Michael Byers
Obesity is a global epidemic, and the large amounts of calories, fat, sugar, and salt in fast-food and packaged products get much of the blame. In response, some countries, including the United States, mandate posting nutritional information on food packaging on the theory that it helps people make healthier choices.
Recent years have seen a new wave of food packaging reforms. One of the heaviest-handed such interventions is a 2016 Chilean law limiting TV advertising for offending foods. The measure also requires manufacturers to affix prominent black stop signs on the front of food packages warning that the contents are “high in sugar,” “high in saturated fats,” “high in salt,” or “high in calories.” The same or similar labels have since been adopted by many countries including Peru, Mexico, and Israel.
As intended, the warning labels suppressed demand for such foods, according to a study of breakfast cereals in Chile by Bar-Ilan University’s Jorge Alé-Chilet and Chicago Booth’s Sarah Moshary. But the labels affected both consumers and food manufacturers, which immediately started tweaking their product formulations to avoid the labeling requirements, the research finds.
Chile’s breakfast cereal purchases total $194 million a year, Alé-Chilet and Moshary note. Just before the law went into effect, about 13 percent of the cereals fell below the cutoff of 350 calories per 100 grams, which meant that the other 87 percent were required to post a high-calorie warning on their packaging, according to the study. Just after, 28 percent of the market squeaked under the cutoff, leaving 72 percent with the package warnings.
Analyzing data from Nielsen’s Global Snapshot on monthly product-level sales, hand-collected nutrition data from two stores, and data from Mintel’s Global New Products Database, the researchers demonstrate that volumes and prices for cereal overall held steady after the law went into effect. But the calorie content of cereal purchased fell 4 percent, or about 17 calories per 100 grams of cereal, and the amount of sugar dropped 1.5 grams per 100 grams of product.
The law, then, certainly made some breakfast cereal products healthier, yet might have kept consumers from choosing even healthier choices, the researchers point out.
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What Policies Best Address Obesity?“Imagine, for example, that Kellogg’s reformulates Froot Loops to have 9g instead of 12g of sugar per serving,” they write. “If consumers who would otherwise have purchased Cheerios (0g sugar) switch to the new Froot Loops, the reformulation could increase sugar consumption. On the other hand, if consumers who would otherwise purchase Frosted Flakes (10g sugar) switch to Froot Loops, the reformulation could lower sugar consumption.”
Modeling purchases before and after the law took effect, the researchers find that about half the calorie decline can be attributed to consumers switching to new and healthier cereals and more than half to consumers staying with reformulated versions of the cereals they were buying before.
“Our estimates suggest that reformulation was critical to achieving the observed reduction in the calorie content of cereal purchases,” Alé-Chilet and Moshary write. “These findings highlight the potential for supply-side forces to amplify government policy in the war on obesity.”
The researchers have one caveat for the policy’s success, however. Some manufacturers switched from sugar to artificial sweeteners in their reformulations, and it’s unclear how those ingredients affect consumers’ health.
Jorge Alé-Chilet and Sarah Moshary, “Beyond Consumer Switching: Supply Responses to Food Packaging and Advertising Regulations,” Marketing Science, forthcoming.
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