Tag / Natural Foods

by Frank Maduri

Doubling Up: Danone Purchases White Wave

The latest in the seemingly continuous cycle of food industry mergers and consolidations was finalized today with international dairy giant, Danone acquiring a leading American organic food maker, White Wave Foods, in an all cash deal. The details of the transaction put a valuation on White Wave of $56.25 per share which equates to about a 24% premium over their average share price in their 30 day outlook. The deal has a total value of $12.5 billion according to several mainstream media outlets covering the financial transactions of the day.

My perspective on this situation comes from my time working for a food ingredient supplier that was partnered with Danone on numerous product lines. I have had direct involvement with Danone in the US which is more commonly known as Dannon. The statements released today announcing this transaction reflect the emphasis on values which are very important to Danone, in my experience. The focus on healthy food options for the consumer being a core value.

The transaction today essentially doubles the size of Danone’s North American business market share once the deal is finalized. The two companies have some great synergies with a common shared strategic specialty in the dairy segment of the industry. The proposed transaction will provide two major boosts to Danone with regard to their long term business strategy by obtaining White Wave: it provides a robust boost to their overall sales growth (Danone has had some issues with barriers to growth in emerging markets) and it will give them an entry point into the American organic foods segment which is poised for huge growth potential.

Danone has several well-known brands such as Oikos Greek Yogurt, Activia (yogurt), and Evian bottled water. This move to fold in White Wave will enhance their ability to compete with Nestle and General Mills, among other competitors.

White Wave has such notable brands as Horizon Organic and Silk. They possess some very valuable strategies and technologies with regard to the coveted organic/healthy food trend that is sweeping North America at this point. Their combination with Danone will result in an expansion of those brands and product lines as well as new business growth areas based on their shared expertise.

Both companies are committed to healthy lifestyles and sustainable product supply chains with shared focus on providing the consumer with healthy choices at cost effective price points. It will be interesting to see how the White Wave portfolio will be grown with Danone steering the ship.

In my view I know that Danone will seek to work with their select ingredient suppliers to eliminate redundancy in the supply chain for both companies wherever possible because that will directly enhance cost controls and maximize profitability.

It should not be lost that this move will also give Danone a position to compete with their yogurt lines against Chobani and Fage through the utilization of White Wave’s brand portfolio and organic milk production capabilities.

In the end, it is a smart move by Danone and it looks like a very fair valuation of the White Wave business at this point. In the event it gets finalized the consumer will reap the benefits of their collaborative strengths in the production of healthy and organic food offerings.

by Frank Maduri

Tainted: Academies of Science GMO Report

The report issued today from the Academies of Science which essentially stated that GMOs in our food supply are safe for humans to consume came under fire by several consumer advocacy groups. The media coverage of the report can easily be found, and in fact, USA Today did fair and balanced overviews of both sides of this argument.

The focus of this commentary on my own blog here is to not delve into the specifics of the report from this organization, but rather to focus on the facts and implications that still remain in the “great GMO debate” in America. Most of you know as readers of my prior work on the topic of GMOs that I am very strongly anti-GMO. That stance has been honed by researching tons of scientific studies and empirical data from trusted sources and reading accounts of the effects of herbicides such as Roundup and their impact on the soil and crops in our country over a period of roughly 20 years.

Despite what this report released today states, GMOs are not safe for humans to consume, products such as herbicides and pesticides have caused all sorts of illnesses in children and adults. The use of genetically engineered seeds and other products in our agricultural production processes has a direct correlation to increased incidences of gastrointestinal, autoimmune, cancers, and other diseases.

Several other consumer advocacy groups and others involved in the food industry agree with my view on this report and on this situation. The reason: the Academies of Science report is tainted, it is skewed because the scientists and other members of the organization are linked with the large biotech companies and the agricultural production giants such as Monsanto. This effectively caused one group, Food & Water Watch (which is a respected consumer advocacy group) to call the results “watered down”.

This is not the first time, nor will it be the last, that the biotech and big agricultural giants like Dow Chemical and Monsanto got involved to directly or indirectly influence a report or a legislative measure when it comes to GMOs. I have written numerous articles over the past few years on this same subject with political donations being linked to high powered politicians who then change the course of a particular bill so that it is favorable to the big business interests involved.

This should come as no surprise to anyone in the audience because the genetic engineering of food has always at the core been inherently about pure greed. The ability to grow more product or make the food last longer so that stores had less perishable or expired inventory has been the catalyst behind a “make it GMO or bust” mentality.

The evidence of that is clear in the U.S. according to reports published in USA Today, Yahoo! News, and other trusted sources the following numbers for 2015 are staggering with regard to the prevalent nature of genetically engineered produce in our food supply. I have listed below the percentage of each crop that is genetically engineered:
Sugar beets = 99%
Soybeans = 94%
Cotton = 94%
Feed corn = 92%

I have written previously about the pervasive and persistent nature of the GMO problem in the U.S. based on these numbers above. It has created conditions where now the staple products are genetically modified and the soil has been degraded to a point where it is not capable of growing non-GMO produce. The other issue which is just as troubling is that the seed used in so many crops are genetically modified and two main companies – Dow and Monsanto control a huge market share in the seed business for our food supply.

The amount of feed corn that is genetically modified is also a tremendous problem because it has a direct impact on so many areas of agriculture which impacts the food that is provided to many of our sources of animal protein. In turn that creates a scenario where it is very difficult to avoid GMO containing products in your given daily food intake.

In any case, despite your view on the situation, God created all that we have been given here on Earth, every living thing, the soil, the seeds, the water, and the Sun. Then mankind came along and decided that they knew better than God and they decided to alter what God created in the name of enhanced profit margins. There are many other people and groups out there that also agree with this component of my argument against GMOs.

The incidences of increased levels of autoimmune diseases such as celiac, Parkinson’s disease, dementia, certain types of cancers, and other gastrointestinal diseases all jumped up in the past 20 years since man decided that they would alter the crops and the seeds and the soil with chemical ingredients and herbicides.

I cannot emphasize enough that the ties to the Academies of Science and the biotech and agricultural products suppliers casts a huge cloud of suspicion over the validity of the report issued today. It certainly was a far cry from an independent analysis on this issue.

National Geographic put together a really informative and well done piece on the effect of Roundup brand herbicide on the crops and the soil in the American farming system. The results, and the amount that we do not know about such a widely used chemical are alarming.

The final subtopic I will touch on with regard to this issue is the labeling of GMO product which is a debate that I have covered vigorously over the past few years as well. The consumer groups today stated that the majority of Americans still believe strongly that they have the right to know if the food they are consuming is GMO containing. That fight over labeling standards and a national protocol for labeling food products is not going away with this announcement today.

The basic premise being that even if a group states that GMOs are safe, the majority of people, whether they believe those ingredients are bad or unhealthy or not, still maintain that they should know whether the product they are going to purchase contains genetically engineered components.

The fact that so many of the staple food crops that I referenced earlier in this piece are genetically engineered creates a potentially very negative situation for certain large food producing companies such as Nestle and ConAgra just to name two. The consumer will most definitely think twice about buying a can of soup with genetically modified soy in the ingredients.

The federal government has to get involved with a standard protocol because each individual state cannot have their own separate ways of declaring GMOs on labeling for grocery products, it will become a complete nightmare for interstate commerce.

In the end, the report today did nothing to quell the debate over GMOs in the food we eat, instead it stoked the fire. This debate will continue because there is a mountain of evidence to refute what this report claimed today. The trend toward healthy and fresh/ organic eating habits in the American consumer will not change because of this report today. The distrust of the government, the disdain for lobbyists, and the general skepticism towards large corporations will continue in America, and in fact was emboldened by this report today. I urge you to educate yourself on this topic because it can have a dramatic impact on your health and that of the rest of your family. This report cannot change that fact.

by Frank Maduri

Senate Rejects Anti-GMO Food Labeling Bill

In a landmark victory for the American consumer, the United States Senate voted on Wednesday to reject S-2609, a measure aimed at making the labeling of GMOs “voluntary” for food producers. This bill was also known by some consumer groups as the DARK (Deny Americans the Right to Know) Act, and it represented a rare pushback by the Senate against big corporate interests such as Monsanto, who were trying to advance this measure into passage as the law.

This bill, S-2609, if passed, would have nullified the food labeling law approved in Vermont that requires the disclosure of genetically modified ingredients in all food products sold in that state (effective in July – see my previous article). The Senate cited the recent poll data that demonstrated that 9 of 10 Americans want GMOs to be labeled on food products. This bill (2609) was introduced by Senator Pat Roberts of Kansas, and his response to the defeat of the measure was, and I am paraphrasing, that he presented a solution and that the opposition should present a solution to address this problem.

In fact, that is where this issue is headed in political terms, since the vote was so close and the votes are not there for cloture to be achieved, the debate is headed for a compromise version of the bill. In my view, after covering this issue for years now and having worked in the food industry, that compromise version is going to center on balancing the multiple components involved. The compromise bill will focus on the determination of a fair policy for the food producers, the farmers, and the consumer.

Opposition View

The contention by Senator Roberts regarding the absence of an opposition solution is also not a completely accurate statement. In March, Senator Jeff Merkley of Oregon proposed a separate bill which would make the labeling of GMO ingredients mandatory, but it gave food producers several options on how to disclose that information. I wrote a piece a few months back about the Campbell Soup Company decision to disclose the genetically engineered ingredients in all their products. The Merkley bill proposal was similar in that the food company had the option to put an asterisk by the ingredients that are modified and then put the following statement on the bottom of the label: “produced with genetic engineering”.

The debate can (and will) continue about a universal food labeling policy because it is needed to streamline costs. I have covered this topic previously in that as much as I agree with the law passed in Vermont and the ambition displayed there, we cannot have a system of interstate commerce where each state has their own individual food labeling laws. That will increase costs for the food producing companies and most likely those costs will be passed along to the consumer.

In general, I believe in the state level being able to mandate their own individual legislation, but in this scenario, a federal standard for food labeling of GMOs is needed. The big corporate interests such as Monsanto do not want to see that happen because it will be bad for their business, pure and simple. The bill, S-2609, was in some degree a misnomer, because it would make the labeling voluntary, which begs the question: what food companies would volunteer the presence of genetically engineered ingredients in their products? The answer is few to none.

The simple fact remains that an overwhelming majority of American consumers feel that they have the right to know what is in their food. That sentiment gave rise to the “right to know if it’s GMO” slogan used at several public rallies and on social media platforms. The political system is going to have to determine how it will mediate this situation to determine a solution that works for all parties involved.

Tip of the Iceberg

However, I believe, and others have echoed this sentiment in the media whether from the political side or from the strict viewpoint of regulatory controls over the industry; that this issue is just the tip of the iceberg. I believe that the food labeling policy as it relates to genetically engineered ingredients or components is just one piece of a larger set of issues with regard to our food supply.

It is true that a good amount of momentum in this anti-GMO movement has come Gen – Xers and Millennials that are concerned about the health issues that have plagued our country in recent years: increases in the incidences of cancer, autoimmune diseases, autism, and diabetes just to name a few. There are some media reports of consumer groups made up of parents who are petitioning pediatricians throughout the U.S. to send a formal report to Congress regarding the negative effects of GMOs in food and the linkages to certain childhood illnesses.

The trend toward healthier eating and utilization of organic as well as locally raised or locally grown food products is one that I have covered extensively in the past. It is certainly a contributing factor in the decision of the Senate with regard to the “DARK” Act this week. These are the types of issues I am referring to with regard to an entire food industry related set of legislation to make some needed reforms to help better inform the consumer when making food purchasing choices.

The country of origin being disclosed on products is another whole area in regards to food labeling that could be addressed. The issues regarding where our food is actually coming from has been a challenge for Congressional legislation for some time now. It makes sense that if the public is passionate about what ingredients are in a particular product, they would also care strongly about where the product came from.

The issue of organic food scale up is another topic that could use some form of policy solution. The crops and seed for certain staple food products have been genetically engineered by big corporations like Monsanto and Dow Chemical for years. I am currently researching an article on the effects of Monsanto’s Roundup product on soil and agricultural use which has been linked by the World Health Organization to be a carcinogen. The ability, or lack thereof, to scale up the amount of food needed to supply even part of the population with organic food is a huge problem.

Then, the whole issue of access to healthy and fresh food could be addressed by the government. I wrote an entire series of articles on food deserts in America back some time ago, and there are many problems still today with the inability for access to healthy food particularly in inner cities and in very rural areas. The USDA and other government agencies have discussed certain incentive programs to potentially remedy the situation, but they have no real impetus to take action without a Congressional mandate.

Finally, the whole topic of irrigation issues and water supply concerns with fracking and other wastewaters getting into our water table as well as the access for farming communities to water for their crops is another aspect of this subject area that could be explored through the legislative process.

No Longer In the “DARK”

In returning to the topic at hand, the defeat of this Senate bill and the solution presented as an alternative by Senator Merkley, which seems to not have the support to move forward anywhere either, a solution is needed. The compromise bill will be just that, a meeting in the middle. It will make the disclosure of genetically engineered ingredients mandatory for food producers but it will be done without the options in the Merkley bill, and probably entail something more visible on the product packaging than an asterisks.

The result of this vote demonstrated that when people are united in a cause, and this is one of the biggest issues facing the food industry, then the people are heard. We, the consumers, have a right to know what is in the food we eat and we have a right to make informed decisions based on what that information provided to us yields. We have the “right to know if it’s GMO” and the Senate heard that loud and clear, and more importantly they listened. What is left in the weeks to come is for a law that is universal, that makes sense, and that provides the consumer with the information disclosed in a clear manner. I hope the Senate will listen and will provide the public with that legislation, the results from this week give me some degree of confidence that they will do so.

The presence of genetically engineered ingredients in our food is a reality. The issue at hand is how we are going to better inform ourselves as consumers to the presence of these ingredients. This disclosure will raise awareness levels further to the widespread utilization of GMOs in our food supply. The discourse should then shift into a measurable action plan to scale up alternatives that are GMO-free. The stage is set for some landmark changes to potentially take place.

In the event that you are reading this and did not have an active position on this important issue, I encourage you to inform yourselves to do so. The presence of GMOs in food has consequences to us and to our children and to future generations. We have the obligation to make sure our policies provide alternatives and education so that all consumers have access to accurate information in the future.

by Frank Maduri

Fast Food Recipe Changes: Smart Science or Smart Marketing?

One of the bigger news stories over the past few weeks in the mainstream media cycle was the series of announcements by fast food chains regarding the removal of artificial preservatives and other recipe changes. The news rides a trend of increased focus by the American consumer on natural foods and healthier eating.

 

However, at the core of the debate is the question whether this set of changes was smart from a food science perspective or is it a case of smart marketing? Will the changes to the recipes make the food taste different?

 

These questions will be explored as well as the background to the decisions from an executive level. This news follows the introduction of new chicken offerings by fast food giants McDonald’s and Subway recently that feature the removal of preservatives and artificial ingredients. Those changes made consumers, such as myself, pause and wonder what was in the chicken in the first place, if the chains had to pronounce the new supply basically as “real” chicken.

 

I have covered the natural foods trend for a while now, but I am still surprised at how some people within the media feel it is a “fad”. Where that label is a misnomer is that fads do not last as long as this trend has within the American food landscape. The sales of organic foods were at an all-time high in 2014, this “fad” is not slowing any time soon, and now you see the bigger players across the industry getting on board.

 

The most recent of those big players to drop into the recipe change trend came just before the Memorial Day holiday weekend, when Taco Bell and Pizza Hut announced changes to make their food offerings “more natural”. Both chains are experimenting with the revamped recipes at this point. Taco Bell mentioned in the press release to the media that they are focused on removing ingredients such as natural black pepper flavor and replacing it with real black pepper.

 

I have prior industry experience in the flavor industry and this trend of replacing flavor systems, whether they be natural or artificial flavors (Panera Bread is removing all artificial flavors and ingredients from their menu by the end of 2016) will damage the flavor ingredients industry which has already been slowed by other factors. The chief factor in the downturn being the decreased number of new products being developed in many segments of the food industry by the large food production companies.

 

These changes to the menu offerings of several major fast food operators will have a dramatic impact on the supplier side of the food industry across many segments from preservatives, sweeteners, and other industrial products. It is similar to anything else, it is a relationship of cause and effect.

 

Taste and See

 

The big question at the forefront of this debate is whether these changes are smart from a food science perspective or whether they are just simply an exercise in smart marketing? I think the “jury is still out” on the answer. In my view the new recipes will have to be rolled out first and then be subjective to public opinion before we know the answer.

 

In a related issue, it remains to be seen whether the taste profiles of some of these menu items will be altered based on the changes made to the recipes to make them more natural in orientation. Some industry experts seem to feel that the changes to the recipes being proposed by these restaurant chains will inevitably alter the taste profiles of those menu offerings in some way.

Panera Bread, for instance, has already completed the most painstaking of the menu changes at hand: the removal of artificial sweeteners and chemical ingredients from their salad dressings. They believe that the taste profiles are similar to the original line of dressings for their extensive salad offerings.

 

However, in the end, as the food expert featured on Fox Business explained relative to Panera Bread and I am paraphrasing: all these changes are all well and good but at the end of the day their main product is still bread, and bread is still inherently unhealthy.

 

Other restaurant chains have publicly stated that they will only make these recipe changes if it makes sense from both a taste and a cost perspective. In the event that the executives at a given company feel that the taste profile is too dramatically altered, or if the cost of the alterations to an all-natural recipe are cost prohibitive, then it will be scrapped.

 

Smart Marketing

 

I mentioned earlier that I have industry experience in the flavor industry working on product line extensions with the largest food companies in the world. I also have experience in marketing in a variety of other industries and I can tell you, and some other industry experts agree with this assessment, that most of these announced recipe changes from the large fast food restaurant operators are based on smart marketing more than any other variable within this equation.

 

Taco Bell, for instance, took a hit back several years ago when it was discovered that they used GMO corn in their tortilla shells and other corn based menu items. They took another hit when they had issues with their supply of beef for their menu items back about five years ago.

 

The net effect of those two public relations nightmares caused the executive team at Taco Bell and other fast food operations to look to the natural foods trend to bring some positive marketing and media coverage to the often negative feedback loop which is the fast food industry.

 

In the case of a chain like Panera Bread it is smart marketing more than smart food science and for two reasons: it appeals to the purchasing habits of their core demographic customer base, and it distracts somewhat from the fact that their main offering is still bread based products loaded with calories.

 

It is also true in the case of Pizza Hut, which is trying to stave off fierce competition from a resurgent Domino’s and a stalwart in Papa John’s, their executive team looked at this angle as a potential avenue to gain a point of difference with the customer. If they can tout that they are using natural products in their pizza offerings they are trying to win over a general public that is very much in tune with that natural products messaging.

 

This is a developing story and one where I am sure we have not seen the end. I am confident that more companies will come forward with pledges to change their recipes or their product offerings to reflect a change to more “natural” ingredients. It may, in some cases, end up costing the consumer more money for the same products before the changes were indoctrinated.

 

In the end, this whole scenario is more about smart marketing than anything else as these major food producers and restaurant chain operators all vie for one thing and one thing only: your money.