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Beer for tots, lottery for the poor, and other cases of evil marketing

Much has been made of Anheuser Busch's (NYSE: BUD) new "premium malt beverage" product called Spykes. Critics allege that the drink's small (easy to hide) size, colorful packaging, and caffeine are designed to attract underage drinkers. Of course the company denies the charge, but numerous groups are still calling for legal action. While I really am not familiar enough with the product or alcohol marketing to comment on this specific case, my issue is this: It is unethical for companies to consciously market their products to people who shouldn't buy them. Spykes draws inevitable comparisons to the Joe Camel ads of the 1990's, but here are some of the less obvious parallels:
  • Predatory lenders luring in college students with credit card offers they don't understand, and mortgage brokers sticking lower-income people with subprime mortgages when they would have been better-served with one of the federally-subsidized programs. PeachDirect offers luxury items to college students on installment with exorbitant interest rates.
  • Hungry-Man's thousand-calorie breakfast, which contains 231% of the recommended daily value for cholesterol in one serving. So the recommendation is that you consumer 2.3x as much cholesterol at breakfast as you should during that entire day. No one should eat this product, and companies shouldn't market products that are by definition bad for you.
  • Several years ago, The Illinois lottery put up a billboard in a poor Chicago neighborhood with the slogan, "This could be your way out." Of course, people should never gamble with money they can't afford to lose. If you're poor, you by definition can't afford to lose money. It's wrong for anyone, most of all the government, to prey on society's least fortunate.

These are just a few of the examples that come to mind when I think of companies marketing to people who shouldn't buy their products. Can you think of others?

Cramer loves Genentech (DNA) because of Avastin

Cramer said he made a fortune off of the cholesterol lowering statins long ago, and statins are now $32.4 billion in global sales around the world. He said he made a fortune off of investing in Merck long ago back on the statin play. Cramer said the next wave of medical spending that is underestimated is the cancer drug Avastin from Genentech, Inc. (NYSE:DNA). He thinks this could be bigger than any street estimates out there and that Avastin may have many more uses because it starves tumors and doesn't destroy the rest of you like chemo. He thinks the market is already expecting a lot from Avastin, but he thinks it can do significantly more than the street thinks. Cramer said that everyone thinking they are marking up Avastin to cover up for low-end Lucentis sales, he thinks there are many more uses.

Cramer said buy 1/2 of the position before the stock reports earnings next week and then buy another half after they report earnings and the single-quarter risk is behind the stock.

DNA closed down 0.6% at $83.20 in regular trading, and its shares are up 0.9% at $83.97 in after-hours. DNA has a market cap of $87+ billion.

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Last updated: May 28, 2012: 05:48 AM

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