Conventional Food Companies Facing A Big Dilemma
According to a new report from JP Morgan, food companies are facing a crisis. Do they continue to rake in the profits associated with less healthy foods, or do they begin marketing foods that are better for you but bring in less money?
The sad economic fact is that it continues to be way more profitable to market junk food than it is to market foods that are good for you. Bottled water, for example, brings in way less bucks than carbonated soft drinks. And fruit and vegetables have never been high profit items. But with the obesity crisis looming larger every day, food companies are increasingly in the spotlight and under pressure to change their ways.
A new global equity report entitled Obesity: Re-Shaping the Food Industry, was requested by United Nations asset managers who wanted an analysis of how obesity may affect company performance and valuations. These companies are in a bind- their shareholders clamor for profits, but the social costs of these profits is enormous. The biggest bucks are made from "junk" foods, but the massive consumption of these same products is producing a worldwide public health crisis of enormous proportions.
There are no easy answers. Some, such as crusader Kelly Brownell, MD of Yale University (author of the excellent "Food Fight: The Inside Story of the Food Industry, America's Obesity Crisis, and What We Can Do About It") have argued for a punitive tax on junk food, much like the tax on cigarettes. This solution is not without problems of its own. Defenders of our "right" to eat junk food argue that government meddling curtails personal liberty. It was the same argument used by the defenders of the tobacco companies before the tides turned against them in the last decade and the true health costs of their products became known.
While the battle over how much liability the food companies actually have for the consequences of their products continues to be fought in the political arena, consumers can exercise their right to vote with their pocketbook. Sure, fruits and vegetables are not as profitable for the food companies as chips and sodas. Sure, macaroni and cheese is more convenient than freshly cooked chicken and vegetables. And sure, healthier foods and products- including those made by Atkins- may cost a bit more money than the candy bars at the snack machine.
But the real cost of junk food is in diminished quality of life. And that's a price no one wants to pay.