NESTLE SA REG ORD (NSRGY, Financial), the US confectionery company has announced that it is removing artificial flavors and colors from its sweets and chocolates. The food giant said that it would get rid of artificial flavors from more than from around 250 products. This change is expected to be implemented by the end of 2015. This will be the first American confectionery manufacturer to ban artificial flavors and colors.
Nestle S.A., the multinational beverage and Food Company has its headquarters at Vevey, Switzerland. Products include coffee, tea, breakfast cereals, bottle water, frozen food, etc. Around 29 of Nestle's brands have CHF 1 billion annual sales. IE $1.1 billion. The company has its primary listing on the SIX Swiss Exchange and secondary listing on Euronext. It was also included as Number 1 in the Fortune Global 500 for the most profitable company. As a part of their CSR, the company has formed World Cocoa Foundation, Sustainable Agricultural Initiative, etc. Nestle was titled as “The World’s Most Admired Food Companies” for continuous seventeen years in the Fortune Magazine.
Nestle saw a drop in revenue last quarter as compared to last year's quarter from SFr.22.6B CHF to SFr.21.5B CHF. There was also a simultaneous rise in cost of goods sold expense. This in turn led to a fall in in the bottom line from SFr.2.6B CHF to SFr.2.3B CHF.
REASON FOR THE BOLD DECISION
Consumer activists have pointed out the use of caramel coloring in the production of Nestle products. This issue is under scrutiny by activists as it is said to have carcinogenic properties. Currently, caramel coloring is used in nine of Nestle's chocolate products. Hence, all newly launched chocolates will be made without any artificial colors or flavors, the company pledged. All revamped products will be available on store shelves by the mid of 2015. The revamped products will have the label “No artificial flavors or Colors'.
Nestle USA will now use ingredients from natural sources, which are approved by the Food and Drug administration (FDA). Right now, artificial vanillin is use in the manufacture of Crunch. This will be replaced by natural vanilla flavor. Red 40 and Yellow 5 are used in producing Butterfinger's crunchy center. This wi8ll be substituted by the healthy seed of the fruit of achiote tree. The company, in a statement said that their candy customers are centered towards broader food trends with few artificial components. Hence, Nestle's first step will be to stop using artificial flavors without increasing prices as well as without affecting the taste of the candy.
OFFICIALS SPEAK
The president of Nestle USA Confections & Snacks, Doreen Ida, said that the company is very excited to be the first US Company to implement such kind of a thing. Research of the unit said that US consumers prefer candy that does not contain artificial flavors and colors. The company also took into consideration the results of Nielsen's 2014 Global Health & Wellness Survey. It stated that more than 60% of US consumers prefer purchasing food products that are free of artificial colors. Leslie Mohr, nutrition, health and wellness manager of Nestle Confections & Snacks, said that Nestle will now make changes to around 75 recipes. The company's number one priority is to maintain the taste as well as the appearance that consumers expect. Consumer testing will also be done after the new recipes are declared so as to ensure customer satisfaction. A few of the brands that will be affected are Baby Ruth, Skinny Cow, Crunch, Butterfinger, Sno Caps, 100 Grand, etc. Basically, 10 brands and 250 products will go through the change.
Just recently, Newcastle Brown Ale announced that the company will stop using caramel coloring used in the manufacture of beers and will use roasted malts instead. But unfortunately, the food giant won't be able to use such a substitute in the making of its chocolates. Let's hope more companies stop using artificial flavors and colors and use FDA approved ingredients instead. Although products may not turn into health foods all of a sudden, it may shift power to the consumers.
