By Evie Liu
Big Food stocks are getting crushed as investors weigh the outlook for regulation under Robert F. Kennedy Jr., President-elect Donald Trump's choice to lead the Department of Health and Human Services.
In a Thursday statement on Truth Social, Trump said Kennedy would restore the nation's health agencies "to the traditions of Gold Standard Scientific Research, and beacons of Transparency, to end the Chronic Disease epidemic, and to Make America Great and Healthy Again!"
Though Kennedy is better known as an opponent of vaccination, he has also accused the Food and Drug Administration of doing the bidding of Big Pharma and Big Food. The FDA is part of Health and Human Services, so Trump's decision opens the path for Kennedy to shake up the agency, as he has promised.
His "Make America Healthy Again" movement has pushed for bans on pesticides and genetically modified organisms, restricting additives and chemicals in food products, and reducing unhealthy and processed foods in federal programs such as school lunches.
"The nomination of Robert F. Kennedy Jr. to lead HHS with oversight over the FDA creates more unwelcome uncertainty for processed foods and beverages companies that are already reeling from price, elasticity and uncertainty about GLP drugs," wrote TD Cowen analyst Robert Moskow in a Friday note.
Stock in PepsiCo, Keurig Dr Pepper, and Coca-Cola dropped 3.2%, 4.6%, and 1.3%, respectively, in Friday trading. Hershey stock fell 3.8%, while Conagra Brands and Mondelez International lost 3.5% and 1.6%, respectively.
Moskow believes Kennedy's nomination is unlikely to come to fruition, saying senators would likely vote against him based on his views on vaccines. But if he were confirmed, meatpackers such as Tyson Foods and makers of ultraprocessed convenient meals -- Kraft, Campbell, General Mills, and Conagra -- would face the biggest risk of tighter regulations, the analyst wrote.
Kennedy has in the past actively protested against Smithfield Foods, saying its pig farms contaminated water supplies. He likely would take an aggressive stance against other meatpackers as well, pushing for stricter environmental regulations.
The FDA is already in the process of evaluating the risk of ultraprocessed foods. If Kennedy is in charge of the HHS, he could accelerate those efforts and force food and beverage companies to display unhealthy ingredients more predominantly on their packaging.
Still, all that might be hard to achieve. High food prices are a concern for voters across the political spectrum, so regulations that could boost the cost of putting a meal on the table might run into trouble. The food industry and farmers are also expected to lobby aggressively against stricter measures, especially on ultraprocessed foods, citing a lack of clear definitions, says Moskow.
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 15, 2024 14:21 ET (19:21 GMT)
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