Salt Sugar Fat: How the Food Giants Hooked Us (23 page)

“Kraft has always taken pride in labeling its products clearly and accurately and in a manner that is not misleading to consumers,” a company spokeswoman told me. “The nutritional information resulting from the addition of real fruit juice and use of the natural claim was in keeping with the labeling regulations.” But Capri Sun’s use of “natural” in its marketing would come under fire in 2007, when a Florida grandmother named Linda Rex picked up a case for a young relative visiting from Ireland. “When I saw ‘All Natural’ on the label, that sounded healthier than soda,” she said. “But when I got home and got out my glasses, I threw it in the garbage, when I realized it contained high-fructose corn syrup and was nearly identical to soda.” Some of Capri Sun’s flavors, in fact, were higher in sugar than soda. Wild Cherry, for instance, had 28 grams of sugar—more than six teaspoons—in each 6.76-ounce pouch. Coke, in its larger 12-ounce can, has 39 grams—28 percent less per ounce. Working with an attorney for the Center for Science in the Public Interest, Rex sued Kraft for deceptive marketing.
Eighteen days later, Kraft announced it would replace the words
all natural
with the phrase
no artificial colors, flavors, or preservatives
, and thanked the group for its work in resolving the matter. Kraft later set out to reduce the drink’s sugar load to 16 grams, the company said.

Whether Kraft lost any sales from these concessions, however, is not clear. It was projecting a 5 percent drop in 2008 due to a variety of factors, but a new advertising campaign—“Respect the Pouch”—aimed at making the drink cooler with six- to twelve-year-olds,
sent consumption soaring
again by more than 17 percent. But Capri Sun has been helped by another scheme, which was first deployed back in the 1990s, and this was an idea that the Philip Morris executives could claim as their own.

W
hen Philip Morris acquired General Foods and Kraft, its executives were faced with one overriding challenge: They knew almost nothing about processed foods. Moreover, the people who ran these two food giants disliked and distrusted one another. Their operating styles could not have been more different. General Foods, with its throngs of food scientists, was cerebral and painstaking in the way it rolled out products or adjusted its marketing to exploit consumer-driven trends like fiber or low-fat. One former Kraft executive who started out with General Foods described the latter as Ancient Greece, studied and cultured and not especially keen on warfare. By contrast, he viewed Kraft as the imperial Roman army on a brutal march to conquer the world. It boasted a powerful lineup of mega-brands and ever-changing fast food sensibilities. Its president, Michael Miles, was a former executive at Leo Burnett, the advertising agency, and chairman of Kentucky Fried Chicken. Shortly after arriving at Kraft, he recruited a number of Ivy League MBAs and Procter & Gamble executives to add to Kraft’s skills. They did things like increase prices and advertising simultaneously to take the lead over competitors. Following the merger, Miles was made CEO of the combined food divisions, and he brought the top executives from both companies to Key West for three days of team building. By the end of 1990, however, the merger looked more like an acquisition by Kraft:
Only two of the thirty-five executives who remained had come from General Foods.

The Philip Morris executives, led by CEO Hamish Maxwell, had an easygoing management style that might have made them more partial to the reserved manners at General Foods, but they valued even more the revenue gains from Kraft. Their answer to merging these two “nation-companies” as smoothly as possible was to send Geoffrey Bible to the Kraft
headquarters near Chicago and have him show the way. His rallying cry was “synergy,” and Philip Morris
had some strategies of its own to offer on this front. In the coming months, the vast sums that Philip Morris spent advertising tobacco won discounted ad rates for the company’s Miller beer; products were jointly promoted, such as cigarettes and Post cereals in the Virginia Slims tennis tour; and the pacts that Marlboro had with 7-Eleven stores leveraged the sale of an extra $20 million a year in Oscar Mayer hot dogs. Philip Morris also made sure that the technicians and brand managers throughout its empire talked to one another to share the secrets of their marketing triumphs.

“The concept of ‘synergy’ derives from the powerful idea that two or more entities have greater strengths combined than they could ever claim apart,”
Bible told Kraft managers at a strategy meeting in late 1990. “That’s certainly true of the family of companies represented here today. If the tremendous creative resources of KGF
^*
, Miller and the Philip Morris companies can be brought together to interact on behalf of understanding the consumer—power can be released on the market unlike any of us could do on our own. That’s our mission for this conference, in a nutshell. To start a chain reaction of synergy throughout this corporation. A chain reaction whose ultimate goal is to better understand the men and women who buy our products.”

Nowhere did this message resonate more loudly than in the beverage division. By 1996, the company’s fruity drinks—created by General Foods but now marketed by Kraft—were dominating a large stretch of the beverage aisle. Not only had their annual sales moved to the cusp of the hallowed mark of $1 billion, Kool-Aid and the company’s other brands were now in solid third place behind the titans of soda, Coke and Pepsi.

The beverage managers at Kraft fully embraced the concept of synergy in responding to Bible’s call to better understand and target the consumer. In the summer of 1996,
they were back in front of the Corporate
Products Committee at Philip Morris, presenting a detailed account of their victories. The meeting minutes, in turn, reflect the celebratory air, with the tobacco executives doling out nothing but praise.

“The Beverage division, consisting of seven core trademarks, is approaching the one billion mark in both pound volume and revenue,” one of the Philip Morris executives who attended the meeting, Nancy Lund, wrote in the minutes. “1995 was a turning point, 1996 is on track for a record year.”

The details of this accomplishment were presented to the committee by James Craigie, a Harvard-trained MBA who had joined Kraft thirteen years earlier and risen to executive vice president and head of beverages, and they offer a window on more than just Kraft’s efforts to accelerate its sales. The beverage division’s work reflected the culmination of the food industry’s decades-long love affair with sugar and the cunning developed by processed food managers, whether gleaned from laboratory experiments or the war rooms of marketing experts. All of this skill and resourcefulness was channeled into a colossal, sustained push to remake and exploit one of the America’s biggest dietary habits: the nonalcoholic drink.

To achieve their gains, the Kraft beverage managers went into the suburbs, where the principal target was moms who had grown worried about the health implications of sugar. They rolled out products whose formulations were still guaranteed to generate bliss, but with fruit motifs that disguised the sugar as something more nourishing. One such new line for Kool-Aid, called Island Twists,
“received extremely high scores from Moms who found the real fruit flavors to be very wholesome,” the presentation to the products committee said. They handily beat, by more than two to one, the sales of Snapple, then owned by rival Quaker Oats.

Having reached the moms, the beverage division went after African Americans next, targeting their preferences. It used pinpoint-accurate studies of black consumers to nail down their likes and dislikes and then adjusted the company’s advertising accordingly. “Consumer research has
revealed that African Americans like to customize their Kool-Aid by adding
fruit or mixing flavors,” so the marketing division used this “consumer insight” to produce a more effective marketing theme: “How do you like your Kool-Aid?”

Kraft then went into supermarkets with new clever strategies to increase the power of their displays. Each April, in grocery stores throughout the country, the company’s sales force installed thirty-thousand stand-alone racks with five shelves each and a banner on top to display their drinks, towering over the aisle to draw the shopper’s attention. These usually stayed up only for the summer, when sales for sugary drinks peaked. But Kraft convinced the stores to keep these racks up—and extend America’s sugary drink habit—until winter by agreeing to share the shelf space on the racks with puddings and other desserts from their sister divisions.

The urban centers of America don’t have many supermarkets, so there the drink managers focused their efforts on corner stores, which are laid out like traps for the unwary. Kraft had to work hard to get its drinks on the shelves, since it didn’t deliver directly to the stores like Coke and Pepsi did through their “up and down the street” campaigns. On this front, however, Kraft had its own secret weapon, borrowed straight from Philip Morris. The beverage division hit the phones to call these stores and sell the owners on the virtues of carrying Kraft’s drinks, first and foremost among which was their low pricing to suit the low incomes of their customers. But they didn’t leaf through the phone book; they used targeted lists prepared by the tobacco company in selling cigarettes—yet another example of the synergy Philip Morris had been advocating.

“Consumers in these stores represent prime prospects for our value-oriented brands, but have been inaccessible,” the beverage division explained. “As such, we have leveraged Philip Morris’ scale by utilizing their tobacco data base to develop a list of carefully selected stores to target via telemarketing. Our initial test of this program in the first quarter generated over $1 million” in added sales.

They even targeted people who may have overindulged on the company’s drinks in the first place: diabetics, whose growing ranks were, ironically,
opening up a hot market. Or, as the beverage division put it, this “targeted marketing effort involves new programs on our sugar-free brands that are focused against diabetics.”

“Diabetics already represent 12 percent of the U.S. population and this figure is unfortunately expected to steadily grow as the large Baby Boomer segment ages,” the committee was told. Unfortunate for those afflicted, perhaps, but not for sales of the company’s artificially sweetened Crystal Light. “We believe there is significant untapped opportunity through advertising and promotion programs aimed at gaining trial with diabetics,” which Kraft would leverage by combing the Crystal Light diabetic campaign with another developed for sugar free Jell-O.

Finally, they dusted off one of the early stars of processed foods, turning back to the first product General Foods created in the wake of the 1956 speech by its CEO, Charles Mortimer, who implored his food developers to get creative: Tang. With sales now flagging, Kraft drink managers aimed to rejuvenate the brand. They looked at the age of the people who drank Tang, and decided to go further than even Coke dared to go. Where Coca-Cola had drawn the line at age twelve in its pursuit of kids,
Kraft went after a younger set. “We restaged the brand by changing our target consumer from Moms to Kids age 9–14, otherwise known as ‘tweens,’ ” the report disclosed.

Lund, the Philip Morris executive who prepared the meeting minutes, summed up the Tang presentation in this way:
“For Tang, it’s a three-part restage—new target, new positioning and a fully loaded marketing plan.”

Tang and Kool-Aid were among the highlights of this Corporate Products Committee meeting, which took place on June 24, 1996, but they were really just two among many. It turned into one of the committee’s longest sessions ever,
an all-day affair in midtown Manhattan. The morning started with Marlboro and the introduction of a new cigarette box in the brand’s most recently captured territory: the kingdom of Nepal. Lunch was served as the beverage division delved into all its feats, and if that conversation was all about sugar—from its power to attract to the power of alternative sweeteners when sugar becomes overwhelming—what came next
on the agenda was something else. This discussion moved on to frozen pizza, whose allure was now being enhanced by the addition of ever greater amounts of cheese, on top and in the crust, so as better to compete with the fast food pizza chains.

The fat in this cheese and a range of other foods in the Philip Morris portfolio would bump up against its own consumer backlash, for which the company managers would need all of their cunning and skill. Through the 1990s and beyond, fat would in some ways grow to be even more powerful than sugar, delivering untold riches to Philip Morris and other food manufacturers. It would also bring them some of their biggest troubles.

T
here is a piece of lore, cherished among food scientists, that Aristotle was the first to explore our ability to detect flavors in food. This ability, called taste, is one of the five basic senses that include sight and smell, and the study he made of all of these senses was part of the remarkable observations on life that established him as a founding figure in Western philosophy. A student of Plato, who in turn had studied under Socrates, Aristotle had been tutoring Alexander the Great and other future kings of ancient Greece in 335
B
.
C
. when he established his own school in Athens known as the Lyceum. It was there, over the course of twelve years, that he is believed to have written his series of elegant treatises that ranged from physics to music, ethics to zoology, politics to poetry. Among these writings was
De Anima
, which examined the life force in plants and animals, and it was in this book that Aristotle attempted to parse the nature of taste. He was fond of creating lists, and first and foremost on his list of tastes was sweet, which he described as pure nourishment. The others that followed, which
included bitter, salty, harsh, pungent, astringent, and acid, were mere “relish” that served as a counterbalance, “because the sweet is over-nutritive and swims on the stomach.” The final entry in his lineup of basic tastes, however, was one whose power to generate pleasure was on par with sweet. Aristotle called this the “fat or oily.”