The problem with low-fat, low-sugar and low-salt claims

Food label claims are no stranger to controversy, and educated consumers may know how to read between the lines of some of the claims they see on products. But many claims are entirely misleading and give the average consumer a false sense of confidence in choosing products they think are healthy, according to a new study.

An analysis of 80 million food and beverage purchases from more than 40,000 households found that while 13 percent of foods and 35 percent of beverages purchased had a low-content claim—either low-fat, which was the most common, or low-calorie, low-sugar or low-sodium—those claims did not necessarily represent high nutritional value. "In many cases, foods containing low-sugar, low-fat or low-salt claims had a worse nutritional profile than those without claims," explained lead researcher Lindsey Smith Taillie.

The researchers suggest the problem is rooted, in part, in the FDA’s lax rules allowing food and beverage manufacturers to assign labels in different ways for different foods, and there’s no standard that governs what "low" means, so the claim is often relative to other brands or items in a category. A cookie labeled low-sugar, for example, may have less sugar than another version of the cookie, or than another brand of cookie, but for someone who needs to limit their sugar, the claim can be essentially meaningless. The claims may also suggest to the consumer that the product is healthier—but "reduced-fat" Oreos contain the same amount of sugar per serving as full-fat Oreos, even if their fat content is in fact lower. Chocolate low-fat milk, as another example, may be lower in fat than plain milk but is higher in sugar, and is higher in both sugar and fat compared with other beverages.

The study, published in the Journal of the Academy of Nutrition and Dietetics, is a reminder of the seemingly Wild-West nature of food label claims, and the risks that weak or inconsistent regulations pose for consumers who struggle to make healthier food choices.

"A low-/no-nutrient claim means different things for different foods. This could potentially lead to confusion if consumers focus on seeking out products with specific nutrient claims or use a claim to justify the purchase of less-healthy foods," said Taillie. "In fact, in some cases, products that tend to be high in calories, sodium, sugar or fat may be more likely to have low- or no-content claims."

How Justin's, Noosa and Annie's retain their core values after acquisition

"We've always been genuine about who we are, very transparent, very authentic ... nothing is changing, if anything we are going to make even more delicious products that will blow your mind." 

—Koel Thomae, Noosa Yoghurt

Part 1: The exit strategy

Highlights: 

• How did these entrepreneurs grow their brands to national recognition? 
• What led them to decide to sell their companies? 

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Part 2: Forging a new era

Highlights:

• How do you create lasting values in business? 
• Committing to the right partner and negotiating quality retention.

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Part 3: 'Buying in' versus 'selling out'

Highlights:

• Can Big Food companies change to meet the new generation of consumers?
• Standing up for your core values in the midst of a business acquisition is essential.

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Part 4: Teamwork

Highlights:

• How did the acquisition affect employees?

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Part 5: Questions and answers

Highlights:

• The importance of mentors. 
• How to raise capital and partner with investors.
• Crafting a visual brand identity that is authentic and unique.

 

This session—How to Sell Without Selling Out—was recorded at Natural Products Expo West 2017.

5@5: General Mills' 301 Inc. invests in Purely Elizabeth | A small natural food store with a big impact

General Mills' VC arm invests in breakfast food startup

301 Inc. has selected its eighth portfolio company—breakfast food purveyor Purely Elizabeth. The $3 million financing is the first outside capital Purely Elizabeth has taken in and will help the startup continue product development. 301 Inc. says it sees Purely Elizabeth expanding beyond oatmeal, muesli, cereal and other breakfast foods. Read more at Fortune...

 

The little Canoga Park vegetarian restaurant that created the natural foods industry

Back in the 70s, it was the little health food store that could. Follow Your Heart started as a store just north of LA that was founded by hippies and sold avocado sandwiches for 95 cents. The owners bought the store in '73 for $15,000 and decided they wouldn't sell meat—a somewhat controversial move at the time. In '88, its tofu salads caught the eye of Trader Joe's, which started selling packaged versions, and then the founders launched a plant-based mayonnaise in the early '90s. Read more at LA Weekly...

 

Forcing people at vending machines to wait nudges them to buy healthier snacks

An associate professor of preventative medicine at Rush University Medical Center designed a clever (or annoying, depending on who you are) device that goes inside vending machines and controls how long it takes certain snacks to drop. He conducted an experiment where he set the device to delay the delivery of unhealthy snacks by 25 seconds; healthier snacks dropped instantly. It's kind of a "time tax," he said. The implementation of a time delay triggered a 5 percent change in the proportion of healthy snacks sold. Read more at NPR...

 

Publix putting GreenWise stores back in plans

These stores are slightly smaller but carry a larger selection of organic, natural and specialty diet foods. The retail chain last built a GreenWise store in 2008 but says it "continues to aggressively look for additional GreenWise locations throughout its operating area." Read more at Orlando Sentinel...

 

Could General Mills be a buyer for Stonyfield?

Analysts seem to think so, as the company has struggled in the yogurt category and is looking to boost its sales of natural and organic products to $1 billion by 2019. Danone said last week it would offload Stonyfield to avoid antitrust issues and have its purchase of WhiteWave approved quickly. Read more at StarTribune...

Growing relationships: For Chef Patrick Mulvaney, local starts with a handshake

Chef Patrick Mulvaney runs Mulvaney’s at the B&L, a farm-to-table institution in Sacramento, in the heart of California’s Central Valley. A New York chef by trade, Mulvaney fell in love with the farm and food culture of Sacramento before opening his restaurant 10 years ago.

Mulvaney’s has since become a hub for food thinkers and ag bigwigs to enjoy a local, seasonal menu and talk turkey about the future of food. Mulvaney talks here about his close-knit network of farmers and building relationships to last for generations.

What’s the philosophy behind Mulvaney’s at the B&L?

Patrick Mulvaney: We opened in 2006. It’s a menu that changes daily based on what’s coming in. Yesterday, my neighbor gave me the first sugar plums, so there’s duck with sesame plum sauce. Chris Rob just brought a pig down from Ukiah, so we’re going to make porchetta, which will probably be on tomorrow night. And then hams will get cured for coppas and prosciuttos. One of the new kids will have a chance to take a crack at head cheese and guanchiale.

For us the idea has always been about the sourcing and, in the end, the relationship with the farmer. Here in California it’s really easy. We got invited to cook at the Beard House, and some of my snobby friends from New York came down. They asked, “What is this farm-to-fork? We read about it in the Times.” And I say that the seven-course meal you eat in New York is what we eat here as a matter of course. And every ingredient, with the exceptions of bread, water and Irish whisky, came from 50 miles from my restaurant.

How do you define local?

PM: I use this story from Paul Muller of Full Belly Farms. Somebody asked him what his definition of local was. Fifty miles? One hundred miles? Day’s drive? And Paul says, “My definition of local is if there’s a relationship between me, the farmer and you, the end user.” For us, that extends fairly far. We purchased a whole crop of coffee from Luis Nolasco in Honduras. The distance is different, but the act of going to his farm, shaking his hand, walking the fields, seeing his practices—that’s all the same.

How do you manage such an extensive network of farmers?

PM: As chef it’s easy. I just have to say, ‘Yes, bring it in.’ Logistically, when I started 30 years ago, it would have been a nightmare. We have an email account for the restaurant and the farmer will hit us up: ‘Hey chef, we’re doing some hogs. Do you want one this week?’ Yes.

Here in Sacramento, there have always been a few farms that came into the city—River Dog, Full Belly, Good Humus—that had connections with chefs. With email, it becomes much easier, and once you’re on the list you stay on the list forever. Then you know River Dog comes in on Tuesdays, Heidi Watanabe comes in on Wednesdays. That’s not unique to Mulvaney’s. We each have our own relationships.

What is unique here was kickstarted by Jim Mills from Produce Express. His job is to go find local produce, and he would call: ‘Hey, I’m in a peach orchard. I’ve got two cases that need to be used right now and I’m going to have 20 cases per week for the next four weeks. How much do you want?’ He’s cultivated a relationship with those farmers, so many of our small farms go through Produce Express.

Sacramento customers know the farmers and expect that everything will be seasonal. The biggest change is that people now are surprised or disappointed to see a tomato in February or asparagus in July. The first 18 months we were open, people would come in and say, ‘Oh, last time I was here I had this and I really liked it.’ Well, that was fall. This is summer. Now other customers will just tell that person, 'Hey that’s not how it works. Dude’s got something new.' That’s been really gratifying over the last 10 years.

Has your attitude toward food waste changed over the years?

PM: Our attitude toward waste in our own kitchen has changed dramatically. We used to compost about three garbage cans per week of pre-consumer waste: husks, skins, stock vegetables. But now, there’s a large anaerobic digester at a nearby cardboard plant. And they figured out that they needed nitrogen to fuel the digester. They’ve reduced our landfill production from three dumpsters per week to less than a five-gallon bucket.

We also take cooks to a pig slaughter, a matanza. It’s very serious and very moving. And I tell the kids in the kitchen, “We say thank you to the animal.” Seeing that pig’s life end, and then seeing it get butchered and sent to the restaurant really has a dramatic impact on people that go see it. And for about two months after we go to a matanza, waste—things like burning onions in a skillet or not scraping out the last of the mustard—cuts down at least 20 percent to 30 percent. You’ve looked in the eyes of the pig and you had to say thank you.

Any advice for a farm-to-table entrepreneur?

PM: The important piece is to talk about how you’re sourcing. I go back to the Paul Muller quote: Knowing how something was produced, where it came from, who the family is—it really goes a long way to increase your comfort. It took us many years, but our regulars know that when they come in our organization has ensured sustainability. It takes a while to build up that trust, but it is clear that there is a lot of interest in it. From a marketing or financial point of view, it’s a smart money bet.

It’s a good bet because you’re supporting farms. So there will still be the world’s largest organic walnut farm here in the valley. So there will still be heirloom tomato farms. So there will still be a next generation of seed savers. You get to tell those stories of others, and it’s through those stories that people build an attachment and decide to come back.

Nutritional Business Journal recognizes business achievement with annual awards

A time has come for business, and perhaps the natural products industry in particular, to step up. With governments marching into political paralysis, trapped in a cycle of ideology eclipsing positive action, the need has never been greater for companies to make decisions that are good for the people and the planet but also, ultimately, good for their bottom lines.

Business as a force for good? Yes. It’s possible, even profitable, for corporations to make the right decisions.

This could be obvious in energy production—Google the Bloomberg piece on how “capacity factor” dooms fossil fuel plants in favor of solar and wind—but it’s an obligation in natural products and nutrition.

Bringing more health to more people is the mission of the industries we cover. Supplements, natural and organic food, non-toxic personal and household care, all of these are better products for those customers better educated about what goes into those products. That education is more accessible than ever. You might be reading this on your smartphone, a device that’s in your pocket as you make purchase choices in a retailer’s aisle.

In that pixelated light, victory goes to the companies with those customers’ better interests in mind.

Which brings us to this year’s NBJ Awards. Perhaps more than ever before, we select the award winners based more on principle than profit. We seek to honor companies and individuals helping to lead the conversation on the good that companies can do. That can mean using business skills to turn an idea into a successful company. It can also mean tinkering with or creating a new business model that keeps the ideals matched to that idea.

We looked for some of that in every award we gave this year.

The winners

GT’s Kombucha built a category that delivers a beverage that is lower in calories than soda while offering the health benefits of fermented products.

Ganeden devised a way to put probiotics into more products that make better digestive health accessible, while focusing on the most healthful partners in that quest.

Ribus examined the not-on-the-label excipient components that go into supplements and used innovation and invention to offer clean label solutions.

CVS took a look at its identity as a health-oriented destination and took tobacco products out of the store, abandoning a revenue stream measured in the hundreds of millions. On top of that, they launched a $50 million anti-smoking initiative.

Mike Archbold’s departure as CEO of GNC may not have been his choice, but his choices there left a legacy of reform for the whole supplement industry. Archbold’s efforts to corral and coordinate trade groups and put transparency on the shelf at the leading supplement chain transformed how the industry should look at itself.

Natural Grocers stands out in the natural channel for educating consumers, with training requirements for every employee and engagement opportunities for every customer. The company was an obvious choice in an obvious retail channel, but Natural Grocers shares the education award with Hy-Vee, a Midwestern and very-much-mass chain that put a registered dietician in every store and offers health and nutrition education both online and in-person.

When people talk about ideas that could improve transparency in the supplement industry, they are often talking about things that Gaia Herbs is already doing. Lot numbers linked to origin and certificates of analysis, a gold-standard example of transparency, are accessible online. Vertical operations and outreach creating new opportunities for American farmers are the onshore stories, but responsible international sourcing is an essential element in the Gaia mission statement.   

Nitric oxide does not have household-name familiarity for consumers, but HumanN is using and leading science to bring the ingredient into the mainstream. Such responsible science and category commitment are what the industry needs to see.

Personalized nutrition can be an overused word and a concept of questionable practicality. Habit uses real-time science, more tangible than DNA readouts, and a meal kit model to make personalized nutrition more approachable and accessible.

Palm oil is a healthful ingredient from an unhealthy supply chain. More ubiquitous than most realize, the oil has been connected to environmental destruction and worker exploitation. Natural Habitats changes that with a model that’s better for the environment and the producer communities. Teaching farmers to convert to organic/regenerative practices and then paying a premium for the product fosters economic development for impoverished and exploited communities on two continents.

OSC² turns business as a force for good into a collective effort for a community of companies. Some of these companies are small with limited opportunity for impact. As a community, they have a chance to make a difference. That difference was seen in Climate Day at Natural Products Expo West, where OSC²’s Climate Collaborative was an important partner to New Hope Network.

Stepping up

OSC² might be the best example of urgency-meets-action in this year’s selection of NBJ Awards. A good example of community, too. But all of the companies honored here are part of a community. A competitive community, perhaps, but still a group of companies leading change and sharing common goals. Working together could be the best way to achieve those common goals.

After all, it’s time for business to step up. Governments are plainly incapacitated and incapable. Enlightened and educated, consumers will protest with their pocketbooks (and smartphones) to separate the high-minded from high-profits.  

The nutrition industry has always had the opportunity to lead. Now it has an obligation.

5@5: Danone sells Stonyfield to close on WhiteWave | Panera posts sugar content on beverages

Danone’s sale of Stonyfield will fast-track closing on $12.5B WhiteWave deal

With the sale of Stonyfield — and thus, the approval of the U.S. Department of Justice — Danone can close on its purchase of White Wave. The new brand, which sells several popular soy- and plant-based dairy products, will allow Paris, France-based Danone to offer “a full spectrum of better-for-you” choices, CEO Emmanuel Faber said. Read more at Food Dive …

Soda or bear claw? Panera to post added sugar in drinks it sells

Panera Bread found and CEO Ron Shaich wants his company’s customers to know how much sugar they are drinking. One of the company’s chocolate chip cookies has less sugar than a 20-ounce serving of Pepsi, he says. So the company will be the first, apparently, to label its beverages with the amount of added sugar. Read more in The New York Times …

Why Trump's antitrust pick is great news for pesticide companies

Makan Delrahim, President Donald Trump’s choice to lead the Department of Justice’s antitrust division, has spent nearly 30 years working for large corporations and government agencies that oversee merger policy. Delrahim’s appointment likely would make the executives at Dow and DuPont, and Bayer and Monsanto very happy. Read more in Mother Jones …

A land trust asks farmers to change their ways

A nonprofit, the Sustainable Iowa Land Trust is helping young and new farmers purchase property in the state, which has the second-highest land values in the country. The trust, founded in 2014, requires landowners to work toward sustainable certification such as USDA Organic or Certified Naturally Grown. Read more in Civil Eats …  

Republican skeptics call climate change hearing that massively backfires

U.S. Rep. Lamar Smith — known for his skepticism of climate change and disregard of the scientists who support the theory — was likely surprised when a climate science policy writer called for a carbon tax to support climate-related research. Read more at the Independent …

 

 

Direct to China

Business people in China have a shared mantra, of sorts. Guanxi, which roughly translates to “relationships,” signifies the common practice of doing business with people you know and building a network of mutually beneficial relationships.

Based on the principles of guanxi and the fact that China is the world’s most populous country, it seems to be the ideal place for the ultra-personal, face-to-face aspect of direct sales. But the government there has a long, rocky and ever-changing relationship with the concept.

After years of communist rule, China opened up its market to trade in the 1990s, and MLMs like Amway and Avon moved right in to set up shop. Unfortunately, so did companies that were decidedly more like pyramid schemes than MLMs. The country wasn’t ready for any it. Regulators couldn’t successfully enforce the rules, and suspicion spoiled the party before it could really get started. In April 1998, China’s State Council announced a blanket ban on all direct selling. Pyramid schemes were deemed illegal, but so were non-pyramid MLMs. The official notice charged that direct marketing “led to the spreading of heretical beliefs, ganging up, superstition and hooliganism, which seriously deviate from the requirements of building of spiritual civilization and seriously affect social stability in China.”

But nothing sits still in China’s regulatory swirl.

The ban was modified slightly two months later, allowing Amway, Avon and other established companies the chance to remain in the country if they opened retail outlets. They continued operating quite successfully in China during the ban and Amway China’s 1999 sales volume was reportedly double that of 1998.

Still, an estimated 30 million direct marketers had just four months to cease operations indefinitely. Devastating news of impending unemployment led to protests throughout the country. Meanwhile, China was busy lobbying for membership in the World Trade Organization, the group responsible for regulating and negotiating international trade among 164 member countries. Potential members must meet a number of requirements in order to join, and in China’s case, the negotiations took 15 years. China officially became a WTO member on December 11, 2001, and one of the economic concessions they had to make was lifting their 1998 ban on direct sales.

It took China a few more years to sort it all out, and in 2005, the Ministry of Commerce (MOFCOM) released two-part legislation titled “Regulation of Direct Sales and Regulation on Prohibition of Chuanxiao [Pryamid Schemes].” The new rules allowed for companies to apply for a Direct Sales License from the Chinese government, but only for the purpose of conducting single-level direct marketing—meaning MLMs and pyramid schemes were still expressly forbidden.

The 2005 regulations laid out strict rules for direct selling, outlined in 55 separate Articles. For instance, “door-to-door salesmen” must be Chinese citizens, and they can’t be under 18, a teacher or other public servant, or an active member of the military. Payments to a salesman cannot exceed 30 percent of the sales price of products sold directly by that salesman, including commission, bonuses and awards. Payments to salesmen can never be based on how many other salesmen they recruit. Salesmen are required to carry an official selling certificate with them at all times and wear a nametag. Company trainings must be free to salesmen and they must be recorded and taught by full-time company employees. Since products sold by direct sellers in China must be made in China, direct-sales companies must open new factories to manufacture their products. And, only certain categories of products can be sold. The list was modified in 2016 and includes only cosmetics, cleaning products (for personal hygiene or household), health food products, health care equipment, small kitchen implements and household electronic appliances.

Shifting winds

By 2015, 73 Direct Sales Licenses had been issued to domestic and international companies, and that number more than doubled in 2016 alone, with about 80 more licenses being issued. (This number includes existing license-holders being issued licenses for sales in additional provinces.) U.S.-based health/supplement and personal-care companies with licenses include Amway, Avon, Shaklee, Herbalife, Nu Skin, USANA and Morinda.

The direct-selling market in China is a highly regulated one, difficult to navigate, and each U.S.-based company has a different story to tell about how they’ve charted their own unique course. Here are a few highlights:

Amway

In 2006, Amway (“An Li” in Chinese) was one of the first companies to receive a Direct Sales License in China, due in part to the fact that they had opened retail stores to continue selling their products in the wake of the 1998 ban. Amway recently reported 2016 sales of $8.8 billion overall, landing it in the number-one spot on Direct Selling News’ Global 100 rankings, but said they “experienced softening marketing conditions in China.” China, however, was still the biggest market for Amway in 2016, with the United States a close second.

Herbalife

Herbalife, ranked number three on DSN’s Global 100, received its Direct Sales License in 2007. In February of this year, Herbalife chairman and CEO Michael O. Johnson announced that “2016 was a dynamic and record-breaking year,” with an overall increase of approximately 5 percent over 2015 (up 7 percent in China). However, the company—which has seen its share of pyramid accusations back home in the United States—chooses to take a somewhat cautious view of its operations in China, acknowledging that any forward-looking statements in its report could be adversely affected by a number of factors, including “uncertainties relating to interpretation and enforcement of legislation in China governing direct selling; our inability to obtain the necessary licenses to expand our direct selling business in China; [and] adverse changes in the Chinese economy.” Herbalife declined to comment on this story directly.

Nu Skin

Nu Skin received its license for direct selling in China in 2006. In 2014, after a long investigation, the Chinese government accused Nu Skin of overstating the effectiveness of its products, selling products that were not registered and holding “brainwashing gatherings,” and it fined the company $540,000. Also in 2014, the SEC opened its own investigation into Nu Skin’s operations in China, specifically regarding a donation that Nu Skin made to an unnamed charity that the SEC alleged was an attempt to bribe a high-ranking Chinese Communist party official. In late 2016, Nu Skin settled with the SEC for $765,688. A company press release in February of this year reported a 2 percent decrease in year-over-year revenue for 2016, but showed a 3 percent increase in Greater China. (Sales in the Americas decreased 16 percent in 2016.) Although Nu Skin officials declined to offer comments for this story, president and CEO Truman Hunt said in the February press release that “Revenue in the fourth quarter of 2016 was also negatively impacted by $7 million of deferred revenue, primarily from a stronger-than-anticipated response to a promotion of ageLOC Me cartridges in China, where orders outstripped our supply.”

doTERRA

Although doTERRA does not yet have a Direct Sales License in China, the company operates retail stores in Shanghai, Beijing, Guangzhou and Chengdu, according to Micheal Carson, vice president of doTERRA China. “We continue to work closely with relevant officials on our direct selling application in China,” Carson says. “When this status changes, we will publicly announce.”

Nature’s Sunshine

On March 7, 2017, Nature’s Sunshine reported fourth-quarter 2016 sales of $84 million, up 4.9 percent from fourth-quarter 2015. However, the company explained that the results were skewed because of the lack of a Direct Sales License in China, which they had expected to receive sometime in 2016, but were still waiting for at press time. “Fourth quarter financial results were negatively impacted by items related to delay and uncertainty surrounding receipt of a direct selling license in China,” commented chairman and CEO Gregory L. Probert when the report was released. “While our 2016 financial results have been constrained by the infrastructure built in anticipation of a future market opportunity, we remain steadfast in our belief that the investments are prudent given the potential opportunity that lies ahead of us should the regulatory process in China be completed.”

Worth the work

Despite the issues that many companies have faced, direct sales in China are a popular and essential part of the country’s consumer culture. In a June 2016 recap of global direct sales for the year 2015, the World Federation of Direct Selling Associations reported that although the United States had retained its number-one spot—with an annual sales volume of $36.1 billion in direct sales—China was close on its heels with $35.5 billion. And, since China’s market growth rate in 2015 was four times that of the United States, the World Federation of Direct Selling Associations and other industry experts predict that China is likely to take over the top spot when 2016 numbers are released by June 1 of this year.

Even with strict regulations, daunting hoops to jump through and an application process that can take years, it seems that U.S.-based direct-selling companies see China as a mutually beneficial guanxi worth fostering.