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Artillery Row

Big business versus small consumer

Producers only get a hearing at the expense of consumers

As reported by the Observer, Danone UK & Ireland has become the first “UK food giant” to call on the government to introduce taxes and advertising restrictions on food that is deemed high in fat, sugar and salt (HFSS). This intervention comes hot on the heels of the latest pronouncement from Blairite quango king Matthew Taylor who is currently in charge of something called NHS Confederation and wants taxes on sugar and salt.

Is this a sign that the food industry has admitted that it is to blame for obesity and yearns for the firm hand of government regulation? Perhaps not. Danone is not a company I am very familiar with. To be honest, I thought they made shampoo, but my wife informed me that they are synonymous with yoghurts. Consulting their website, I see that they sell Actimel yoghurts, Oikos yoghurts, Activia yoghurts and, for pre-school children, Danonio yoghurts.

It’s not all yoghurts. No stranger to a merger and acquisition, Danone also owns Alpro, which makes various soya-based products, and Silk, which makes “milk” out of various nuts. But mostly it sells mineral water. Danone not only owns Evian, Volvic and Harrogate water, it also owns Hayat water, Żywiec Zdrój water, Villa del Sur water, Bonafant water, Font Vella water, Salus water and Aqua Water. So many types of water it could be a Two Ronnies sketch.

Danone could be in trouble if the government ever decides to crack down on single-use plastic bottles, but it clearly has little to fear and much to gain from a crusade against HFSS food. According to the Observer, it once owned “popular biscuits brands, including Lu biscuits, but sold its biscuit and cereal snack unit to Kraft Food in 2007”. It now boasts that “90 per cent of its UK portfolio of products by sales volume is not high in fat, sugar or salt (HFSS)”. The key phrase here is “by sales volume”. As the owner of two of the UK’s top selling mineral water brands, this is less impressive than it sounds.

The good people at Danone UK & Ireland may be sincere in their belief that Britain has “reached a point where meaningful intervention from the government is a necessary course of action.” But nobbling your competitors with taxes and bans looks rather like regulatory capture and corporate rent-seeking.

Statements from large corporations are usually treated with scepticism

Statements from large corporations are usually treated with scepticism by the Guardian Media Group and yet criticism was conspicuously absent in the Observer’s coverage. In the old days, a left-wing newspaper would be opposed to the idea of making food more expensive for the workers. That ship sailed a while ago, but you’d think there was still room for a little suspicion about a company’s motives. There is no sign of it at the Observer which seems comfortable wailing about imaginary “greedflation” while giving the nod to corporate lobbyists who want the price of everyday food products to rise even higher.

The ways in which big business benefits from nanny state policies are rarely commented on. Minimum alcohol pricing in Scotland and Wales was bad news for makers of cheap cider, but setting a floor price for a unit of alcohol was a boon for large parts of the booze industry because it forced drinkers of budget products to upgrade and to spend more money on alcohol overall. If the companies had done voluntarily what the government forced them to do by law, it would have been illegal price collusion.

The sugar tax worked out nicely for the soft drinks industry. Artificial sweeteners are cheaper than sugar and the tax gave manufacturers an excuse to use more of them. Overall sales increased after the sugar tax was introduced, the companies made more money and the only people who suffered — to the tune of £300 million a year — were those who prefer sugary drinks.

Adam Smith once said that “the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer”. Woke capitalism and public health paternalism have turned that on its head. These days, the only time a producer gets a fair hearing is when it is promoting its own interests at the expense of consumers.

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