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June 1, 2021

Nestle wants “healthier and tastier” portfolio

Nestlé has countered publication of documents said to describe many of its products as unhealthy.

The Financial Times yesterday (31 May) reported on a document issued among Nestlé executives earlier this year that the business publication said stated more than 60% of the company’s mainstream food and drinks could not be considered healthy under a “recognised definition of health”.

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According to the FT, the presentation excluded from its analysis products in sectors such as infant formula, pet food, coffee and medical nutrition.

In response, Nestlé issued a statement to say it is “working on a company-wide project to update its pioneering nutrition and health strategy”.

The world’s largest food maker said: “We are looking at our entire portfolio across the different phases of people’s lives to ensure our products are helping meet their nutritional needs and supporting a balanced diet.

“Our efforts build on a strong foundation of work over decades to improve the nutritional footprint of our products. For example, we have reduced the sugars and sodium in our products significantly in the past two decades, about 14-15% in the past seven years alone.”

Nestlé said it is “first focusing” on food and beverage products “that can be measured against external nutrition profiling systems”. Labels like Australia’s Health Star Rating system and the Nutri-Score programme used in continental Europe “are useful in this regard and enable consumers to make informed choices”, the company explained.

“However, they don’t capture everything. About half of our sales are not covered by these systems. That includes categories such as infant nutrition, specialised health products and pet food, which follow regulated nutrition standards.”

Jon Cox, an equity analyst covering Nestlé for France-based financial-services group Kepler Cheuvreux, suggested the percentage of the company’s sales covered by the description in the internal document would be much lower than 60%.

“Despite the sensationalist FT headline, the internal report actually excluded over half of the group – namely pet care, nutrition and coffee. Given the group’s confectionery, ice cream, and pizza businesses, the real figure for the group based on 2021 estimates would be 28%, which is hardly a surprise,” Cox wrote in a note to clients.

“However, the report could point to further portfolio optimisation to sharpen the group’s focus on health and wellness. We have long argued that mainstream confectionery is not a particularly attractive category, given structural pressures despite a Covid-linked boost to increased in-home consumption.”

In recent years, Nestlé has sought to reshape its portfolio via M&A, moves that have continued into this year.

Two months ago, the company snapped up a clutch of brands from The Bountiful Company, a US-based manufacturer of vitamins and supplements. Last June, US-based nutrition business Vital Proteins, which makes supplements and food and drink products using collagen, sold a majority stake to Nestlé.

Elsewhere, the company has further scaled back its position in ice cream and sold a majority shareholding in its Herta meats business.

In 2018, Ferrero, the Italy-based snacks group, acquired Nestlé’s confectionery business in the US.

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  • Ingredients in Food & Drink
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  • Ingredients in Household Care
Take a look now to understand which ingredients are impressing consumers, and make them work for your brand.
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Enter your details here to receive your free Report.

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