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Sugar in fizzy drinks and food came under fresh attack from scientists on both sides of the Atlantic this week in an escalating public health debate about the link between added sugar and mounting global health problems.
A growing number of scientists and public health authorities are putting pressure on food and beverage companies to reduce added sugar – sugar that does not occur naturally – which they say is overused to help sales but contributes to problems of obesity, diabetes, heart disease and cancer.
For highly profitable food and drink multinationals, the challenge is to absorb these pressures without threatening their business models and losing out to newer, more health-focused companies.
“Reducing or removing sugar has a host of complications for the food industry, including taste, formulation, texture, regulatory, labelling, etc,” said Charles Mills, analyst at Credit Suisse.
The lack of conclusive proof linking added sugar to disease is beginning to be eroded. Laura Schmidt, professor of health policy at the University of California, San Francisco, said this week: “We are in the midst of a paradigm shift in research on the health effects of sugar, one fuelled by extremely high rates of added sugar overconsumption in the American public.”
The World Health Organisation projected a 75 per cent increase in annual cancer cases over the next two decades in a report on Monday that linked the causes of cancer to lifestyle.
It has called for higher taxes as “an effective way to control and reduce the consumption of these products.”
So far the industry has broadly avoided extra regulation and tax through voluntary deals. But the growing body of research on sugar could push governments facing escalating healthcare costs to use taxes or step up regulation to force through changes in eating habits.
Such moves are not necessary, according to the industry, which says that it has been reducing fats, sugar and salt from its products.
Nestlé, the world’s biggest food group by sales, says it reduced sugar in its products overall by 30 per cent over the 10 years to 2011. Last year it cut saturated fat in its Kit Kat wafers 11 per cent.
Unilever, the world’s biggest ice-cream maker by sales, has a target of lowering sugar in its tea-based drinks by 25 per cent by 2020.
These promises are hard to measure, says Action on Sugar, a UK campaign group formed last month. Having successfully campaigned for salt reduction in the UK, it is lobbying the government for a sugar reduction target in drinks and foods – including soups, pasta sauces, baked beans and bread – of 30 per cent over three to five years.
The industry says the focus on sugar is exaggerated and that other factors, such as sedentary lifestyles, are a big factor in expanding waistlines.
“Our portfolio includes chocolates, candies and gum,” said Hubert Weber, head of Europe for Mondelez, which makes Oreo biscuits, and Cadbury chocolate. “Most cultures have a traditional between-meal eating moment. I don’t think we should demonise a behaviour that is widespread and rooted in tradition.”
Simon Litherland, chief executive of Britvic, the UK producer of Fruit Shoot, Tango and a bottler for Pepsi, said: “The causes of obesity are far more complex than simply the amount of sugar a person consumes. Blaming one ingredient or one set of products is misguided, particularly when soft drinks comprise only 3 per cent of calories in the average diet in the UK.”
Consumer behaviour affects sales – concerns about health have contributed to a downward trend in fizzy drink sales since 2010.
“There’s no question that US beverage stocks have been underperforming relative to the rest of the consumer staples stocks, and we still don’t know if they can figure out a way to deal with the public health concerns,” said Ali Dibadj, analyst at Bernstein.
Sales of zero calorie drinks made with artificial sweeteners are also falling in the face of health trends. PepsiCo and Coca-Cola have reduced their dependency on fizzy drinks by diversifying into healthier drinks such as flavoured waters and fruit juices.
Some analysts predict tough times ahead for artificial sweeteners. The UK’s Tate & Lyle, which makes sucralose, is also working on natural alternatives.
“Sucralose is zero calories and 600 times the equivalent sweetness of sugar,” said Robert Dickinson, analyst at Citigroup. “But increasingly companies want to put ‘natural’ on the label, which means no artificial sweeteners.”
Stevia, a fast-growing sweetener, has the advantage of being natural – but tastes like liquorice. “It’s relatively more expensive and doesn’t mirror the taste of sugar,” Mr Dickinson said. Coke used stevia to sweeten Sprite in France but sales were down last year – albeit in a falling market.
Action on Sugar says consumers will get used to less sweetness if sugar is reduced gradually – without adding sweeteners.
For manufacturers, taking sugar out is not as simple as it sounds – sugar adds bulk and texture, not to mention taste.
“Reformulating products does have cost implications, but nothing material – the issue is more about avoiding any compromise on taste that could lead to a loss of sales. That’s why finding a non-calorific substitute for sugar has been the holy grail for decades,” Mr Mills said.
The large food and beverage producers are pouring money into this quest – the research and development budget of Nestlé alone stood at SFr1.54bn ($1.7bn) in 2012.
For the time being, the limits of the compromise between calorie-reduction and taste have been reached, according to Mars.
The US confectioner reduced the weight of its Mars bars in the UK by 12 per cent and Snickers bars by 17 per cent in December – without altering the price – to meet its promise of getting calories in the chocolate bars down to a maximum of 250.
“Having taken product reformulation as far as we can for now without compromising the great taste, we have reduced the portion size,” Mars said.
Coca-Cola is set to axe its two-litre bottles in the UK next month, replacing them with 1.75-litre bottles at a price that will work out 3p a litre higher, which the company says reflects production costs.
Shrinking portions are welcomed by public health lobbyists, some of whom say the food and drink industry’s big mistake was to have got consumers used to outsized portions.
Simon Capewell, professor of public health at the University of Liverpool and a member of Action on Sugar, calls sugar “the new tobacco”. He is convinced the industry will respond to the public health pressure.
“Sugar is recognised as a hazard to health. We are pushing at an open door – there is a real feeling of zeitgeist,” Prof Capewell said.