2014 Food and Beverage Industry Outlook

We've developed a list of five issues we foresee as having an impact on the food and beverage industry in 2014.

By Kevin T. Higgins, Managing Editor, and Dave Fusaro, Editor in Chief

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American companies step gingerly around the sustainability issue, careful not to offend climate-change deniers or invite a carbon tax on emissions. Not so their European counterparts: Unilever’s CSR unabashedly acknowledges the scientific rationale for lower emissions and waste. As a consequence, the company will attain supply chain efficiencies that U.S. firms will have to match to avoid a competitive disadvantage. The price of crude oil, after all, quadrupled in the past decade.

Unilever’s Sustainable Living Plan calls for 40 percent reductions in water use and CO2 emissions per unit of production by 2020, and the company’s manufacturing facilities are on target to achieve them. Unilever’s U.S. facilities have cut water use 26 percent in four years, with the Covington, Ky., ice cream facility setting the pace with a 75 percent cut in water use via process improvements. That’s either a testament to American ingenuity or evidence of previously profligate use.

Will American food companies maintain and even strengthen their position at the top of the global food network? Or will trade in value-added foods follow the pattern of commodities, with currency valuations and other factors creating volatility? With their unparalleled throughput capacities and low cost of production, domestic processors hold the inside rail.

The end of trans fats?

It wasn't a complete shock when the FDA announced on Nov. 7 it no longer considered partially hydrogenated oils (PHOs), a precursor to trans fats, a generally recognized as safe (GRAS) food ingredient. But it sent off shock waves all the same.

Citing scientific evidence, the FDA said removal of PHOs from the food supply could prevent up to 7,000 deaths from heart disease each year. The agency called its announcement a preliminary determination and opened a 60-day comment period – which at the end of last year was extended till March 8, in response to numerous stakeholder requests to provide additional time for comments.

Hydrogenation seemed like such a great idea when it was introduced widely early in the past century, not only a practical solution to several problems but apparently better than saturated fats. But it was discovered PHOs are just as bad as sat fats in raising LDL "bad" cholesterol, and they also lower HDL "good" cholesterol, unlike saturates, perhaps doing more damage than sat fats. Damage especially in the way of heart disease.

In 2006, the FDA required food processors to declare the amount of trans fat in their products on the Nutrition Facts label. With public awareness growing of the health threat, many food processors already reformulated to reduce or eliminate trans fat in their products, but a substantial number of products still contain PHOs.

One product developer at a very large firm said the bigger processors either have already phased them out or are in the process of doing so, as much for their own healthier food and labeling corporate initiatives. But smaller processors may not have the technical resources or the funds to do it, so a ban may be toughest on them.

Most food processors we contacted for the initial news story said they saw this coming, whether they had eliminated trans fats or not. But General Mills, at least, indicated it might put up a fight.

“General Mills will be very responsive to this new FDA request for comment," said a spokesperson. "Partially-hydrogenated oil has always been considered safe for use by FDA, and by the food industry as well. General Mills has been working to reduce the use of PHOs for some time – and more than 90 percent of our U.S. retail products are already labeled zero grams trans fat. But FDA has requested comment on this question, and we will.”

Still, an eventual ban appears likely, although the agency indicates it will give food processors a fair amount of time to reformulate. It could even take years before these oils are completely phased out. We will, of course, chronicle the progress. Processors can submit comments electronically at www.regulations.gov -- use docket number FDA-2013-N-1317.

Make or break year for GMOs

2014 could be a make-or-break year for genetically engineered food ingredients (most often called GMOs, for genetically modified organisms). A very vocal but slight minority (like 49 percent) of consumers appears concerned, and groups continue to lobby the FDA for some kind of ruling, probably involving labeling.

We say slight minority because the only real quantitative votes on the subject were ballot initiatives in California in November 2012 and in Washington state last November, and they were close. The California vote to require labeling lost 51.4 percent to 48.6 percent, and the Washington one failed 55-45. Similar referenda are being discussed in New Mexico, Connecticut and Vermont.

So, especially in light of the two close but failed referenda, the question is: Is the momentum building or fading?

There are two salient but opposing facts about GMOs:

  • No credible scientific evidence has proven they carry any dangers.
  • Consumers increasingly are concerned about them and want to know if they are present in the foods they buy.

Because of that second point, natural and organic products retailers are seeing growing demand for products that don't use genetically engineered ingredients. Whole Foods Market "set a deadline that, by 2018, all products in our U.S. and Canadian stores must be labeled to indicate whether they contain genetically modified organisms (GMOs)," the company explains on its website.

Not a ban on them, just a label. "Whole Foods Market has long believed that consumers have a right to know how their food was produced," the statement continues. "We strongly support mandatory labeling of GMO-derived food. We believe that government-mandated labeling of GMO ingredients would enable shoppers, retailers and manufacturers to make purchasing decisions that reflect their beliefs."

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