Given that Americans continue to disregard basic nutrition, nanny FDA may come in and enforce regulation banning all PHOs (commonly found in trans fat in processed food). Given this ban, which may or may not already be priced in, companies will probably need to undergo a shift in the materials they use and process they use to make such processed food. This has to be deterimental in the short term and probably giveway to increased expenses for next qtr. So without further ado, what does the community think of shorting GIS?
Put SJM on the list too.
I’m not too familiar with this industry but can’t they just pass it on to the consumer? Seems like, for example, when there is a mandate on fuel economy or safety on automobiles they just pass it on to the consumer. A small bump in price for a cheap comsumer good won’t be noticed by people, especially when they all have to do it.
I may be underestimating it though, it’s an interesting though.
How were bans similar to this one in the past carried out? What was the timeline of events and how long does it really take to eliminate the ingredient?
I think, PHO aren’t dangerous so wouldn’t it take a while?
The only thing that will anger Americans (and Canadians) more than being told they need to eat properly is being told the price of their Hungry Man processed TV dinner or Big Mac is going up. I don’t think processed food/fast food prices are very elastic at all. This would have an impact on producers, IMO.
In the long run, I think a lot of these garbage food prodcuers and sugary drink makers will be facing a similar situation as the tobacco companies of today. It’s not a viable long run business, eventually regulation and then public opinion will turn against these guys. What they produce could possibly have even more serious health impacts as smoking cigarettes.
I’ll play devil’s advocate (as I haven’t really made my mind up) .
If you look at the segment of people who have a demand for the cheapest processed food (hungry man dinners certainly qualify) and fast food, I don’t think they will have much other choice, even if they get angry. What’s the alternative? The people who buy this kind of food are already lazy and have the habit of doing so. I think it will take a pretty huge increase in price for them to fire up their stove and start cooking.
Also a big part of that market is people receiving gov’t assistance, they don’t care as long as they are fed, and don’t manage money well in the first place.
If price increaese go up all across the board and consumer taste change, the people I see possibly hurt the most are the Olive Gardens, Outback, Chili’s, ect chain resturants. People will eat even more fast food and cheap frozen dinners.
Donuts, fried in a giant vat of partially hydrogenated oil and then coated in syrup.
^ 'merica
i thought they banned pro hormones years ago…man that 1-ad got me JACKED
This is like banning America. Also, who are we kidding? The fat asses over here are just going to eat a bunch of cheeseburgers and have heart attacks anyway.
This is quasi off topic, but i recently had a debate with my old man about this very subject. I made the argument that my generation is far more healthier than his for reasons relating to diet. Now, it’s very likely that i live in a bubble but don’t you think those who are in their 30s (and younger) are far more concious than their parents?The trend of obesity certainly wouldn’t back this up but i think that is more related to activity as opposed to diet and may help as it relates to this section of investing.
Ok, we are obviously more knowledgeable about nutrition than our parents’ generation. Science has improved and education is more widespread. There is barely any question about this.
However, knowledge does not always translate into action. Young people today eat more than their parents did. Society is richer and manufacturing is cheaper. We can afford more food than our parents could. McDonalds has like 2 more Value Meal sizes than it had in 1970. Everyone knows eating 3000 calories of cheeseburgers is bad for you. However, resisting this temptation requires more than intellectual awareness of the problem.
Exercise level is the other problem - particularly among kids. Kids in the past did not have iPads or XBox. They had no choice but to play outside. Today, there is no such constraint.