Grocery Update #111: Can Grocery EAT-Lancet? A Deep Dive.

Feeding The Planetary Health Diet Into The Grocery Meat Grinder.

Can Grocery EAT-Lancet?

By Errol Schweizer.

A few weeks back, I started getting flooded with news about the new EAT-Lancet Report.

I had no idea what it was about. One of my favorite international food sources, Thin Ink, gave me the scoop, “In January 2019, a group of eminent scientists and food systems experts, unveiled, for the first time, an ‘ideal diet’ for both a healthy population and a sustainable food system. The diet called for a doubling of consumption of nuts, fruits, vegetables and legumes, and a halving of meat and sugar intake, rich in plants with moderate amounts of animal-sourced foods and limited added sugars, saturated fats and salt.” Very interesting, even if a bit pie in the sky!

In case you are like me and don’t always follow this kind of high level international work and are more caught up in the day to day work of surviving, here is what the EAT-Lancet folks are up to and why:

“Building on its influential 2019 report, the new Commission – comprising leading international experts in nutrition, climate, economics, health, social sciences and agriculture from more than 35 countries across six continents – finds that:

· Shifting global diets could prevent up to 15 million premature deaths per year.

· Food systems are the largest contributor to the transgression of five planetary boundaries.

· Food systems currently account for roughly 30% of total greenhouse gas emissions globally. Transforming food systems could cut these emissions by more than half.

· Fewer than 1% of the world’s population is currently in the ‘safe and just space’, where people’s rights and food needs are met within planetary boundaries.

· The wealthiest 30% of people drive more than 70% of food-related environmental impacts.”

And, “the analysis warns that even with a complete global transition away from fossil fuels, food systems could still push temperatures beyond 1.5°C. The planetary boundaries framework defines nine key Earth system processes that regulate life on Earth. The world has already passed six of these nine boundaries: climate, biodiversity, land, freshwater, nitrogen and phosphorus pollution, and novel entities (pesticides, antimicrobials, and microplastics)... A fairer distribution of resources, benefits, and costs is required to ensure that food systems are sustainable for both people and the planet.”

And this is what they concluded:

“Across all regions, the analysis reveals a common shortfall: diets consistently lack sufficient fruits, vegetables, nuts, legumes, and whole grains. In many places, the analysis also finds that diets contain excess meat, dairy, animal fats, sugar, and excessively processed foods.”

The report also claims that “reshaping systems could deliver returns of $5 trillion a year through better health, restored ecosystems, and climate resilience – more than ten times the $200-500 billion investment* needed to drive food systems change.”

How? The report’s recommended diet, called the Planetary Health Diet (PHD), says we need to:

· Protect and promote traditional healthy diets

· Create accessible and affordable food environments that increase demand for healthy diets

· Implement sustainable production practices that store carbon, create habitat, and improve water quality and availability

· Halt agricultural conversion of intact ecosystems

· Reduce food loss and waste

· Secure decent working conditions across the food system

· Ensure meaningful voice and representation for food systems workers

· Recognize and protect marginalized groups

If you follow The Checkout Grocery Update regularly, you know this sounds a bit different than the business as usual in the U.S. grocery industry.

And it’s a world different from the mainstream American discourse on food, whether it be the USDA Dietary Guidelines, the MAHA movement that brought RFK into federal office, or really anything that the Trump Administration is doing when it comes to food, from SNAP cuts, cuts to local food purchasing, cuts to food safety, trade wars cutting farmers off from global markets, cuts to H2A farmworker wages and labor protections, cuts, cuts, cuts, cuts to everything except prices, which are still going up.

Let’s say you are in the grocery industry, read this EAT-Lancet thing and are moved to action. What would you do, beyond what it would take to actually make America healthy again?

What EAT-Lancet is calling for is a vast change to the highly industrialized and globalized U.S. food system, namely what grocery stores actually sell and what we eat every day. The $1.1 trillion U.S. grocery industry is a competitive, even brutal, marketplace. It takes a lot to keep up and get ahead. It is growth oriented and profit-driven, and financed, built, operated and consolidated in a way that is 180 degrees away from the conclusions of the report, to say nothing of the vast blue and white collar food industry workforce, the lobbyists, politicians, pundits, industry-funded astroturf groups and academics as well as skeptical, burnt out, exhausted and cash-strapped consumers…

It’s a lot to digest.

Here’s what the EAT-Lancet PHD calls for:

And now for some grocery numbers (All data graciously provided by NIQ).

Total U.S. grocery sector food sales are around $800 billion a year. Packaged food sales across ambient grocery, bakery, frozen and dairy departments account for over 66% of all food. Fresh food sales account for less than a third of all food sales, and fresh produce at under 10%. These high level numbers for the U.S. represent an enormous investment in supply chains, labor and cropland, as well as engineering and rewarding customer behavior.

It may also help explain why the PHD has mostly been ignored by the grocery industry since 2019.

Can Produce Scale?

The PHD calls for a 67% increase in fruit and vegetable consumption to 50% of our diet, including lesser cultivated varieties. When you add up all fresh, frozen, canned and minimally processed fruits and vegetables, you get about $120 billion in sales annually. If the grocery industry is currently around $1.1 trillion in annual sales, that means total produce (fresh, frozen, canned) is around 11% of the industry total. At Whole Foods, fresh produce sales were about 20% of the business, so while Whole Foods is very much not perfect, they are probably the only national grocery chain to even get out of the lowest double digits of fresh produce share. There are some grocery cooperatives and indies that are in the 15-20% range, but they are premium priced, upscale chains with choosey clientele and a focus on selection and freshness more so than price. Not for the masses.

The other question is how to do you make 40-50% of the space of a grocery store produce-focused, without it becoming a shrink tsunami. When I was at Whole Foods, we looked at doing produce-centric stores with a more limited assortment of packaged foods, and the math was not mathin’. Produce was only profitable at Whole Foods because it balanced its higher labor, shrink and pricing blend on the back of the packaged food selection that was much lower in shrink, price and labor costs, but higher in gross margin dollars. It was a bummer to my produce friends, they had the best of intentions. So the first big hurdle to EAT-Lancet, is how we create the enterprise models, supply chains, store layouts and customer interest in a produce-centric supply chain.

The Meat and Dairy Bind.

The EAT-Lancet diet calls for a large reduction in meat and dairy consumption, down to around 5% of total. Meat and dairy are already culture war fodder, with MAHA and regenerative agriculture advocates pushing animal-centric diets; around 12% of shoppers buy over 50% of meat.

And the meat and dairy selections of grocery stores represent a different set of challenges. Meat sales, both fresh, packaged and frozen, are around $130 billion a year, or around 12% of the total industry sales. Dairy product sales are around $150 billion, so around 13.5% of the total. So, taken together, meat and dairy are around 25% of all grocery sales. That is around $280 billion a year. That is a big change, not just to lifestyles, and the folks whose steak burgers will need to be pried out of their cold, dead hands before giving up their meat habit, but also to store layouts and financing, grocery supply chains and how most grocers do business.

Meat drives basket sizes and tends to live “above the fold” in ads, while dairy milk and butter tend to be “key value items”, priced to market to generate loyalty and draw consumers through the store. Yogurt is among the highest sales volume, most frequently promoted, highest margin and highest turn categories in the store. And ice cream is among the highest sales and gross margin dollar departments in the store, and tremendously responsive to promotional markdowns and seasonal pushes.

So, meat and dairy are pretty important to the functioning of grocery stores. What happens if their sales are reduced by a fifth? This is part of the problem that the alt/meat and alt/dairy sectors have tried figuring out to varying degrees of success, by marketing analogous plant-based and non-animal based ingredients, like Beyond Meat, Oatly, Impossible and other various legume, seed, nut, grain-based meat, cheese and milk analogues to try to replace the types of products consumers are used to. It is also what grassfed/regenerative and humanely raised meat and dairy producers are trying to solve for, by making animal products more responsibly source and environmental friendly. Neither side has it figured out, or hasn’t been subject to immense criticism and/or ridicule. Can you reproduce these purchase occasions and consumer habits more sustainably, or, according to PHD, is the real solution blowing up the sales mix in grocery stores and radically changing what people eat, against decades of marketing and “check off” propaganda, and against peer pressure, traditions and dietary restrictions? That’s a lot to digest.

Sunk Costs.

These dietary habits are the result of American food industrialization and decades of marketing propping it up. During World Wars One and Two, the U.S. massively scaled up production of processed foods to feed the troops overseas. Once the wars were over, the infrastructure that had been funded by government contracts could not just be retired and forgotten The wide availability of canned food and beverages, freeze dried foods, frozen foods and various other shelf-life extending methods were not driven by consumer demand. These foods were pushed by processors who saw an opportunity to capture American pantries and palates and capitalize on all that government funded infrastructure. Brilliant and delicious.

Processed foods were civilianized and mainstreamed, becoming cheap and ubiquitous while the manufacturing remained in private sector ownership and generated enormous profits. This became the American dream of convenience, that would end hunger and food insecurity, and become the envy of the world, according to Cold War era propaganda, filling the shelves and freezers of supermarkets which had been built along federally subsidized highways leading to federally subsidized suburban subdivisions. Decade later, this infrastructure for processed food production, including production, harvesting, processing, manufacturing, transportation and storage (both ambient and chill) is now even more massive and the grocery chains that sell these products have gotten bigger and bigger. Billions in infrastructure, millions of jobs, and thousands of facilities and stores, feeding Americans.

The Processed Food Racket.

The categories of these products on groceries shelves are now typically dominated by a handful of packaged food monopolies. Bread? Flower Foods and Bimbo brands like Wonder, Nature’s Own, Dave’s, Thomas’, Sara Lee and Arnold’s. Cereal? Post, General Mills, Ferrero/Kellogg’s. Yogurt? Chobani, Danone. Beef? JBS, Tyson, Cargill. Chocolate? Hershey’s, Mondelez. These firms invest billions of dollars to dominate shelf space. Even when they are losing market share, they can crowd out competitors.

Retail business models are dependent not just on what they sell. but also “buy side” revenue streams such as trade promotions, slotting fees, stock level requirements, payment terms, service fees, or chargebacks and billbacks that tack a markup onto supplier funded markdowns, and various other vastly under-regulated fees, tolls and requirements for brands to get and stay on shelf. Rent seeking is alive and well in grocery.

These deep-pocketed, under-regulated revenue streams favor incumbent players. Scale attracts scale and assures that other than occasional minor trend shifts or assortment updates, nothing major really changes in most grocery stores. And in response to customers feeling pinched on price, most retailers are also expanding their private label selection, so they can directly control sourcing, pricing, quality and negotiate everyday low costs with suppliers and put their own name brand on popular consumer products made by third party packers.

Food Finance.

Any major change to the grocery industry must be underwritten by investors. Capital must be allocated to scale up ideas. Whether its plant-based or regenerative, organic or biodynamic, precision fermentation or cultivated meat, whole grain and legume based, ketogenic or MAHA-approved, or whatever consumers are lately buying more of, investors can make or break any food trend by what they choose to throw money at. Many food investors have patterned their funding theses after Silicon Valley, throwing money at a bunch of ideas, hoping one shoots up like a hockey stick. It also means they can flock to trends and create a bubble of unrealistic, unrealized expectations. Why is that?

Private equities need a significant return on their capital outlays. Not just for themselves, but for their limited partners, for the mutual funds, pension funds and institutional investors who have in turn invested in their funds. How often have U.S. grocery and CPG investors thrown billions at a problem because world leading scientists thought they should, even when they tease the ROI of changing the planetary food system? Capitalism is simply an economic systems where the capitalists, those with the most capital and the most influence over capital, call the shots. They need to believe. And once they believe, they cut checks, especially in the current deregulatory climate. And when they don’t believe, or worse, mobilize against, it’s pretty hard to gain any real momentum no matter how well thought out or seemingly profitable the program may be.

The Innovation Problem.

This isn’t just a funding puzzle. Future Market’s Mike Lee was first out of the gate to point out such a shift to the EAT Lancet diet will need significant investment in product development and recipe innovation.

“Nobody orders dinner from a research paper. The report glosses over the crucial part: making the Planetary Health Diet irresistible. It’s not data that’s missing—it’s desire. Logic doesn’t drive food decisions. Emotion does. If the food doesn’t feel delicious, people won’t eat it, and your climate impact stays at zero…

“Creating genuine desire for healthier food is harder. It requires shifting culture, not just prices. But desire is more ironclad. When people actually want the Planetary Health Diet—when it feels delicious and appealing, not virtuous and medicinal—you don’t need governments to enforce it.”

This means shifting people’s palates and cravings as much as figuring out new and interesting ways to prioritize fruits and vegetables in all sorts of recipes and formulations. Processing technologies that extend shelf life, such as IQF, recart/retort and aseptic packaging should be on the table, especially for food storage and food securityas well as retail. Expanding farmers markets and direct sales are low hanging fruit, but also meeting people with where they are at, their hectic work schedules, taste preferences, purchase occasions, as well as significant cultural, regional, lifestyle, allergy and dietary preferences need to be taken into account. EAT Lancet’s PHD needs an army of food innovation and product development professionals as well as category managers, supply chain and logistics experts, as well as farmers and chefs.

Food is Not Ag. Ag is Not Just Food.

And that matters if we want to transition U.S. food production to an EAT Lancet paradigm. The vast majority of American farmland is not for people food. It is for ethanol fuel and livestock feed, and then ingredients for processed products. And the largest use of land in the U.S. is grazing land for livestock. These land uses encompass hundreds of millions of acres, whole subcontinents of geography. Actual food, particularly what EAT-Lancet concludes we need to eat more of, is a much smaller use of land. And the majority of domestic fruits and vegetables are grown in sunny but flood, earthquake, wildfire and disaster prone California. Tom Philpott’s cogent analysis of the fragility of California climate and food production should scare the crap out of everyone.

That is why scaling up fresh produce to meet 50% of our diets also means decentralizing and doing row crop production everywhere, including in urban, suburban and rural communities close to centers of consumption. It also means disincentivizing farmers from the pathological overproduction of corn for fuel, and transitioning commodity growers away from the easy money of soy and corn exports. The most ambitious ideas, such as regional food security plans from Austin, New England or New York, still don’t approach the majority of what people are eating in those areas and will still require significant dependence on California.

Food Trade, Food Labor.

It is admirable that EAT-Lancet addresses head on the inequities in global food trade and labor markets. Global South countries export a growing share of American’s fresh fruits and vegetables, as well as plenty of other food. They structure their economies to favor American multinationals like Mondelez, Driscolls or Cargill, which benefits large landowners, shippers, exporters and their investors, usually at the expense of farm and supply chain workers, communities and any end goals of economic fairness. With tariffs top of mind and already driving up prices, it seems like more production of things that can grow or be made domestically would make sense.

The problem with scaling up domestic production, besides the big problem of how awful farm work is, is President Trump’s labor and immigration policy. At the behest of farm owners and labor recruiters, Trump has cut H2A pay rates for migrant workers by over 30% and has rolled back enforcement on anti-trafficking laws, all while aiming to scale up H2A recruitment. H2A is like a matchmaker for farms and migrant workers, and locks workers into this relationship, as opposed to letting them find better paying jobs if they are underpaid, abused or unhappy. This is why advocates call H2A a form of indentured servitude. And Trump era immigration policy, including violent raids and deportations of farm workers and their communities, has sent a shockwave through the mostly Hispanic farm labor sector, with thousands of workers not showing up for fear of deportation. Trump’s own labor department even issued a report warning of a food systems collapse unless the administration eases up raids and deportations.

But the addressing problems with farm work is just the beginning. Very few blue collar grocery jobs pay a living wage. Over 75% of grocery staff reported food insecurity in a survey done in 2022, and over 14% experienced being homeless. And even unionized grocery personnel in the U.S. have fewer job protections than comparable jobs in Europe.

Food Prices Are Bullshit.

Why is the fresh healthy food that EAT-Lancet calling for so expensive at grocery stores?

Because food prices are bullshit. The way we value and account for production in supply chains is bullshit. The invisible, underpaid labor undergirding food production, society paying the price of soil loss, air pollution, water pollution like the dead zone at the mouth of the Mississippi the size of New Jersey, the archipelagos of hog shit lagoons dotting Iowa and North Carolina, the lack of any meaningful regulation of the marketing of ultra processed foods that are responsible for non-communicable diseases and health care costs 30% largest than the annual sales of the grocery industry, the climate-warming greenhouse gas emissions from meat and dairy production as well as the fertilizers, logistics, packaging, storage and retail emissions, and the political power and economic dominance of all the firms, investors, consultants and their pet lobbyists and politicians, well, all of this is adds up to why food prices are bullshit.

Good healthy food isn’t innately more expensive, even though manufacturers, wholesalers, retailers will take higher margins on healthier products any chance they get. Food prices are bullshit, and good food is too expensive, because the vested interests who benefit from the current system make the laws and regulations to keep it that way.

Food Price Inflation, Though, Is Very Real.

Food prices have gone up over 35% in the last 5 years. Pundits like to cite the main measure of inflation, the CPI, which is creeping up at 3% recently. But it does not tell the whole story.

In the last 5 years, beef has gone up 70% in price, eggs have gone up 160%, coffee has gone up 36%, chocolate has gone up 48%, cookies and crackers have gone up 40% and pet food has gone up 50%. On average, the top 10 most popular grocery categories have gone up 60% in just 5 years. If you are feeling a pinch in your wallet, you are not along.

And consequently, the consumption volumes of these products have plummeted. Yes, people are eating less beef, buying less milk and cookies and yogurt. Does that make the EAT-Lancet PHD’s happy? But folks are not buying more of the fruits and vegetables, grains and legumes that EAT-Lancet recommends scaling up. Food consumption volumes since 2021 are down 3.5%, not even adjusted for population gains. That is a drop-off of over 8 billion annual grocery transactions compared to 2021.

47 Million Americans Go To Bed Hungry.

The result is record high food insecurity, over 47 million people going to bed hungry. This number is likely growing due to cuts to food assistance, as well as wage stagnation, consumer credit card debt, higher energy and housing costs, and life just getting more expensive across the board. SNAP generates nearly $100 billion revenue every year, and reaches over 40 million Americans, and it is still not nearly enough. Most users run out of SNAP by week two or three of the month. And banning junk foods from SNAP redemptions doesn’t solve anything if that is all that dollar stores or convenience stores are stocking. The ability to eat an EAT-Lancet diet is a wonderful privilege, increasingly out of reach of more and more people in the wealthiest country in the world. At the time of this publication during a “government shutdown” (though ICE raids and deportations are not “shut down”), the Trump Administration is unwilling to fund SNAP benefits after November 1, and food industry groups are even mobilizing to keep the program funded.

Food and Inequality.

Food insecurity is just the tip of the iceberg when it comes wealth and class in the U.S. America is the wealthiest country in the world, but this status belies vast wealth inequalities by race and geography, as well as wealth inequalities within racial groups and geographies.

Inequality in grocery manifests as food apartheid: different food systems and options based on where you live, what you can afford, what you’ve learned and what you were raised on. America’s most common grocery store is Dollar General, which barely sells any fresh food. America’s biggest grocer by far is Walmart, and fresh produce in Walmart is dwarfed by their colossal packaged food and meat departments. And thousands of American communities are monopolized by a handful of retailers. Thousands of communities don’t have access to full service grocers, such as the zip codes in east Austin, Texas. The total number of grocers nationally has dropped by 25% since the 1990s.

Grocers customize their assortment based on the demographics of their communities. This is such a basic retail strategy that it gets taken for granted in the industry. Grocers know how their prices and assortment are influenced by race, class, geography, and they adjust their business models to best serve these communities. It is business as usual. But it is also food apartheid, when you consider what gets sold to whom.

Walmart has a couple hundred stores in higher income areas that sell more new items and organic products. HEB will have very different store layouts and assortment priorities in different neighborhoods, but also following a similar model as Walmart in how they market to upscale areas versus low income communities. Food apartheid means that folks from upmarket neighborhoods in California get their Gelson’s, Erewhon and Whole Foods with gorgeous fresh produce selections. But there will be a dollar store after dollar store with little or no fresh food on Federal Highway in Broward County, or in strip malls in Rockford and Love’s Park, Illinois, or on the country roads in Vermont and between Tyler and Corsicana, Texas.

The DIY PHD Lifestyle?

And for folks that can afford it, and have the time and access, the EAT-Lancet Diet looks really compelling. Influencers can take it and run with it on social media, make it a marker of coolness and social status.

But we need to be careful about individual actions as the solution. Not everyone can afford to shop for fresh and local goodies every week at the farmer’s market. And even fewer folks can grow much of their own food in the form of fruits and vegetables, grains and legumes that EAT-Lancet recommends. Besides the price of food at stores, other hurdles include land access, time and energy, weather and seasonality, plus cash flow to invest in tools and maintain small scale irrigation and grow-house infrastructure, as well knowledge and experience to be an effective homesteader. Only a small percentage of Americans can grow much of their own food, and climate chaos is making such subsistence even more challenging and expensive.

Or PHD Via Public Groceries?

Perhaps the obvious answer is then is to fold an EAT-Lancet agenda into the growing movement for public groceries. Many towns and cities around the U.S. are seriously considering such public provisioning, building on years of experience of using values based procurement in publicly owned supply chains. While the U.S. already has a massive public sector supply chain in the form of the military PX and commissary system, it is still primarily dependent on the same highly processed, industrial supply chains as most supermarkets.

Public provisioning could be the angle that EAT-Lancet advocates use to make sure that good, fresh, healthy food is a human right, available to all, and does not become yet another signifier of social status, educational attainment, economic mobility or elitism. And bringing this program into the public sector could also mean the financing of an EAT-Lancet transition would not be beholden to capital markets and the whims and profit objectives of investors. How many great ideas have died on the vine because they couldn’t get funded? Public sector financing can be fraught with bureaucracy and political struggles, but it can take a longer view and doesn’t need a quick ROI to appease LPs.

Does this mean giving up on the U.S. grocery industry in the transition to an assortment that favors planetary health, equity and diversity? Not necessarily, but maybe a little competition for the private sector wouldn’t hurt.

End Note.

The EAT-Lancet Planetary Health Diet is an incredibly well-researched and articulated global food system plan.

It shows that good, fresh food is the ideal diet and it requires equity and fairness. It makes sense. It looks great on paper. The enthusiasm and clarity of the scholars bringing it to the masses has been refreshing. But it will take more than great ideas and energy to make such a huge and necessary shift to all of our dietary habits and the massive grocery operations, infrastructure, supply chains, labor and trading relationships that uphold them.

It’s a lot to digest.

peace.

(Perspectives are 100% our own and do not reflect sponsors.)