Overcoming the Trend Toward Healthier Foods: The Impact of Advertising and Intangibles on Investor Returns in the Packaged Food Industry

The study analyzes the impact of advertising, goodwill, and other intangibles on investor returns in the consumer packaged food and beverage industry during 2008–2012, a timeframe during which smaller brands wrestled $18 billion in sales away from large manufacturers of processed foods. The findings demonstrate that those firms that were able to allocate a greater percentage of their revenue to their ongoing advertising efforts were able to enhance investor holding period returns (HPR). In addition, those firms with a higher ratio of intangible assets other than goodwill to total assets were also able to enhance HPR. However, there was not a significant positive relationship between the ratio of acquired goodwill to total assets and HPR. Hence, packaged food and beverage manufacturers are advised to seek competitive advantages through their own brand-building efforts rather than seeking to enhance investor returns through a strategy based on company mergers and acquisitions.