Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 24, 1993 TAG: 9301220096
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: DAVID E. KALISH ASSOCIATED PRESS
DATELINE: NEW YORK LENGTH: Medium
DIVINING WINNERS, LOSERS OF NEW FOOD LABEL RULES
As food makers digest the new labeling rules unveiled last month, the supermarket's competitive environment is due for some drastic changes.Potential losers are companies that have tried to make their products appear healthier than they really are.
Lesser-known health-food manufacturers may stand to gain from more accurate, informative labels, since their products already include ingredients with the least fat, cholesterol and sodium.
"I think those companies that have been working hard to try to develop healthier, more nutritious foods at this point benefit simply because the ground rules are laid out," said Stephen Greyser, a marketing professor at Harvard Business School.
The guidelines, approved in early December by the White House, throw into question some product trends that have proliferated in the absence of national standards, notably hundreds of brands now claiming to be "healthy," "light" and "low-fat."
Now, consumers can expect fewer packages of processed meats that claim to be "light," since many are not low enough in calories or fat to meet the Food and Drug Administration's new definitions.
However, by reducing the product's salt content, companies may use "light" on the label if it is in the same type size as the word "sodium."
Marketers of fatty, high-calorie foods such as cheeses and ice creams may find themselves at a disadvantage since new labels will explain the number of calories, grams of fat and amounts of other nutrients in the context of a daily sample diet. The rules also restrict claims of "low-fat" to foods with less than 3 grams of fat per serving.
Another possible drawback for marketers is the FDA's standardization of serving sizes. Many high-fat foods base information on tiny serving sizes.
The new rules promise to change advertising because competitors may capitalize on the shortcomings of companies with claims that don't hold up under the new regulations.
Companies, whose officials estimate that the label changes will cost them $2 billion, don't like disruption of strategies that have won products market share and loyal consumers. But some marketers may be forced to overhaul their strategy, substitute more expensive ingredients, or dump a "light" brand.
Potential winners include manufacturers of pricey but high-quality "health" foods, including such small companies as Little Bear Organic Foods, Health Valley Foods and Arrowhead Mills.
Many in this roughly $4.7 billion industry believe the rules will help them boost product sales and market share, and possibly help them win hard-to-get space on crowded supermarket shelves.
Other potential beneficiaries are chemical manufacturers of artificial fats and other nutrient substitutes.
Spokesmen at several large food companies generally said it was too early to tell how the rules will affect their product strategy.
But companies, which are not required to begin putting on new labels until May 1994, are hardly sitting idle.
Quaker Oats Co., for one, has assembled a 25-member team that includes nutritionists, lawyers, and marketing and package design specialists, to help the company change labels for its roughly 1,700 products.