SELF-REGULATORY EFFORTS TRIGGER FOOD INDUSTRY DEBATE
CARU Raises Hackles By Tightening Children's Advertising Rules
ANA, DISNEY SUFFER SETBACK IN FIGHT AGAINST CHILDRENS' AD RESTRICTIONS
Court Shifts FCC Case From Washington to Cincinnati
WEB TAKES CENTER STAGE IN BATTLE OVER CHILDREN'S ADS
FCC and ANA Duel Over Use of Web Addresses in TV Commercials
FCC WEB RULE FOR CHILDREN'S SHOWS GOES TO TWO COURTS
Consumer Groups Want It Tougher, Broadcasters Call It Unconstitutional
FCC COMMISSIONER DECRIES 'COMMERCIALIZATION OF MEDIA'
Rails Against 'Fake News' and 'Relentless Marketing'
CARU TARGETS PRODUCT PLACEMENT AND CARTOON ADS
Industry Group Raises Public Profile on Obesity Issue
REPORT HITS 'COMMERCIALIZATION OF CHILDHOOD'
Calls for Restrictions on Children-Oriented Advertising
In his opening remarks at the Ronald Reagan Center on Tuesday, Hershey Co. President-CEO Rick Lenny said “the rate of change is going to accelerate” as innovation in food technology and biotechnology drive companies closer to the “holy grail” of products that offer convenience, taste and nutrition. But at the same time attendees and speakers acknowledged the difficulties marketers face in trying to profitably develop healthful fare even as the threat of government regulation and the continued rise of obesity-related health-care costs demands that they do so.
Lamar Johnson, a veteran food developer who recently left General Mills to join Bush Bros. as director-product development, said “There is always pushback from upper management when we come up with new ideas [for more healthful foods]” because stringent FDA regulations make it difficult to deliver products that taste good and can be made at low enough cost to be profitable.
Mr. Johnson, like other industry executives at the meeting, lamented that despite all the hype about health, “the majority of consumers have not grasped what it means to lead a healthier lifestyle, which makes it hard to justify development of healthier products as a profitable endeavor.”
Parade magazine confirmed Mr. Johnson’s supposition with data from its annual consumer food survey that showed health ranked far below other factors, including price and taste, in purchase decisions. Only 12% of respondents cited nutrition as factor in purchasing food.
Futurist Faith Popcorn, founder of BrainReserve, condemned the industry for its reliance on focus groups and other research that merely “optimizes yesterday,” and called for executives to cast aside expired myths, including the one that says doctors know best.
“Consumers are self-prescribing. Ninety percent of people feel improving health is important, and you must claim your own self-prescription turf, taking advantage of price inelasticity for health and wellness products,” Ms. Popcorn rallied. Lay’s chips with birth control, calcium, vitamin C and echinacea? All in the realm of possibility, she believes. That said, though, even she admitted a universal truth: People resist change.
And nowhere more so do they resist it than in their food purchases. General Mills CEO Steve Sanger said that change for the industry is certainly more evolutionary than revolutionary and said in fact that “the fundamentals don't change at all: People eat what they like.”
He noted that while the “future will belong to the innovators,” many in the industry haven’t pushed the envelope and are instead looking at old data. General Mills did try some innovation this year, with its much-hyped addition of whole grains to its cereals. But gains from the grain message were more than offset by higher prices General Mills imposed on its cereals, a move Kellogg Co. did not follow.
'Starved for solutions'
John Haugen, VP at General Mills’ Health and Wellness Center for Excellence, said that while “people continue to have more information on health issues, they’re still starved for solutions and the future has to be one in which we make it easy for people.”
PepsiCo Senior VP-New Growth Platforms and Chief Innovation Officer Brock Leach and Kraft Foods’ Senior VP-Global Health & Wellness Lance Friedmann both sung the praises of their growing better-for-you portfolios and the faster growth of that category (up 15% vs. flat sales for non-health-oriented foods, according to data from AC Nielsen.)
Mr. Leach called the opportunity to help consumers with their health “the largest consumer opportunity in decades” and said that the better-for-you products Frito designates with a Smart Spot label now make up 41% of PepsiCo’s portfolio and two-thirds of the company’s growth.
Kraft has had some success, with its 100-calorie packs hitting more than $100 million in sales and South Beach Diet products also surpassing the $100 million mark. But Kraft certainly has a long way to go to turn around its ailing portfolio. Mr. Friedmann noted that “the challenge is to crack the code” by developing more-healthful products that taste good.
Not to mention selling them as widely enough to turn a profit. That’s been an issue at McNeil Nutritionals, the nascent Johnson & Johnson unit that markets brands including Splenda, Lactaid and Benecol, which has decided it “cannot be all things to all people,” according to Dondeena Bradley, director-strategic marketing. “When we develop functional products backed by specific nutrition claims, we can't expect to go out and mass market these products.”
Instead, she said, McNeil looks increasingly to market products toward health-care professionals and in targeted ways to specific channels and audiences depending on the focus area, whether it be diabetes or weight loss.
Food and pharmaceuticals
McNeil's efforts are indicative of the blurring line between food and pharmaceuticals that the government has clearly in its sights. The Food and Drug Administration is hoping to spur food companies to do more to promote the use of diet to mitigate and even prevent disease. And according to Dr. Scott Gottlieb, FDA’s deputy commissioner for Medical and Scientific Affairs, the unit is even considering a shift toward post-market enforcement to allow health-claim marketing at a faster rate than the current regulation process allows. “FDA resources are not growing as fast as science is percolating,” Dr. Gottlieb said.
The reasoning is clear. According to Dr. William Dietz, director of the Centers for Disease Control's Division of Nutrition and Physical Activity, half of the increases in medical costs in the U.S. can be attributed to obesity. “The industry paradigm must change from companies selling more food for less money to selling less food for more money.” If only they could figure out how.