Back to top

Analyst Blog

With claims that junk foods are detrimental to health and can cause Type 2 Diabetes, the Anti-Obesity campaign seems to have irked beverage companies and food chains. In retaliation, the food bigs are now claiming that the campaign’s ads are misleading.

The controversy revolves around an advertisement in subways of cities in the U.S. The ad portrays a man suffering from diabetes who had to get one of his legs amputated sitting near a soda drink displaying the growing size of soda portions. It is aimed at shocking people and bringing them out of dietary habits that can lead to obesity.

The beverage giants belonging to The American Beverage Association, which represents companies including PepsiCo International (PEP - Analyst Report) and Coca-Cola Company (KO - Analyst Report), say that the campaigns are misleading and argue that the soft drinks are in no way directly responsible for such extreme health conditions.

The videos used in anti-obesity ad campaign run by Strong4Life in Atlanta, Georgia, has also faced stark criticism from parents on grounds that children being depicted as fat and chubby could result in reducing their self esteem. The parents argue that overweight children are already bullied in their schools. Such ad campaigns, they claim, would further add to their worries..

However, studies show that aggressive advertising by the food industry -- especially items such as pizza, soda, potato chips, french fries and dessert foods -- partly contributes for 25% of the calories consumed by children between the ages of four and eight. Teenagers get 33% of their calories from those same fatty, salty and sugary foods.

Moreover, nearly 57% of New Yorkers are overweight or obese, according to the department, and about 10% of the obese children there have been told they have Type 2 diabetes. The health officials report that many obese children are under treatment in the city hospitals and need knee replacements, among other things.

There have been campaigns earlier on promoting healthy diet for children as well. In 2009, Congress instructed the Federal Trade Commission, Food and Drug Administration, Centers for Disease Control and Department of Agriculture to form an Interagency Working Group to examine the role of child-targeted advertising in the alarming rates of childhood obesity and recommend standards for marketing food to children under 18.

The Working Group suggested that food companies should advertise only those food for children which make “a meaningful contribution to a healthful diet” by containing a significant amount of fruit, vegetables, whole grains, low-fat dairy products, fish, extra lean meat or poultry, eggs, nuts and seeds, or beans. It was also suggested that advertised food should only have “minimal quantities of nutrients that could have a negative impact on health and weight,” such as sodium, saturated fat, trans fat and added sugars.

Due to the above-mentioned efforts, the percentage of children drinking at least one sugary drink a day declined from about 36% in 2007, before the ads appeared, to about 30% in 2010, the department said, citing surveys.

New York City has made it mandatory for certain chain restaurants to prominently display calorie counts for each item on their menus to make customers more aware of how much they are consuming.

The ‘Let's Move’ campaign patronized by First Lady Michele Obama has changed the way the Americans eat. Mrs. Obama has addressed governors, mayors, school groups, food makers and other constituencies, urging them to promote a healthy and obesity free lifestyle for the future of America.

She visited schools across the country to to encourage students to plant vegetables and fruits in their own school gardens and also open salad bars in their lunchtimes. And she's worked herself into a sweat at exercise clinics with kids, including those on the White House South Lawn.

These campaigns seem to be forcing the retailers reconsider things, as most recently Walmart Stores Inc. (WMT - Analyst Report), the country's largest retailer, promised to cut the levels of salt, fat and sugar in their products. It also pledged to bring down the prices of fresh fruit and vegetables so that they are easily available to people who strive for healthy eating habits.

Currently we have a Zacks #3 Rank for Wal-mart, implying a Hold rating. For Pepsi and Coca Cola, however, we hold a Zacks #4 Rank, implying a Sell rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
TRIQUINT SE… TQNT 20.67 +6.55%
RF MICRO DE… RFMD 12.45 +5.82%
VASCO DATA… VDSI 14.79 +4.82%
STRATTEC SE… STRT 81.23 +4.27%
PATTERSON-U… PTEN 34.44 +2.68%