A case for food before profit

26 May, 2014

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By Eric Stryson

A recent case in the US reminds us that food companies cannot be trusted.  Coca-Cola has been sued for marketing a ‘Pomegranate Blueberry’ juice that contains .3% pomegranate and .2% blueberry juice, filled mostly with other juices, dyes and sugars.  Last year the company faced a class action lawsuit for manipulating consumer perception of its Vitamin Water brand and disguising the fact that it was in reality just colored sugar water just as damaging to health as regular carbonated soda.

Coca-Cola is not alone. Over the last two years, more than 100 lawsuits have been filed against companies marketing ‘All Natural’ products which have all sorts of unnatural things in them.  The danger was serious enough for General Mills to attempt to modify its terms and conditions to restrict consumer lawsuits.  The result was such a media firestorm that the company reversed its policy and apologized for the mistake. 

The lesson here is that food companies driven foremost by the profit motive should simply not be trusted to do the right thing, regardless of their PR campaigns and claims of ethical practices. From the point of General Mills’ executives, for example, it was no mistake to attempt to restrict consumer lawsuits. Succeeding would have potentially saved the company millions of dollars. The mistake was getting caught. Incentives like this are why food companies must be more highly scrutinized and regulated and encouraged to produce real food rather than packaged food products. 

Economic incentives drive all commercial activity, but in the case of industrial food companies in particular such incentives often run counter to the public interest.  The business model of these companies is to create a perception of higher value for their products while using the lowest quality, lowest cost and sometimes even dangerous ingredients.  Too often this is accompanied by deceptive practices in and huge budgets for marketing, branding, packaging, sports sponsorships and political lobbying.  In-house legal resources have no doubt also swelled to keep pace with lawsuits.  

This huge outlay of resources has little to do with producing better or more nutritious food as much processed food has little to no nutritional value.  Instead there is a constant emphasis on consuming more, a direct assault on good health.  The role excessive sugar continues to play in current health epidemics including obesity, diabetes and cardiovascular disease has become well known. 

The current administration in the US has launched an unusually concerted effort to reform food industry practices, for example by reducing the availability of junk food in schools and preparing the groundwork for soda taxes and increasingly strict rules for nutritional labeling.  Yet this is still missing the mark. 

Stronger measures should be taken to reduce the destructive influence of big food companies and these should be tied to directly reducing or removing their incentives to do harm, not just in the US but in other countries as well.  For one, policies should encourage the production and distribution of whole foods rather than highly refined processed products.  Such products should instead go the way of tobacco – stigmatized, yet still available at a high price for those who understand the risks, with the aim of moderating and marginalizing their use. 

Whole foods offer smaller margins than creatively engineered and industrially processed foods and so there may be less obvious opportunities for profit.  Governments should support and even subsidize those who are in the business of selling less or non-refined foods, in order to make them accessible to a broader range of consumers and to encourage other companies to follow suit.  It is telling that the most highly processed unhealthy food products – soda, crisps, biscuits, sweets – are also the cheapest and most available to consumers at the lowest socio-economic classes in modern societies.  Governments should make it their priority to make unhealthy food less accessible than healthier choices, not more.  Subsidies for companies selling produce and whole packaged foods could improve access to currently underserved regions. To improve ease of access, retailers selling nutritious foods in affluent areas could be required to also serve lower income areas as part of their license to operate.

Food marketing should also be restricted and not just among children.  This should go beyond simple label reform.  It should be outcome driven and aimed at discouraging consumption of dangerous processed foods.  Imagine the equivalent of cigarette labeling: mandatory warnings on soda bottles with the naked abdomen of an obese person.   

Thirdly, political lobbying by food companies should be banned.  Such lobbying undermines the ability of lawmakers and regulators to do their jobs.  Nutritional science should not be obscured by well funded studies designed to justify marketing claims.  Nor should the average consumer be expected to understand the nuances of the complex issues they must base their choices on without help.  Thus there is an increasing need for mainstream nutritional education, beyond simple buzz words on labels, which will support a shift to greater consumption of proper whole foods.

Finally and most importantly the economic incentives to lie, cheat and manipulate must be eliminated.   Publicly listed companies operate with a short-term outlook driven by the whims of institutional shareholders demanding buoyant share prices.  Professional managers who follow the agendas are rewarded in kind.  This is no doubt a fundamental driver for unscrupulous claims on products and other decisions that place profit before the provision of high quality food.   Companies in the business of selling whole foods should therefore be de-listed from public exchanges in order to protect the integrity of the goods they produce.  Instead they might be eligible to receive subsidies and favorable access to markets.  Other companies manufacturing “processed food products” should be designated with a different status and subject to greater restrictions in the marketing and access for their products, thereby changing perceptions and reigning in financial returns.