E256: ATNI - driving market change towards nutrition

Now more than ever, it's important to challenge the world's food and beverage manufacturers to address nutrition issues like obesity and undernutrition. Today, we're going to discuss the 2024 Global Access to Nutrition Index, a very important ranking system that evaluates companies on their nutrition related policies, product portfolios, marketing practices, and engagement with stakeholders. The index is an accountability strategy produced by ATNI, the Access to Nutrition Initiative, a global nonprofit foundation seeking to drive market change for nutrition. Our guest today is Greg Garrett, Executive Director of ATNI.

Interview Summary

You know, I very much admire the work you and your colleagues have done on this index. It fills such an important need in the field and I'm eager to dive in and talk a little bit more about it. So, let's start with this. You know, we've all heard of the concept of social determinants of health and more recently, people have begun talking about corporate determinants of health. And your organization really is focused on corporate determinants of nutrition. Let's start with a question that kind of frames all this. What's the role of industry in nutrition, according to the way you're looking at things? And how does the Global Index shine a light on this topic?

Thanks for the question. We're working primarily quite downstream with large manufacturers and retailers. But we hope to affect change across the value chain by working with that group. Of course, when we talk about private sector in food, that's a very, very broad terminology that we're using. It could include farmers on the one hand, looking all the way upstream, all the way through to SMEs, aggregators, processors, manufacturers.

SMEs are what?

Small and medium enterprises, small and medium enterprises, local ones. All the way through to the multinational food and beverage manufacturers. But also catering organizations and restaurants. When we talk about business what we're trying to do is ensure that business cares about portability, and access to safe and nutritious food. And I think we can say pretty safely, based on the data which we'll talk about, that the health aspects of food are still not as, they're not at the forefront like they should be. Yet.

We'll dive in and talk a little bit more about what the index is and what it shows in a minute. But let's start with a kind of broader question. What is the role of diet and consumption of processed foods in influencing health?

Yes, so they say now one in five deaths are related to poor diet. It's arguably now the biggest risk factor related to global morbidity and mortality. We've seen in the last 20 years a slight slowing down of our efforts to combat malnutrition and undernutrition. Whereas we've seen over nutrition, obesity, really taking off. And that's not just in high income countries, but also low- and middle-income countries. So, you know, it might be too little good food and that can lead to at the extreme end of things wasting. It might be too little micronutrients, which can lead to all kinds of micronutrient deficiencies or hidden hunger that leads to many adverse outcomes. Including, for example, cognitive decline or reduced immune system. And then, in terms of diabetes and obesity, we're seeing that really skyrocket. Not only in countries where we have excessive food intake, but also in low- and middle-income countries where they have too much food with a lot of, say, empty calories. Not enough nutrients that are needed. In fact, the recent numbers that we've been working with, it looks like in the last 20 years, obesity rates have gone from about 7.9 percent to 15.9 percent. And by 2030, it might be that 20 percent of global population is considered obese if we don't mitigate that.

Right, and of course that number is many, many times higher in the developed countries. So, you've got a tough job. You talked about the complexity of the food industry going all the way to the farmers, to the big companies, and caterers even, and things. And a lot of different health outcomes are involved. How in the world do you construct an index from all that? Why don't you tell us what the Global Index is, and then some of what you found in the most recent report.

Yes, so the Global Index, we've been running it for 11 years since ATNI was founded. And it has gone through multiple iterations. This latest one was the biggest we've done and we tried to capture about a quarter of the world's market. So, what we did is we took the 30 largest food and beverage manufacturers by revenue. We looked at 52,000 of their products, and that's where we know the market share was about 23 percent global market share. We profiled the foods. We tried to understand their governance structures and how much nutrition features in the way they run their business. We tried to understand, for example, how they market the foods. Are they marketing them responsibly, according to the World Health Organization guidelines? Really dive deep. It's dozens and dozens of indicators where we ask lots of questions of the companies over a 10-month period. And, by doing that, we hope to understand how financially material is nutrition to these companies. We want to give something of use, not only for the companies, but to policymakers. Because we know there's a big role for policymakers to both incentivize the production and the marketing of healthy foods, but also disincentivize unhealthy foods. We want this to be useful for investors. So, we spend a lot of time, through collaborative engagements, working with the shareholders of these companies as well so that they can invest more responsibly in the food company. And then the other group that we hope to eventually work with are the consumer associations. The groups that would represent consumers so that they can put appropriate pressure on the demand side, you know. They can demand healthier food. It's not that we believe by running an index somehow companies are going to start doing everything right. No. We want to provide data and analysis to the sector so that all the stakeholders can use it to help influence change.

That makes perfect sense to have some data driven enterprise to figure out what's actually going on. Otherwise, you're just having to go on intuition. So, what did the most recent index find?

Right, so out of those 30 companies, what did we find? There's some good news. Let's start with the good news before we get into the bad news. There's maybe more bad news than good news. In aggregate, we're actually now seeing that 34 percent of the revenue derived from the products that we profiled, those 52,000 products, is based on healthier sales. Meaning 34 percent could be considered healthier foods. That doesn't sound great, maybe, but consider just 4 years ago when we ran this index, it was at 27%. So, there's some marginal increase and maybe if we can accelerate things, and that's what we're trying to do, it's our big strategic objective. We hope that by 2030, we could say that at least half of business' revenue is coming from healthier food options. There's a lot of changes that need to take place to get to that point, but some companies are doing it.

Also, we noticed a lot more companies are now starting to use a government endorsed nutrient profile model to define the healthiness of the food products, to measure and monitor the healthiness of their food portfolios, and then to disclose that. That's really good. It's the beginning. First step is measure, disclose. The second step would be put targets on that and actually start to get substantive change towards 2030.

But there was a lot of unfortunate news too. We had some backsliding from some of the major companies. For example, low- and middle-income countries actually had the lowest health score. What we think is happening, based on the data we looked at, is that if you're a low-income country, you're getting the lowest healthiness score of these products in your country. So, brand X would be slightly healthier in Europe, but less healthy in the low-income country. So there's a need for regulation there.

Can I stop and ask you a question about that? I've got a million questions just flying out of my head that I'm dying to ask. But what you reminded me of is the history of the tobacco industry. When the policies came into play, like very high taxes and banning smoking in public places in the developed countries, US specifically, the smoking rates went way down. But the companies made more money than ever because they just went outside the US. Especially the developing countries and were selling their products. So, it sounds like the food companies might be engaged in a similar enterprise. But why in these countries would they be pushing their least healthy foods so aggressively?

I'll start with the facts, because there's some speculation here. But the fact is, if you look at your own monitored data, the highest growth of the modern food retailers is in Africa. So, you've got, for example, 80 to 300 percent growth over the last 5 years in Africa of these modern food retail shops. And in Asia, that's, that's already happened. Still happening in some countries. So, you have enormous opportunity for packaged foods, right? Because that's usually what they're selling, these retailers. I think you have some aspiration going on there, too. I think there's consumers who aspire to have convenient foods. They're more affordable now as incomes increase in those settings. Now, regulation is definitely, in general, in those countries, not as mature as it might be in Europe when it comes to colorants, and taxing, say, sugar sweet beverages. So, what you've asked, I think there's some truth to it. I don't want to come out and say that that's exactly what's happening, but we ran the numbers and the healthiness score. So, we use a five-star rating system. The Health Star rating system, one to five. Anything 3.5 or above, we would consider healthier in a diet. 3.4 and below would be considered unhealthy. And the score in low-income countries was 1.8. And in middle to high income, it was 2.4. So, it's quite a, quite a big difference.

That's really very striking. You know, I guess if I'm a food company and I just want to maximize my profits, which of course companies are in business to do, then what I'm going to sell are the foods that people eat the most of. Those are the ones that are triggering the brain biology, the 'over consume'. And the ones that have the greatest shelf life and are easiest to produce and things like that. So, I'm going to make processed foods and push those into new markets as aggressively as I can. So, I'm not asking you to think through the corporate mindset about what's driving this. But it sounds like the data that you have, the end product of all these practices, would be consistent with thinking like that.

We like to think that there could be a role for healthier processed foods. But it has to be in moderation. So, what we looked at is the materiality of nutrition. Are companies actually able to have their business and have a healthier food portfolio? So, before we ran the global index, we did an assessment of this. And what we found is that if you're a mixed food company, and you decide to reformulate so that over time you have a healthier food portfolio, in fact, we found that their capital valuations and how they did on the market was slightly better. Not a lot. Than their say, less healthy counterparts. So, what we see is the beginning of a 'health is wealth' sort of narrative. And we hope that we can drive that forward. And of course, policy would help a lot. If policy would come out and say, let's tax the bad, subsidize the good. Then I think industry is going to fall in line. So, we're not sympathetic with industry because a lot of what's happening is not good. On the other hand, we're realists. And we know that these companies are not going away. And we need to make sure that what they offer is as healthy as it should be. And there's a role for everybody in that.

All right, that's such an interesting perspective. So, you talked about the global findings. What can you say about the US in particular?

What I'd like to do is actually refer to our 2022 US index. So, we did a deep dive just recently; October 2022, right after Biden's Nutrition Conference in DC. And, it wasn't really positive in the sense that we looked at 11 companies. The 11 biggest companies representing 170 billion revenues in the US. And 30 percent of all US food and beverage sales were based on healthier food options. Now, that was 4 years after we ran a 2018 US index. So, 2018, same thing, 30%. There's no change. It's still as unhealthy as ever. I think we need the US to come on board here because it is such a leader. A lot of these companies are headquartered in the US. So, we need to see that healthiness score go up in the US.

You know, it's interesting some of the things you mentioned companies might be doing outside the US would be helpful if they did take place in the US. Like front of package labeling would be one example of that. So that would be a place where American companies are behind the curve, and it would be helpful if they caught up. It'd be interesting to dissect the reasons for why they are. But it's interesting that they are. What are some of the things businesses are doing to improve nutrition outcomes? Let's talk maybe on the more positive side. Do you think there's progress overall? It sounds like it from the numbers that you're presenting. But are there signs also of backsliding? And what do you think some of the successes have been?

Yes, and I think we can get specific on a few. There's a company headquartered in Mexico, Grupo Bimbo. They rose up in the rankings six places between our 2021 Global Index and this one in 2024. They've been reformulating. They've been making their product portfolio healthier overall. It's about 50 percent now. I think some of that was their own initiative, but it was also prompted by a lot of Latin America's regulations, which is great. I think we can learn a lot from Latin America when it comes to front of pack labels and taxes. So, Group of Bimbo was a good success story. Arla, a Danish dairy company, they came out on top in the index in terms of marketing. So, they have basically said they're not going to market unhealthy foods to children under the age of 16. And they try to even go to 18, but it isn't quite being monitored across all digital platforms. And that's the next level is to take it to the digital platforms and monitor that.

And that was a bit disappointing in general, just to find that out of the 30 companies, not one is able to come out and say that they followed the WHO Guidelines on Responsible Marketing 100 percent. The latest index shows that nine out of the 30 companies now, or 30%, nine out of the 30 companies are now using a government endorsed nutrient profile model to define healthy, and then monitor that across their portfolios. And that's a lot of progress. There were only a handful doing that just four years ago. We would ask that all 30 use an NPM, a nutrient profile model, but nine is getting somewhere. So, we're seeing some progress.

Boy, if not a single company met the WHO Guidelines for Food Marketing it shows how tenacious those practices are. And how important they are to the company's bottom line to be able to protect that right to market to kids, vulnerable populations, to everybody really. So it really speaks to keeping that topic in the limelight because it's so important.

We'd like investors to come out and say they will only invest in companies that are moving towards a 2030 target of marketing response. Zeroing in on 1) responsible marketing and 2) the healthiness food product. Zero in on those two things make really clear what the metrics are to measure that.

So, you've mentioned several times, a very important, potentially very important group: shareholders. And you said that that's one of the stakeholders that you interact with. Are there signs out there of activist stakeholders? Shareholders that are putting pressure on the companies to change the way they do business.

Yes. So, institutional investors have the ability to talk directly to the board, right? And they have the power in many cases to remove the CEO. So, they're a powerful group, obviously, and we've worked with over 80 now. And had them work with us to understand what investing in a progressive food company would look like. It's making better and better decisions, continuous improvements on nutrition. We have 87, I think is the latest count, who have signed a declaration to invest like this in a food healthier business. They represent $21 trillion of assets under management. It's a very powerful group. Now are all 80 actively, like you mentioned activist shareholders, you know, pushing, say, for example, for resolution. No. Some are. And they're using our data for that. And we applaud any kind of action towards better nutrition, healthier foods, better marketing using our data. We, as ATNI, do not sign these shareholder resolutions. But we absolutely will make our data available as a public good so that they can be used by this powerful group to yeah, hold the companies to account and hopefully invest in the long term. That's what it comes down to. Because it's true that this will take time for the benefits to come to both business and to people, but it's worth it. And I think the longer-term investors get it. And that's why they're doing these shareholder resolutions and different other investor escalation strategy.

That strikes me as being pretty good news. Let's go down this road just a little bit further, talking about this, the shareholders. So, if the shareholders are starting to put, some at least, are putting pressure on the companies to go in a healthier direction, what do you think is motivating that? Do they see some big risk thing down the road that they're trying to anticipate and avoid? Is it policies that if the companies don't behave, governments might feel more emboldened to enact? Is it litigation that they see? What are they trying to avoid that's making them put pressure on the companies to move in these directions?

That's a great question. When we ran the materiality assessment on nutrition earlier this year, we interviewed many of the investors and it seemed to come down to three things. One, there is coming regulation. There's more and more evidence that when you regulate the food system and you regulate food industry, and you do it in a smart way through a two-tiered levy system, for example, on sugar sweetened beverages. You tax the company, not the consumer. It actually does work. You have a decrease in consumption of these beverages. So coming regulation. The other one is increasing consumer demand for healthier options. Now, that might not be happening yet everywhere. And I think it only really happens when people can afford to demand healthier foods, right? But it seems like it's a trend everywhere as incomes increase and people's knowledge and understanding of nutrition increases, they do want healthier options. So, I think investors see that coming. And the third one is healthcare bills. Now, the investors don't always pick that up. Although in the case of some of our insurance companies who we work with, like AXA, it does. But they see the big macroeconomic picture. And we were talking to one of the investors last week, and they said it's all about megatrends. For them it's about investing in the megatrends, and they see this as a mega trend. This, you know, growing obesity, the cost related to obesity, growing costs related to diabetes and all NCDs. And they don't want to be investing in that future. We need to be investing in a healthier future. I think those are the three things we're gathering from the investors.

So, Greg, there's sort of this jarring reality, it seems to me. And other people have written about this as well. That if the world becomes healthier with respect to its diet; let's just say you could wave a magic wand and obesity would go from its very high levels now to much lower levels or even zero. It means the world would be having to eat less food and the companies would be selling less food. And then you superimpose upon that another jarring reality that people simply buy more, eat more, of less healthy options. So, if a child sits down in front of a bowl of plain cornflakes, they're going to eat X amount. If that's sugar frosted flakes, they're going to eat, you know, 1.5 X or 2 X or whatever the number is. So, how can the companies try to make as much money as possible and be true to its shareholders and shareholders while at the same time, facing these realities.

That's a great question. It goes to the heart of what we're trying to do at ATNI. That's why we say we're transforming markets for nutrition. Because if we don't help support that underlying market change, then we won't get very far in a sustainable way. You mentioned calories and over consumption. And that, of course, is part of the problem, but I think it's equally fair to say not all calories are treated the same and we need to look at the ingredients going into these food products to begin with. You know, why is sugar or any kind of corn derivative such an attractive cheap ingredient to put into food? And so bad for people if it's not eaten with anything else, if it's just an empty carb, for example. It's because of the subsidies, the billions of dollars of subsidies going into sugar around the world. In the United States, a very large subsidy going to the corn industry. And so, corn is then turned into many types of derivatives, many different types of ingredients that go into our foods. So, that's one thing. I think the other is that there's a big role for food policy to level the playing field. We hear this all the time from our industry partners, and we tend to agree. You know if two or three of the 30 companies that we just indexed stick their neck out and do something good, it’ll work for two or three years until the other 27 start to undercut them. And if they're somehow making, you know, better money, bigger profits, more market share it's going to be very tempting for the three that made the good decisions to go back to what they were doing before. We have to change the market structure and end the perverse market incentives.

Makes sense. One final question. What can policymakers do?

I think we've touched on it a little bit. There's the fiscal policy space, which we're very excited about at ATNI. There are over 100 jurisdictions now that have put in place some kind of sugar sweetened beverage tax. But why not expand that take it to any kind of product which is too high in sugar, right? And again, make it like a proper levy on the company and not the consumer. Because that's where the evidence is that it works. Subsidies, you know, there's very few countries which are subsidizing healthier foods. Instead, you're seeing subsidies, as we just mentioned, going to the wrong kind of product. So that's one. And here's a new one: environmental, social, and governance investing metrics. As countries start to mandate the disclosure requirements for publicly listed companies, why not include two nutrition metrics? One on marketing, one on healthiness, so that every food company is mandated to disclose information on these things. That would be a real innovative way for policymakers to help regulate things. And front of pack labeling. You mentioned it yourself earlier. We would agree clear front of pack labels. So, the consumers know what's healthy and what's not.

BIO

Greg S Garrett is the Executive Director of ATNI (Access to Nutrition Initiative), a global foundation supporting market change for nutrition. Greg has held several leadership roles over the past twenty years, including serving on the Global Executive Team of the Drugs for Neglected Diseases initiative (DNDi), directing Abt Global’s health reform in Kyrgyzstan and leading strategy at ThinkWell, a global health organization. During his eight years with the Global Alliance for Improved Nutrition (GAIN), Greg served as Director of Food Fortification and Director of Policy & Financing during which time he established a multi-million-dollar financing facility and managed a portfolio that reached one billion people with fortified foods. Greg serves on the Global Nutrition Report’s Stakeholder Group and is a member of the Blended Finance TaskForce. He holds a BA and an MSc in International Development from the University of Bath, UK.