What are NCDs?
- NCDs - noncommunicable diseases - are illnesses that aren’t passed from person to person. Typically, they have a slow progression and are systemic in nature.
- Five common NCDs are cardiovascular diseases, chronic respiratory diseases, cancer, diabetes and musculoskeletal disorders.
- The prevalence of NCDs increases with age. The rising average age and the growing number of elderly people means the problem may become even more acute in the future.
The world has learned a lot about infectious diseases in the past year due to COVID-19. In its shadow are a group of non-infectious diseases — NCDs — that are putting strain on global healthcare systems. According to the World Economic Forum and the Harvard School of Public Health, NCDs like cancer, cardiovascular diseases, chronic respiratory diseases and diabetes are among the leading threats to global economic growth.
Broadly speaking, an individual’s risk of developing NCDs is driven by three factors: genetic, environmental and behavioral. While a genetic predisposition and environmental risk factors are often beyond an individual’s control, behavioral risk factors are among those where individuals can make a difference.
Within the field of behavioral risk factors, there are four main modifiable (and therefore preventable) lifestyle risk factors: excessive alcohol consumption, smoking, an unbalanced diet and a lack of exercise. These factors can cause physiological changes over time that may lead to NCDs, such as rises in blood pressure, blood glucose, obesity levels and cholesterol.
The question is: Are there any ways to encourage consumers further to make better decisions?
Five common noncommunicable diseases
How do consumers make choices?
Human decision-making is complex and not always rational. While people all have the capacity for what Daniel Kahneman refers to as “slow thinking” (i.e. the rational, conscious and analytical decision-making, controlled by the prefrontal cortex of our brain), many everyday decisions are made in a process of “fast thinking” (i.e. intuitive, unconscious, and driven by the more ancient parts of the human brain).
It’s in the process of fast thinking where humans have been shown to make frequent errors of judgment, such as disregarding potentially unfavorable consequences of their actions. If public and private actors are to change consumer behavior, both slow- and fast-thinking decision-making processes need to be considered.
Consumer choices in the area of drinking, smoking, diet and exercise fall into the “benefits now, costs later” domain, where people tend to choose actions that offer immediate rewards with little regard to future consequences. These decisions can be aided to make better choices. This paper explores two major pathways which support the shift in consumer demand toward consuming healthier and less harmful products:
- Change in consumer perception speaks to how consumers consciously and unconsciously think about a product. This can be influenced by providing information through marketing or awareness campaigns, for example. It’s also connected to the consumer’s acceptance of a product through the importance of the sensorial experience (e.g. taste, feel and smell) or ritual, for instance.
- Change in accessibility to products covers access to products through the distribution of products or by expanding the product range to include better alternatives. This pathway also considers affordability and pricing as relevant levers to influence access to products.
Through these pathways, the private and public sector have a pivotal role in shaping future consumer demand.
Enabling better choices
One way for fast-moving consumer goods (FMCG) companies to help address the NCD challenge is to develop healthier and less harmful alternatives. Such alternatives are new or improved products — where some harmful ingredients or effects are reduced or substituted by healthier elements — giving the consumer a sense the new product is similar to an established product. Here is a short overview of recent developments in the FMCG industry regarding better alternatives
- Non-alcoholic drinks: While more data is needed to understand whether alcohol-free drinks will effectively reduce alcohol consumption, there are increasingly better alternatives being made available to consumers who wishes to reduce their alcohol intake.
- Smoke-free alternatives: Some cigarette manufacturers have made major strides to provide better alternatives and replace traditional cigarettes, having already converted millions of people to these new options.
- Sugar and salt reduction: Various FMCG companies have launched better alternative products containing less sugar and salt. It seems that successfully changing consumer preferences toward lower-sugar foods without alienating them requires a patient and gradual approach, ideally executed in tandem by leading FMCG firms with the support of the public sector.
- Innovative flavors and ingredients: Companies higher up in the value chain that don’t make final products for consumers can also have a significant impact. Some flavor and ingredient companies have developed novel flavors, enabling larger food companies to offer better alternatives that have similar flavors compared to their unhealthier counterparts.
- Plant-based meat alternatives: Global meat consumption is increasingly seen as an ecologically unsustainable source of proteins and seems to be correlated with adverse health effects. This has driven the recent development of plant-based meat alternatives, which is an interesting space to watch — one that has the power of innovation to bring about consumer change.
Public and private sector levers to change consumer demand
Ultimately, the private and public sector can help consumers make better choices by nudging and incentivizing them toward better alternatives. They have specific levers at their disposal to influence consumer perception and product accessibility:
New products and product reformulation — The private sector has a unique understanding of its customers and its core products, as well as the resources and innovative capability to develop new or reformulate existing products to enable consumers to choose from healthier and less harmful products.
Pricing — Pricing decisions made by FMCG companies can affect product accessibility. Comparable or lower pricing for better alternatives can have a particularly significant effect.
Distribution — Making a product more available across various channels lowers the hurdle for consumers to gain access to it and ultimately purchase it.
Placement — Product placement is a classic method to nudge consumers towards certain products by manipulating their subconscious decision-making process.
Marketing — FMCG companies and their marketing consultants can use marketing to influence perception of products and help consumers choose better alternative products.
Packaging and labelling — Product labels are well established in the consumer goods industry. Such labels can be developed by private organizations (for example, fair trade or sustainability labels) and become popular, or they can be generated by government organizations (e.g. car emission standards).
Products and ingredients prohibitions and limits — Governments may make harmful products and ingredients illegal or restrict their use, but citizens could oppose having their favorite products taken away. Besides that, prohibition risks the emergence of illicit markets and a loss of tax revenues.
Taxation — Governments can increase taxes on unhealthy products, making them less affordable for consumers, and better alternatives can be taxed at lower rates. In the case of cigarettes, this is a tried-and-true strategy for lowering demand, especially among young customers.
Grants, subsidies and sponsorships — Governments can also provide grants, subsidies and sponsorship for desired products or innovation areas, reducing costs for businesses to perform research, consequently reducing the risk and uncertainty of a company to innovate.
Limit availability — This approach involves restricting sales of a product to certain groups of the population or restricting their sales channels.
Recommended ingredient reduction — Recommendations, ideally developed in collaboration with leading FMCG firms, can ensure ingredient recommendations are practical and increase the buy-in of the private sector — as opposed to the private sector developing undesired workarounds to unilateral ingredient restrictions by the government.
Informational campaigns and education — Although informational campaigns and education may be slow and may not yield immediate results, they might be effective in the mid to long term.
Packaging and labelling requirements — Another method that policymakers may use to alter customer perceptions is to require the display of certain information on products.
The FMCG sector is rapidly evolving to meet emerging consumer demands for better alternatives, so we expect to see the following three major trends.
- The boundaries between the FMCG and life science industries may continue to blur: When an FMCG company is looking for ways to develop healthier products, they may either invest in life science research organically or acquire a start-up to accelerate life science capabilities. This growing overlap between FMCG and life science may produce increasingly compelling arguments for cooperation over time. But they may also start to compete for the same talent, customers and sales channels.
- The shift toward prevention may continue: Although the pharmaceutical industry has made great progress in developing treatments, it’s clear that NCDs still cause human suffering and reduce the quality of life of consumers. Additionally, NCD treatment is costly and responsible for healthcare costs. These factors will lead to a growing focus on prevention.
- The politics of this shift may not be easy: Various responses are likely to be encountered across the political spectrum, from voices pushing for government intervention (e.g. prohibitions and bans) to pushback against anything that may have the appearance of attempting to influence what’s perceived to be free choice. Heads of government, FMCG companies and consumer associations will play a critical role in these discussions.
How fast-moving consumer goods companies in Switzerland offer better alternatives helping customers make better consumption choices.
How consumer goods companies can help their customers to make better consumption choices.