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The Changing ingredienT gamea BUSineSS CaSe FOr high FrUCTOSe COrn SYrUP
The New England Consulting GroupMintel Research Consultancy
John S. White, PhD
November 2011
2
The food ingredient game is changing, with big implications for food product and beverage manufacturers.
In response to the widespread increase in obesity and other health-related issues, consumers are showing
a greater interest in healthier eating. Notably, public attention is shifting from a focus on specific ingredients
to total calories and overall nutrition. This shift promises substantial new opportunities to forward-thinking
food and beverage companies.
At the same time, some food and beverage marketers continue to make unwise decisions based on the
misperception that many consumers are worried about and avoiding high fructose corn syrup (HFCS) in
food and beverage products.
This white paper reviews:
• New government and industry dietary initiatives that are changing the ways consumers think about
food and beverage ingredients.
• The transient nature of public perceptions of ingredients.
• The science of HFCS and other sweeteners.
• Market research into what consumers say compared to what they do.
• The facts about “HFCS-free” marketing strategies.
• What F&B manufacturers can do to get ahead of the changing ingredient game.
ChangeS in The PUBliC POliCY and BUSineSS landSCaPeS
Both government and industry are moving away from a focus on individual ingredients and toward more
useful contextual information that will help consumers manage their calorie intake and overall health.
The U.S. Department of Agriculture’s (USDA) 2010 Dietary Guidelines, for example, place new emphasis
on calorie balance and nutrient-dense foods. USDA’s “Food Plate” model, introduced in 2011 to replace
the previous “Food Pyramid,” focuses on a balanced approach to nutrient-dense foods such as fruits,
vegetables and whole grains.
Figure 1: New Nutritional Icon
Source: USDA
3
Manufacturing and trade groups such as the Grocery Manufacturers Association and the American
Beverage Association have implemented new, voluntary, front-of-package labeling guidelines that
simplify product ingredient information into food nutrient groups and total calories. Notably, these
nutrient groups include “sugars” rather than a list of specific types of sugar.
Among major retailers, Walmart has championed the formulation and reformulation of food and
beverage products to provide more balanced nutrition, with lower levels of sugars, salt, fats and oils.1
Together, these public and private initiatives are working to shift consumers’ attention toward a more
holistic approach to healthy eating.
YESTERDAY:Emphasisonreducingspecificingredients
TODAY:Focusontotalcaloriesandnutrientgroups
Figure 2: New Food Labeling
1Wal-Mart Stores, Inc., “Walmart Launches Major Initiative to Make Food Healthier and Healthier Food More Affordable,” 20 January 2011.
2Value Line Inc., $M Sales 2003-2009.
5gSAT FAT25% DV 15% DV
360mgSODIUM
PER SERVING
PRIMARY
5gSAT FAT25% DV 15% DV
360mgSODIUM
14% DV 12% DV
500mgPOTASSIUM
PER SERVING
3gFIBER
ALTERNATIVES
SMALL PACKAGES
(Four Broad Nutrients) (Expanded Nutrients)
“PaSSing FanCieS” in PUBliC PerCePTiOn OF FOOd ingredienTS
Several examples from recent “food history” illustrate the changing ingredient game.
For about an 18-month period from 2003 to 2005, carbohydrates were the target of the widely publicized,
aggressively promoted Atkins and South Beach diet regimens. Sales of pasta in the United States dropped
more than 15 percent during this “no carb” craze. However, after the Institute of Medicine of the National
Academies reaffirmed that carbohydrates are an important part of a balanced diet, pasta sales rose a full
70 percent over the next four years.2
4
Caffeine has received mixed press over the years, causing it to fall out of favor with many consumers.
Yet, at the same time, Starbucks has repositioned the entire coffee business for major growth, and the
energy-drink category has become a part of mainstream culture, with nearly a 20 percent compound
annual growth rate from 2005 to 2010.3
Excessive consumption of salt has been and continues to be an understandable concern in the medical
and nutritional communities—and for many health-conscious consumers. In 2008, Campbell Soup
Company responded to this interest with the launch of its lower-sodium Healthy Request® soups.
However, the company’s focus on salt reduction to the detriment of benefits such as taste and value
resulted in significant volume declines.4
HFCS is the most recent object of critical hyperbole, with detractors ranging from Whole Foods to Dr. Oz
to Jillian Michaels. However, several prominent influencers have acknowledged that their previous
positions on these ingredients were uninformed or misguided. In May 2011, for example, one of HFCS’s
earliest critics, Dr. Barry Popkin, retracted his original 2004 claim that HFCS is a unique contributor to
obesity, noting that “all sugar you eat is the same. That’s what we know now that we didn’t know in 2004.”5
With regard to HFCS specifically, it is worth noting that the ingredient is not the subject of widespread
conversation on social media. Furthermore, other food topics rank higher in social media conversations.
MYTH:PublicinterestinHFCScontinuestogrow
REALITY:HFCSisoldnews
Figure 3: HFCS: Not Social Media News
3Hoovers Inc.
4 The Nielsen Company
5”The Market Report” on TBD.com, 5 May 2011.
Source: Radian 6 social media report, October 1, 2010 to September 30, 2011
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The real SCienCe OF SweeTenerS
HFCS has been misunderstood and mischaracterized by some nutritionists, by a small number of
consumers and by uninformed marketers. However, many credible scientists agree that HFCS:
• Is similar in composition to sugar. (American Medical Association) 6
• Has the same calories as sugar. (American Dietetic Association) 7
• Once absorbed into the bloodstream, is indistinguishable from sugar. (American Dietetic Association) 8
• Has been shown in clinical studies in humans to have no meaningful differences from table sugar.
• There is no scientific justification for switching to table sugar.
“Most scientific experts now agree that high fructose corn syrup and sucrose produce similar effects
on human metabolic responses. Studies comparing high fructose corn syrup and sucrose have found
no significant differences in fasting blood glucose, insulin, leptin and ghrelin. Satiety studies of the two
sweeteners have found no differences in appetite, feelings of fullness or short-term energy intakes.”
(American Dietetic Association)9
Among the many organizations that support this science, the Center for Science in the Public Interest
concludes: “The bottom line is there isn’t a shred of evidence that high-fructose corn syrup is nutritionally
any different from sugar.”10
In addition, HFCS meets the U.S. Food and Drug Administration’s (FDA) definition of natural and has been
deemed safe by FDA. (GRAS 1983, 1996)11
Chemically and metabolically, a sugar is a sugar. The bonding of glucose and fructose molecules in
table sugar (sucrose) is slightly different from HFCS, but those differences disappear as these sugars are
absorbed into the bloodstream. The end product is the same: the simple (free, monosaccharide) sugars
glucose and fructose.
As Figure 4 illustrates, the form of HFCS used in many foods (HFCS-42) is the lowest fructose-containing
caloric sweetener on the market.
Figure 4: Simple Sugars
6American Medical Association press release, 17 June 2008.7American Dietetic Association, “Hot Topics” paper on high fructose corn syrup, December 2008.8 Ibid.9 Ibid.10M. Jacobson, PhD, Executive Director, Center for Science in the Public Interest, USA Today, 2 March 2010.11(61 Fed. Reg. 43447 (23 August 1996), 21 C.F.R. 184.1866. Direct food substances affirmed as Generally Recognized as Safe; High Fructose Corn Syrup - Final Rule.)
Source: NutritionData.com Condé Nast 2008
HFCS 42 Sugar Honey HFCS 55 Pear JuiceConcentrate
AgaveNectar
% Content
55
74
5042
TOTAL SIMPLE SUGARS* – FRUCTOSE & GLUCOSE CONTENT
FRUCTOSE GLUCOSE
*Total sugars = (sucrose + glucose + fructose + lactose + maltose + galactose)
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Multiple studies have compared the metabolism of table sugar and HFCS, and all have reached the
same conclusion: The human body metabolizes both the same way. In six key measures of obesity—
concentrations of glucose, insulin, triglycerides, uric acid, ghrelin and leptin—the studies show no
difference between table sugar and HFCS. Figure 5 illustrates these comparisons.
Figure 5: Metabolic Equivalence
Melanson, et al. 2007. Nutrition 23(2):103-112.
Zukley M, et al. June 2007. Presented at the June 2007 meeting of The Endocrine Society. Program Abstract #P2-46.
Lowndes J, et al. June 2007. Presented at the June 2007 meeting of The Endocrine Society. Program Abstract #P2-45.
7
Rates of obesity in the United States have indeed risen dramatically—but for one simple reason: an increase
of nearly 25 percent in average daily per capita calorie consumption. Notably, added sugars—both table
sugar and HFCS—account for only 14 percent of these additional calories; a full 80 percent of the caloric
increase comes from fats and oils, along with grains. Of even greater note: Per capita HFCS consumption in the
United States has dropped steadily since 2002, while obesity rates were climbing.
The bottom line: Sweetener reformulations from HFCS to sugar provide no nutritional gains—and to claim
or imply otherwise is to mislead consumers.
MYTH:SugarisahealthiersweetenerthanHFCS
REALITY:HFCSandtablesugararemetabolicallyandnutritionallythesame
Figure 6: Obesity vs. HFCS
Figure 7: Sources of Added Calories
Source: National Center for Health Statistics, part of the Centers for Disease Control and Prevention; USDA ERS
Source: Economic Research Service, USDA (U.S. per capita loss-adjusted food availability: “Total Calories”)
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whaT COnSUmerS SaY vS. whaT TheY dO
Some recent market research has seemed to indicate that as many as 44 percent of consumers are trying
to limit their consumption of HFCS.12 But this research is flawed in its failure to distinguish between aided
and unaided responses to survey questions.
Market researchers and experienced marketers know that a gap exists between aided and unaided responses
from consumers. The type of study cited above, for example, typically uses multiple-choice questions, where
“HFCS” is, in effect, a suggested response. In contrast, unaided responses, which represent unprompted,
top-of-mind opinions or statements, are more predictive of consumers’ true attitudes and behaviors.
In early 2011, Mintel, a global provider of market intelligence, conducted research on attitudes toward
HFCS among more than 2,000 U.S. consumers. The survey examined consumer awareness, avoidance of
HFCS, message recall about HFCS, food product label-reading habits and purchase decisions. The unaided
responses revealed a clearer picture of consumers’ actual attitudes and purchase behaviors.
When consumers were asked the open-ended question “What ingredients do you look for on food and
beverage packages?”, only 3 percent responded with HFCS. Similarly, when asked “What foods, beverages
or ingredients are you trying to reduce or avoid?”, only 4 percent said HFCS.
Figure 8: Label Reading
12International Food Information Council Foundation, “2011 Food & Health Survey,” May 2011.
Figure 9: Ingredients/Foods Avoided
Source: Mintel 2011; N = 2005
Source: Mintel 2011; N = 2005
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Even when survey questions focused specifically on HFCS (aided questions), the responses indicated that
claims of “HFCS-free” products were not compelling to consumers. When asked “Have you ever bought any
HFCS-free product?”, only 11 percent answered “yes.” But when asked to name specific product categories
for the HFCS-free products they had purchased, they could name, on average, only 1.2 product categories.
MYTH:ThemajorityofconsumersareavoidingHFCS
REALITY:Fewconsumersareavoidingit
Figure 10: Claims to Have Purchased HFCS-Free Products
Source: Mintel 2011; N = 2005
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Figure 12: Fresh Bread/Muffins
After switching to an HFCS-free formula, a national brand of English muffins experienced continued
decline in brand share, with annual share spikes reflective of seasonal promotional activity.
Source: NECG Analysis; The Nielsen Company 9/3/11
Source: NECG Analysis; The Nielsen Company 9/3/11
hFCS and markeTing STraTegieS
Actual purchase behavior, of course, is what really counts. Nielsen data was collected through
September 3, 2011, as part of a comprehensive review of retail sales of products that had switched
from HFCS to sugar.13 The data covered 25 leading brands and more than 3,200 SKUs in beverages,
baked goods and prepared foods. These brands are representative of those that have not only
switched from HFCS to sugar, but have also communicated the new formulations to their consumers.
The analysis confirmed that HFCS-free strategies, regardless of execution, had not been effective in
driving incremental share growth.
Figure 11: Catsup
In March 2010, an HFCS-free catsup product launched with a reduced-salt product line extension (32-oz.
and 15-oz. bottles) by replacing two existing SKUs with the new formula. Brand dollar sales share trend for
the HFCS-free products is flat after HFCS removal. HFCS-free did not drive a significant increase in market
share during catsup’s key summer season.
13Nielsen U.S. Retail Sales Food Stores (over $2 million annual sales), Drug Stores (over $1 million annual sales) and Mass Merchandisers (excluding Walmart), September 2011.
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Based on these facts, the performance of HFCS-free products to date does not appear to support marketer
goals because—in case after case—there has been no significant improvement in brand share, no significant
improvement in volume sales and no noticeable shift in consumer attitudes or behaviors in favor of HFCS-
free products.
MYTH:HFCS-freewillhaveapositiveimpactonmybusinessasafoodorbeveragemanufacturer
REALITY:HFCS-freeisaverysmallconsumeropportunityforfoodandbeveragecompanies
This lack to date of a favorable consumer response to HFCS-free products complicates the assessment of
the costs and the risks in switching from HFCS to sugar, but there is no question that the combination of
sugar’s higher input costs and the lack of consumer demand for HFCS-free products is central to the calculation.
The negative impact on ROI that switching is likely to have is evident in soft drinks, where sweetener costs
would approximately double (a floor-cost increase of about 7 percent), and retail prices would have to
increase by approximately $0.75 per case to maintain soft-drink system margins.14
Similar negative impact on ROI can be seen in bread, where the retail price would have to rise by approximately
15 cents per loaf, or as much as 5 percent, to maintain manufacturer and retailer margins.15
In big-picture terms, a 100-million-case bottler switching from HFCS to sugar would see incremental ingredient
costs rise approximately $45 million annually, in addition to major increases in labor and capital costs.
A baking company producing 1.5 billion loaves annually would see its cost of goods sold rise by $60 million.
MYTH:ThebenefitsofswitchingfromHFCStosugarstronglyoutweighthecosts
REALITY:Thecostsofswitchingaresignificant;thebenefitsareminimal
14NECG Analysis, Confidential Sources (fully loaded at bottler plant level before delivery costs).
15Ibid.
Figure 13: Beverages
In 2009, a major brand of citrus soft drink introduced an HFCS-free formula in addition to its standard
formulation. Review of the brand’s combined dollar share sales trend indicates that the HFCS-free
formulation did not provide incremental sales growth.
Source: NECG Analysis; The Nielsen Company 9/3/11
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geTTing ahead OF The Changing ingredienT game
The time has come for food and beverage marketers to rethink their sweetener ingredient strategies.
Aggressive strategies can create long-term advantage if they focus on value to the consumer, based on
real demand rather than on inflammatory headlines.
While past focus in the industry has often been on individual ingredients, consumers are broadening their
interest in nutrition and healthier eating—meaning that product success is likely to depend on building
and sustaining total brand value propositions.
Marketers have the opportunity to advance that effort through a rigorous reassessment of HFCS in their
brand portfolios that considers accurate measurement of HFCS-free product and SKU performance,
thorough economic analyses of the true costs of switching from HFCS to sugar, a nuanced portfolio
configuration, and in-market demonstrations and vitality tests of products containing HFCS.
Innovative, research-based, fact-based assessments and strategies such as these can enable marketers
and their brands to get ahead—and stay ahead—of the changing ingredient game.
nOTeS
The New England Consulting Group is the largest marketing management consulting firm in the world,
servicing food and beverage companies in all categories, countries and channels. Its strategy is to have
a significant and immediate positive impact on clients’ businesses by providing superior management
counsel to companies that are or wish to be market-driven.
Mintel Research Consultancy is an independent, award-winning provider of world-leading market
intelligence, delivering robust information, analysis and critical recommendations. Its trusted portfolio of
proprietary industry solutions and products has been supporting high-profile clients in key sectors such
as FMCG, financial services, media, retail, leisure and education for over 38 years.
John S. White, PhD, is founder and president of White Technical Research. He has spent more than 28 years in
researching the production, functionality, applications, consumption and metabolism of caloric sweeteners.
The Corn Refiners Association represents the corn refining (wet milling) industry and has launched a national educational campaign to provide science-based facts about high fructose corn syrup to the public. High fructose corn syrup contains the same two simple sugars as table sugar, honey, and maple syrup. It is used to sweeten, preserve freshness, and flavor foods and beverages.