Consumer products giant Procter & Gamble Co. will cut back capacity on the controversial fat substitute Olean, which never lived up to the company's expectations, P&G said on Friday, Reuters reports.
The company said it has provided for a write down of Olean capacity as part of $900 million in charges it will take, mostly in the fourth quarter, to fix or exit underperforming businesses.
P&G officials would not say specifically how much production capacity for Olean - the company's name for the fat substitute Olestra - would be cut.
The company will continue to make the product for PepsiCo Inc's Frito-Lay unit, which uses Olestra in fat free snack chips.
The company will also continue to use Olean in its own fat free Pringles chips, a spokeswoman said.
Olestra has had a controversial reception from its introduction due to concerns that it can lead to gastrointestinal discomfort.
The U.S. Food and Drug Administration allowed Olestra to be marketed in 1996, but the additive has faced regulatory problems elsewhere.
Last year, Olestra was blocked for use as a food additive in Canada.
The company also has discontinued a test started last year to sell low-fat crackers made with Olestra, after the product did not meet expectations, the spokeswoman, Margaret Swallow, said.
Swallow would not say how much demand there has been for Olestra.
"Clearly less than we had anticipated," she said.
The cutback in Olean comes as P&G eliminates underperforming brands to focus on larger brands like Tide laundry detergent and Charmin toilet paper.
P&G's lagging food business has been a major focus of that effort.
The company has said it is looking to sell its Jif peanut butter and Crisco shortening brands, while Pringles and Sunny Delight juice drink will be spun off into a joint venture with
Coca-Cola Co.
"Clearly, it (Olean) is not the home run on the food front that they though it would be," Ann Gillin Lefever, consumer products industry analyst, said.
Source: Reuters