Brazil’s unwanted growth

Dora Ris pushes hard to shift her blue-and-white cart uphill in the rising morning heat, dodging potholes and cars to bring biscuits, cakes and sweet yoghurts directly to the doors of her Brazilian customers. Every day, she paces the Baruari district of Osasco, a ramshackle collection of self-built houses, car repair workshops and truck stops on the outskirts of São Paulo. She offers a taste of western consumerism and aspiration to the fast-growing working-class population, sweetened by carefully targeted products, free gifts and 15 days’ credit.

“I have a lot of customers who don’t care about their food, about what or when they eat. I always tell them that these products are good,” she says as she collects an outstanding payment from one of her regular customers. She dangles biscuits in front of an eager-eyed young boy on the doorstep, and hands over a free plastic lunchbox as she clinches a fresh sale of yoghurts after a 10-minute chat.

Ris is one of 8,000 frontline female “resellers” recruited to an innovative programme called “Nestlé ate voce” (Nestlé comes to you), which has brought welcome extra income to her and a huge surge in sales to the Swiss consumer products giant. But she and her customers are also participants in a broader battle over diet, which is pitting the multinational’s approach – and that of other food and drink companies in Brazil – against some of the country’s leading public health specialists struggling to reverse a rising epidemic of obesity.

Nestlé claims its tactics help all its “stakeholders” by creating jobs, responding to rising demand and respecting regulations, while tapping into lucrative new sources of growth. It has sparked imitation by its rivals and fact-finding missions by executives from its own subsidiaries in other emerging markets. But its critics see the rapidly expanding network of micro-distributors as a cynical and relentless marketing effort that is overturning traditional lifestyles. They draw parallels with the controversial anti-breastfeeding baby milk powder campaigns Nestlé championed in the developing world in the 1970s.

In the past 30 years, the US, the UK and many other parts of the industrialised world have experienced a fast-growing epidemic of obesity. The newer economies – from the Gulf states to China – have even more recently and rapidly observed a jump in the numbers of children and adults exceeding a healthy bodyweight. Brazil is no exception. It has seen a sharp jump in the proportion of its population that is overweight, imposing an ever greater burden on individuals and substantial costs on the national health system. But the country’s public health advocates are fighting back, arguing for some unusually innovative and aggressive official measures, from healthier school meals and greater breast-feeding to taxes and tougher warnings on unhealthy food products. That has triggered growing interest from their peers around the world – and concern from the food industry.

Late last October, a handful of people filed into an ordinary-looking meeting room on the fourth floor of the rectangular concrete building of the ministry of health in Brasilia for an extraordinary gathering. Senior representatives of pharmaceutical companies from around the world sat on the blue seats arranged in neat rows to prepare for an unusual tender, numbered 177. The participants, ranging from Biocon in Bangalore to Eli Lilly in Indianapolis, battled against others’ ever-lower prices in a “Dutch auction” for the world’s single largest competitive tender for insulin, the product needed by diabetics to control their blood sugar levels. Novo Nordisk, based in Denmark, clinched the contract with the cheapest bid to supply enough of its product to the government to support one million Brazilian patients in 2011.

While Brazil prides itself on a basic free healthcare system available to all, patients have to pay out of their own pockets for most of the medicines prescribed by doctors. But a number of basic, essential drugs, and some much more costly ones judged necessary to meet national priorities – such as anti-retrovirals for HIV – are bought and distributed free by the government. Insulin is another such example, a measure of rising official concern and the need to respond as the burden of diabetes closely follows escalating obesity, bringing with it the risk of complications from cardiovascular disease to foot ulcers. “It’s the result of junk food and lifestyle, especially in the north-east of Brazil where things are very bad,” says Federico Renzo Grayeb, a slim, elegantly dressed Argentinian who heads Novo Nordisk’s Latin American operations from São Paulo.

Obesity was long viewed as a problem of affluence, but traditionally poorer yet fast-growing countries such as Brazil are catching up. “We have a scenario that is very worrying. Half the population is overweight,” says José Gomes Temporão, Brazil’s health minister until December last year and a scientist, who, with his trim form and advocacy for sex as a way to keep fit, seems the antithesis of the problem. “The population is getting older, the main diseases are chronic and the standard of food is changing drastically. The structure of the family is evolving, women are working more and there is a rise in prepared foods. There is a new lifestyle, with TV, the internet and lack of exercise, while violence stops kids going out on the streets.”

Dr Carlos Monteiro, a tall, earnest academic, was one of the first to identify the trend. He began his career as a young paediatrician in the 1970s, working first in the Amazon and then in a poor suburb of São Paulo, where many of his patients suffered from infectious diseases and malnutrition. His conversion came during the early 1990s, when he first learnt about the “nutrition transition” – a shift from malnourishment to over-nourishment in developing countries – during a stint at the World Health Organization’s headquarters in Geneva. He switched focus and has tracked the growth of obesity in Brazil ever since, as he built his career at the University of São Paulo’s School of Public Health.

His research shows an explosion in the past two decades of the number of people above the internationally accepted healthy norm of “body mass index”, a widely used ratio of weight relative to height. Since 1990, the proportion of Brazilian men over the age of 20 who are overweight has more than doubled from 20 per cent to 50 per cent; with those who are obese up from 5 per cent to 12 per cent. For women, the figures last year were 48 per cent and 17 per cent. On current trends, he forecasts that in little more than a decade, Brazil will reach world-beating US obesity levels of 34 per cent for men and 36 per cent for women.

Brazil has so far suffered less than other emerging countries such as Mexico, which rivals its US neighbour in obesity driven by fast-food culture and record-breaking consumption of sugary fizzy drinks. Monteiro argues his country was traditionally shielded by its strong food culture, based on protein-rich beans and rice. He speculates that its history of immigration has helped protect its people through greater genetic diversity, while the “body beautiful” beach culture on the eastern seaboard may also have helped keep people trim.

Yet changes in diet and lifestyle are bringing about the same inexorable pattern already underway among Brazil’s neighbours in Latin America and beyond. One factor has been the recent accelerated economic boost to the long-neglected poor. Former President Luiz Inácio Lula da Silva’s “Bolsa Familia” social programmes provided financial support for those on lower incomes, reducing inequality but also creating a new aspirant class with money to spend.

The result has been an intensifying shift away from the older staple diet towards what Monteiro dubs “ultra-processed”, energy-dense food with high levels of salt, sugar and fat. He winces as he shows a picture of Lula in 2009 inaugurating a factory opened by Nestlé in the north-east of the country for Maggi instant noodles.

“They are nothing like noodles,” he says. “They look like pasta but [some varieties] contain a lot of fat and salt. It is very cheap packaged food, although you could make your own much healthier soup for a fraction of the price. Healthy things are being replaced by Nestlé. They are not replacing other unhealthy things with their products.”

Monteiro recalls being on the receiving end of the company’s marketing campaigns himself in the past. When he was still a paediatrician, he was offered baby milk powder for his patients. “I remember Nestlé came to us and gave us one year’s supply for each baby.” Such practices, accompanied by intensive advertising, sparked wide-ranging criticism of the company across the world.

The availability of baby formula encouraged young mothers to abandon breastfeeding early, depriving their children of its healthy ingredients and promoting reliance on a costlier and, arguably, less nutritious powdered alternative, which was often mixed with unclean water. Nestlé, like its competitors, complied with tough Brazilian legislation in the 1980s to ban marketing of formula for children under the age of two and to introduce health warnings.

In Brazil today, the company is actively promoting a broader range of products in unusual ways. Aside from its network of micro-distributors and resellers, last summer it launched “Nestlé comes to you onboard”, a floating supermarket that travels to isolated communities along the Amazon River, stocked only with the company’s goods. The boat includes factory-made ice-creams, which substitute for artisanal ones produced locally. More recently, Monteiro’s ire was sparked by vending racks suspended next to the drivers at the front of buses in Rio de Janeiro. The trend of such marketing efforts – from multinationals such as Coca-Cola and Dr. Oetker to Brazilian groups such as Itambé and JBS Friboi – is sharply upwards.

But if direct marketing and aggressive provision to consumers is one aspect of the drive to encourage sales, Monteiro is just as worried about the influence of industry via medical academics, nutritionists and doctors. “Paediatrics is heavily funded by the food industry,” he says. He cites numerous academic colleagues who have received research grants to publish articles on nutrition sympathetic to industry products, and talks of the generous financial support offered, which covers not only participation fees at scientific conferences, but also business-class travel, luxury hotels and high-class meals throughout. And in his own faculty, he laments, “industry hires our best students”.

Sitting at a desk in Nestlé’s corporate headquarters in a large tower block in central São Paulo, Juliana Lofrese proudly lays out a series of flash cards used to train resellers like Dora Ris. One shows a picture of raw meat, another some beans, the third a vegetable. Then she brandishes two more cards, bearing images of different Nestlé products. The talking point is that the latter products contain more iron. “We are not doing this to argue for our products, but to put things into context,” she stresses. “We say a healthy diet should contain these different things.”

Lofrese is one of nine trained nutritionists in the company’s wellness strategic unit. “We work with nutrition in a marketing way, but ethically,” she says. “Chocolate is pleasurable, and it can be good for the health with moderate consumption. It’s our responsibility to show consumers how to use our products. We are opinion leaders. We have to make every Nestlé employee believe in the concept. Our saleswomen use their jobs to improve quality of family life. The focus of our training is not the products but how they can be a driver of quality of everyday life.”

For Lofrese and her colleagues, Nestlé is not driving the trend towards more unhealthy processed foods in Brazil, but following and even moderating it by responding to existing consumer demand pattern while respecting all regulations and offering healthier products than its rivals. “Our Neston wholegrain cereal has a lot of sodium in it, but we are reducing the quantity,” she says. “And we have been cutting back the sugar content in our products over the years.”

Company employees speak in the language of marketing. Their appetite is increasingly whetted by the “C, D and E” social classes at the “bottom of the pyramid”, whose rising income levels in the past few years have created new sources of growth for the company. Nestlé has swiftly responded, selecting 140 of the 1,500 total products in its range to sell via a network of “micro-distributors”. Each in turn recruits dozens of commission-based freelance door-to-door resellers like Ris, incentivising them with mobile phones, bicycles and river cruises for the best performers. Special promotions for customers include free school backpacks and cheap teddy bears for those who buy.

Some products are bundled with other goods so that the price of individual products is difficult to compare with those on sale in shops. Others are modified or entirely new, often containing nutritional supplements designed to gild the rhetoric of healthy eating. Ideal, for example, is a powdered milk enhanced with extra iron and vitamins. La Frutta is a powdered fruit drink that is mixed with water; it contains natural fruit, with no dye or artificial flavours.

“Our research shows that 82 per cent of CDEs use powdered juice because it’s cheaper than fresh fruit. One orange is the same price as more than one litre of juice,” says Lofrese. “I know it’s not the best thing, but it’s cultural. We try to stress that they should enrich the mix with natural juice, just as we say with meals you should always add in any fresh vegetables or fruit you have. We encourage people to have fresh fruit for dessert, or only a little piece of pudding.”

The results are paying off for Nestlé. “Bottom-of-pyramid” sales were R$1.3bn of a total R$16bn revenue in Brazil in 2009, and grew at 27 per cent over 2008: twice the national average and four times the global rate. “It’s a huge opportunity,” says Alexandre Costa, who runs the programme and pioneered the floating supermarket. “If you’d seen the results, you would do more immediately. These people have access to radio and TV. We are proud we get them cheaper products on a regular basis. They say Nestlé is the only one who has created this for us.”

Alongside the micro-distributors and floating supermarket, Costa has masterminded an itinerant cinema that offers free biscuits to customers who bring a proof of previous purchase; and health and nutrition events for school children, with its logo prominently displayed. He dismisses any suggestion that he is driving Brazil’s obesity epidemic: “Our standards are becoming tougher and tougher. To launch a product I have to show I am not doing bad things to the consumer. Hey, I’m very healthy and I eat chocolate like crazy.”

In the shadow of an outcrop of Sugar Loaf Mountain in Rio de Janeiro, a mid-morning bell summons children at the Estácio de Sá school back inside from their playground break. There are no vending machines selling sweets, biscuits or soft drinks; and in one classroom, a university nutrition researcher brandishes an empty packet of McDonald’s french fries as she takes a session on food ingredients. In the adjacent canteen, a local artist has painted giant smiling pictures of fruit and vegetables on the walls, while young students eat the only lunch option available to them: rice, beans, chicken and potato, followed by fruit.

“Rio offers one of the biggest free, universal, basic school meal programmes in the world,” says Inês Rugani, head of the city’s nutrition policy unit. Originally conceived as a way to feed workers and their children in the 1930s with products from the US agro-industry, it has more recently become a bulwark against imported foodstuffs and a way to offer a balanced, traditional diet. In 2009, a federal law was passed requiring a third of all ingredients in feeding programmes to be provided by local farmers. In Rio, the authorities have banned vending machines in government-supported schools.

The situation remains far from perfect. “Brazilians like sugar and salt,” Rugani sighs, as one of the school cooks describes bringing extra salt to help season the children’s food because she believes the official recommended amount is not enough. Milk is provided in the morning, but sweetened with vanilla or chocolate powder. And the canteens have their limitations: lunch is served during the morning for many children – too early to fill them up for the day; many schools have ill-equipped kitchens; and the influence of the cook on the school’s administration is limited. In cities such as Rio, finding sufficient local farming to meet the legal requirements is also difficult.

Yet progress is being made. The children are among a new generation that has benefited from the aggressive Brazilian campaigns to promote breastfeeding, slowing the growth in obesity among the young. Programmes have been launched to ensure mothers can sleep alongside their children in maternity wards, and to set up a “bank” of baby milk donated by young mothers for others who cannot lactate because their children were born prematurely. In the past three decades, the average duration of breastfeeding has risen from less than three months to 10 months.

Anvisa, Brazil’s food and drug regulator, has followed many of its western counterparts in requiring detailed lists of ingredients on packaged food. It has already toughened the regulation on advertising foods for children, although it has been limited in its listing of the sugar content without broader agreement from Mercosur, the Latin American trade bloc. The regulator has also sponsored “Trilha da saúde” or the “Path to health”, a board game for school children, designed to provoke critical thinking around healthy food.

Still more ambitious campaigns lie ahead. Since 2006, consumer groups and nutritionists have been pushing a draft health warning for processed food. “This product has a high sugar content that can produce obesity if consumed in large quantities,” reads one version. There has been sharp resistance from the food industry, which last year obtained an injunction halting its introduction. “In our opinion, these are illegal and unconstitutional,” says Edmundo Klotz, head of Abia, the Brazilian food industry association. “We oppose them because of the need for freedom of speech, and because we are already doing what is necessary to solve the problem in removing products dangerous to health.”

Gomes Temporão supports the idea of food label warnings, and while still health minister raised the prospect of a tax to increase the price of unhealthy food products containing excessive salt or sugar. But it was never introduced. The activists are concerned that his replacement has shown little sign of taking a confrontational stance with industry.

As Rio de Janeiro prepares to host the World Nutrition Congress in 2012, campaigners like Monteiro and Rugani can only hope they will be able to showcase the introduction of more aggressive public health controls to their foreign colleagues. Meanwhile, Nestlé and its peers continue to thrive, and – regardless of where the cause lies – obesity to escalate.

Andrew Jack is the FT’s pharmaceuticals correspondent

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