Discussions with Food Manufacturers and Restaurant Chains on Food Product Characteristics and Labeling

1. Discussions with Food Manufacturers and Restaurant Chains on Food Product Characteristics and Labeling Presented atFAMPS Economics of Obesity Conference Washington, DC March 11, 2004 Presented by Mary K. Muth, RTI David Zorn, FDA Katherine Kosa, RTI P.O. Box 12194 · 3040 Cornwallis Road · Research Triangle Park, NC 27709Phone: 919-541-7289 · Fax: 919-541-6683 · muth@rti.org · www.rti.org RTI International is a trade name of Research Triangle Institute.

2. Motivation and Background • FDA and DHHS were interested in obtaining information from food manufacturers and restaurant chains about what FDA could do using labeling, claims, or other incentives to influence the characteristics of foods produced or served in the context of weight management goals. • This project was one of several short-term studies funded by DHHS’s Office of the Assistant Secretary for Planning and Evaluation. • The results from this project provided information to support the Obesity Working Group formed by FDA Commissioner Mark McClellan on August 11, 2003.

3. Methodology for Discussions • Developed lists of discussion topics through several iterations with DHHS and FDA • Identified food manufacturer contacts with the assistance of Dr. Bob Smith (former head of R&D at Nabisco) • Medium-to-large food manufacturers, including ingredient suppliers • Identified restaurant chains using an on-line database, Chain Restaurant Operators • Quick service, casual dining, fine dining • Kept identity of all participants confidential

4. Limitations of the Study • Discussions were qualitative and open-ended. • Discussions were not intended to be representative of the industry as a whole. • Contacts were based on “convenience” not on random sampling. • Some discussions were based on input from several people in the company, and others were based on one person’s input. • Implications: Information from the discussions should be viewed as suggestive but not representative.

5. Economic Concepts • Decisions to offer foods consistent with weight management depend on whether producers believe the expected private benefits of offering such foods will exceed private costs for • Reformulating existing foods • Creating entirely new foods, including line extensions • Expectations about private benefits and private costs depend on • One-time costs of formulating or reformulating • On-going costs of production • Consumer responses to product formulation and labeling attributes • Expectations about competitors’ reactions

6. Food Manufacturers: Areas of Discussion • Current food offerings and technical product formulation issues • Effects of labeling regulations on food offerings • Consumer use of labeling information • Policy suggestions for FDA

7. Food Manufacturers: Product Characteristics and Reformulation • Most companies consider taste and other characteristics to be more important than calorie targets in product formulation decisions. • Several companies are actively evaluating the nutritional profile of existing and new products, including setting nutritional guidelines for product characteristics. • Challenges in reformulating foods to contain fewer calories include the following: • Consumer expectations for taste and texture of foods need to be maintained. • Certain “signature” foods cannot be changed without negative consumer responses. • Products, especially entrees, must provide some level of satiation.

8. Food Manufacturers: Reformulation Barriers • A few companies have encountered barriers to marketing products with lower fat and calories because of standards of identity (SOI). • Manufacturer suggestions: • Modify SOIs to allow for innovation in product development, especially for recipes. • Allow gradations for claims other than “low” or “reduced” to help some companies produce SOI products with fewer calories. • Costs, availability, functionality (taste and texture), and side effects of sugar and fat substitutes are barriers in their use. • Manufacturer suggestions: • Improve the approval process (faster and easier) for sugar and fat substitutes. • “Advocate” use of sugar and fat substitutes.

9. Food Manufacturers: Low- and Reduced-Calorie Claims • Currently, foods must have 40 or fewer calories to be labeled as low calorie. • Manufacturer suggestion: Allow 80 to 90 calorie foods to be labeled “low calorie” to encourage development of more products in this range. • Many companies will reduce or would reduce incrementally the level of fat or calories in existing products, but their incentives are reduced because they cannot include a claim about the reduction. • Manufacturer suggestion: Allow claims for small (5 to 10 percent) caloric reductions OR for “x” percent caloric reductions when x < 25 percent.

10. Food Manufacturers: Nutrition Facts Panel and Caloric Balance • NFP has too many lines devoted to fat, causing consumers to focus more on fat than calories, and does not indicate a daily value for calories. • Manufacturer suggestion: Modify NFP to focus more on calories, including adding a daily value for calories. • Consumers do not understand the relationship between weight gain and excess caloric intake. • Manufacturer suggestion (a few): Allow pictorials on packages to illustrate caloric balance.

11. Food Manufacturers: Serving Sizes • Many companies believe: • Consumers consider some multiple serving packages to contain a single serving. • Serving sizes are not realistic and are not equivalent to what most people eat. • Different serving sizes across categories of foods make comparisons difficult. • Manufacturer suggestions: • Require number of servings on front of package. • Require packages that “appear” to be a single serving to be labeled as one serving. • Modify serving sizes to be more equivalent to what people eat and to allow for more direct comparisons across product categories.

12. Food Manufacturers: Food Product Claims • Some companies believe: • Consumers prefer nutrient content and structure/function claims rather than health claims on foods. • Nutrient content claims related to calories on the front of packages would likely affect consumers’ purchasing decisions. • Manufacturer suggestions: • Expedite the claims approval process. • Allow more flexibility in use of nutrient content claims related to weight management. • Allow use of clear and direct structure/function claims (without excessive disclaimers) related to weight management.

13. Food Manufacturers: Other Policy Suggestions • FDA should form partnerships with CDC and USDA to develop a unified weight management message. • Develop a government Web site that provides information to consumers about appropriate food choices. • FDA should encourage manufacturers to • make small incremental reductions in caloric content of foods and • promote physical activity directly on packaging.

14. Restaurant Chains:Areas of Discussion • Current food offerings and technical product formulation issues • Nutrition information on menus and effects of customer responses • Policy suggestions for FDA

15. Restaurant Chains: Menu Items and Calorie Content • Many restaurants offer “lower-calorie” menu items but often do not identify them. • Most restaurants rarely consider calorie content when determining menu offerings. • Challenges in offering lower-calorie menu items: • Fats and sugars provide flavor in foods, and customers prefer a lot of flavor when dining out. • Customers want “value” at restaurants; thus, restaurants provide large portions. • Signature food items cannot be reformulated without adverse customer reaction. • Customers do not want fat and sugar substitutes. • Restaurants do not manufacture their own foods. • Restaurants need to work with existing space and equipment for any new menu offerings.

16. Restaurant Chains: Methods of Providing Nutrition Information • More than half of restaurants already provide nutrition information in some format. • Some restaurants offer guidance for particular types of weight loss diets or medically restricted diets. • Restaurants said that menus would be too large, and menu boards would be too overcrowded if information was required in these formats. • Also, some restaurants have frequent (up to daily) menu changes. • Restaurant suggestion: If nutrition information is required, allow restaurants to provide nutrition information in a variety of formats—brochures, printed receipts, posters, notebook at counter, hand-held server device, 800 number with phone in restaurant

17. Restaurant Chains: Methods of Determining Nutrition Content • Use of different food suppliers in different parts of the country means nutrition content varies. • Software for estimating nutritional content does not contain all ingredients used, especially for ethnic foods. • Individual serving amounts at restaurants vary substantially. • Many customers customize their orders. • Restaurant suggestion: Provide guidance on how to determine nutrition content, including acceptable labs and analysis procedures.

18. Restaurant Chains: Other Policy Suggestions • Focus on educating consumers about eating in moderation, caloric balance, and ability to customize orders. • Emphasize that small changes help. • Some restaurants said they would help FDA distribute education materials. • Allow flexibility in how different types of restaurants respond to requirements for nutrition information—fine dining restaurants should not be categorized with quick—service restaurants.