Nutritional Ratings and Whole Foods: Whole Body, Whole Nightmare

by: Michael Steinberg

The Wall Street Journal’s “The New Nutritionist: Your Grocer “ reports that Kroger (NYSE:KR) started testing the NuVal nutritional scoring system in some Kentucky stores, with the potential for a national rollout. Each shelf price tag contains a NuVal rating from 1 to 100; the higher the rating the more nutritional value. Shoppers might be surprised that organic favorites such as Kellogg’s (NYSE:K) Kashi brand and General Mills (NYSE:GIS) Natures Valley don’t always score well.

Griffin Hospital’s NuVal system was developed by Yale University based on food labels and federal dietary guidelines. It is best used as a relative scale for slowly improving health. This is a big step in the right direction because as I wrote recently "You Can’t Lose Weight Counting Calories."

HyVee, Wegmans, Safeway (NYSE:SWY) and Wal-Mart (NYSE:WMT) have either joined the party or are about to jump in. Their programs range from suggesting healthy food choices based on data mining loyalty card purchases to offering dietary consulting services to their customers. Conspicuously missing from the healthy eating party is Whole Foods (WFMI).

The premise behind Whole Foods is making customers feel good about what they eat, regardless of how healthy the foods really are. Remember the old TastyKake (TSTY) slogan “all the good things wrapped up in one?” Philadelphia natives will. The idea is quality ingredients are all that matters; quality flour, sugar and salt. So you can feel better about Whole Foods chocolate or TastyKake cupcakes than other brands.

But are organic granola bars less harmful than conventional? With many of the brands stocked in Whole Foods center isles now available in most grocery stores, including Wal-Mart and Target (NYSE:TGT), the competition is on. The relative nutritional value of some of Whole Foods most profitable items might soon be tested by customers, and the entire image of Whole Foods might be called into question.

When Whole Foods CEO John Mackey was at the height of his rant against healthcare reform, he said during an earnings conference call that he couldn’t believe all the crap they were selling. He stated a goal of moving back to a healthier selection and away from catering to foodies. After healthcare reform passed and the company’s fortunes began to recover from the economic catastrophe, all was forgotten. They still target customers who want to feel good about eating heavily salted organic potato chips.

Are nutrition ratings a Whole Foods nightmare alone or will the entire packaged food industry suffer along? I think we are looking at the start of a long term trend. Society will start demanding better nutrition as the cost of healthcare is increasingly borne by the federal and state governments.

Americans will begin to become aware that their food supply is slowly leading them down a path towards diabetes, cancer and other ills of obesity. Then, just like smoking they will start weaning themselves off packaged foods. I think this change will occur over the next 10 to 15 years. This does not bode well for companies such as General Mills, Campbell (NYSE:CPB), Kellogg’s, Kraft (KFT), Coke (NYSE:KO) and Pepsi (NYSE:PEP).

I encourage readers to have some fun on the NuVal scoring page. Select cold cereals and see that Kashi Strawberry Fields (11) has a lower score than Post Shredded Wheat Frosted (31). Who would have thought that “seven whole grains on a mission” could have less nutrition value than a convention sugar coated cereal. Let’s “keep’em full and focused.” (Post is a Kraft brand.)

Disclosure: None