Following shareholder pressure, Tesco has pledged to boost sales of healthy foods between now and 2025 with a major new reformulation program. 

Hailed as a landmark victory for shareholder activism on health issues, the retailer now plans changes to promotions and pricing to remove barriers to buying healthy food, and further expanding its plant-based ranges, with new plant protein products.

ShareAction has led a coalition of seven institutional investors, putting pressure on the retailer to step up its health commitments. 

In February, Tesco was hit with the UK’s first-ever shareholder resolution on health grounds. As part of this, Tesco set a target to increase the proportion of sales from healthier products in the UK to 65 percent by 2025.

The obesity factor 
The shareholders, including Robeco and JO Hambro, argued that supermarkets promoting unhealthy food were a significant driver of the UK’s obesity crisis, which has been a key factor in the UK’s high COVID-19 mortality rate. 

If the resolution were passed at Tesco’s annual general meeting, scheduled for June, it would have forced Tesco to disclose the proportion of its sales linked to healthy products, set targets to increase that proportion over time, and publish a strategy aimed at achieving that goal. 

Over the last few months, the retailer has made several concessions to the shareholders, seeking to avoid the public vote. 

In March, the supermarket agreed to disclosure and targets for UK stores, but shareholders kept the resolution on the table to encourage Tesco to take similar steps with their EU stores and their Booker subsidiary, which supplies Budgens and Londis. 

ShareAction now says that Tesco has agreed and plans a “wealth of new commitments,” prompting the shareholder coalition to withdraw their resolution.

Tesco will offer affordable plant-based protein options and increase the number of promotions on healthy products.Louisa Hodge, engagement manager at ShareAction, feels although Tesco has been working to address the impact it has on health through the food it sells for some time now, there has been a “step change” in the retailer’s approach in recent months.

“We warmly welcome these new commitments and think they set a precedent for other retailers in the sector to ensure health is a priority,” she tells FoodIngredientsFirst. 

“We will continue to hold Tesco to account through our ongoing plan of engagement with our institutional co-filers and the Healthy Markets investor coalition,” she says. 

Landmark decision
“These commitments from Tesco come following the shareholder resolution, which was the first health resolution to be filed at a UK supermarket. It’s great to see shareholders driving company commitments on health through such methods of engagement,” Hodge continues. 

She stresses how investors are increasingly recognizing the importance of consumer health, including the role supermarkets play in shaping consumers’ diets.

“Tesco notes that they will meet these targets through reformulation, removing barriers to healthier choices and inspiring customers to make bigger lifestyle changes,” she adds.

Tesco echoes that its new plans will help consumers eat more healthily and make the supermarket chain “the easiest place for customers to shop for affordable, healthy and sustainable food.”

Together with its existing ambition to increase sales of plant-based food, the supermarket’s 2025 commitments on health are:

• An increase in sales of healthy products, as a proportion of total sales, to 65 percent by 2025, as defined by the UK Government’s nutrient profiling model – up from 58 percent today.
• To increase sales of plant-based meat alternatives by 300 percent by 2025. Tesco says it aims to have even more plant-based alternatives alongside meat options.
• To make products healthier through reformulation. This includes plans to increase the percentage of ready meals that contain at least one of the recommended five-a-day to 66 percent by 2025 (currently 50 percent, up from 26 percent in 2018).

Tesco plans to disclose progress against its targets annually through its Little Helps Plan. The next update, due to be published in May, will share further details on its strategy to support healthy diets.

Healthy ambitions and reformulation
The new targets are the culmination of 18 months of work to understand how the average UK weekly shopping basket could be made more healthy. Tesco has worked closely with its charity partners and other stakeholders and listened to consumers to understand how they want to eat more healthily and what barriers need to be overcome, notes the retailer. 

To meet the targets, Tesco’s strategy will focus on reformulating products, removing “billions of calories and thousands of tons of salt, fat and sugar from products.”

ShareAction stresses that supermarkets play a pivotal role in population health by influencing what consumers eat.Tesco will offer affordable plant-based protein options and increase the number of promotions on healthy products.

The supermarket will inspire shoppers to make bigger changes to their lifestyle – including through the launch of new ranges and reviewing the prominence and the amount of space dedicated to healthier products in stores.

“We’ve worked hard to help our customers eat healthily, and we’re proud of our track record, and it’s clear we can do more. We are sharing our stretching new ambitions on health and committing to reporting our progress against them,” says Tesco Group CEO Ken Murphy.

Professor Judy Buttriss, British Nutrition Foundation, adds: “It is essential that supermarkets play their part in helping customers selec a healthy and sustainable diet that provides the nutrients we all need.”

“These new commitments are aligned with the nation’s need to eat more vegetables, fruits, grains, and pulses such as beans and lentils and cut back on calories, saturated fat, salt, and added sugar,” he continues.

“A varied plant-rich diet is a great place to start, remembering that nutrient-rich milk, eggs, fish and meat remain part of a healthy diet for most of us. It’s about getting the balance right.”

ShareAction stresses that supermarkets play a pivotal role in population health by influencing what consumers eat. ShareAction’s Healthy Markets investor coalition will continue its work engaging with supermarkets and food manufacturers on the risks and opportunities they face from increasing regulation and shifting consumer preferences.

“Investors recognize the importance of health. They see the risks and opportunities supermarkets face, given their outsized role in shaping our diets. By filing a shareholder resolution, our investor coalition sent a strong message to Tesco and to other supermarkets that shifting sales toward healthier options is important,” continues Hodge. 

“We look forward to continuing to engage with Tesco as it implements these commitments and fully develops its plans beyond UK retail.”

She concludes that Tesco is setting a precedent for the retail sector as a whole. “This comes at a time when there is a need to improve health and resilience in society following the COVID-19 pandemic, wher people with obesity were up to 1.5 times more likely to die from the virus.” 

“We hope and expect other retailers to follow suit.”