By Michelle Briffett and Alexander Belderok

As obesity and other diet-related diseases become increasingly widespread, policymakers are reviewing nutrition labeling. Front-of-package nutrition information on packaged food and beverages is on the rise. This presents both challenges and opportunities for companies throughout the value chain.

The prevalence of obesity has surpassed that of malnutrition globally, with approximately one in eight people living with obesity compared to one in ten with malnutrition. In advanced economies, obesity is an even bigger issue, affecting over 40 % of adults in the United States, for instance.

Obesity may be the most widespread diet-related disease, but numerous others, including diabetes and cardiovascular diseases, are also increasing. Despite this, consumers now have more access to nutrition information than ever before, thanks to detailed nutrition labeling requirements and the internet.

There is extensive data available on the back-of-package nutrition facts of packaged foods and beverages, but most consumers find it time-consuming to process all the information while shopping. Recognizing these limitations, regulators are increasingly taking a proactive approach to improving public health. In 2009, South Korea became the first country to introduce front-of-pack nutrition labels to provide consumers with simpler and more immediate nutrition information. Since then, many countries have followed suit.

Early impacts of front-of-package labeling

Front-of-package nutrition labels can be broadly classified into repeated systems, warning systems and spectrum systems. South Korea's labels fall under the 'repeated system' category, which repeats key nutrition information from the back of the packaging on the front, including nutrient values and recommended daily intake percentages. Other countries, particularly in Latin America, have implemented 'warning systems,' which utilize visual or textual indicators to alert consumers to high levels of specific nutritional elements such as calories, sugar, saturated fat and sodium. Singapore stands out as the only country to have mandatory 'spectrum system' labeling, which mathematically simplifies all nutritional aspects into a single color-coded or graded visual score.

Front-of-package nutrition labels have been shown to have an impact on consumer health. In 2016, Chile implemented a multi-pronged obesity reduction program that combined front-of-package warning labels with marketing restrictions, school-based restrictions and taxation. A study published in the Lancet in 2021 examined the effects of Chile's multi-pronged program by analyzing purchase data from a sample of the population. The study compared data from 18 months before and after the program's implementation. It revealed a 3.5 % reduction in calorie intake, as well as reductions of 10.2 %, 4.7 % and 3.9 % in sugar, sodium and saturated fat consumption, respectively.

The researchers also observed changes in consumer behavior within specific food categories. For instance, consumption of industrialized fruit and vegetable juices with warning labels decreased by 47 %, while purchases of meat substitutes with warning labels declined by 11 %. However, overall consumption within each category remained relatively stable as consumers predominantly switched to products within the same category that did not bear warning labels.

While obesity rates have continued to rise in Chile after the implementation of the multi-pronged obesity reduction program, policymakers consider it an early success story in the adoption of front-of-package nutrition labels. Currently, both the United States and the European Union are in different stages of implementing mandatory
front-of-pack nutrition labels. Several EU member states have already adopted NutriScore, a voluntary spectrum system. However, there is controversy surrounding a potential EU-wide implementation, as many Southern European member states see it as placing traditional foods at a disadvantage.

In the United States, extensive research has been conducted on various front-ofpackage nutrition labels, with a proposal expected later in 2024. The US Food and Drug Administration looks likely to propose either a repeated or warning system.

How and whether to reformulate products

Companies across the value chain will encounter both challenges and opportunities as systems evolve. Packaged food and beverage manufacturers will have to decide whether to reformulate their products and, if so, whether to do so on a global or regional level. Additionally, these companies can explore opportunities to streamline their product offerings (SKUs) and introduce nutritionally optimized products. Food
ingredient companies can assist in reformulations by offering solutions for reducing sugar and salt content, for example. Retailers have opportunities to optimize their shelf-space to prioritize products with better nutritional profiles.

How we can help future-proof your business

With an increasing number of food and beverage companies under pressure to reimagine their portfolio and future growth path, Roland Berger is well positioned to support in developing tailored strategies and robust execution roadmaps to ensure long-term success and sustainable progress.

We are a trusted partner for clients operating in this space, having successfully advised global multinational CPG companies as well as regional players alike on how to navigate the dynamic and ever-changing regulatory and consumer landscape. From innovation and sourcing to global and regional go-to-market strategies, Roland Berger provides valuable insights to help clients assess their portfolio exposure to the risks and opportunities associated with these changes.

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