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January 26, 2004

Food Firms Oppose Fat Tax Amid Move to Health Food

DAVOS, Switzerland (Reuters) - The food industry has recognized obesity as a problem and will develop healthier products, but is strongly opposed to laws that could make junk food more expensive, executives said on Saturday.

Food companies gained support from U.S. Health Secretary Tommy Thompson who believes he does not need to raise taxes to convince food manufacturers to create healthier products, as part of a larger U.S. program for Americans to lose weight.

"Taxation can have a negative impact on the progress we're making now," he said at the World Economic Forum, adding that talks with companies such as PepsiCo had already helped raise the output of healthy foods.

PepsiCo now generates 60 percent of its revenues from healthy foods, versus 40 percent a few years ago, he said. PepsiCo said an extra tax on candy bars in some U.S. states and cities failed to work in the early 1990s.

Unilever Chairman Antony Burgmans, asked to represent food companies who were accused by the British National Consumer Council of mainly marketing high sugar and fat products to children, said his sector had recognized the issue. "This is serious. It's a problem. The food industry is prepared to work on a solution. But I don't think taxation (of junk food) is going to sustain it. We've tried it with tobacco and it failed," he said.

He said the food industry also needed better labels to tell consumers which elements their product contained. "That is an area where we can remarkably improve," Burgmans said.

Obese people, who are seriously overweight, cost the United States $117 billion in healthcare every year. Worldwide there are 300 million obese people, while one billion are overweight.

Obesity is linked to all kinds of diseases, including heart disease and diabetes. Some 16 million U.S. citizens are suffering from diabetes and another 17 million almost have it.

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