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The Impact of Obesity-Driven Public Policy Initiatives in Latin America

January 2019

Facing an obesity epidemic, governments across Latin America have enacted sweeping public policy initiatives. Taxes, mandatory labels and marketing restrictions have proliferated. However, these efforts have elicited only short-term changes in consumption, while obesity rates continue to rise. While government-mandated change has proven ineffective, a more cooperative approach between companies and policymakers is more likely to encourage long-term shifts in consumer habits.

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Key Findings

Obesity has reached crisis levels in Latin America

Dietary and lifestyle changes have led to rising obesity rates in Latin America. Deaths from diseases like diabetes have become more common, public health expenditures have risen, and countries see a future defined by health crisis.

Governments have taken action with policy tools

Governments across the region have responded with a series of sweeping public policy initiatives. Sugar taxes, mandatory warning labels and restrictions on marketing and retail channels have proliferated in many markets.

Results have been largely muted and short-lived

These efforts have had had only short-term impacts on consumption patterns. Obesity indicators continue to worsen across the region.

The “top-down” approach used in these policies has limited their long-term effectiveness

Change via government mandate has proven ineffective. Public policies have generated opposition, as certain categories are singled out (eg beverages) or as companies scramble to reformulate or repackage products. As a result, there is little industry “buy in”, limiting the potential for lasting change.

Broader shifts in consumer lifestyles are necessary for lasting change

The only long-term solution to the obesity crisis is a shift in consumer habits. People need to adopt new paradigms on food, exercise and health. Public policy efforts aimed at forcing this change will have only short-term effects.

A cooperative approach between governments and companies is more likely to bring sustainable change

Cooperation between companies and governments is a better model to drive sustainable, long-term changes in consumption. Policymakers can work with companies to set regulations and establish labelling laws. Companies will innovate, reformulate and develop new pack sizes in response. Public-private cooperation on educational initiatives can also encourage moderation, promote healthier lifestyles and contribute to lasting change in consumption habits.

Introduction

Scope
Key findings

The Problem: An Obesity Crisis

A challenging scenario
Why? what factors trigger or promote obesity?
Obesity strains public health resources

Governments Respond: Public Policy Tools

Regulatory efforts expand across Latin America
Policy design options
Taxes: disincentivising unhealthy food and beverage purchases
Drinks become the focus of taxation, given established links with obesity
Mandatory labels/alerts: helping consumers make healthier choices
Promotional and channel restrictions target children

Muted Results: The Challenges of Mandated Change

Public policy efforts have not effectively changed consumer behaviour
Taxes: no long-term effects on the demand for sugary beverages
Taxes create winners and losers
Taxes have not changed the trajectory of obesity
Mandated labels: effects similarly modest and temporary
Ecuador’s labelling regulations have also had only modest effects
Channel restrictions: loopholes render them ineffective in Chile
Marketing restrictions: product reformulation vs new brand imagery
Product reformulation, consumer backlash and dual offerings

A Better Approach: Cooperating to Drive Long-Term Dietary Shifts

Top-down mandates versus a cooperative model
Cooperation offers companies new strategies and opportunities
Companies launch initiatives to improve health
Claim development/standardisation is ripe for public-private cooperation
Regulatory frameworks are a continual work-in-progress
Product reformulation and innovation: building healthier portfolios
Innovation is not always straightforward: the role of trial and error
Covert reformulation is possible: the case of snack bars in Chile
Portion control: driving healthier outcomes with packaging innovation
The acquisition of health-focused innovators can be a viable strategy
Retailers are also vital: labelling and education to drive better diets
Retailers are also vital: pricing to reach a wider consumer segment
Case study: Coca-Cola’s multifaceted approach to the obesity crisis

Conclusion

Obesity is a highly complex problem that is very difficult to solve
The severity of the crisis has forced governments to take action
Cooperation can be a win-win and help foster lasting change
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