Marketing Letters

, Volume 29, Issue 1, pp 1–12 | Cite as

Should “big food” companies introduce healthier options? The effect of new product announcements on shareholder value

  • Nicole Hanson
  • Wonjoo Yun


In recent years, big food companies, such as Kellogg, PepsiCo, and Kraft have been under increasing pressure to introduce more healthful offerings to their existing product portfolio. Our research seeks to understand if such announcements are viewed favorably by the stock market. Are firms rewarded for introducing healthy new products? Using established methodologies, we are able to isolate what percent of an increase or decrease in a firm’s stock price can be attributed from such an announcement. Our analysis reveals some interesting results on how healthy new product announcements impact shareholder value. Findings suggest that big food companies are indeed rewarded financially for introducing healthy new products into the marketplace, and this increase is higher than when introducing less healthy products. We also find that positive ingredient additions (e.g., added fiber) are more highly valued than negative ingredient reductions (e.g., reduced sugar). We discuss the significant implications of our findings and provide managerial recommendations.


Nutrition Food marketing New product development Shareholder value 



The authors contributed equally and are listed in a random order. The authors thank Oakland University for their research support.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.


  1. Basu, S., Yoffe, P., Hills, N., & Lustig, R. H. (2013). The relationship of sugar to population-level diabetes prevalence: an econometric analysis of repeated cross-sectional data. PLoS One, 8(2), e57873.CrossRefGoogle Scholar
  2. Boeschenstein N. (2013). How the food industry manipulates taste buds with “salt sugar fat.” NPR.
  3. Carhart, M. M. (1997). On persistence in mutual fund performance. Journal of Finance, 52(1), 57–82.CrossRefGoogle Scholar
  4. Cawley, J., & Meyerhoefer, C. (2012). The medical care costs of obesity: an instrumental variables approach. Journal of Health Economics, 31(1), 219–230.CrossRefGoogle Scholar
  5. CDC. (2016). Health, United States, 2015: with special feature on racial and ethnic health disparities. National Center for Health Statistics.
  6. Chandon, P., & Wansink, B. (2012). Does food marketing need to make us fat? A review and solutions. Nutrition Reviews, 70(10), 571–593.CrossRefGoogle Scholar
  7. Chaney, P. K., Devinney, T. M., & Winer, R. S. (1991). The impact of new product introductions on the market value of firms. Journal of Business, 64(4), 573–610.CrossRefGoogle Scholar
  8. Clark, J. M., Bettina Cornwell, T., & Pruitt, S. W. (2009). The impact of title event sponsorship announcements on shareholder wealth. Marketing Letters, 20, 169–182.CrossRefGoogle Scholar
  9. Cordain, L., Eaton, S. B. S., Anthony, M. N., Lindeberg, S., Watkins, B. A., O'Keefe, J. H., & Brand-Miller, J. (2005). Origins and evolution of the western diet: health implications for the 21st century. American Journal of Clinical Nutrition, 81(2), 341–354.CrossRefGoogle Scholar
  10. Cutler, D. M., Glaeser, E. L., & Shapiro, J. M. (2003). Why have Americans become more obese? The Journal of Economic Perspectives, 17(3), 93–118.CrossRefGoogle Scholar
  11. Drewnowski, A. (2007). The real contribution of added sugars and fats to obesity. Epidemiologic Reviews, 29(1), 160–171.CrossRefGoogle Scholar
  12. Drewnowski, A., & Specter, S. E. (2004). Poverty and obesity: the role of energy density and energy costs. The American Journal of Clinical Nutrition, 79(1), 6–16.CrossRefGoogle Scholar
  13. Economist. (2012). Good for you, not for shareholders.
  14. Fama, E., & French, K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33(1), 3–56.CrossRefGoogle Scholar
  15. Food and Drug Administration. (2016). Food labeling: revision of the nutrition and supplement facts labels. Final rule. Federal Register, 81(103), 33741–33999 Scholar
  16. Gagliardi, N. (2015). Consumers want healthy foods—and will pay more for them. Forbes.
  17. Harris, J. L., Pomeranz, J. L., Lobstein, T., & Brownell, K. D. (2009). A crisis in the marketplace: how food marketing contributes to childhood obesity and what can be done. Annual Review of Public Health, 30, 211–225.CrossRefGoogle Scholar
  18. Joshi, A. M., & Hanssens, D. M. (2009). Movie advertising and the stock market valuation of studios: a case of “great expectations?”. Marketing Science, 28(2), 239–250.Google Scholar
  19. Lee, H., Smith, K. G., Grimm, C. M., & Schomburg, A. (2000). Timing, order and durability of new product advantages with imitation. Strategic Management Journal, 21(1), 23–30.CrossRefGoogle Scholar
  20. Louie, T. A., Kulik, R. L., & Jacobson, R. (2001). When bad things happen to the endorsers of good products. Marketing Letters, 12(1), 13–23.CrossRefGoogle Scholar
  21. Ludwig, D. S., & Nestle, M. (2008). Can the food industry play a constructive role in the obesity epidemic? Journal of the American Medical Association, 300(15), 1808–1811.CrossRefGoogle Scholar
  22. Ludwig, D. S., Peterson, K. E., & Gortmaker, S. L. (2001). Relation between consumption of sugar-sweetened drinks and childhood obesity: a prospective, observational analysis. The Lancet, 357(9255), 505–508.CrossRefGoogle Scholar
  23. Martin, J., Beshears, J., Milkman, K., Bazerman, M., & Sutherland, L. (2009). Modeling expert opinions on food healthfulness: a nutrition metric. Journal of American Dietetic Association, 109(6), 1088–1091.CrossRefGoogle Scholar
  24. Mathur, L. K., & Mathur, I. (2000). An analysis of the wealth effects of green marketing strategies. Journal of Business Research, 50(2), 193–200.CrossRefGoogle Scholar
  25. Menza J (2012). PepsiCo gets healthier: CEO. CNBC.
  26. Milkman, K., Rogers, T., & Bazerman, M. (2010). I’ll have the ice cream soon and the vegetables later: a study of online grocery purchases and order lead time. Marketing Letters, 21(1), 17–35.CrossRefGoogle Scholar
  27. Mizik, N., & Jacobson, R. (2007). Myopic marketing management: evidence of the phenomenon and its long-term performance consequences in the SEO context. Marketing Science, 26(3), 361–379.CrossRefGoogle Scholar
  28. Moss, M. (2013). Salt, sugar, fat: How the food giants hooked us. Random House.Google Scholar
  29. Nestle, M. (2002). Food politics: how the food industry influences nutrition and health. Berkeley: University of California Press.Google Scholar
  30. Nestle M (2010). The food movement’s new frontier: “ultra-processing.” Food Politics, (November 2, 2010).
  31. Patell, J. M. (1976). Corporate forecasts of earnings per share and stock behavior: empirical tests. Journal of Accounting Research, 14(2), 246–276.CrossRefGoogle Scholar
  32. Pollan, M. (2009). In defense of food: an eater’s manifesto. Penguin Books.Google Scholar
  33. Provencher, V., Polivy, J., & Herman, C. P. (2009). Perceived healthiness of food. If it’s healthy, you can eat more. Appetite, 52(2), 340–344.CrossRefGoogle Scholar
  34. Raassens, N., Wuyts, S., & Geyskens, I. (2012). The market valuation of outsourcing new product development. Journal of Marketing Research, 49(5), 682–695.CrossRefGoogle Scholar
  35. Raghunathan, R., Naylor, R. W., & Hoyer, W. D. (2006). The unhealthy—tasty intuition and its effects on taste inferences, enjoyment, and choice of food products. Journal of Marketing, 70(4), 170–184.CrossRefGoogle Scholar
  36. Riet J, Cox AD, Cox D, Zimet GD, Bruijn GJD, Van den Putte B, Vries HD, Werrij MQ, Ruiter, RA (2016). Does perceived risk influence the effects of message framing? Revisiting the link between prospect theory and message framing. Health Psychology Review, forthcoming 1–13.Google Scholar
  37. Seiders, K., & Petty, R. (2004). Obesity and the role of food marketing: a policy analysis of issues and remedies. Journal of Public Policy & Marketing, 23(2), 153–169.CrossRefGoogle Scholar
  38. Sharma, A., & Lacey, N. (2004). Linking product development outcomes to market valuation of the firm: The case of the U.S. pharmaceutical industry. Journal of Product Innovation Management, 21(5), 297–308.CrossRefGoogle Scholar
  39. USDA (2015). Dietary guidelines for Americans 2015–2020. USDA.
  40. Verbeke, W. (2006). Functional foods: consumer willingness to compromise on taste for health? Food Quality and Preference, 17(1–2), 126–131.CrossRefGoogle Scholar
  41. Verbeke, W., Scholderer, J., & Lahteenmaki, L. (2009). Consumer appeal of nutrition and health claims in three existing product concepts. Appetite, 52(3), 684–692.CrossRefGoogle Scholar
  42. Wansink, B., & Chandon, P. (2006). Can “low-fat” nutrition labels lead to obesity? Journal of Marketing Research, 43(4), 605–617.CrossRefGoogle Scholar
  43. Wansink, B., & Pope, L. (2015). When do gain-framed health messages work better than fear appeals? Nutrition Reviews, 73(1), 4–11.CrossRefGoogle Scholar
  44. Wyatt, S. B., Winters, K. P., & Dubbert, P. M. (2006). Overweight and obesity: prevalence, consequences, and causes of a growing public health problem. American Journal of Medical Sciences, 331(4), 166–174.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Management and Marketing, College of BusinessIdaho State UniversityPocatelloUSA
  2. 2.Department of Management and Marketing, School of Business AdministrationOakland UniversityRochesterUSA

Personalised recommendations