Kids Help Grocers Kick Their Sugar Habits as Taxes Spread

(Bloomberg) -- Before cutting the sugar in its children's yogurt, Dutch grocer Albert Heijn conducted a taste test modeled on a classic U.S. TV ad in which two young boys get their little brother to sample a new cereal.

The supermarket chain invited kids ages 6 to 12 for blind taste tests of its existing yogurt and the proposed reformulation. Like the commercial's little Mikey, who stuns his siblings by devouring the supposedly healthy Life cereal, a majority of the Dutch children preferred the new version.

European supermarkets are on the front lines of a push to reduce the amount of sugar in food and drinks, with consumer groups pushing for healthier fare and governments in the U.K., France, Spain and other countries imposing taxes on fizzy beverages or sweets. Food companies are trying to pinpoint just how much sugar they can cut before shoppers reject their products.

“If you tell consumers a product has less sugar, they will often stop buying because they think it will taste worse,” said Kate Ewart, product development director at Tesco Plc, the largest U.K. retailer.

Swiss food giant Nestle has turned to technology that alters sugar's structure to make it sweeter in smaller amounts, Coca-Cola Co. and PepsiCo Inc. are cutting sugar in dozens of drinks and Unilever has reduced the size of Magnum ice cream bars. Anti-sugar measures are a particular challenge to European grocers, with lesser resources to devote to research and development and direct exposure to the new regulations in their main markets.

The supermarkets are testing their own-label groceries, which have grown to nearly half of the 105 billion-pound ($136 billion) industry's sales in the U.K., according to industry researcher Kantar Worldpanel. These ranges provide higher profit margins because they're made by smaller outside contractors than the global food giants, giving retailers more bargaining power.

To avoid alienating buyers of its private labels, which include Taste the Difference, U.K. supermarket operator J Sainsbury Plc is trying to remove sugar “by stealth,” company nutritionist Julie Dean said. The company has cut sugar by an average of 13 percent across 80 of its breakfast cereal lines, and by 70 percent and 30 percent, respectively, in its own-brand lemonade and cola.

The London-based retailer initially takes out as much sugar as is feasible without significantly impairing flavor, then experiments with different cocktails of sweeteners. Even then, there can be glitches when the revised version hits the shelves.

“There's always a bit of a wobble at the start because people are very, very sensitive, especially if they are long-term consumers of that product,” Dean said. “But it usually peters out and returns to the normal level.”

Rival Tesco has cut sugar in a range of products, including an 18 percent reduction in its cooking sauces and a 9.5 percent reduction across breakfast cereals. The grocer has found it must be careful in communicating the changes to shoppers, so as not to be seen as denying them an indulgence.

“We have to slowly re-educate consumers' taste buds,” Ewart said. “It's a constant challenge and we have to keep chipping away at it.”

The moves to cut down on product sweetness are having an effect, with Group Sopex and Green Pool Commodity Specialists seeing growth in sugar consumption in 2017-18 falling below the average 2 percent a year of the past decade or so. The U.S. Department of Agriculture sees the first drop in demand in a quarter century.

At Albert Heijn, owned by Royal Ahold Delhaize NV, the yogurt tasters were part of the company's “kids' council,” established to ensure that its reformulated, healthier range doesn't miss the mark with a notoriously fickle consumer group.

The company gathered 25 of them at an office in Amstelveen, a city south of Amsterdam, last year for the test. The children were interviewed one-by-one in a separate room to prevent peer pressure from swaying the results. Participants were asked to rank the flavor, color and texture of the reformulated yogurts on a scale of 1 to 10. Finally, the researcher asked for a thumbs-up or -down.

“It was like a focus group but with kids,” said Megan Hellstedt, vice president for sustainable retailing at Ahold Delhaize. “The main challenge for us is, will people still like it?”

To contact the reporter on this story: Sam Chambers in London at schambers7@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Benedikt Kammel