ANALYSIS - Michelle Obama Sounds Final Warning to Food Industry on Obesity?
NEW YORK/LOS ANGELES (Reuters) - First lady Michelle Obama has a message
for the U.S. food and beverage industry: Take real steps to sell healthier
products or the federal government will force you to do it.
Obama has taken on childhood obesity as her signature issue, and President
Barack Obama appointed her head of the interagency panel he formed
to study it. The resulting obesity task force delivered its 70-point
plan on Tuesday for reducing childhood obesity within a generation.
While the document does not recommend regulatory actions or federal
taxes on unhealthy foods, experts said it sounded like a final warning
"It's sending a polite but clear warning shot across the bow of industry,
especially with regard to marketing to children," said Kelly Brownell,
director of the Rudd Center for Food Policy and Obesity at Yale University
and a leading proponent of using taxes to reduce consumption of sugary
"The report says in no uncertain terms, 'clean up your act or we'll
take action,'" he said.
U.S. food makers such as Kraft Foods Inc, Campbell Soup and General
Mills have pledged to reduce the amount of sugar and sodium in their
products, while drink makers like Coca-Cola and PepsiCo removed full-calorie
sodas from schools amid pressure from states.
Despite these voluntary steps, experts say self-regulation is unlikely
to go very far, since the large packaged food and drink companies
often make the bulk of their sales and profits from products high
in salt, sugar and fat.
"This is not the Dalai Lama here. They're there to make money," said
Tom Pirko, founder of consulting firm Bevmark LLC. "They'll slip and
slide to accommodate certain consumer trends, but they're not going
to change their business model."
Financial analysts agree that for business, going healthy -- whether
through voluntary actions or forced regulation -- is potentially profitable.
Selling healthier items often can give a company a way to charge more
for its products, especially when they are in high demand from increasingly
health-conscious consumers. That could be the carrot that persuades
companies to change.
"There is a financial incentive for Coke and Pepsi to get the next
generation to drink more of the noncarbonated brands because that's
where consumption's moving," Morningstar beverage analyst Phil Gorham
said, referring to drinks like bottled teas, juices and flavored waters.
"The larger the scale they can make this stuff, the more profitable
they will be."
THE PROSPECT OF REGULATION
A key area of focus of the White House Task Force on Childhood Obesity
report was advertising to children.
The report cited a Federal Trade Commission finding that purveyors
of food, beverages and fast food spent $1.6 billion in 2006 to promote
their products to young people. Children and adolescents are critical
to marketers because in addition to being consumers themselves, they
influence purchases made by parents and are the future adult market,
the report said.
In light of practices such as using licensed cartoon characters to
sell products, the report suggested that regulation or legislation
could be helpful.
"Effective voluntary reform will only occur if companies are presented
with sufficient reasons to comply," the report said. "The prospect
of regulation or legislation has often served as a catalyst for driving
meaningful reform in other industries and may do so in the context
of food marketing."
As an example of where government stepped in after self-regulation
failed, U.S. regulators late last year halted an industry-funded food
labeling program called Smart Choices after nutritionists and consumer
advocates complained that sugary breakfast cereals like Kellogg's
Froot Loops and Cocoa Krispies were being marketed as healthy choices.
HAMBURGERS AND FRIES -- AND CHICKEN AND SALAD
Industry executives say they promote regular physical activity and
offer healthy options as a way to combat obesity but ultimately, consumers
are responsible for their own health.
Health experts agree that exercise and better food choices are important,
but say widely available, heavily advertised and often cheap high-calorie
food in the United States has led to an increase in average calorie
consumption, playing a starring role in the obesity epidemic.
Edward Jones analyst Jack Russo said companies like McDonald's Corp,
PepsiCo and General Mills Inc already have made strides in either
making their products healthier or highlighting the health benefits
of existing products, such as commercials that imply that eating Cheerios
will help lower cholesterol.
McDonald's, the world's largest fast food purveyor, has introduced
more grilled chicken, salad and low-calorie drink options, moves Russo
said have helped business and made the company less of a target.
"They still sell hamburgers and fries ... but having that complement
of healthy products in your portfolio sometimes can make all the difference,"
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