american idle...obesity in the usa
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1
Obesity in America…
Specialty Medical Gregory Schaeppi
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Agenda
Background
• Obesity defined
• Obesity / economic trends
• Health risks and causes
Implications for the Food System
• The tobacco and alcohol industries?
• Litigation, legislation / regulation, business factors
Developing a Strategic Response
• Understanding the changing consumer
• Customer, product and internal strategies
Background
• Obesity defined
• Obesity / economic trends
• Health risks and causes
Implications for the Food System
• The tobacco and alcohol industries?
• Litigation, legislation / regulation, business factors
Developing a Strategic Response
• Understanding the changing consumer
• Customer, product and internal strategies
10
What is Obesity?
Obesity is a disease defined as an imbalance Obesity is a disease defined as an imbalance between energy intake and output with the between energy intake and output with the accumulation of large amounts of body fat.accumulation of large amounts of body fat. Calculated by Body Mass Index (BMI)
• “Overweight” = BMI of 25 or more
• “Obese” = BMI of 30 or more
• “Severe Obesity” = BMI over 40
BMI Calculation:
• (weight [lbs] / height2 [inches]) x 704.5 = BMI
Obesity is a disease defined as an imbalance Obesity is a disease defined as an imbalance between energy intake and output with the between energy intake and output with the accumulation of large amounts of body fat.accumulation of large amounts of body fat. Calculated by Body Mass Index (BMI)
• “Overweight” = BMI of 25 or more
• “Obese” = BMI of 30 or more
• “Severe Obesity” = BMI over 40
BMI Calculation:
• (weight [lbs] / height2 [inches]) x 704.5 = BMI
Source: Centers for Disease Control
11
What is Obesity?
Obesity is a disease defined as an imbalance Obesity is a disease defined as an imbalance between energy intake and output with the between energy intake and output with the accumulation of large amounts of body fat.accumulation of large amounts of body fat. Calculated by Body Mass Index (BMI)
• “Overweight” = BMI of 25 or more
• “Obese” = BMI of 30 or more
• “Severe Obesity” = BMI over 40
BMI Calculation:
• (weight [lbs] / height2 [inches]) x 704.5 = BMI
Obesity is a disease defined as an imbalance Obesity is a disease defined as an imbalance between energy intake and output with the between energy intake and output with the accumulation of large amounts of body fat.accumulation of large amounts of body fat. Calculated by Body Mass Index (BMI)
• “Overweight” = BMI of 25 or more
• “Obese” = BMI of 30 or more
• “Severe Obesity” = BMI over 40
BMI Calculation:
• (weight [lbs] / height2 [inches]) x 704.5 = BMI
Source: Centers for Disease Control
127 mm Americans
9 mm Americans
60 mm Americans
12
Percent of U.S. Adults Overweight
0
10
20
30
40
50
60
70
1976-1980 1988-1994 1999-2000
Overweight
Obese
Severely Obese
0
10
20
30
40
50
60
70
1976-1980 1988-1994 1999-2000
Overweight
Obese
Severely Obese
64.5%56.0%
46.0%
30.5%
23.0%
14.4%
Source: Centers for Disease Control
13
Childhood Obesity in the U.S.
0
2
4
6
8
10
12
14
16
1976-80 1988-94 2000
Age 6-11
Age 12-19
0
2
4
6
8
10
12
14
16
1976-80 1988-94 2000
Age 6-11
Age 12-19
Source: Centers for Disease Control
6.5%
5%
11.3%10.5%
15.3% 15.5%
14
Food Expenditures – Nominal Dollars
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
1929
1934
1939
1944
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
1929
1934
1939
1944
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
Total
Food At Home
Food Away From Home
Source: USDA Economic Research Servicehttp://www.ers.usda.gov/briefing/CPIFoodAndExpenditures/Data/table7.htm
15
Food Expenditures – Constant Dollars
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
1953
1957
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
1953
1957
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
Total
Food At Home
Food Away From Home
Source: USDA Economic Research Servicehttp://www.ers.usda.gov/briefing/CPIFoodAndExpenditures/Data/table7.htm
16
Food Expenditures as a percent of Disposable Income
0%
5%
10%
15%
20%
25%
30%
1929
1934
1939
1944
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
0%
5%
10%
15%
20%
25%
30%
1929
1934
1939
1944
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
Total
Food At Home
Food Away From Home
Source: USDA Economic Research Servicehttp://www.ers.usda.gov/briefing/CPIFoodAndExpenditures/Data/table7.htm
17
Food Expenditures as a % of Disposable Income vs. Prevalence of Adult Overweight / Obesity
0%
10%
20%
30%
40%
50%
60%
70%
1962 1974 1980 1994 2000
0%
10%
20%
30%
40%
50%
60%
70%
1962 1974 1980 1994 2000
Source: USDA Economic Research Service / CDC NHSChttp://www.ers.usda.gov/briefing/CPIFoodAndExpenditures/Data/table7.htm
Obesity is defined as a BMI of 30+
% Overweight
% Obese
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Food Expenditures as a % of Disposable Income vs. Rate of Overweight Children in U.S.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1965 1970 1974 1980 1994 2000
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1965 1970 1974 1980 1994 2000
Food Away From Home
Food At Home
TotalAges 6-11
Ages 12-19
19
Foodservice Sales by Type of Outlet
0%
10%
20%
30%
40%
50%
60%
1929
1939
1948
1954
1958
1963
1967
1972
1977
1982
1987
1992
1997
2002
0%
10%
20%
30%
40%
50%
60%
1929
1939
1948
1954
1958
1963
1967
1972
1977
1982
1987
1992
1997
2002
All Other
Lodging
Source: USDA Economic Research Servicehttp://www.ers.usda.gov/briefing/CPIFoodAndExpenditures/Data/table17.htm
Full Service
QSR
Education
20
Calorie Supply Per Capita Per Day
0
500
1000
1500
2000
2500
3000
3500
4000
1961 1966 1971 1976 1981 1986 1991 1996 2001
0
500
1000
1500
2000
2500
3000
3500
4000
1961 1966 1971 1976 1981 1986 1991 1996 2001
Total
Vegetable
Animal
Source: USDA Economic Research Service
(Adult male requires 2800 calories)
21
Total Supply: Calories vs. Other Components
2900
3000
3100
3200
3300
3400
3500
3600
3700
3800
3900
1970 1973 1976 1979 1982 1985 1988 1991 1994
0
100
200
300
400
500
600
2900
3000
3100
3200
3300
3400
3500
3600
3700
3800
3900
1970 1973 1976 1979 1982 1985 1988 1991 1994
0
100
200
300
400
500
600
Calories Grams
Source: USDA ERS
Per Capita Supply Per Day
Carbohydrates +27%
Calories +15%
Total Fat +3%
Protein +16%
22
Cost Per Calorie
$0.0000
$0.0005
$0.0010
$0.0015
$0.0020
$0.0025
1961 1966 1971 1976 1981 1986 1991 1996 2001
$0.0000
$0.0005
$0.0010
$0.0015
$0.0020
$0.0025
1961 1966 1971 1976 1981 1986 1991 1996 2001
Current Prices
1988 Prices
Source: USDA Economic Research Service
Total Supply / Per Capita Expenditures
23
Cost Per Calorie
Item Cost CaloriesBeefsteak Tomato $1.59 35
Atkins Advantage Bar $2.69 230
Red Delicious Apple $0.69 80
Wonder Light Wheat Bread $2.49 80
AVG. COST PER CAL
Fruity Pebbles $3.85 150
Big Mac $0.99 580
Original Whopper $0.99 710
Kraft Macaroni & Cheese $.79 390
Ramen Chicken Vegetable $.19 190
Some studies suggest that the low cost of highly processed “unhealthy” calories contributes strongly to the obesity epidemic, particularly among lower-income segments.
24
Cost Per Calorie
$0.0454
$0.0117
$0.0086
$0.0031
$0.0018
$0.0017
$0.0014
$0.0007
$0.0005
$- $0.0100 $0.0200 $0.0300 $0.0400 $0.0500
Beefsteak Tomato
Atkins Advantage Bar
Red Delicious Apple
Wonder Light Wheat Bread
Fruity Pebbles
Big Mac
Original Whopper
Kraft Macaroni & Cheese
Ramen Chicken Vegetable
Cost per Calorie
Source: The Hale Group, Ltd.
25
Obesity Trends* Among U.S. AdultsBRFSS, 1985
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
26
Obesity Trends* Among U.S. AdultsBRFSS, 1986
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
27
Obesity Trends* Among U.S. AdultsBRFSS, 1987
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
28
Obesity Trends* Among U.S. AdultsBRFSS, 1988
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
29
Obesity Trends* Among U.S. AdultsBRFSS, 1989
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
30
Obesity Trends* Among U.S. AdultsBRFSS, 1990
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
31
Obesity Trends* Among U.S. AdultsBRFSS, 1991
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
32
Obesity Trends* Among U.S. AdultsBRFSS, 1992
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
33
Obesity Trends* Among U.S. AdultsBRFSS, 1993
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
34
Obesity Trends* Among U.S. AdultsBRFSS, 1994
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
35
Obesity Trends* Among U.S. AdultsBRFSS, 1995
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
36
Obesity Trends* Among U.S. AdultsBRFSS, 1996
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
37
Obesity Trends* Among U.S. AdultsBRFSS, 1997
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
38
Obesity Trends* Among U.S. AdultsBRFSS, 1998
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
39
Obesity Trends* Among U.S. AdultsBRFSS, 1999
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
40
Obesity Trends* Among U.S. AdultsBRFSS, 2000
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
41
Obesity Trends* Among U.S. AdultsBRFSS, 2001
Source: Mokdad A H, et al. J Am Med Assoc 1999;282:16, 2001;286:10.
42
Health Risks of Obesity
High blood pressure High blood cholesterol Type 2 (non-insulin dependent)
diabetes Insulin resistance, glucose
intolerance Hyperinsulinemia Coronary heart disease Angina pectoris Congestive heart failure Stroke Gallstones Cholescystitis and cholelithiasis Gout
High blood pressure High blood cholesterol Type 2 (non-insulin dependent)
diabetes Insulin resistance, glucose
intolerance Hyperinsulinemia Coronary heart disease Angina pectoris Congestive heart failure Stroke Gallstones Cholescystitis and cholelithiasis Gout
Osteoarthritis Obstructive sleep apnea and
respiratory problems Some types of cancer (such as
endometrial, breast, prostate, and colon)
Complications of pregnancy Poor female reproductive health
(such as menstrual irregularities, infertility, irregular ovulation)
Bladder control problems (such as stress incontinence)
Uric acid nephrolithiasis Psychological disorders (such
as depression, eating disorders, distorted body image, and low self esteem).
43
Health Risks of Obesity
High blood pressure High blood cholesterol Type 2 (non-insulin dependent)
diabetes Insulin resistance, glucose
intolerance Hyperinsulinemia Coronary heart disease Angina pectoris Congestive heart failure Stroke Gallstones Cholescystitis and cholelithiasis Gout
High blood pressure High blood cholesterol Type 2 (non-insulin dependent)
diabetes Insulin resistance, glucose
intolerance Hyperinsulinemia Coronary heart disease Angina pectoris Congestive heart failure Stroke Gallstones Cholescystitis and cholelithiasis Gout
Osteoarthritis Obstructive sleep apnea and
respiratory problems Some types of cancer (such as
endometrial, breast, prostate, and colon)
Complications of pregnancy Poor female reproductive health
(such as menstrual irregularities, infertility, irregular ovulation)
Bladder control problems (such as stress incontinence)
Uric acid nephrolithiasis Psychological disorders (such
as depression, eating disorders, distorted body image, and low self esteem).
$93 Billion in
Health Care Costs
Cost of healthcare for obese people estimated to be 37% greater than normal weight people, adding $732
per capita each year to healthcare costs.
44
Weight Loss: A Significant Concern
Source: NMI 2002
Health conditions the general population is trying to manage / treat:
Weight Loss-Appearance
Cholesterol Level
Weight Loss-Health
Fat Intake
Sugar Intake
Salt Intake
Carbohydrate Intake
Lactose Intolerance
Food Allergies
Protein Intake
44.8%
39.9%
38.8%
33.8%
31.1%
28.7%
14.3%
9.7%
9.6%
9.1%
45
Causes of Obesity
Calories Consumed
Calories Burned
46
Causes of Obesity
Source: The Hale Group, Ltd.
More Calories Consumed than
Burned
Declining Food Costs
Food Supply Chain Over-Capacity
New Realities of Society, Family and Education
Consumer Confusion – Diet Fads, Food Pyramid
47
Tobacco, Alcohol Set Examples?
What can be learned from tobacco, alcohol? “Big Fat” seen as the next “Big Tobacco”
Years of regulation, litigation and consumer education
Social stigma associated with smoking, drinking
Growth of no-smoking zones
Death of the “3-Martini Lunch”
Key drivers in litigation, legislation:• Health care costs• Effects of second hand smoke• Drunk driving
What can be learned from tobacco, alcohol? “Big Fat” seen as the next “Big Tobacco”
Years of regulation, litigation and consumer education
Social stigma associated with smoking, drinking
Growth of no-smoking zones
Death of the “3-Martini Lunch”
Key drivers in litigation, legislation:• Health care costs• Effects of second hand smoke• Drunk driving
48
Tobacco History
1800 2000
Early 1800s – Cigarettes first introduced to U.S.
1864 – First Federal tax imposed
WWI – Doctors praise cigarettes for helping soldiers relax and ease their pain Late ’40s – Early ’50s –
Smoking first linked to lung cancer, other diseases
49
Tobacco History
1800 20001964 – S.G. report concludes smoking is a
cause of lung cancer
1965 – Congress requires health warnings on cigarette packs
1969 – TV and radio ads banned1973 – AZ first state to restrict smoking in
public places
1979 – Smoking restricted in gov’t facilities1988 – Smoking banned on short domestic
flights
1990 – Smoking banned on all domestic commercial flights
1993 – Smoking banned in White House
50
Tobacco History
1800 2000
1994 – US tobacco manufacturers testify nicotine is not addictive and they do not manipulate nicotine in
cigarettes
1994 – Mississippi is first state to sue industry seeking to recover medicated costs (settled 1997)
1996 – Liggett offers to settle class action suit by taking financial responsibility for related disease
and death for first time
1998 – Industry approves 46-state Master Settlement Agreement for
$206 billion (paid through 2025)
51
U.S. Cigarette Consumption
Source: U.S. Tobacco Production, Consumption, and Export Trends, Report for Congress, Updated June 3, 2003 (Primary data source: USDA, ERS
52
Per Capita Alcohol Consumption (gals.)
0
5
10
15
20
25
30
35
1975
1978
1981
1984
1987
1990
1993
1996
1999
Total
Beer
Wine
Distilled Spritis
0
5
10
15
20
25
30
35
1975
1978
1981
1984
1987
1990
1993
1996
1999
Total
Beer
Wine
Distilled Spritis
Source: USDA ERS
1980: MADD established
53
Per Capita Alcohol Consumption (gals.)
0
5
10
15
20
25
30
35
1975
1978
1981
1984
1987
1990
1993
1996
1999
Total
Beer
Wine
Distilled Spritis
0
5
10
15
20
25
30
35
1975
1978
1981
1984
1987
1990
1993
1996
1999
Total
Beer
Wine
Distilled Spritis
Source: USDA ERS
1982: Presidential Commission on Drunk Driving
54
Per Capita Alcohol Consumption (gals.)
0
5
10
15
20
25
30
35
1975
1978
1981
1984
1987
1990
1993
1996
1999
Total
Beer
Wine
Distilled Spritis
0
5
10
15
20
25
30
35
1975
1978
1981
1984
1987
1990
1993
1996
1999
Total
Beer
Wine
Distilled Spritis
Source: USDA ERS
1984: Federal “21” minimum drinking age enacted
55
Yet, Alcohol Succeeds
2003 Adams Handbook Advance Overall sales of $137.2 b (2002)
Distilled spirits up for fifth consecutive year (1.8%)
Wine up for ninth year (3.3%)
Beer up for seventh year (1.8%)
High end products – particularly imports – outperform the overall business
Malternatives, lights (40% of market) and imports advance in beer sector
You don’t have to drink more, just drink better!
2003 Adams Handbook Advance Overall sales of $137.2 b (2002)
Distilled spirits up for fifth consecutive year (1.8%)
Wine up for ninth year (3.3%)
Beer up for seventh year (1.8%)
High end products – particularly imports – outperform the overall business
Malternatives, lights (40% of market) and imports advance in beer sector
You don’t have to drink more, just drink better!
Source: Adams Beverage Group
56
Implications For Food System
0
500
1000
1500
2000
2500
3000
3500
4000
Calorie Supply Calorie Requirement
0
500
1000
1500
2000
2500
3000
3500
4000
Calorie Supply Calorie Requirement
So, who will voluntarily trim sales to accommodate lower calorie requirements?
57
Implications for Food System
Litigation
Legislation / Regulation
R&D / Innovation
Sales & Marketing
Litigation
Legislation / Regulation
R&D / Innovation
Sales & Marketing
All could add significant cost to food system, but could also lead to new opportunities.
All could add significant cost to food system, but could also lead to new opportunities.
58
Litigation
Class action lawsuits on behalf of “overweight” or “obese” consumers
• From states seeking to recover healthcare costs
Targeted lawsuits
• Individual manufacturers and operators could be targeted for their perceived role in misleading consumers
• Trans fats could be a key issue
“Legal Approaches to the Obesity Epidemic,” helped attorneys and public-health advocates plan strategies for future
Class action lawsuits on behalf of “overweight” or “obese” consumers
• From states seeking to recover healthcare costs
Targeted lawsuits
• Individual manufacturers and operators could be targeted for their perceived role in misleading consumers
• Trans fats could be a key issue
“Legal Approaches to the Obesity Epidemic,” helped attorneys and public-health advocates plan strategies for future
59
Legislation
Nutrition Labeling NLEA addresses manufacturers now; Trans fat labeling due in
2006 Some states and DC attempting to force restaurants to post
nutrition information
Federal and State Competitive Foods Policies Prohibit sale of foods of minimal nutritional value during lunch;
may be allowed if income accrues to benefit of existing school foodservice or school / student organizations
23 states go beyond USDA policy
Personal Responsibility Acts Primarily tort reform legislation; limits liability of food
companies in question of consumer obesity
Nutrition Labeling NLEA addresses manufacturers now; Trans fat labeling due in
2006 Some states and DC attempting to force restaurants to post
nutrition information
Federal and State Competitive Foods Policies Prohibit sale of foods of minimal nutritional value during lunch;
may be allowed if income accrues to benefit of existing school foodservice or school / student organizations
23 states go beyond USDA policy
Personal Responsibility Acts Primarily tort reform legislation; limits liability of food
companies in question of consumer obesity
60
Federal Legislation
S.1172 (Frist) Improved Nutrition and Physical Activity Act
H.R.2227 (Castle) Obesity Prevention Act
S.1428 (McConnell) Commonsense Consumption Act of 2003
H.R.339 (Keller) Personal Responsibility in Food Consumption Act
S.1201 (Graham) YMCA Healthy Teen Initiative Act
S.1007 (Leahy) Better Nutrition for School Children Act of 2003
S.995 (Leahy) Child Nutrition Initiatives Act of 2003
… and at least three other unnamed bills aimed at nutrition, wellness and obesity
S.1172 (Frist) Improved Nutrition and Physical Activity Act
H.R.2227 (Castle) Obesity Prevention Act
S.1428 (McConnell) Commonsense Consumption Act of 2003
H.R.339 (Keller) Personal Responsibility in Food Consumption Act
S.1201 (Graham) YMCA Healthy Teen Initiative Act
S.1007 (Leahy) Better Nutrition for School Children Act of 2003
S.995 (Leahy) Child Nutrition Initiatives Act of 2003
… and at least three other unnamed bills aimed at nutrition, wellness and obesity
61
R&D / Innovation
1980s-1990s
Low Fat Foods
Fat Bad
Carbs OK
Food Pyramid
Food Pyramid
2000s-
Low Carb Foods!
Some Fat OK
Carbs Bad7-10 Servings of Starch (carbs)
7-10 Servings of Starch (carbs)
How does this evolution affect current R&D platforms and investment?
What needs to change to meet new diet reality?
62
Innovation
Innovation . . . a winning strategy to create sustainable profitable growth
Innovation . . . a winning strategy to create sustainable profitable growth
1982 1995
Mar
ket
Val
ue
Top Tier Innovators24.5% Return
S&P 500
Bottom Tier Innovators 8% Return
The Innovation Premium Historical Market Value
63
Sales & Marketing
Consumer expected to shift spending
• Merrill Lynch sees 1% shift ($1.5 b) in consumer spend
• Risk: Companies with 25% or more of sales exposed to “unhealthy categories”
At risk categories: potatoes, pastas, bakery / bread, etc.
Can added cost of labeling, revamping R&D, litigation and lobbying be passed on to customers?
Consumer expected to shift spending
• Merrill Lynch sees 1% shift ($1.5 b) in consumer spend
• Risk: Companies with 25% or more of sales exposed to “unhealthy categories”
At risk categories: potatoes, pastas, bakery / bread, etc.
Can added cost of labeling, revamping R&D, litigation and lobbying be passed on to customers?
64
Arby's Philly Beef Supreme Sandwich
730 calories, 40 grams of fat $5.99
McDonald's Grilled Chicken California Cobb Salad
400 calories, 23 grams of fat $3.99
BK Santa Fe Fire-Grilled Chicken Baguette
345 calories, 5 grams of fat $2.89
“Our Drive-Thru Fancy Feast”
Source: USAToday, 15 October 2003
65
Source: USAToday, 15 October 2003
66
Americans Avoid Cookie Jar
Kraft Loses as Americans Avoid Kraft Loses as Americans Avoid Cookie JarCookie Jar
Merrill Lynch – “We’ve identified cookies as an at-risk category.”
US sales of cookies at about $5 b, but Q3 showed 5% drop in shipments.
Health-oriented bar snacks and granola bars were up 15% with category sales of $1.8 b (excluding WalMart.
Source: LA Times, 20 October 2003
67
Fastest Growing Category in Foodservice
68
Expectations Exceed Growth
For many manufacturers, growth mandates targetedacquisitions and alliances . . .
Growth Expectations8 – 10%
Growth Gap3 - 7%
Foodservice Industry2 - 5%
10%
5%
1990 1995 2002
Years
Ch
ang
e in
Sal
es G
row
th
Source: The Hale Group, Ltd.
69
The Strategic Planning Matrix
Existing New
Exi
stin
gN
ewProducts
Cu
sto
mer
s
Status Quo
Innovation
Customer Acquisition
Acquisitions & Alliances
A Useful Framework to Structure Strategic Thinking
$$$
Future Goal
70
Spending On Food Away From Home
Growth in foodservice will continue from both … Meals eaten away from home Meals prepared away from home, but eaten at home
Growth in foodservice will continue from both … Meals eaten away from home Meals prepared away from home, but eaten at home
25%25%
44%44%53%53%
1955 1995 2005
Foodservice as Percent of Total Food Expenditures 1955 - 2010
Foodservice as Percent of Total Food Expenditures 1955 - 2010
Source: US Census BureauSource: US Census Bureau
58%58%
2010
71
Change Agents
The consumer will drive change . . . The consumer will drive change . . .
Who they are,
What they have,
What they want …
What they eat,
When they eat,
Where they eat ...
Defines
Source: The Hale Group, Ltd.
72
Consumer Driven
Future demand will be driven by: Consumers 45 and up - 100% of population growth
“On-the-go” consumers – take-out sales increasing
Ethnic menu influences
Manufacturers will capture a greater “share of stomach” by meeting consumers’ needs . . .
Future demand will be driven by: Consumers 45 and up - 100% of population growth
“On-the-go” consumers – take-out sales increasing
Ethnic menu influences
Manufacturers will capture a greater “share of stomach” by meeting consumers’ needs . . .
PlannedOccasions Planned
OccasionsOn-The-GoOccasionsOn-The-GoOccasions
Manufacturers’ Foodservice SolutionsManufacturers’ Foodservice Solutions
Source: The Hale Group, Ltd.
73
The Foodservice Manufacturer Response
Customer Strategies
Product Strategies
Internal Strategies
Contain costs & maximize revenueContain costs & maximize revenue
Shift focus from obesity to wellnessShift focus from obesity to wellness
Source: The Hale Group, Ltd.
74
Customer Strategies
Partner with customers to share knowledge, build programs to support target consumers.
Define corporate positions on issues and support with new products, program innovation and marketing materials
Understand customer menus, ingredients and role your products play
Understand potential risks faced by different customers
Partner with customers to share knowledge, build programs to support target consumers.
Define corporate positions on issues and support with new products, program innovation and marketing materials
Understand customer menus, ingredients and role your products play
Understand potential risks faced by different customers
Source: The Hale Group, Ltd.
75
Product Strategies
Positioning of current products and development of new products in a wellness-driven world will be critical to future success.
Promote obvious health qualities of products
Position based on consumer perceptions of wellness & willingness to pay – natural, low calorie / carb, fresh
Develop new products that fit within wellness
Align with health-related organizations
Positioning of current products and development of new products in a wellness-driven world will be critical to future success.
Promote obvious health qualities of products
Position based on consumer perceptions of wellness & willingness to pay – natural, low calorie / carb, fresh
Develop new products that fit within wellness
Align with health-related organizations
Source: The Hale Group, Ltd.
76
Internal Strategies
Consider how the total organization can support wellness strategy.Always provide nutritional information to
consumersMonitor legislative, regulatory, legal events;
stay active with trade associationsDevelop / sponsor health and nutrition
education and physical fitness programsGood example – help employees with health /
nutrition
Consider how the total organization can support wellness strategy.Always provide nutritional information to
consumersMonitor legislative, regulatory, legal events;
stay active with trade associationsDevelop / sponsor health and nutrition
education and physical fitness programsGood example – help employees with health /
nutrition
Source: The Hale Group, Ltd.
77
Obesity in America…
Specialty Medical Gregory Schaeppi