FOOD MARKETING PRACTICES AND ANTI-OBESITY POLICY: IMPACT ON SHAREHOLDER WEALTH.

Ghani, Waqar I.; Childs, Nancy M.; Szewczyk, Samuel H.

A public policy report is examined for its potential to persuade changes in corporate marketing practices as a result of changes in shareholder wealth. Wealth effects of the 2003 United Nation's World Health Organization's technical report "Diet, Nutrition and the Prevention of Chronic Disease" are measured on a sample of 14 multinational food companies using standard event study methodology. Results show an adverse impact on shareholders' wealth around the WHO report issue date. The market correctly anticipated the costs and decreased profitability of the food industry in the presence of a public health anti-obesity offensive. Corporate response required defensive marketing behavior addressing reformulation, label revision, repackaging, limitations in advertising and promotion practices and endurance of increased costs of taxation and restricted distribution. Issuing a high level policy document both anticipated and triggered food industry behavior to mitigate marketing practices that may contribute to obesity. It suggests that a public policy report can impact shareholder wealth and thereby may have the potential to motivate firm level behavior without the implementation of regulation.

MARKETING; STOCKHOLDERS; WEALTH; FOOD industry; OBESITY; FOOD marketing

Marketing Management Journal, 2007, Vol 17, Issue 1, p123

1534-973X

Academic Journal