Processed Foods Companies Under Attack Need To Reinvent Themselves

Threats of package warning labels and weight-loss GLP-1 drugs add to ultra-processed foods woes

Like the unexpected snowstorms and bitter cold that blanketed the southern US last week, a perfect storm of troublesome challenges is about to engulf processed foods companies. And if they’re unprepared, they risk being buried under or frozen out.

The food industry has always been resourceful in dealing with external threats. When fat and cholesterol were declared the boogeymen by public health advocates in the early 1980’s, food companies reformulated their products using more carbohydrates (and yes, more sugars). When trans fats were declared unhealthy, the industry made the shift to oils that were not partially hydrogenated.

But today, a slew of concurrent assaults makes Big Food feel like it is being carpet bombed. The industry is facing attacks along multiple fronts involving calls to eradicate ultra-processed foods, adding warning labels to the front of food and beverage packaging, and more consumers adopting GLP-1 weight loss drugs and eating less.

Ultra-Processed Foods Under Fire

Antipathy towards ultra-processed foods (UPF), which account for over 70% of food items found in grocery stores, has been intensifying. While a consensus has not been reached on the definition of and damage accruing from individual products, UPFs are facing increased scrutiny and legal challenges. California Governor Gavin Newsom issued an executive order in December to crack down on UPFs. A Morgan & Morgan lawsuit has targeted Mondelez, Kraft-Heinz and other companies, alleging that their UPFs are addictive and cause chronic disease. Truefoods.com, a new, free database from Mass General Brigham in Boston, has been specifically designed to help consumers avoid these foods. And this spring, the Non-GMO Project will introduce Non-UPF verified, a certification to highlight products that are not ultra-processed foods, which they blame for hormonal disruptions, sleeplessness and other issues.

If Robert F. Kennedy Jr. — a proponent of improving health by diet rather than drugs — gets confirmed as Secretary of Health and Human Services, this war against UPFs will surely escalate. It should be noted that RFK Jr. is of counsel to the law firm of Morgan & Morgan cited above.

New Warning Labels On The Way

Along with the brewing storms over UPFs, the Food and Drug Administration (FDA) is developing a plan to require warning labels on the front of packaged foods. “The box would provide consumers, including those who have lower nutrition knowledge, with standardized, interpretive nutrition information that can help them quickly and easily identify how foods can be part of a healthy diet,” notes the FDA in an announcement. A public comment period is in process now, and we will know more details after the comment period ends on May 16.

While labeling has not yet proven itself as an effective measure to curb obesity – in fact, obesity rates have continued to rise in Chile since 2016, when it became the first country to implement onerous black stop signs on food labels – the labeling will no doubt deter health-conscious consumers from purchasing certain foods. In contrast, findings from the Georgetown University Power of Portions report concluded that those with the highest rates of obesity read labels the least.

GLP-1 Drugs: A Game Changer For Processed Foods

Finally, a sea change is underway in consumer appetites for large quantities of indulgent foods because of GLP-1 hunger-suppressing drugs such as Ozempic and Wegovy. Their use is poised to explode, as they result in approximately a 20% reduction in weight and are now targeted for Medicare price negotiations. Reduced prices for Medicare recipients will only expand the adoption of GLP-1 drugs by millions more Americans.

These drugs make people want to eat less, and people who take them are buying less. In fact, an in-depth Morgan Stanley report published in August 2023 highlighted that several food and beverage categories, such as carbonated soft drinks, salty snacks, cookies and confections, saw declines after people started using the drugs. A January 2024 report from researcher Circana illustrated that GLP-1 users’ monthly spending for frozen foods also declined. And a study by Cornell University and Numerator reported this month that households with at least one GLP-1 user cut their grocery spending by approximately 6% within 6 months of taking the medication, with the biggest declines among chips, baked goods, sides and cookies.

So what should food companies do to get ahead of this perfect storm? Luckily, the same tools that they’ve used to entice people to buy their products – those advertising campaigns and food scientists – can be indispensable in heading off Armageddon. Here are some ideas.

Follow the leaders. Food companies must recognize that this is not business as usual. A tectonic change is underway. The way these companies have marketed their brands and communicated their benefits is no longer feasible. Forward-thinking companies have already observed the first stirrings of change and are responding with new products designed for evolving consumer tastes and the growing swath of those taking GLP-1 drugs. For example, Nestle has introduced Vital Pursuit, a line of frozen meals that has the protein and fiber that GLP-1 users need, in smaller sizes. ConAgra has debuted more than 2 dozen Healthy Choice items featuring a “GLP-1 friendly” flag – high in protein, low-calorie and a good source of fiber. A new Boost brand pre-meal drink is specifically marketed to these patients to ensure they are getting enough protein.

Commit to smaller portions. Reduced portions are what a growing number of consumers want. They appeal not only to GLP-1 users who need to eat less, but also to health-conscious consumers who want to eat less. For role models, look at the National Confectioners Association’s “Always a Treat” initiative which resulted in candy companies capping the number of single-serve items at 200 calories or less at 50%. Earlier, the Healthy Weight Commitment Foundation convinced a coalition of food companies to pull 6.4 trillion calories out of the food supply. It’s (finally) time for food companies to make hard commitments to reduce the sizes of a meaningful number of products they sell. Along with making such commitments, these companies should earmark marketing budgets to aggressively promote smaller sizes.

Unleash the food scientists. Packaged goods companies are excellent marketers, but in this new world they need to redouble their efforts towards developing affordable, convenient, better-for-you foods and beverages. Applying their “bliss point” capabilities will enable them to deliver what consumers ultimately want: exceptional taste. Food industry R&D expenditures today are too low to successfully meet these new challenges and companies need to double, if not triple, their R&D budgets from the measly 1-2% of revenues that they now spend.

In short, Big Food must prepare for a tsunami of change that will surely level them unless they embrace new strategies for a world where people are eating less and shunning processed foods. Food companies have what it takes to make this happen…but first they have to believe the forecast and take it seriously.