

The UN body’s recommendation of “ideally” limiting sugar to 5 per cent of daily calories is equivalent to six teaspoons of sugar a day. By his own admission, Mr Valverde used to drink the equivalent of between 18 and 27 teaspoons in fizzy drinks alone.

Health officials and a growing number of doctors worldwide have converged on the role played by sugary drinks and sugar added to food in feeding what the WHO describes as an obesity epidemic.

“Sugar has become the new tobacco,” says Simon Capewell, professor of clinical epidemiology at Liverpool University, one of the founders of Action on Sugar, a UK campaign group formed in January. “Everywhere, sugary drinks and junk foods are pressed on unsuspecting parents and children by a cynical industry focused on profit not health.”

That is a charge the big producers, such as Coca-Cola, PepsiCo, Nestlé and Unilever, deny. But their fear is that, like the tobacco industry decades ago, they will face greater regulation and taxation, to say nothing of the stigma attached to their brands.

The industry says sugar is being unfairly demonised, arguing that lack of exercise and overall calorie consumption are to blame for growing obesity rates.

Paul Polman, the chief executive of Unilever, the world’s biggest ice cream maker by sales, says: “The issue is not about who shouts the loudest. It’s that the challenge is very big and complex and has to be solved holistically.”

There is nothing new about the fight between “big food” and consumer groups. One reason why sugar has ended up being so prevalent in processed food is because it was used, along with high-fructose corn syrup, to replace fats when they faced a health backlash in the 1980s. Nor is obesity a new problem; the WHO has been calling it an epidemic for at least a decade.

But a number of developments have combined to push sugar up the health policy agenda with implications for food industry trends for years to come.

The amount of scientific research linking sugar intake with obesity has increased. And governments are waking up to the rising costs of illnesses such as diabetes and cancer that have increased alongside obesity.

“The discussion on sugar linked to dietary concerns has been gathering momentum,” says Stefano Natella of Credit Suisse. “The related global healthcare costs are at an all-time high – the bill is $500bn or over 10 per cent of global healthcare spending – as are obesity and diabetes levels.”

The number of obese people worldwide has climbed from 300m a decade ago to 500m, putting pressure on already strained public health purses.

But obesity is no longer a rich nations’ problem. “What has changed is that the majority of people who are overweight or obese today can be found in the developing, rather than the developed, world,” the UK’s Overseas Development Institute said in January.

Health officials now apply the term “malnutrition” to the obese as well as the overly thin. “Obesity and micronutrient deficiency frequently overlap – a person can suffer from both, they are both forms of malnutrition,” says Kostas Stamoulis, an economist at the UN’s Food and Agriculture Organisation.

Consumers, too, have become more health-conscious and are voting with their wallets. This is one reason why sales of sugary fizzy drinks in the US have been falling for a decade. More recently, sales of zero-calorie colas have started to drop because of concerns about artificial sweeteners such as aspartame.

Sales of some types of packaged food, including tinned fruit, frozen puddings, canned spaghetti and frozen pizza, have also stalled.

“The clear patterns of growth in healthier, fresher food categories at the expense of more heavily processed foods provide some fairly strong evidence that this is a structural shift in consumer attitudes,” says Alexia Howard, an analyst at Bernstein Research. Social networks, she adds, have helped disseminate food-related concerns.

For the first time in two decades, the US Food and Drug Administration overhauled food labelling in February, demanding more prominent information about added sugar. The action was needed, it said, to take account of the “latest scientific information, including the link between diet and chronic diseases such as obesity and heart disease”.

So far the industry has staved off burdensome regulation but it is facing new threats.

When Michael Bloomberg tried to ban large “supersized” sugary drink portions as mayor of New York in 2012, the US beverage industry took him to court and won. Now, a number of US states, including California and Illinois, have proposed soda taxes.

The WHO faced the fury of the sugar lobby in 2004 with a guideline limiting sugar intake to 10 per cent of daily calorie consumption, while the lobby preferred 25 per cent. The WHO held the line, prompting the Sugar Association, the US industry group, to warn it could ask its supporters in Congress to challenge US funding contributions to the UN-affiliated organisation, although it denied making any such threat.

. . .

The food and drink industry points to voluntary pledges to reduce sugar, salt and fat, arguing this mitigates the need for more regulation.

Nestlé says it cut the overall sugar content of its products by 30 per cent between 2001 and 2011. It has a big research budget aimed at reformulating products to make them healthier.

Debra Sandler, head of Mars Chocolate, North America, told a conference last year that the industry needed to “step-up” in addressing concerns about obesity: “If we don’t [act], I worry that someone else will do it for us . . . Don’t wait for regulators to tell us what to do.”

Coca-Cola last year introduced Coca-Cola Life, complete with natural-looking green packaging. The soda is flavoured with stevia, a natural sweetener, and has half the sugar and calories of a regular Coke. The launch was limited to Argentina and Chile but Muhtar Kent, Coke’s chief executive, said it would be rolled out to more countries this year because “it has shown great promise in recruiting new and lapsed consumers into the sparkling category”.

Pepsi is working on a similar drink this year. As Indra Nooyi, PepsiCo’s chief executive, said last year of diet drinks using artificial sweeteners: “We are seeing a fundamental shift in consumer habits and behaviours.”

The industry’s biggest challenge is cutting sugar without altering taste. Mars, the US confectioner, used the blunt instrument of cutting the weight of its Mars and Snickers bars to meet its promise of reducing calories to a maximum of 250 a bar in the UK in December.

“Having taken product reformulation as far as we can for now without compromising the great taste, we have reduced the portion size,” says Mars, which did not, however, cut the price.

. . .

Such voluntary measures do not go far enough, says Graham MacGregor, a cardiologist at the Wolfson Institute of Preventive Medicine in London.

“Every company can do something different with their calorie pledge, so it’s impossible to measure and has no effect,” he said.

Prof MacGregor spearheaded the UK’s successful salt-reduction plan with the UK’s Food Standards Agency. Salt added to processed food dropped gradually over a decade by 30 per cent and British consumers now eat 15 per cent less salt than previously.

He wants to repeat the success with sugar. The key, says Prof MacGregor, is to reduce the levels gradually so consumers will be less likely to notice the change.

“Sugar added to food and drink has little or no nutritional value and contributes to calorie intake,” says Prof MacGregor, calling on the UK government to set sugar-reduction targets. His aim is to reduce the amount of sugar in food products by 20-30 per cent over five years.

During the gradual reduction, people would be consuming 100 calories less a day “without even noticing the difference in taste”.

Prof MacGregor is pushing at an open door. Dame Sally Davies, England’s chief medical officer, told lawmakers in March that more education was needed to get people to understand “how calorie-packed fruit juices, smoothies, colas and carbonated drinks are”.

She has called for regulation and leaves open the possibility of a sugar tax. Otherwise, she warned: “We have a generation of children who, because they are overweight and lack activity, may not live as long as my generation. They will be the first generation who will live less.’’

One thing is clear: the sugar issue is already shaping views of the industry.

Moody’s, the rating agency, in March cited the Mexican government’s 1 peso (8 US cents) soda tax as a reason for lowering its outlook for the global beverage industry from positive to stable.

Back in Mexico City, Elpidio Gayoso, a 67-year-old domestic worker: says: “I used to drink one litre of soda a day but I stopped because of diabetes. If it hadn’t been for the doctor, I would have cut back anyway because of the cost.”

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Food labelling: A dizzying array of guidelines

It should be simple, says Michelle Obama. “You, as a parent and a consumer, should be able to walk into your local grocery store, pick up an item off the shelf and be able to tell whether it’s good for your family,” said the US first lady as she unveiled an overhaul of US food nutrition labels in February.

But bringing change to food labelling has proved far from simple mainly because the rules are neither consistent nor detailed enough.

Take the World Health Organisation’s new draft recommendation that “free” sugars should “ideally” not exceed 5 per cent of daily calorie intake. It defines free sugars as “added” sugar – sugar added by manufacturers to food or drink to make it tastier – and sugar that is naturally present in fruit juice, honey and syrup. It excludes the “intrinsic” sugar that occurs naturally in fruit.

These distinctions are open to abuse, say health advocates.

The current WHO advice is 10 per cent (5 per cent is a draft ideal that is out to consultation). The UN agency has a separate guideline that people can eat another 10 per cent of intrinsic sugar found in fruit and vegetables, which is aimed at encouraging healthier eating.

Some fizzy drink manufacturers add the two together to make the claim that the 35g of sugar in a 330ml can represents 39 per cent of an adult’s daily recommended total intake of sugars, even though the drink contains added sugar only.

This will no longer be possible under the Obama administration’s labelling proposals, which require added sugar to be specified.

Added sugar contributes an average of 16 per cent of total calories in US diets, according to the agriculture department’s 2010 Dietary Guidelines for Americans.

Naturally occurring sugars usually come along with other nutrients, whereas added sugar is empty calories.

Additional reporting by Jude Webber in Mexico City

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Letters in response to this report:

Don’t swallow all the spin on sugar / From Prof Dennis Bier

Sugar is the scapegoat for a broader problem / From Mr Mark Carr

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