Startups target sugar reduction

Sugar reduction startups

The consumer-packaged-goods-related article that I found most interesting this week was in FoodBusinessNews and it described three startups focused on developing very innovative sugar reduction alternatives. Here is a quick synopsis of those companies:

DouxMatok produces a patented product called Incredo Sugar. It is designed to improve the efficiency of sugar delivery to the sweet taste receptors and enhances the perception of sweetness in food and beverages. The goal is to reduce sugar by 30%-50% without compromising taste or texture.
The Supplant Company creates fiber-rich sugars by using the specific fiber-rich parts of crops, such as stems, stalks, husks and cobs.
Bonumose Inc. is endeavoring to reduce the cost of using tagatose, a rare sugar that the company describes as a “good for you sugar.” Tagatose is 90% as sweet as sugar without any off-flavors, according to Bonumose. The company’s founders invented an enzymatic pathway to enable the cost-effective usage of tagatose. The Hershey Co. and sugar marketer ASR Group partnered in 2018 to co-lead an equity investment in Bonumose.

Growing concern about sugar and salt intake

Of course, there are easy ways for consumers to cut sugar. For starters, maybe stop eating Pop-Tarts and drink coffee black, like a real coffee drinker. But consumers want healthier foods without compromise and capital is available for companies addressing those trends. The public perception on healthy eating has evolved away from avoiding fats to also shunning foods that have limited positive nutritional value and also limiting sugar and salt intake. However, I don’t think most consumers fail to appreciate the connection between sodium and hypertension. To address the evolving consensus, the Food and Drug Administration revised its definition on what foods are considered “healthy” and the Biden administration has proposed a European-style CPG labeling system on the front of food packaging that adds clarity to what is currently required in the U.S. Those regulatory changes play into the hands of any companies that can help CPGs reduce the sugar content of their products.

*CPGs in the U.K. are required to have front-of-package nutrition labels, such as this one. Clearly, this product is high in sugar. (Image: Shutterstock)*

Personal care cutbacks

Shares of Procter & Gamble are down 6% year to date — versus S&P year-to-date change of plus-2.8% — after the company reported a 6% year-over-year (y/y) volume decline for its most recent quarter Thursday amid a 10% y/y average price increase. That demonstrates cutbacks to consumer spending that, at first, were more prevalent for big-ticket, discretionary items are now spreading to consumer staples.

No time to pull back on marketing

In addition to my CPG show, “The Stockout,” I recommend listening to the CPG Insiders podcast. On its most recent episode, the hosts made a compelling case for CPGs to avoid cutting back on marketing, as appealing as that might be as a “discretionary” cost-reduction measure in challenging times. They make the case that cuts to advertising budgets are shortsighted, pointing to the early days of Procter & Gamble as an example of what’s possible by ramping up marketing as others are scaling back. One exception is when service supply chains are under so much pressure that in-stock rates are below targeted levels. In that case, a marketing pullback can be a way to manage in-stock rates.

Shippers ask carriers to demonstrate effective service

As a further sign that shippers possess the negotiating power, in order for carriers to participate in the bidding process for contracted freight shippers are now asking carriers to first demonstrate they can provide solid service by hauling loads in the spot market. That news is according to a major logistics company that is in frequent contact with FreightWaves. With spot rates still below contract rates in most cases, most carriers would rather not participate in the current spot market if they can avoid it. But that appears to be part of the price of admission to win certain business. After public complaints from CPGs about not knowing when trucks will show up and not having sufficient ingredients and/or packaging materials, it’s easy to see why they would go that route, particularly with the market in their favor.