Been to Germany lately? Every third child under age 12 and every fifth teenager there is overweight. How about Greece, land of the much-ballyhooed Mediterranean diet? More than 70 percent of adult men and women in that nation are above their ideal size. The Middle East? About 60 percent of the women in Egypt are overweight.
The problem of excess consumption has spread to every corner of the globe, except for pockets of Africa. The US, in other words, no longer enjoys a competitive advantage when it comes to corpulence.
Americans -- 61 percent of whom are overweight -- may take comfort in the fact that they are not the only ones packing on the pounds. But multinational food companies could soon find themselves carrying the increasing weight of the world upon their corporate shoulders.
For food companies, the stakes could be large. Last year, US companies exported 11.8 billion euros (US$13.22 billion at current exchange rates) of agricultural products to the EU, everything from cranberries and candy bars to cereals and sodas. It's not at all certain that corporations can satisfy shareholder hunger for growth and still fulfill demands by regulators to sell smaller portions and healthier foods.
Unhealthy exports
The message to consume less is hardly a capitalist notion. Food companies grow by selling to more people, or convincing existing customers to eat more. They don't have a lot of potential for expansion left in the US, said Marion Nestle, chairwoman of the nutrition and food studies department at New York University and author of Food Politics: How the Food Industry Influences Nutrition and Health (University of California Press, 2002). Because of that, she said, American companies have been exporting the salty, sugary foods they are known for and undermining the generally healthier eating habits of other countries.
Unlike the US, Europe has a tradition of regulating problems away. Chances are small that the Bush administration will threaten food companies with more regulations. In fact, the Food and Drug Administration recently made it easier for companies to make health and nutrition claims on food. The EU, on the other hand, proposed a directive last week that would make it much tougher for companies to make such claims.
David Byrne, the health commissioner for the EU, seemed to catch the food industry by surprise on Wednesday when he proposed the regulations, which would prevent companies from marketing a food as having a health or nutrition benefit if it was also high in salt, sugar or fat. Byrne has not yet completed the profile of what foods would be affected, so executives say it is too early to panic. The rules, if passed by the European Parliament, would go into effect in 2005.
Still, if Byrne has his way, the makers of most processed foods, from snacks to soups, may be barred from saying the products are nutritious.
WHO involvement
In March, the World Health Organization (WHO) issued a report that connected improper diet, along with a decline in physical activity, to a devastating rise in chronic diseases like heart conditions, diabetes, osteoporosis and cancer. By 2020, chronic diseases will account for nearly three-fourths of all deaths worldwide, the report said. This fall, the WHO will release a draft of recommendations to its 191 member states on how to address the problem, and it is expected to consider important issues for business, like nutritional labeling and marketing to children.
A result is that food companies, long thought to be recession-proof, are facing scrutiny by investors who are factoring in the risk of litigation and regulation in valuing them, according to a recent research report by the UBS Investment Bank.
"There is a slow, but clear, evolution of how regulators are looking at these issues," said Arnaud Langlois, vice president for equity research at J.P. Morgan Chase in London. The impact on food companies, he said, is not all negative.
"It doesn't change our view of the sector," Langlois said. "To meet consumer demand for healthier products, companies will have to reposition and upgrade their product portfolio. We believe that consumers are prepared to pay a premium for health coupled with taste."
Positioning perk
How companies react will depend in part on how well positioned they are in the market to offer healthier choices. Companies with the most to lose are those that mainly sell foods or drinks that are high in fat, sugar or salt -- like Cadbury Schweppes of Britain and Hershey Foods and McDonald's of the US -- according to a report by J.P. Morgan Chase. The report argued that companies that are more diverse in their food lines, like Nestle of Switzerland, would find it easier to adjust.
Even foods that are considered healthy, like cereals, could be negatively affected by the European regulations. Under the proposed EU directive, products cannot be labeled as healthy, even if they contain fortified vitamins and minerals, if the products have a high amount of sugar.
If put into effect, that change would have an impact on a company like Kellogg, based in Battle Creek, Mich. Some of its cereals would meet the proposed guidelines; others, especially those popular to children, would not. Aileen Thompson, European director of Kellogg Management Services in London, said the company would not comment on the impact of the proposed rules.
Others companies, like Nestle; Kraft Foods of Northfield, Illinois; Unilever, the British-Dutch conglomerate; and Groupe Danone of France, are already repositioning themselves and their research and development departments to offer foods that contain healthier oils and use less salt and sugar.
But it takes time to develop the new products, and companies cannot afford to satisfy regulators but fail consumers. "That's death," said Francois-Xavier Perroud, vice president for communications at Nestle.
Some companies are already reacting to the threat of lawsuits and more regulations. In early July, Kraft said it would stop promoting its products in schools and make smaller portions. It made the announcement after it was the target of a lawsuit in May by a San Francisco lawyer who wanted to block Kraft from selling Oreos to children because the cookies contain trans fats, which exist in hydrogenated oil. He soon dropped the suit, reportedly because he felt that the publicity from the action had raised awareness about trans fats.
Last September, McDonald's, based in Oak Brook, Illinois, announced that it would seek a healthier alternative to the oil with trans fats that it uses to cook French fries.
Some are skeptical that companies will make real changes. Nestle, the nutrition professor, noted that the fast food chain said last year that it would change the kind of oil it uses, but that it still has not done so. McDonald's has said that it is carrying out tests to develop the approach that will work best.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2