General Mills and Nestle Join the Latest Battle in the Sugar Wars

There is a big number staring the U.S. food and beverage industry in the face; that number, 35 percent, represents the percentage of adult Americans who are obese.

Soda makers Coca-Cola (NYSE:KO) and Pepsi (NYSE:PEP) are already fighting proposed soda bans in New York City. Now, as part of an initiative to reign in obesity in the United States, General Mills (NYSE:GIS) and Nestle have agreed cut the amount of sugar used in 20 popular breakfast cereals by 30 percent. By 2015, each cereal will have 9 grams of sugar or less per serving, whole grains will be the main ingredient, and sodium content will be cut to 135 milligrams or less per serving. The reformulation will affect about 5.3 billion portions of cereals sold this year.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

On Monday, Cereal Partners Worldwide, the joint venture between the two cereal manufacturers, issued a statement announcing its plans to “make it easier for consumers to eat a nutritious breakfast without compromising on taste.”

American obesity has prompted several new governmental regulations throughout the country. In New York City, Mayor Michael Bloomberg proposed, and the Board of Health approved, a ban on sugary soft drinks sold in cups larger than 16 ounces in restaurants, movie theaters, stadiums, and arenas.

However this measure has drawn plenty of criticism. On October 12, a group of businesses and trade groups sued the city, saying that the Bloomberg-appointed health board should not be able to dictate the size of soft drinks. While the mayor claimed that the law was a reasonable way to fight obesity, soda makers, local restaurants, the American Beverage Association, and affected union workers called it “a coup for public health,” according to the Huffington Post. The suit itself, alleges that the Board of Health did not have the authority to approve the regulation and calls the ban an “arbitrary and capricious in its design and application.”

While a New York Times poll from August showed that six in ten New Yorkers opposed Bloomberg’s ban, the mayor has said, according to the Huffington Post, that the obesity problem has taken a toll on the city’s hospital budgets.

Obesity does in fact take a toll on public funds. An NPR article entitled “Pounding Away At America’s Obesity Epidemic,” quotes the director of Yale University’s Rudd Center for Food Policy and Obesity Kelly Brownell, who said, “Health care costs are estimated now at $150 billion a year, and about half of that is born by public funds for Medicare and Medicaid.”

Don’t Miss: Reuters: Starbucks Finds Clever Ways to Sidestep U.K. Taxes.