Last Updated: 2003-04-22 13:00:24 -0400 (Reuters Health)

By Trevor Datson

LONDON (Reuters) - The world is getting fatter, and though the makers of chocolate, soft drinks and burgers are taking the rap from watchdogs like the World Heath Organization, some food producers can still look forward to fat profits.

In a new set of dietary guidelines due to be published on Wednesday, the WHO recommends that sugars should not account for more than 10 percent of the energy in an average diet -- in other words, lay off the cakes, chocolate and candies.

The recommendation runs contrary to the sugar industry's own recommendation of a 25-percent limit, based on a 2002 report by the Institute of Medicine, part of the U.S. National Academy of Sciences.

But the WHO believes its 10 percent ceiling would help counter the "epidemic" of obesity which is now believed to affect 1.7 billion people, and which is estimated to have cost the U.S. economy alone some $117 billion in 2000.

The findings have caused a predictable furor in the sugar industry and elsewhere. The U.S.-based Sugar Association branded the report "misguided and misleading," saying it was a lack of exercise, not just a poor diet, that caused obesity.

Lobbyists for both sides have been out in force. But whatever the truth of the matter, industry experts say the WHO report represents a fresh challenge to the sector in an intensifying battle against obesity that could represent a real risk to some food players and an opportunity to others.

ADVERTISING CURBS?

"Given the human and financial cost of the disease, we believe governments cannot ignore the call of national and international health organizations to act," broker JP Morgan said in an analysis of the industry impact.

Such action could take several different forms. Easiest for the policymakers to tackle is advertising and labeling, the achilles heel of the junk food purveyors, whose products stand and fall on marketing and image.

There is also an increased risk of civil litigation, particularly in the United States, if a causal relationship is established -- in law, rather than just in common sense -- between sugary or fatty foods and obesity.

Two law suits have already been brought in the U.S. against McDonald's Corp and other fast food chains including KFC and Burger King, alleging Big Macs, Zingers and Whoppers had caused obesity, heart disease and diabetes.

The first action was thrown out and the second has been derailed for the time being, and although it seems unlikely that the food industry will suffer in the same way as tobacco manufacturers, the writing is on the wall.

"Lawsuits don't need to be lost to hurt. We believe that food companies may find it embarrassing to see courts shedding light on some of their marketing practices," JP Morgan said, referring, among other things, to marketing targeted specifically at children.

RUN OFF YOUR CHOCOLATE BINGE

Food manufacturers maintain that sugar and fats can't make you obese by themselves. It's okay to indulge in chocolate heaven as long as you go for a five-mile run afterwards.

Be that as it may, JP Morgan has identified a number of companies having a high risk profile in the context of increasing public awareness of the dangers of obesity, based on the proportion of their portfolio exposed to "unhealthy" foods.

Hershey Foods Corp, the largest candy maker in the United States, tops the risk list, with some 95 percent of its output in the "not so healthy" food category.

And while soft drink giants Coca-Cola and PepsiCo are high up in the JP Morgan ranking, both are beaten by Cadbury Schweppes, whose "not so healthy" production is almost nine times greater than its "healthy" food production.

It remains to be seen whether governments or the public react to the anti-chocoholic lobbying by the WHO, the International Obesity Task Force, the Harvard Institute of Economic Research and others, although the British Government has launched its own enquiry into obesity.

But on the fairly safe assumption that no one is going to stop eating, the makers of healthier foods stand to gain, and JP Morgan singles out companies such as French yogurt, bottled water and biscuit maker Danone.

"Danone is the most attractive hedge against obesity concerns in the food industry, as 80 percent of its business is in 'healthy' product categories," the broker said, noting that while Nestle, the world's largest food company, has about 60 percent of its products on the healthy side, it is also a huge chocolate maker.

Neither Cadbury Schweppes nor Nestle were immediately able to comment, but Penny Hawley of the UK's Biscuit, Cake, Chocolate and Confectionery Alliance (BCCCA) said the industry was already adapting.

"What's interesting for me is that if you look at consumption of biscuits, chocolate and confectionery, it has actually increased (in Britain) by less than one percent per year since 1990," she said.

"Policymakers look for quick wins. People argue that it's just snacking that makes you fat but it's not as if we're eating more chocolate. What the science shows is that consumption is not rising significantly. The evidence is that we're all sitting around a lot more."


http://www.reutershealth.com/archiv...422elin027.html

Interesting to note that Hershey has come out with a sugar-free version of their bite size dark chocolate, milk chocolate, chocolate with almonds and peanut butter cups. Could it be that they are seeing the proverbial writing on the wall?