Food groups look to make products leaner

December 1, 2013 12:58 pm

Food groups look to make products leaner

By James Shotter and Scheherazade Daneshkhu in Vevey

As waistlines in the west expand ever outwards, food companies are under growing pressure to make their products healthier. That might sound like something that could be achieved in a kitchen, rather than a laboratory. But Nestlé needs the lab to devise ways of reducing fat and sugar in the ice cream, chocolate, frozen pizzas and ready meals on which it relies for much of its sales.An example is its KitKat bars. Earlier this year, Nestlécut the amount of saturated fat – which increases cholesterol in the blood, raising the chance of heart disease – in the four-finger chocolate snacks by 11 per cent from 7.2g to 6.4g.

Nestlé did this by replacing one palm oil ingredient with another. But finding the right oil required detailed research into molecular structures: with the wrong oils, the wafer inside the KitKat changed in texture, losing its all-important crunch.

Every three years, the Swiss company overhauls a third of its range, looking at ways to make them healthier without compromising taste.

Each new product must be preferred to its nearest rival by at least 60 per cent of tasters in a blind trial. But to pass muster, it must also be demonstrably healthier.

Like Danone, its smaller French rival which is also active in this field, Nestlé has occasionally been rapped over the knuckles by regulators over health claims.

But this focus on the scientific side of producing healthier food is reflected in Nestle’s research and development budget, which stood at SFr1.54bn in 2012.

The company has also made a series of investments in so called medical foods. Last year it took a stake in Accera, a company that makes Axona, a medical food designed to help people with mild Alzheimer’s disease.

And last year, Nestlé set up a joint venture with the healthcare group Chi-Med which gave it access to a library of Chinese medicines containing more than 50,000 extracts from 1,200 plants.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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