Pricing junk food out of the market

burgerThe Australian Health Minister, Nicola Roxon, has recently released the report of the federal government’s Preventative Health Task Force. Amongst some of the recommendations, the most sensible one is that it should be easier for people to be healthy, when the commercial imperative is more likely to encourage unhealthy lifestyles for a short-term (business) gain. However, much of the media reporting has focused on the report’s recommendation that taxing of unhealthy products would lead to shifts in behaviour.

If the government is serious about reducing smoking, obesity, and alcohol consumption, they need to make some dramatic changes to the way that they reward business, to the tax system, and to marketing practices.  This is possible, but any shift is going to have to do more than charge people more for their beer, burger and fag. The detail of the report covers much of this, but sadly this subtlety is often missed in much media reporting.

An increase in price through taxing junk food would need to be relatively large for people to change their long-term behaviour. Increasing prices of cigarettes from the current price of around $12.00 to $20.00, as Minister Roxon suggested, is likely to have a significant influence on how often most people buy cigarettes. But that is an increase of about 60 per cent.

In the context of junk food, though, if a “value meal” was taxed at an additional five per cent, that would only increase the price by about 30 cents (from $6.95 to $7.25), for a chocolate bar about 10 cents (from $2.40 to $2.52) and for a can of drink about the 15 cents (from $2.60 to $2.75). This would be unlikely to change many consumers’ minds about buying the meal. For many, it wouldn’t be noticeable; for most it would be a simple psychological dismissal and adjustment of expectations. 

If we were seriously trying to get consumers to change their long-term behaviour, there would need to be an initial relatively dramatic and noticeable spike, such as 20 or 30 per cent resulting in an increase of about $1.30 – $1.50. This would probably have some effect among a large proportion of consumers. However, this change would need to be backed up with all sorts of other activities that would make it harder (physically and psychologically) to buy junk food, and easier to buy and make healthy food (which is more complex).

The other problem with most junk foods, is that they deliver an instant energy reward, which is what humans have evolved to seek. So, a Big Mac, Fries and Coke, have everything that they body wants; high levels of sugar, fat and salt. In the past (a long time ago) this was needed, particularly if we were facing long breaks between meals or even famine.

Now, we have access to mostly energy dense food, and we also live less active lives. The junk food companies know this – they don’t focus on a single marketing factor, such as advertising or pricing, they focus on everything; convenience, flavour, pricing, access, branding, and ingredients that reward. Couple this with more sedentary lifestyles, in comparison to hunter-gathering, and you have a problem.

So, a tax of 10 per cent, might have a short-term effect on those consumers who were already willing to be “nudged” into eating healthier food. In a way, it will make them think (which is what the marketers don’t want you to do). But the effect may not last for long, unless the government makes it easier for them to buy, make and eat healthier food.

A tax of 20 – 30 per cent will have a longer effect, but on its own will not change long-term behaviour. What the government has to do, is think like the marketers (not just the advertisers, either), and spend the similar amounts of money in all areas of marketing healthy eating that the junk food companies spend on persuading us to eat junk food.

This should include restricting all forms of promotion (not just on TV), but also making it easy for supply chains to get healthy food to people, and also simply making it more difficult for people to eat unhealthy food, and easier to eat healthy food.

This entry was posted in Advertising, Consumer Behavior, Essay, Marketing Strategy, Social Psychology and tagged , , , , , , . Bookmark the permalink.

One Response to Pricing junk food out of the market

  1. Pingback: The ingredients of Masterchef’s success | tribalinsight

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