“Health” food brands are challenging Krispy Kreme and Nutella

Anthony Fletcher, former president of snack brands Graze and Innocent, was looking for a new healthy eating venture when he came upon an unlikely category: donuts.

His fledgling brand Urban Legend, which launched a year ago, is competing with Krispy Kreme in UK supermarkets as it seeks to persuade hungry consumers to switch to a lower-sugar and lower-calorie alternative.

Its banana pie, strawberry cupcake, and “Shock Party” desserts, made using a patented process that “bakes” dough using steam rather than deep-fat frying, placing it among a host of startups seeking to replace stale food brands. Family names with healthy options.

These startups are also set to benefit from new UK obesity regulations, which limit where supermarkets can put foods high in fat, sugar and salt (HFSS) – but not versions with ingredients Greatly healthy.

“Urban Legend’s idea is not to ask the consumer to change…it’s to take the garbage out of fast food rather than make something that looks different to the consumer,” Fletcher said.

“Krispy Kreme is a very indulgent product that’s high on all kinds of things. We wanted to recreate that taste experience without the higher levels of sugar, fat, and calories — that was our outrageous vision.”

The UK’s obesity problem, one of the worst in Europe, has put packaged food companies in the spotlight. Unilever, under pressure from investors, last month published a nutritional assessment of its portfolio that found only 35 percent fell outside the HFSS category.

Companies like Unilever, which makes Magnum ice cream, Ben & Jerry’s and Hellmann’s mayonnaise, recognize changing consumer habits and regulatory pressures to make healthy offerings. Unilever has set new nutritional goals this year. It bought Graze, which makes healthy snacks like roasted nuts and seeds, in 2019.

However, entrepreneurs like Fletcher believe something else is needed. His latest project was inspired by a conversation with a senior public health official, who told him that UK diets continued to deteriorate annually despite voluntary sugar reduction targets for the industry – and despite the growth of companies such as Graze, which has reported annual revenues of £38m. In 2020, the first year after I bought it.

The emergence of the healthy snack brand “hardly moved the needle,” he said. “I didn’t want to make another premium health product.”

Instead, he has turned to donuts as part of an effort to make healthy food available and affordable to those most at risk of obesity.

Public health groups such as Impact on Urban Health, part of the not-for-profit Guy’s & St Thomas, argue that low-income families are more likely to have poor diets due to higher prices for healthy products, a prevalence of unhealthy foods in disadvantaged areas, and a lack of “Money and space” to prepare healthy meals.

“[For companies] “Unhealthy food is cheaper to produce, tasty and sells,” said Louis Bidwill, managing director at venture capital firm Mission Ventures.

While the new rules in the UK have prompted some change, “there are healthier snack options popping up but they’re in a small range of categories, stocked in certain stores and often more expensive,” Bidwell said.

Multinational companies are often reluctant to take risks with new brands or healthier versions of existing brands, especially after a series of failures in areas such as low-sugar chocolate.

Meanwhile, some £42m of venture capital investment in ‘healthy’ food categories dwindled between 2018 and 2022, for example, with £296m immersed in alcohol brands, according to corporate finance group Oghma Partners.

To try to bridge the gap, Mission Ventures and Impact on Urban Health created the Good Food Program, which provides funding and advice to “healthy competitor brands,” including Urban Legend, that make affordable products in categories with affordable, nutritious, minimal options. Not only do they want these brands to succeed, they want to influence global food makers.

Another brand supported by the scheme is seven-year-old Jim Jams chocolate spread, which poses a direct challenge to Nutella. Others include Naturelly’s Jelly, which is made with fruit juice and added fiber, and Rootles’ chocolate chip cookies, which are made with 40 percent root vegetables.

These products are not without their problems. Many low-sugar brands rely on sweeteners called polyols, which can have laxative effects when taken in large amounts or by people with digestive issues.

Products will need to show that they can entice consumers to try a new brand, taste good enough to draw repeat custom, and that buyers will not eat large quantities encouraged by a lower calorie count.

Bakery products like donuts are one of the toughest categories to recreate into healthier versions, Fletcher said, with chocolate being the most technically challenging. He added that new techniques to recreate texture and flavor allow for more compelling alternatives.

Food sources of free sugars

However, Ferrero, the multinational company that makes Nutella, said that “reformulation is not a straightforward option. We have not yet found alternative recipes that our customers prefer.”

“The main issue with food intake is calories, not sugar, so changes that reduce sugar but increase calories can backfire,” she added.

Ferrero said Nutella’s focus from a health standpoint has been portion control, as its marketing materials encourage consumers to eat a single 15-gram serving. Krispy Kreme did not respond to a request for comment. They also serve smaller “bites” servings.

Experts agree that much broader change is needed to tackle obesity, including a shift towards eating more fruits and vegetables.

Kathryn Jenner, director of the Obesity Health Alliance, said: “We’d like to see more of a level playing field when it comes to what’s on our shelves – if cakes and chocolate spreads can be made with less sugar, then all cakes and spreads can contain sugar.” less.

Jim Gums chocolate spread in a jar alongside banana pancake rolls covered in sauce
Jim Jams is a brand supported by the Good Food © Ant Jones Program

“Food companies need sufficient stimulus, and for that we need political will from the highest levels of government.”

For the first group of brands participating in the Good Food Program, the test is popularity. Jim Jams are available in all UK supermarkets, and Good Food said there has been a “significant shift” to the product among low-income families. The company has become profitable this year.

Urban Legend cakes are available at London branches of Tesco and Selfridges, with an experiment in progress at J Sainsbury’s. Fletcher acknowledged it was just beginning, but said he wants to convert a large number of Krispy Kreme buyers, which brought in $1.4 billion in net revenue last year.

Cake, he said, “is a product that makes people feel good and affects their health – that’s why I chose it.” “A healthier brioche isn’t going to change the world.”

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