Investment bankers already eyeing impact of obesity on food industry

24Feb05

Back to back with the last post, the move against big food companies is clearly real enough for UBS, a Swiss-based international investment bank, to be organizing a conference last week to gauge the future impact of the growing concern about obesity.

In an FT article, the interesting though not surprsing development is that US state prosecutors a la Eliot Spitzer are expected to target the big food companies because of the costs to state healthcare budgets of obesity. Meanwhile, the first private suit to be launched against McDonalds initially failed and public opinion generally regarded it as frivolous. But now the case is to be reopened on the grounds that insufficient evidence was reviewed in the first round, and this next time there will be much greater disclosure.

With big tobacco, it was the internal evidence that the companies knew conclusively the harm tobacco caused while maintaining a public stance of ignorance and innocence that ultimately led to their undoing in court. It seems inevitable that there will be ample evidence within the food companies of how the food technologists knowingly manipulate appetite for profit. Simply putting healthy food like fruit on the menu in the way Wendys’ burger restaurants have may not be an adequate response to appear more responsible in future, the FT suggests.

For any company or management examining its corporate social responsibility position, the speed with which the attack on big food is moving should give pause. The issues are complex, but what appeared to be a good defence and even seemed to chime with public opinion only a few months ago may rapidly turn out flawed.

Big food initially responded, as did much public opinion, by regarding food choices being one of individual freedom and responsibility. However, marketers tend to be several steps ahead of academics, economists and legislators in understanding how behaviour can be manipulated for profit. But as the latter learn more about the limitations of individuals to moderate their behaviour in the face of deliberate stimulus, and those behaviours have direct and indirect economic effects, the state is bound to intervene to protect citizens.

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