According to an ABC News report published last Friday, the Department of Health and Human Services (HHS) first postponed, then watered down, a series of TV ads promoting breast-feeding of infants -- at the request of the infant formula industry.
The ads, slated to air six months ago, originally conveyed in stark terms the increased risks of bottle-feeding: respiratory, urinary tract, and ear infections during infancy; asthma and diabetes during childhood; high blood pressure and obesity in adulthood. Most notably, the ads reported that infants who were not breast-fed were more prone to leukemia than breast-fed babies.
Given that laundry list of ills -- and especially the leukemia kicker -- it's no wonder that the planned ads soon had the formula industry up in arms. Such negativity would directly threaten an $8 billion revenue stream dominated by some of the world's largest companies. And with worldwide market penetration currently estimated at only 20%, the major players see this as a real growth industry.
According to the ABC News report, "industry officials" (not identified by name, but it's possible that Similac maker Abbott Labs (NYSE:ABT), Enfamil maker Bristol-Myers Squibb (NYSE:BMY) and Good Start maker Nestle SA were in attendance) were granted a private audience by HHS Secretary Tommy Thompson to discuss their grievances -- a meeting from which pro-breast-feeding interest groups were excluded.
Long story short, HHS caved to industry demands. The first ads, which began airing last week, now take a neutral tack. While praising the health benefits of breast-feeding, they no longer mention many of the risks of putting infants on a formula-only diet. In particular, the most loaded buzzwords -- "diabetes" and "leukemia" -- have been stricken. Shades of Vice President Cheney's private energy policy discussions with the oil industry? It looks like it.
This story has two morals for Foolish readers. First, obviously, is that investors in the big formula companies can rest assured their profits will not be threatened by the government's ad campaign. Second, live-below-your-means-ers will be deprived of information that could help them financially.
For while breast milk is essentially "free food," infant formula is pricey stuff. The cheapest brand name price you will find, even at a warehouse store such as BJ's (NYSE:BJ) or Costco (NASDAQ:COST), is roughly $15 a pound just for the unmixed powder. Not quite gold prices, but easily the price of a tank of gas. So even if you don't factor in the added health costs of formula-feeding -- assuming the breast-feeding advocates' claims are valid -- formula feeding can make a big dent in any family's budget.
Fool contributor Rich Smith has no ownership interest in any companies mentioned in this article.
