Reformulation: The focus of CPGs in 2023

Regulation and innovation are accelerating the reformulation drive

Worldwide, obesity has nearly tripled since 1975. Related non-communicable diseases (NCDs) like diabetes, hypertension, stroke and cardiovascular disease are placing growing pressure on public health providers. In the UK, for instance, obesity costs the National Health Service £4.2 billion a year. Without urgent and radical action, this will rise to £10 billion a year by 2050.

Public health advocates have long urged governments to tip the scales towards healthier options. Recommendations range from nutritional labeling and fiscal levers, to restrictions on the promotion and marketing of HFSS products.

Global regulators are beginning to take note. According to the World Health Organization Global Database on the Implementation of Nutrition Actions, 111 countries are taking action to spur food reformulation.

Regulatory pressure to reformulate

The policy landscape is rapidly evolving. In the UK, we have seen the introduction of restrictions on where HFSS products can be placed in store. Under pressure from the cost of living crisis, the authorities have delayed plans to ban buy-one-get-one-free promotions on HFSS products, but these are set to come into force next year.

Brazil’s food industry is  preparing for new regulations that require producers to include front-of-pack warnings indicating high levels of sugar, sodium, and saturated fats. The legislation is set to come into force this month (October 2022).

In the US, meanwhile, the Biden administration is exploring steps to reduce added sugars through reduction targets, develop a front-of-pack nutrition labeling system, issue stricter voluntary sodium targets, and tighten rules on marketing.

Back on the other side of the Atlantic, in just a matter of months the European Commission is expected to announce which EU-wide harmonized nutritional labeling scheme it plans to back.

In short, global pressure is mounting for businesses to cut the levels of salt, fat and sugar their products contain.

Consumers back reformulation, but taste still king

The need to comply with an evolving regulatory landscape is just one reason why the F&B industry is accelerating reformulation efforts. Consumers increasingly report concern over health and nutrition in the post-COVID world.

Fresh research from McKinsey found around half of US consumers now identify wellness as a top priority in their daily lives. Driven by millennials and Gen Z, McKinsey concludes: “Against the backdrop of COVID-19’s evolution from a global pandemic into an endemic disease, this increasing consumer focus on wellness looks set to continue.”

Gone are the days where ‘health through stealth’ was the secret to successfully landing reformulated products. But while consumers are certainly telling us that they want healthier foods, the old adage also remains true: Taste is still king.

The industry responds

The world’s largest food and beverage brands have heard the call to action. Companies across the CPG sector are setting their own internal reformulation targets as part of their broader ESG agendas.

‘Positive Choices’ are called out as a core action in PepsiCo’s recently launched Pep+ ESG drive, for instance. The Lay’s-to-Pepsi Max maker is evolving its portfolio towards spaces that are ‘better for the planet and people’, accelerating the reduction of sugar and sodium, and switching to healthier oils.

As part of its Future Foods strategy, meanwhile, Unilever said it will double the number of products delivering ‘positive nutrition’ globally by 2025, while continuing to lower the levels of fat, salt and sugar across its portfolio. By this year, 85% of Unilever’s global Foods portfolio will help consumers reduce their salt intake to no more than 5g per day. Additionally, 95% of Unilever’s packaged ice cream will not contain more than 22g of total sugar by 2025.

Unilever and PepsiCo are not alone in their ambitions to reduce HFSS products in their existing portfolios and shift sales to new, healthier, alternatives. Non-HFSS product launches are coming thick and fast, from Mars Wrigley’s non-HFSS chocolate bars under the Mars and Galaxy brands, to Mondelez International’s non-HFSS treats from brands like belVita, Cadbury Drinking Chocolate, and Maynards Bassetts.

Rising to the reformulation challenge

Reformulation strategies need to overcome key challenges that range from high levels of bureaucracy and red tape, to the necessity to innovate at pace.

Successful reformulation also rests on identifying ingredients that replace the functional role that fats, sugar and salt play. Take sugar reduction. High intensity sweeteners can be used to replicate the sweet sensation of sugar, but what of other functions such as bulking and mouthfeel? How can these be simulated while maintaining a label that is as clean as possible? And – at a time of surging costs – can this be achieved at cost parity?

NPD teams need to consider nutritional and sensory science, consumer insight, and culinary expertise. Yet traditional NPD processes remain time consuming and expensive. 

In answer to this, Foodpairing experts have combined these disciplines with AI, machine learning, and digital twin technology to create agile and efficient solutions supporting reformulation efforts.

“On HFSS, we take two approaches,” explains Founder Bernard Lahousse.

The first is to ‘replicate’ the original product profile. “This is achieved by adapting the formulation of low-FSS products to mimic the aroma profile of the original product. The Foodpairing toolkit shows differences in the concentration of aroma compounds and suggests potential solutions.”

Foodpairing leverages in-house analytical tools, including chemometric capabilities and odor mapping, to analyze the original product. AI technologies then test different ingredient combinations to uncover how to replicate taste while improving nutritional profile.

“Our models can take nutritional data into account by filtering out concepts or formulations that do not fit the nutritional requirements of the client,” Lahousse continues. This can also include data on on-trend diets such as keto.

Nevertheless, products that are lower in fat, salt, and sugar do still have some limitations. Recognising this, Foodpairing has developed a second approach to reformulation. This, Lahousse details, is to ask: “What are the optimal concepts and formulations? This potentially means that the client needs to launch new flavors.”

Line extensions forms one of the core part of Foodpairing’s offering in order to help clients grow the sales of their overall portfolio.

To identify these opportunities in the fastest and most cost-effective way, Foodpairing leans on digital twin technology. Creating digital twins of both product concepts and consumers, we can forecast how a change to an SKU will be greeted by shoppers. Understanding the liking score of a product through prescriptive analytics is a valuable indication of whether the reformulation will land successfully.

At Foodpairing, we think of food as software. Software is never finished. It’s continuously upgraded in small iterations. We call this the Infinity Loop. The connection to reformulation is clear, as innovators continually strive for products that are healthier, tastier and have greater consumer appeal.