Banned after the break: Commercials for junk food and booze have reached a watershed

It used to be simple. Companies came up with a product and advertised it. Consumers, liking the look of it, bought it and, well, consumed it.

That, however, was then. These days, how companies market goods, and to whom is highly contentious - especially if they're selling alcohol and junk food. In the US, after the lengthy legal battle waged against the tobacco industry, consumers have started suing companies for making them fat. The most recent case involves the food manufacturer Kellogg's and media sales company Viacom, who are being sued for advertising sugary cereals on children's television in a $2bn (£1.1bn) class action suit.

Meanwhile, in Britain, the communications regulator, Ofcom, recently tightened the rules on advertising alcohol at the Government's behest. The first company to fall foul of the more stringent regulations was Young's: the Advertising Standards Authority ordered the brewer to pull two adverts last month because they linked its beer to social and sexual success.

The Government has also ordered the food industry to raise its game. Labelling on products is being improved and more stringent controls introduced on advertising to children. Ofcom will launch a consultation paper in the spring, while the Food and Drink Federation, a trade body, is also looking at the issue. And well it might - the Government has made it clear that should the industry fail to self-regulate, it will step in next year and legislate changes.

Even the European Union is getting in on the act, with a Green Paper published last December questioning whether, when it comes to marketing sugary snacks, self-regulation is adequate.

So why the surge of interest? Much of it has to do with social issues. Along with underage and binge drinking (alcohol-related deaths in the UK have soared by 20 per cent in the past five years), obesity has become a big concern. The EU estimates that 14 million Europeans are clinically overweight, while in Britain, a fifth of 12- to 16-year-olds are obese.

But whether that is solely down to marketing is a moot point. Jeremy Preston, the director of the Advertising Association's Food Advertising Unit, points the finger of blame at modern lifestyles. "I grew up in the 1950s and 1960s," he says, "and my diet was considerably worse that it is today - fresh food wasn't available like it is now. But we had one television set, my parents didn't have a car and I had to cycle, take the bus or walk. Advertising is an easy target."

Mr Preston takes issue with those who call for advertising to children to go the way of tobacco marketing and be banned. He points to 2004 research from Ofcom that found the average child saw five food adverts a day, only two of which were in dedicated children's programming.

"So when people call for bans, I think, 'Are you really serious that banning five adverts will make a difference?' I struggle to understand that."

The current rules on advertising to children are vague. The ASA says adverts must not exploit a child's inherent vulnerability and lack of sophistication, but that's about it. A report last week by the consumer body Which? condemned the marketing tactics used by snack food manufacturers, which, it claimed, "lure children into eating more unhealthy food".

Advertising spending has also shifted away from television, its traditional home. To name but a few strategies, companies use sponsorship, the internet, text messaging, competitions, celebrity endorsement, product placement and even themed toys. (Argos, for example, sells a McDonald's Play Food Set, complete with plastic Chicken McNuggets.)

"The area that's ripe for regulation is advertising towards children," argues Stephen Nathan QC, a barrister at Blackstone Chambers. "We have a watershed, but children watch programmes at all hours."

Most companies, however, have seen the writing on the wall and are abandoning aggressive campaigns. In the US, soft drinks manufacturers are pulling their products out of elementary schools (although many schools are suffering a drop in funding as a result), while McDonald's is putting nutritional labels on its burgers and shakes.

In Britain, Cadbury Schweppes agreed in 2004 to cease advertising to children under the age of eight. And Walkers - which has been criticised for its use of a child-friendly celebrity, Gary Lineker - relaunched its crisps last week with less saturated fat and salt.

As for alcohol, the drinks giant Diageo drew up its own marketing code in 1999, while rival group Allied Domecq, now part of Pernod Ricard, set up a marketing review board. The drinks industry as a whole has also backed the Portman code of practice, drawn up in association with the alcohol awareness group.

Many drinks companies are also putting responsible drinking messages on products. Some may argue this is unlikely to have much impact on a 20-year-old enjoying a night out. But Kate Blakeley, the head of social responsibility for Diageo GB, says the industry can only do so much.

"Our view is that we need to provide clear and factual information so people can make a sensible choice. The industry has a role to play but so does the individual."

This argument, about joint responsibility, is a cornerstone for the food and drinks industries, which are desperate to avoid legislation. "Advertising agencies want to keep self-regulation in place as much as possible," says Nicola McCormick, the head of the advertising group at Michael Simkins, a specialist media law firm. "But the risk is always there that the Government will step in and say 'Right, this is not working', and that would be horrific."

Yet while there is a real fear of legislation, the threat of UK consumers seeking legal redress is taken less seriously.

"A lot of what happens in the States does have a knock-on effect," says Ms McCormick. "When the obesity cases started, I looked into whether this was likely to happen here and I think we take a much more robust view about people looking after their own lives. I don't think our courts would entertain it."

Instead, the next milestone for advertisers is the Ofcom report into advertising to children. The consultation should take about three months, with another few months to consolidate its findings. The Government will then make its judgements, and is also expected to assess the impact of Ofcom's new rules on the advertising of alcohol.

In the meantime, companies try to get on with business as best they can. Which means ingenious logic is sometimes applied to marketing decisions. For example, Diageo announced last year that it would spend £15m sponsoring the Formula One team McLaren Mercedes-Benz. F1 is one of the world's most glamorous sports, with a huge market and an assured return. But it also, obviously, involves driving - something not best associated with drinking. Indeed, Allied Domecq rejected the idea of a deal for that very reason.

Diageo's response? "We looked at the opportunity in a different way," says Ms Blakeley. "Could it give us the platform we were looking for [to give] a powerful anti-drink-driving message? These drivers are at the top of their game and very much in control. It was a strong opportunity to get our message across."

Diageo is not alone in seeking novel ways to market goods that won't see them fall foul of the rules. The real question, though, is not whether the logic stands up to scrutiny, but how much the Government, regulators, lawyers and an increasingly disgruntled public will accept before deciding enough is enough.

In the land of the Big Mac, class action suits come with fries

Six years ago, the Onion, a spoof website, featured a hoax headline about an American chocolate company: "Hershey's ordered to pay obese Americans $135bn".

But parody turned into reality in 2002 when two New York teenagers sued McDonald's, claiming the chain had failed to warn them that a diet of Big Macs and fries would leave them obese and diabetic. Other teenagers joined their class-action suit, and fellow New Yorker Caeser Barber - all 19 stones of him - launched a separate lawsuit against McDonald's, Wendy's, Burger King and Kentucky Fried Chicken after having two heart attacks.

The bulk of the teenagers' action was thrown out, while Mr Barber's case was dismissed on the grounds that he was responsible for his own health. But as last week's news that Kellogg's and Viacom are being sued showed, the threat of class-action suits against US food companies is not going away.

One of the leading players in food-related litigation is John Banzhaf, a law professor at George Washington University who helped pioneer the multi-billion-dollar class-action suits against the tobacco industry.

US law has a long and rich history of such cases, and few companies know that as well as McDonald's. In an infamous 1992 case, Stella Liebeck, then 81, successfully took the giant to court after spilling coffee on her legs, causing serious burns, at a McDonald's drive-through.

A more recent example saw the burger chain settle with Hindus and vegetarians in a 2002 action over the use of beef extract in its fries.

Fat is something of a sticking point for food companies. Stephen Joseph, the founder of bantransfats.com, sued McDonald's over its use of artery-clogging trans-fats. The parties settled, with McDonald's donating $7m (£3.9m) to the American Heart Association. And a consumer activist group is threatening to sue PepsiCo if labelling on its light crisps does not mention the use of Olestra, a fat substitute.

Food companies are not the only ones under fire. Alcohol groups have been criticised for using child-friendly characters such as the Budweiser frogs. However, judges last year threw out a suit brought by parents of a 20-year-old killed by a teenage drunk driver, who accused brewers of promoting underage drinking.

But there is some hope for legally dazed US companies. The House of Representatives has passed the "cheeseburger bill", to shield manufacturers from "frivolous" lawsuits by individuals blaming their obesity on snack-food companies.

Jill Ferguson