Inflammation Nation – Battling Our Country’s Hidden Epidemic
Bluestein’s Take
Bluestein invests in the future of food with a mission to improve the health of our population. This is particularly important because 90% of the U.S. population is metabolically unhealthy, with 41.9% obese and 11.6% suffering from diabetes.1, 2, 3
Diets high in sugar, salt, and saturated fat are leading to chronic inflammation and poor health outcomes, where many of today’s most popular food products are full of inflammation-inducing ingredients. Thus, one area of critical importance is the need to improve what’s in our food.
That said, reductions in sugar, salt, and fat have proven difficult, as current alternatives struggle to match the taste, functionality, and price of their inflammation-inducing counterparts.
We’re excited about the potential for innovation in the space, as it can help revolutionize our food – and thus our health. What new ingredients and technologies are on the horizon to help solve this problem – and where does that create investment opportunities?
The Market: Shifting Consumer Demand Toward Healthy Food
Chronic inflammation is a hidden epidemic that is tearing at our population’s health. Inflammation results when our body works to get rid of harmful toxins and can damage blood vessels, arteries, nerves, and the intestines – ultimately leading to a myriad of enduring health problems such as heart disease, autoimmune disease, neurological disease, and cancer.4, 5, 6 One major factor in inflammation is poor nutrition, which is a consequence of the Standard American Diet (SAD), consisting of pro-inflammatory foods with excess sugar, salt, and saturated fat.
Thus, there is an urgent need to reduce inflammatory ingredients, and consumers are themselves increasingly demanding healthier products. For example, 44% of consumers are focusing more on nutrition when shopping in 2023.10 Companies are responding, and almost every major food conglomerate has announced plans to reduce the sugar, sodium, and saturated fat in their product portfolio (see: PepsiCo, Kraft Heinz, Nestle, Mars, and Unilever).
That said, while large players are on the hunt for solutions, none have been able to reduce salt, sugar, and fat without impacting taste, functionality, and price.11 This challenge presents an exciting opportunity for startups to significantly improve upon currently available solutions.
Sugar Reduction: The Biggest Opportunity
While sugar reduction is a big priority for almost every major food company, the challenge in swapping sugar is that not only does it impact taste, but it also plays several roles in formulation outside of simple sweetness that makes it incredibly difficult to replace. Sugar impacts food functionality, such as how much cookies spread when baked, how granola bar ingredients bind together, aeration and tenderness in cakes – as well as browning, bulk, freezing point, and shelf life. Even though several legacy low-calorie replacements can solve some of the formulation challenges, they don’t meet the taste or nutrition expectations of today’s consumer. As such, we believe the demand for low-calorie sweetness will only increase over time and have identified three important areas to watch.
1. Non-Nutritive Sweeteners
Non-nutritive sweeteners (NNS) are sugar substitutes known for their significantly sweeter taste than sucrose, and low-calorie density. These substitutes are common in many food products, including diet sodas, baked goods, and breakfast cereals, where their intense sweetness allows for usage in smaller quantities compared to regular sugar. NNS can be either natural (found in nature) or synthetic (manufactured in a lab), and their relative sweetness levels vary.
Despite the widespread use of NNS, a recent groundswell of consumer aversion has emerged specifically directed at synthetic sugar alternatives. In July 2023, the International Agency for Research on Cancer classified aspartame, the dominant NNS used in U.S. households, as "possibly carcinogenic to humans."12, 13 Although the FDA subsequently reassured people that aspartame was safe under current usage levels, the negative press damaged aspartame’s reputation and reinforced existing suspicions toward synthetic sweeteners. Today, 75% of consumers say they prefer to purchase natural sweeteners like honey and stevia over synthetic sweeteners.14
The changing attitude toward synthetic sweeteners has led to an explosion of demand for naturally sourced NNS like allulose, stevia (steviol glycosides), and monk fruit (Mogroside V). Like their synthetic counterparts, natural NNS face challenges such as high cost-in-use, unpleasant aftertaste (metallic, licorice), and limited functionality (browning, binding, shelf-life, etc.). Several startups are working toward creating better natural NNS options. Companies like Bonumose and Elo Life are championing the adoption of rare natural sweeteners and finding innovative ways to lower production costs. We’re excited by these developments and are looking forward to replacement options that more closely mimic the flavor profile and utility of sugar.
2. Ingredients to Extend and Intensify the Sweetness of Sugar
A few companies are trying to amplify the perceived sweetness of calorie-dense sweeteners, thereby reducing the amount required. Sugar in these formulations is reduced but not eliminated, allowing for some of the important flavor and functionality to be retained. Innovations in this space include new ways to encapsulate sugar or link it to specific chaperone molecules. For example, DouxMatok’s IncredoSugar consists of silica particles coated in sugar molecules. The silica chaperones serve to increase the surface area of exposed sugar molecules, meaning that less sugar is required to deliver the same sweetness. Other companies are working on technologies that promote better distribution of sweet tastes and aromas in your nose and mouth (e.g. Crush Dynamics).
Unfortunately, these approaches also face challenges. So far, the incorporation of these next-gen sugar products can only reduce sugar about 30% before the effects of reduction impact flavor, and it is unclear whether this is enough to get consumers excited. For example, in 2018, Nestle launched Milkybar Wowsomes, a chocolate bar with a 30% reduction in sugar achieved through the use of hollowed out sugar crystals.15 It flopped with consumers because of the discernable difference in taste and was pulled from the market, demonstrating that most consumers are unwilling to compromise on flavor for a slight sugar reduction.
3. Sugar to Fiber Conversion
A distinctive – and emerging – approach in addressing sugar management involves enzymatically converting sugar into fiber. This tactic employs enzymes to chemically transform sugar into indigestible fiber. The technology has the potential to facilitate products like low-sugar fruit juice, and in turn, hopefully reduce sugar consumption among children. Startups like Better Juice and BlueTree Technologies are working on reducing the sugar in orange juice by up to 80%. Like Nestle’s Wowsomes, only around 40% of the sugar in juice can be converted into fiber before differences in taste become off-putting.
A related approach involves co-consuming the enzymes alongside sugary food, facilitating the conversion of a portion of sugar into fiber during the digestive process. This innovative method maintains the inclusion of sugar in the product as usual because the transformation into fiber takes place in the gut after ingestion. Although this technology is still in development, startups like Inulox and Cobiota are pioneering ways to reduce the inflammation caused by sugar post-consumption. We suspect that this technology could have lower adoption as it may be difficult for consumers to understand “sugar to fiber” claims on packaging. There will not be any clear on-label benefits for food processors given that the amount of sugar in the product will remain unchanged. Additionally, quantifying exactly how much sugar is converted to fiber in the gut will be difficult. Nevertheless, this is an area we are keeping an eye on that may one day allow consumers to have their cake and eat it too.
Salt Reduction: The Battle Against Excess Sodium
Consumers have not yet prioritized low-salt products to the same extent as low-sugar alternatives.16 Nevertheless, many recognize the significant health risks associated with excess sodium. In fact, health experts estimate that deep cuts in salt consumption could save 150,000 lives per year in the U.S. and the FDA has prioritized sodium reduction due to its link to hypertension (high blood pressure) – a major risk factor for heart disease and stroke.17, 18 Processed and prepared foods account for over 70% of the sodium in our diets, and many consumers are cutting back on these products to improve their blood pressure.19 As a result, major food producers are keen to offer reduced-sodium alternatives. In doing so they face several hurdles related to flavor, function, and price.
Salt not only contributes to flavor – adding tanginess, blocking bitterness, and promoting flakiness – but is also one of the cheapest ways to preserve processed foods. The exceptionally low price of salt means that identifying cost-effective replacements for both flavor and preservation can be challenging. For reference, a fifty-pound bag of salt costs $12, and a similar bag of sodium-free potassium salt is a whopping $150. That said, two factors are working in favor of salt reduction. The first is that salt is used in very low quantities (e.g. a family-sized box of Cheez-It crackers contains just 0.025 pounds of salt). Second, producers and consumers don’t need to cut out salt completely. Reducing the sodium in processed foods by around a third would be enough to fall in line with the FDA’s recommended intake. Replacing a third of the salt in our Cheez-Its with potassium salt would cost around two cents per box. Even if replacements are more costly, they are unlikely to contribute significantly to the overall expense of the product. As a result, food manufacturers and startups have a fair bit of rope to create better salt reduction solutions.
Below are four different approaches to reducing salt; many of which can be used in combination.
1. Stealth Reduction — Gradually reducing the sodium content in a product over several years is one approach, with the assumption that consumers may not immediately detect or object to the gradual decline in the saltiness of their favorite snacks. This method only suits companies with established products. However, it presents challenges in terms of marketing on-label claims about sodium reduction because any reductions occur slowly. Still, companies like General Mills see this as a promising strategy. Since 2010, the company has reduced sodium by 20% across ten key product categories.20
However, gradual reduction has its limits. While a 10% salt reduction is generally unnoticeable, flavor starts to suffer around a 30% reduction. Salt adds tanginess and blocks bitter tastes so making deep cuts (without some kind of salt replacement) may require more expensive ingredients that raise prices. For example, a low-salt tomato sauce may require vine-ripened tomatoes and fresh herbs whereas a high-salt sauce can get away with using dried spices and lower-grade tomatoes. As a result, many companies are combining stealth salt reduction with one of the following three approaches.
2. Ingredients to Extend and Intensify Sodium Salt — Much like sugar, various ingredients have the capacity to amplify and prolong the perception of saltiness, reducing the quantity required in product formulation. For example, savory umami flavors can be harnessed to heighten the perceived saltiness of foods. Monosodium glutamate (MSG) falls into this category, but it faces deep rooted consumer adoption challenges and has not generally been perceived as "clean label." That said, consumer perception has been shifting, especially among the younger generation. Recent studies found that 75% of social media conversations regarding MSG were positive, and Japan’s leading food company Ajinomoto is investigating how MSG can be used to amplify salt in both savory and sweet dishes.21, 22
Another approach to enhance the perception of saltiness involves strategically placing salt on the surface of the product, where it can be tasted more easily. General Mills is testing this strategy in a few products.20 Several companies are also exploring methods to alter the size and shape of salt crystals, resulting in foods that taste saltier while using less salt. For example, Tate & Lyle sells hollow salt microspheres and Cargill sells flake salt with improved solubility and surface area. With these, there is also likely to be a limit to how much salt can be reduced before the effects become noticeable.
3. Alternative Salts — Potassium chloride (potassium salt) serves as an excellent sodium-free substitute for salt and can be used to reduce sodium by up to 50%. After that the bitterness and metallic taste of potassium becomes noticeable, which has hindered widespread use. The startup NuTek is working to create better processing steps that mitigate the bitterness associated with potassium chloride. One area where alternative salts have seen some adoption is reduced-sodium formulations of brines and cures used in meat preservation (e.g. Innophos’ potassium-based stabilizer for meat, poultry, and seafood).
4. Alternative Spices — A wide array of plant extracts and spices can be incorporated into foods to substitute salty flavors with a delightful spice. Salt-free herb blends offer an excellent method to stimulate taste buds without the need for added sodium, like Spicewell’s Ayurvedic spice mixes or Done Properly’s sodium-free umami flavoring isolated from mushrooms.
Progress in salt reduction has predominantly originated from large food companies pursuing stealth reduction strategies. Kraft Heinz has used this strategy to reduce the salt in their ketchup by 40% over the last 30 years.23 This is great for consumers, but the pace of progress is glacial. There is a lot of whitespace to use the other strategies to create salt-free (or at least harshly reduced) versions of products that consumers don’t necessarily think of as high in sodium (e.g. baking powder, pancake mix, and salad dressing).
Fat Reduction: A Healthier Alternative
U.S. consumers eat too much saturated fat and not enough healthful unsaturated fat.24 In fact, three out of five consumers are making efforts to limit their overall fat intake, particularly saturated fats.25 Saturated fats are most prevalent in meat and dairy, often providing processed foods with their irresistible creaminess, lubrication, and melt-in-the-mouth quality (think chocolate, butter, and Twinkies). The health impacts of diets high in saturated fat remain controversial; however, what remains clear is that making a switch to consume a higher proportion of healthy unsaturated fats can improve cholesterol numbers and aid in preventing insulin resistance.26 Certain unsaturated fatty acids like omega-3s also play a pivotal role in lowering inflammation by bolstering the immune system and fostering improved heart function.
The saturated fat reduction strategy adopted by most processed food manufacturers involves substitution, replacing fats and oils high in saturated fat such as butter and palm oil with alternatives like canola oil. For example, McDonald’s no longer cooks fries using beef tallow, they use vegetable oil which is much lower in saturated fat. Still, broad substitution of unsaturated fats for saturated fats presents three significant challenges:
1. Taste — Many unsaturated fats like those found in olive oil and seafood have distinct flavors/odors that make them unattractive for use as substitutes.
2. Melting Point — Saturated fats are usually solid at room temperature while unsaturated fats are usually liquid. Substitute out too much saturated fat and chocolate won’t solidify.
3. Oxidation — Unsaturated fats are more prone to oxidative deterioration, which makes them less shelf-stable than saturated fats.
Many startups are attempting to address these substitution challenges by developing better “healthy fat” alternatives. We’re seeing companies get creative across the supply chain from production and processing to structuring.
Production — Startups like Nourish Ingredients and Algae Cooking Club are harvesting healthy oils from novel sources like yeast and algae. These unique oil blends claim benefits beyond just reduced saturated fat, such as higher smoke points and lower environmental footprints compared to traditional seed oils. These products tend to be marketed as premium specialty oils given the higher cost.
Processing — Regardless of the source, better-for-you oils high in things like omega-3s often necessitate extra processing to mitigate the presence of any unwanted odors and flavors. Extraction and deodorization contribute significantly to production costs, so startups like NoPalm Ingredients are avoiding these extra costs by selling oils and fats that lean into the distinctive umami, nutty and toasty flavors from oil-producing yeast.
Structuring — Downstream, new structuring agents, emulsifiers, and encapsulation techniques are being used to create oleogels made from healthy fats. These gels allow for the incorporation of liquid unsaturated fats into semi-solid and solid foods like spreads, meats, and bakery products. For example, Paragon Pure is working on a rice bran butter that contains much less saturated fat.27 There’s huge potential in adding the right structure to better incorporate unsaturated fats into solid foods.
The Anti-Inflammatory Boom
In addition to reducing consumption of pro-inflammatory ingredients like sugar, salt, and fat, it’s also imperative to note that we can improve our health by eating more anti-inflammatory foods that are high in natural antioxidants and polyphenols and serve to counteract the impacts of inflammation. Examples include spices such as turmeric, cinnamon, ginger, garlic, and cayenne.
Evaluative Criteria
To evaluate opportunities in the space, we ask — does the solution:
Reduce the use of inflammatory ingredients and make a positive contribution to consumer health?
Have defensible IP, or unique partnership agreements?
Benefit from scalable production at attractive unit economics?
Delight consumers with taste, nutrition, and price?
The best solutions are differentiated, delicious, and price competitive. They have the potential to diminish our dependence on sugar, salt, and saturated fat, ultimately enhancing the quality of life for consumers. Companies that successfully address these criteria will play a pivotal role in reducing inflammation within our food system, relieving the strain on our overburdened healthcare system, and paving the way for a healthier and more promising future.
What’s Next
This is an incredibly dynamic space that we’re excited to see further develop as more resources, innovative technology, and positive regulation emerge to enable new solutions. At Bluestein, we’re excited to back the next generation of founders building a healthier food system. If you’re an entrepreneur in this space or know of one, we’d love to hear from you. You can reach us at info@bluesteinventures.com.
A big thank you to our MBA intern Jorman Heflin for his deep analysis on this space!
Sources
1. https://pubmed.ncbi.nlm.nih.gov/35798448/
2. https://www.cdc.gov/nchs/fastats/obesity-overweight.htm
3. https://www.cdc.gov/diabetes/data/statistics-report/index.html
4. https://www.health.harvard.edu/heart-health/the-sweet-danger-of-sugar
5. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6770596/
6. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8389628/
7. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6959843/
8. https://www.fda.gov/food/food-additives-petitions/sodium-reduction
9. https://www.pcrm.org/news/health-nutrition/intake-saturated-fat-us-remains-above-recommendations
10. https://www.nosh.com/news/2022/fda-defines-healthy-on-pack
11. One possible exception to this statement might be the phasing out of artificial trans fats in processed foods. Artificial trans fats have (for the most part) been successfully regulated out of the US food system. In this case, canola and palm oils provided a cheap and highly functional substitute. Diet soda is another widely cited example of beneficial reformulation in sugar reduction, although recent studies have called into question the health benefits and safety of several common synthetic sweeteners.
12. https://www.jandonline.org/article/S2212-2672(20)30442-1/fulltext
13. https://www.fda.gov/food/food-additives-petitions/aspartame-and-other-sweeteners-food
14. https://www.foodnavigator.com/Article/2023/06/21/Clean-label-sweeteners-Could-sugar-make-a-comeback
17. https://www.nytimes.com/2010/05/30/health/30salt.html
18. https://www.hsph.harvard.edu/nutritionsource/salt-and-sodium/
22. https://www.ajinomoto.com/nutrition/delicious-salt-reduction
24. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2843598/
26. https://www.hsph.harvard.edu/nutritionsource/what-should-you-eat/fats-and-cholesterol/types-of-fat/