24 May 2017

Nestlé USA to Remove Artificial Ingredients

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Consumer craving for healthier and more natural ingredients is spreading even to junk food, with Nestlé SA saying it will remove artificial flavors and colors from its Crunch and Butterfinger candy bars and other chocolates in the U.S. Nestlé said it has been working for more than a year on taking out food colorings such as Red 40 and Yellow 5, and flavorings like vanillin from its more than 250 chocolate products. The changes will take effect by the end of the year.

The move makes Nestlé USA, a unit of Switzerland-based Nestlé with about $10 billion in sales, the first major U.S. candy manufacturer to remove such artificial ingredients—though others are working on similar moves. Burgeoning demand for food made with simpler ingredients has put pressure on the packaged-food industry in recent years to develop natural substitutes that have reliable, cost-effective supplies.

Market-research firm Nielsen found in a recent study that more than 60% of Americans say that the absence of artificial colors or flavors is important in their food-buying decisions. Nestlé has made the change in the U.K.—a move that took from 2005 to 2012. U.S. Chief Paul Grimwood led that effort, and he has pushed the issue in the U.S. since taking over in October 2012.

Nestlé said natural vanilla flavor will replace vanillin in Crunch bars. Annatto, which comes from the seeds of achiote trees, will stand in for the artificial food colorings long used in Butterfinger bars. While the move is more expensive, Nestlé said it won’t raise the price of its candy as a result.

The move is easier for Nestlé to make than its far larger rivals. Nestlé’s U.S. candy sales topped $900 million in 2013, the company said. That leaves it with about 5% of the market, according to research firm Euromonitor International. By comparison, the top two competitors, Hershey Co. and Mars Inc., together make up 65% of sales. Mondelez International Inc., which makes Oreo cookies and Cadbury chocolate, said last year it would reduce the saturated fat and sodium in its snacks by 10% by 2020, though it made no promise regarding artificial ingredients.

Even though colorings such as Red 40 are approved by the Food and Drug Administration, such ingredients have come under scrutiny in recent years as consumer advocacy groups such as the Center for Science in the Public Interest argue that they have ill health effects.

Nestlé’s next step will be removing artificial colors and flavors from its gummy and sour candies like SweeTARTS and Nerds. Those are tougher to transition because of the bright colors that are harder to duplicate naturally, a spokeswoman said. But all new candies, such as Wonka Randoms which came out last year, are made with natural alternatives.

Click here to access the full article on The Wall Street Journal. 

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