(Bloomberg) -- A group of Nestle shareholders have criticized the world's biggest food maker for not going far enough in its target to increase sales of more nutritious products.
Last week, the maker of Nescafe and KitKats pledged to increase sales of products that have a Health Star Rating of 3.5 or above by around 50% in the eight years through 2030. The planned increase of at least 20 billion Swiss francs ($22 billion) in revenue is broadly in line with its medium-term guidance to grow sales by a mid-single digit percentage each year.
Since Nestle includes products that nutrient-profile models don't consider as nutritious — like coffee and baby food — the company can meet those targets by selling more of those, the investor group coordinated by NGO ShareAction said.
“It is unclear how Nestle's current target to increase sales from ‘healthy' products will improve population health, given the inclusion of black coffee and infant products,” said Deepshikha Singh, head of stewardship at La Française Asset Management. “We cannot be confident that this target will ensure a move away from an over-reliance on the sale of unhealthy products or that sales from healthy products will increase at a greater rate than those from less-healthy products.”
With obesity a global health crisis in much of the developed world and on the rise in emerging markets, food companies have been under pressure to make their portfolios healthier, protecting them from a regulatory backlash as well as healthier-eating trends.
Besides La Française Asset Management, the group includes asset manager Legal & General Investment Management and UK workplace pension scheme Nest. It warned that Nestle's new target undermines the company's pledge to lead the food industry in improving access to balanced diets. ShareAction and the investors called for Nestle to set a target to reduce the proportion of sales of less-healthy products that are high in salt, fat and sugar.
Nestle intends to grow the more nutritious part of its portfolio and believes that all of its products can be part of a healthy diet, a spokesperson said. The company is also taking measures to make its marketing more responsible.
Nestle's target doesn't include formula for infants up to 12 months old, though the company also makes food for older babies.
In March, the food company first began reporting on the healthiness of the food products it sells using the Health Star Rating system. According to the model, 30% of the Swiss company's portfolio is considered healthy and 35% unhealthy.
Read More: Nestle Gets a Third of Sales From Foods Considered Unhealthy
“Poor diet represents an urgent public health challenge,” said Maria Larsson Ortino, Senior Global ESG Manager at LGIM. “As the world's biggest food and beverage company, Nestle has a significant impact on public health, and can raise market standards across the sector by demonstrating leadership.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
