The WAR on Junk Food Stocks Heats Up

A report released in March by BNY ConvergEx, a leader in global multi-asset class execution and investment technology solutions, predicted that America’s weight problem is not going to slim down anytime soon. The firm said that by 2020, an estimated 75 percent of the U.S. population would be obese. In an effort to hinder expanding waistlines, some leaders in the nation are making drastic changes.

Earlier this year, Walt Disney Co. (NYSE:DIS) and WellPoint Inc. (NYSE:WLP) quietly rolled out a controversial childhood obesity exhibit at Epcot called Habit Heroes. The interactive exhibit featured animated fitness heroes Will Power and Callie Stenics against villains Snacker and Lead Bottom, who are perfect examples of the ideal couch potato. The exhibit came under fire for being insensitive to obese kids and using stereotypes. The National Association to Advance Fat Acceptance even said in a statement, “We’re appalled to learn that Disney, a traditional hallmark of childhood happiness and joy, has fallen under the shadow of negativity and discrimination.” Disney has since shut down the attraction for the time being.

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Although Will Power and Callie Stenics are currently taking a hiatus, Disney has found a less controversial method to try to curb childhood obesity. On Tuesday, CEO Bob Iger and first lady Michelle Obama announced in Washington that Disney will cut back on junk-food advertising for its television, radio and online programs aimed at children. Iger explained, “We’ve taken steps across our company to support better choices for families, and now we’re taking the next important step forward by setting new food advertising standards for kids. The emotional connection kids have to our characters and stories gives us a unique opportunity to continue to inspire and encourage them to lead healthier lives.” The new advertising standards are to be implemented by 2015.

Disney’s move is just the latest blow to the junk-food industry. Last week, New York Mayor Michael Bloomberg announced plans to restrict sales of sugary soft drinks to no more than 16 ounces throughout the city’s restaurants, movie theaters and stadiums. While the large cup ban is controversial, the affect on companies such as Coca-Cola Co. (NYSE:KO), PepsiCo Inc. (NYSE:PEP) and McDonald’s Corp. (NYSE:MCD) is expected to be minimal. The ban does not apply to grocery stores and still allows people to buy as many of the smaller drinks as they want and get refills. All things considered, the ban appears to be an effort to curb the use of large cups. Ironically, the day after Bloomberg announced the cup proposal, he issued a proclamation declaring an official Donut Day for NYC.

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