By Lisa Baertlein

(Reuters) – The United States plans a major overhaul of the way packaged foods are labeled, the Food and Drug Administration announced on Friday. Serving sizes will be adjusted to reflect how much people actually eat, and for the first time labels will list added sugars.

These are the first significant changes since the Nutrition Facts label was introduced more than 20 years ago. They come as an increasing number of Americans battle obesity, diabetes and heart disease and will affect roughly 800,000 products from Coca-Cola and ice-cream to soup and spaghetti sauce.

Speaking at a health summit in Washington, first lady Michelle Obama said she was “thrilled” about the new label and said she believes it is going to make “a real difference in providing families across the country the information they need to make healthy choices.” Her “Let’s Move!” initiative aims to increase the health of young people.

Manufacturers have until July 2018 to comply with the new rule. Small businesses with fewer than $10 million in annual sales have an additional year to comply. The FDA, which first proposed the rule in 2014, estimated at the time that the cost to industry of updating the labels would be about $2 billion.

The Grocery Manufacturers Association, which represents the world’s biggest food and drink companies, said the changes were “timely,” as diets and eating patterns have changed dramatically over the past two decades.

“Food and beverage manufacturers have responded by creating more than 30,000 healthier product choices since 2002,” Dr. Leon Bruner, GMA’s chief science officer, said in a statement.

Under the new rules, companies will have to provide details on the amount of added sugar such as corn syrup and white and brown sugar.

The Sugar Association, which represents U.S. sugar cane farmers, refiners, sugar beet farmers and processors, said it was “disappointed” at the requirement to list added sugars on the label and said the FDA had not demonstrated a scientific link between sugar and disease.

Information about calories from fat will be removed because research shows the type of fat is more important than the amount, the FDA said.

The new rules require serving sizes on the label to reflect what, on average, consumers actually eat. About 20 percent of all package labels will be adjusted, the FDA said. Some, such as ice-cream will be adjusted upwards, while others, such as yogurt, will be adjusted downwards.

“What and how much people eat and drink has changed since the last serving size requirements were published in 1993,” the agency said.

HOW WILL CONSUMERS REACT?

It was unclear how much the new label will actually impact consumer behavior.

Professor Jeremy Kees, a nutrition label expert at Villanova University School of Business who has consulted for both the FDA and industry, said he believes the impact will be “relatively small” because the information is on the back of the package.

“I think front of pack labeling has more potential to have a bigger impact on consumers,” he said.

Some changes have already been made, analysts say.

“Carbonated soft drinks have been on the decline before any of this happened,” said Darren Seifer, an analyst at The NPD Group, a market research company. “It might not make it exponentially greater, but it may help sustain it.”

The largest U.S. chocolate maker, The Hershey Company <HSY.N>, said it “will work diligently to make the necessary updates to our Nutrition Facts labels as requested by the FDA.”

In the United States more than one-third of adults and about 17 percent of youth aged 2 to 19 are obese, according to the Centers for Disease Control and Prevention.

Obesity-related conditions include heart disease, stroke, type 2 diabetes and certain types of cancer, some of the leading causes of preventable death. The estimated annual medical cost of obesity in the U.S. was $147 billion in 2008 U.S. dollars, according to Centers for Disease Control.

The FDA estimated the cost to industry of updating the labels at about $2 billion and the benefit to consumers at between $20 billion to $30 billion.

(Additional reporting by Dipika Jain, Sruthi Ramakrishnan, Melissa Fares and Chris Prentice; editing by Phil Berlowitz and Cynthia Osterman)