Some of the country’s largest food companies are announcing that they will cut back on marketing unhealthy foods to children. Recently Congress asked the Federal Trade Commission and several other government agencies to create voluntary guidelines for marketing “junk” food to children, which were issued earlier this year. But food companies didn’t like the new guidelines, saying they were too broad and too limiting, and instead partnered in their own efforts to create self-enforced nutrition standards for food marketed for children.
The new guidelines will force companies to curb advertising for one out of every three products that are currently marketed toward children. Companies will be allowed to direct advertising for food and beverages toward children if they meet certain nutritional criteria, which may force some brands to change the recipes on some of their more popular products, reducing sodium, fat, sugar, and calorie contents. This agreement between companies including General Mills (NYSE:GIS), ConAgra (NYSE:CAG), and Kellogg (NYSE:K) would force all participating companies to apply the same standards rather than creating their own standards for “healthier food”.
While the standards issued by food companies are not so strict as those proposed by the government, at least they are making efforts to improve. FTC Chairman Jon Leibowitz praised the new industry standards, saying that the government would take them into consideration while developing its own standards. “The industry’s uniform standards are a significant advance, and are exactly the type of initiative the commission had in mind when we started pushing for self-regulation more than five years ago,” said Leibowitz.
However, industry guidelines allow for slightly higher sugar, fat, and calorie contents than the government’s proposal. Furthermore, food companies are restricting advertising of foods not meeting their new criteria only on media platforms like television, radio, video games, and the Internet. They are not including advertising on packaging, meaning unhealthy cereals can still contain cartoon characters on the box. Under the government proposal, this wouldn’t have been allowed.
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Margo Wootan, director of nutrition policy at the advocacy group Center for Science in the Public Interest, recognizes that, “The government agencies have developed standards that are best for kids and the companies have developed standards that are best for industry, now we need to work out a reasonable compromise.” But others think the industry standards fall short, including Iowa Senator Tom Harking, the Democrat behind the government’s new standards. “With childhood obesity rates rising, now is the time for all parties to rally around those guidelines and begin implementing them, rather than coming up with competing proposals,” he said.
Congress could put a final draft of the standards to a vote as soon as the end of this year, but House Republicans hope to delay making a decision until the effects of the new standards on the industry and profitability can be determined.
Stocks to Watch: General Mills (NYSE:GIS), ConAgra (NYSE:CAG), Kellogg (NYSE:K), Kraft (NYSE:KFT), J&J Snack Foods (NASDAQ:JJSF), PepsiCo (NYSE:PEP), The Coca-Cola Company (NYSE:KO), Seneca Foods Corporation (NASDAQ:SENEB), Lancaster Colony Corp. (LAN), TreeHouse Foods (NYSE:THS), Ralcorp Holdings (NYSE:RAH), H.J. Heinz Company (NYSE:HNZ), Hormel Foods (NYSE:HRL), The J.M. Smucker Company (NYSE:SJM).