Saturday, June 23, 2012


A serious worry that is bothering many restaurants is how the new ban being proposed on "jumbo serving" size in some areas in the US will affect their sales. So far regulators have been targeting food with high caloric density or high fat content and if and when any restrictions are placed on these parameters, it would have been much easier to circumvent the same with modified formulations and new product designs. But the effect of "volume" based ban is some what difficult to comprehend because of the complexities inherent in such a control regime. American market was always driven by the concept that bigger the size of the offering, higher will be the business and the foundation of this very concept is going to be affected by the new policy on serving size of beverages. It is always true in the US that smaller the pack size, higher will be the unit cost driving the consumers, especially those who are careful with their money, to go for bigger sizes which, in turn, drives the business raising volumes. The scale of economy for manufacture invariably brings down the production cost and raise the profit margin. Probably this may be reason for the industry to protest and resist the implementation of the ban on large sized beverage servings. Here is a report regarding the dilemma of an internationally successful coffee chain as to what could be the repercussions of the new policy on its business.

"Mayor Michael R. Bloomberg's plan, which would limit the size of sweet drinks sold at many establishments to 16 ounces or less, exempts any beverage that contains more than 50 percent milk by volume. Officials in City Hall and in Seattle said they were unsure how those rules might affect the Starbucks family of syrupy, milkshake-style coffee drinks, catnip to thousands of caffeine addicted New Yorkers who frequent the company's 190 outlets in Manhattan. "It's hard for us to give a definitive word on which of our beverages would be impacted by the proposal," said Linda Mills, a Starbucks spokeswoman, although she said the company was confident that many of its drinks would fall outside the proposed ban. The Starbucks question — complicated by the varying amounts of ice, sugar and milk in each customized drink — is just one of the ambiguities facing the city as it begins a three-month public comment period on the proposed rules. On Tuesday, the Board of Health, which has final say over the rules, agreed to consider the proposal formally at its next meeting, in September. The rules would ban large sodas sold at fast-food restaurants, movie theaters and street carts. But the Big Gulp, the supersized soda cup at 7-Eleven, would still be allowed under the proposal, because the proposal would exempt the sale of drinks in groceries or convenience stores".

As the new policy has not yet been implemented and it is being subjected to more stringent scrutiny in the coming days there may be some changes that will meet with some of the peculiar problems which are likely to be encountered during translation of the policy into practice. Also not understood is why convenient stores and grocery outlets are exempted from the purview of the ban and it is possible that more such stores will start beverage services for circumventing the regulation to make a fast buck in the process. What about the industry offering unlimited refills for the basic 16 oz cup for a slightly higher price which in effect will nullify the spirit behind the new policy. There is a case to exempt beverages containing fruit pulps and milk solids, even if the content is less than 50% because they are much more preferable to 100% sugar based drinks, providing some nutrition. There is every justification to bring in other foods also within the ambit of the banning policy which may include jumbo sized ice creams and large sized high fat products.  Ultimately whether such "pressures" in the form of restrictive policies will make any impact on the obesity epidemic remains to be seen. But trying to do some thing, even with a small chance of success, must not be given up in the face of any hostility from the industry and other arm chair critics!


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