The FDA Wants To Control How You Bathe!

The U.S. Food and Drug Administration (FDA) is at it again. As you’ve seen before, this government agency has the ability to make or break many a fortune.
And this time, it has antibacterial soap in its crosshairs.
You see, the FDA now requires antibacterial soap producers to undergo clinical trials that “demonstrate that their products are safe for long-term daily use and more effective than plain soap.”
Though most Americans will likely ignore the great soap controversy, it provides us with a clear example of how political intelligence can help us invest.
FDA approval is a long, difficult process for any firm to endure. In fact, by requiring soap manufacturers to go through the process, the FDA is essentially entrenching the powerful firms that already control market share.
Future innovation in the industry will be almost completely eliminated, which is why established firms rarely fight this type of regulation. It tends to lock them into their huge portions of market share. Best of all, it can also lock us into potential profits.

A Fine-Smelling Nation
Sixty-five years ago, Dr. William Gump created a germicidal compound to keep American military uniforms free of fungus. It worked like a charm.
Then, a scientist at Armour Foods named Robert Casely created the first soap that could eliminate odor-causing bacteria.
Voila! – Dial Soap and the modern antibacterial soap business was born.
It didn’t take long for Dial to take America by storm. In fact, it became one of the most successful product launches in history. By 1953, Dial was the No. 1 soap in the entire country.
The appeal was simple, but powerful – it consistently cut body odor. Every time I travel to another part of the globe where Dial soap isn’t a top seller, my nose knows the difference.
But following the FDA’s latest bathing behest, a product launch like Dial’s is suddenly impossible. The capital required for clinical trials is held mostly by the large, established firms with deep pockets.
This is why you see anomalies such as Altria Group (MO), the owner of the Marlboro brand, supporting the “Family Smoking Prevention and Tobacco Control Act,” which gave the FDA the right to regulate the use of tobacco products.
Seems counterintuitive, right? But in reality, the act cemented Altria’s control of market share and provided a government regulator to keep Altria on top.
This is one of the reasons we recommended buying Altria when Barack Obama signed the law in June of 2009. Since then, Altria stock is up 103%, all because the FDA moved from being the tormenter to being the protector of established tobacco products.
And the move worked well for government, too. Now the FDA has its own “Center for Tobacco Products” (CTP). The Center has a director, a staff, a budget and offices… all paid for by the evil tobacco firms they allegedly regulate.
A similar outcome could be in the works for the soap industry. Going forward, we’ll be watching for investment opportunities as the FDA turns to regulating antibacterial lather. I’m sure you feel safer already with the government on the case.
I just hope that Dial still cuts body odor when the regulators in D.C. are finished.As Always The Plain Truth!