INTRODUCTION
In this essay, I will discuss the impacts that the restriction of advertising made by the government of Nosugarland will have on the demand and prices of sugar-rich soft drinks. I will expand on the effects that this policy will have on demand and prices both in the short and long run.
The government of Nosugarland has used this policy on sugar-rich drinks because the government has realised that these sugar-rich drinks are a demerit good and bring about a negative externality in the economy. A demerit good is a good which when consumed does not bring about positive effects and because of the market failure of imperfect information, the demerit good is usually over consumed. It brings about a negative externality whereby the social external cost is greater than the social
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CONCLUSION
In conclusion, the government of Nosugarland will need to consider the fact that the resources invested in ensuring the policy on sugar-rich soft drinks is implemented could instead be invested in other important sectors of the economy such as the educational or transport sector and so the opportunity cost needs to be weighed.
Also, rather than restricting advertising of sugar-rich soft drinks, the government of Nosugarland could make use of other policies to improve public health. One such policy is through the provision of perfect information to consumers to enable them to be aware of the disadvantages that the consumption of these sugar-rich drinks will have on them; such as obesity or heart diseases. Labelling these sugar-rich drinks to show a detailed list of all ingredients and their quantities will help to raise awareness and encourage consumers to consume less could do
Adverts often mask foods that are unhealthy by emphasising its positive nutritional features – such as dietary fibre and protein. While at the same time ignoring its negative features – including the high amounts of saturated fat and sugar contents. In some cases, even products that mention any alleged health benefits are usually are outweighed by the health risks associated with consuming the product, that they just fail to
The article,“ Battle lines drawn over soda tax,” by Associated Press , the Press explains how there is an ongoing “national fight about taxing sugary drinks.” According to Associated Press, “ Health experts say the beverages contribute to health issues such as diabetes, obesity, and tooth decay.” This quote demonstrates that sugary drinks can lead to health issues. Since sugary drinks leads to health issues, people are considering soda tax. This is because thirteen percent of adult minorities are diagnosed with diseases such as diabetes.
Drenkard, S. (2010). Overreaching on Obesity: Governments Consider New Taxes on Soda and Candy. Retrieved from http://heartland.org
The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case.
Unfortunately, the widespread availability of sugar makes it difficult for parents and children to make healthy, convenient food and drink choices. This is especially important for kids who are still developing their nutritional foundation, metabolism, and hormones, even a little sugar can be harmful. Would you give your children a bottle of poison and allow them to consume it? Of course not, what parent would. But unknowingly that’s exactly what you are doing when you provide your children with any type of sugary drink whether it be fruit juice or a fizzy drink. A 600ml bottle of soft drink can contain up to 16 teaspoons of sugar. The permeation of sugar through today’s society makes it plainly clear to see that placing a tax on sugary drinks is not enough to combat child obesity. This solution is not enough to overcome this issue in the long term. It needs to be coupled with a strong educational campaign which targets, not only children in schools, but adults in the community through both television, radio and
Reading the case, special attention should be paid to the underlying economics of the soft drink industry and its relationship to average profits, the relationship between the different stages of the value chain in the industry, the relationship between competitive interaction and industry profits, and the impact of globalization on industry structure.
Recently I watched ‘The sugar film” which is about one man's journey to dig deep down and discover the real truth about sugar. Damon Gameau embarks on a unique experiment to document the effects of a high sugar diet on a healthy body, which includes consuming only foods that are commonly known as 'healthy'. Damon highlights some of the issues that plague the sugar industry, and where sugar sits on supermarket shelves. ‘The sugar film’ will forever change the way you think about 'healthy' food. This made me think about the effectiveness of sugar and
After reading "The Toxic Truth About Sugar" and "Banning the Big Gulp", I am not entirely convinced that government intervention is necessary. Lustig, Schmidt and Brindis' article practically clarifies the the dangers of sugar itself, while Bittman's article passionately discusses the temporary cessation of the decision to ban/restrict the sale of over-proportioned drinks. Although, as Lustig and his colleagues pointed out, sugar has potential for addiction and other long term detriment to health and economy, the authors failed to acknowledge the fact that people can still watch what they eat. For example, a 1.9lb (862g) bag of Sour Patch Kids contains approximately 550 grams of sugar; 26g per single serving of 16 pieces (40g). Lustig and his
Central idea: The damage sugary drink does to the body and why it should be banned
If you are a global company, like Coca-Cola and PepsiCo, or a local manufacturer. They all have to develop new soft drinks, to full-fill the changing or new needs for consumers. This development can be done on brand new markets or on the traditional markets. It is a big challenge for the companies to differentiate their product towards the competition. In the more developed markets it is hard to differentiate your product, because there is a lot more competition. The future of the soft drink industry are in the upcoming countries. These upcoming countries are: China, Brazil, India, Indonesia, Nigeria, Venezuela, and Colombia. The current products is the biggest part of the growth in these new markets, but these countries have other lifestyles and that will lead to the obligation to develop new products. The growth of the soft drink industry will be based on staple products, like bottled water and carbonates. In the developed and the new markets is the competition increased, so it is n...
The social issues in this contemporary world tend to cause adults to begin worrying about their health at around age 37. This shift in the views of the adult population has forced Coca-Cola to expand into the sport drink market by producing Powerade. Along the same line of thought there are many people that are diagnosed with diabetes. This causes them to need to stay away from sugary drinks such as Coca-Cola. They have faced this challenge by creating of Diet Version of their ever so popular soda. These reactions to the social needs of its customers has aided Coca-Cola in maintaining its business and offsetting decreases in revenue from these two large groups of consumers.
The economic situation is an environment to be considered when analyzing consumer behavior for this product. Disposable income is very important to ice cream consumption. Since ice cream is typically considered a luxury good, one’s disposable income will affect their demand. Generally, when the price of a normal good increases one will consume less of that good, if the price decrease one will consume more. However, these prices are relative to the consumer’s disposable income. For example, if an individual receives a raise and their disposable income changes from $50 a week to $100 a week, their opportunity cost of buying ice cream may decrease, causing an increase in their demand for ice cream. This can happen even though the actual price remains the
The fear or threat of new entrants in the soft drink industry is low, compare to any other industry like restaurant chain or fast food and retail chain. Carbonated Soft drink industry has high barriers for new entrants. Brand loyalty is one the extremely high barrier for new entrants. The threat of competition has medium pressure on the market strategy for the carbonated soft drink industry because switching cost is low for any consumer. I.e. if you don’t like or want to taste of soda from Coca-Cola you can easily switch to Pepsi. Health awareness is major impact on beverage industry because today’s consumer have become more aware and health conscious. Other factor is advertising, coca cola spending $230 million in advertising for its flagship Coca-Cola drink. This will put more pressure on new competitors or new entrants. For any new entrants or corporation needs to spend more money which is not possible in early years of product launch. People who consume sugary drinks regularly: 1 to 2 can a day or more have more 26% chance of type 2 diabetes than people who rarely have such drinks. Risks are even greater in young children, adults. Due to awareness demand of healthy beverages and health awareness the competition from the health drinks provider has increased day by
Advertising is an information source to inform people about the products and new prices of the company which can help them to make informed choices. More recently, huge amount of money has been spent on advertising throughout the world. Different types of advertisement such as television, radio, magazine, newspaper, the internet, billboards and posters can influence consumer’s behavior positively or negatively as there are different arguments and opinions. This essay will focus on the purpose of the advertisement for the company, the positive effects and negative effects of advertisement on consumer behavior.
American often fail to understand the health factors caused by sugar added products. One commonly overlooked health issue caused by sugar added products is cardiovascular risk. The amount of dietary consumption must be accompanied by appropriate amount of daily exercise than weight gain is heightened. Adults who consume sugar added drinks daily are exposed to hypertension along with coronary heart disease. In addition, hypertension may lead to heart attack. Yet, coronary heart disease occurs from plaque building within arteries. The plaque buildup narrows the pathway through blood for fluent blood flow. Due to influent blood flow, the heart receives insufficient amounts of blood. This issue is linked to heart attacks caused by lack of blood received by the heart. Typically, consuming water is imperative for survival verses drinking soft drinks after every meal. However, American companies continue to add sugar into societies daily diet in relations to people craving sweets. Unfortunately added sweeteners such as corn syrup is less expensive than cane sugar causing companies to insure worse unhealthy diets. Furthermore, individuals fail to consider their eating habits, which causes multiple