Salt Sugar Fat: How the Food Giants Hooked Us (56 page)

142
“We were always”
Jeffrey Dunn to author.

143
“There will never be”
Constance L. Hays,
The Real Thing: Truth and Power at the Coca-Cola Company
(New York: Random House, 2004).

144
The man who instilled
Ibid.

145
“The story they always tell”
Jeffrey Dunn to author.

146
By 1995, two in three kids
Soda consumption rates are parsed in various ways. U.S. Secretary of Agriculture Dan Glickman, at the October 1998 symposium “Childhood Obesity: Causes and Prevention,” stated that two-thirds of teenage boys were drinking three cans or more of soda a day, and two-thirds of girls were drinking two cans a day.

147
They talked about “heavy users”
Jeffrey Dunn to author.

148
Dunn rose nearly to the top
Jim Lovel, “Coke’s a Big Part of His Life,”
Atlanta Business Chronicle
, November 19, 2001.

149
“At Coke, I do think”
Jeffrey Dunn to author.

150
He was put in charge
“Former Coke Executive Walter Dunn Dead at 86,”
Atlanta Business Chronicle
, June 22, 2009.

151
“He took his job very seriously”
Jeffrey Dunn to author.

152
“He was up in first class”
Ibid.

153
PepsiCo pulled off
Roger Enrico and Jesse Kornbluth,
The Other Guy Blinked: How Pepsi Won the Cola Wars
(New York: Bantam Books, 1986).

154
was 4 percent sweeter
Ibid.

155
Coke crushed Pepsi
Hays,
Real Thing
; Edward Hess,
The Coca-Cola Company
, Harvard Business School, 2008; Michael Watkins,
The Coca-Cola Company: The Rise and Fall of M. Douglas Ivester
, Harvard Business School, 2007; David Yoffie,
Cola Wars Continue: Coke and Pepsi in 2006
, Harvard Business School, 2006.

156
“They said what’s fascinating”
Jeffrey Dunn to author.

157
Studies have found
Jennifer Breneiser and Sarah Allen, “Taste Preference for Brand Name Versus Store Brand Sodas,”
North American Journal of Psychology
, vol. 13, no. 2 (2011).

158
“We were no longer in a battle”
Sergio Zyman,
The End of Marketing as We Know It
(New York: HarperCollins, 1999).

159
With diet sodas
Beverage Digest
editor John Sicher to author.

160
“Your heavy-user base”
Jeffrey Dunn to author. The term
heavy user
also slipped into the conversations Coke had with Wall Street executives. For instance, on December 12, 2003, Doug Daft, the company’s chairman and CEO, revealed to investors that Coke was producing a new half-liter bottle, saying, “It’s fundamentally about giving people an opportunity who aren’t heavy users, heavy drinkers, to seriously consider the opportunity.” Four months later, on April 28, 2004, Coke told investors in a conference call that it was introducing a product called C2, which was formulated with half the calories of regular Coke in response to the ever-popular low-carbohydrate Atkins diet; David Van Houten, the chief operating officer said, “We believe that this product will appeal to heavy sugar cola users, and, in total, believe that it will get the total Coke trademark growing again.”

161
said he was astonished
Todd Putman spoke at a June 2012 conference on soda organized by the Center for Science in the Public Interest, and was interviewed by several media outlets. Coke, in response, said that Putman had worked for the company for only a brief time and that one of the strategies he cited, known as “share of stomach,” replacing other
beverages Americans that drank with Coke, was no longer the company’s goal. Rather, Coke said, it was responding to health concerns by developing a host of new low- or no-calorie products, which now totaled 41% of the company’s lineup, compared with 32% in 1999.

162
“It was a mind-bending paradigm”
“Former Coke Executive Slams ‘Share of Stomach’ Marketing Campaign,”
The Washington Post
, June 7, 2012.

163
The advertising policy
Jeffrey Dunn to author.

164
“If you think in terms”
Ibid.

165
“Magically, when they would turn”
“Former Coke Executive Slams.”

166
Coke left nothing to chance
Coca-Cola, in 1978, founded an entity called the Coca-Cola Retailing Research Council to address issues of concern to retailers. Coke points out that while it supports the council by funding the research projects, the council’s leadership is made up of grocery store executives who make independent decisions in using the research. Coke makes this research available to retailers through a service called Coke Solutions, which provides a wide range of assistance to grocers, from consumer trend analysis to customized marketing materials. One of the council’s early endeavors was a 103-page study, “Social Trends and Food Retailing,” produced for Coca-Cola in 1980 by SRI International. It noted the increasing numbers of working women with more money but less time on their hands, a trend favoring convenience foods (page 57). Increasing levels of stress would be driving consumers toward “mood foods” (71), the study said. It also divided Americans into four categories: “Belonger Consumers,” “Achiever Consumers,” “Inner-Directed Consumers,” and “Need-Driven Consumers.” The latter, comprised of economically challenged Americans, “are likely to buy more saturated fats such as pork, fatty hamburger, ham hocks, etc., and will purchase ‘stretch,’ ‘fill-up,’ foods, especially starches (bread, potatoes, spaghetti, noodles, rice, powdered and concentrated milk, etc.)” and are
“heavily inclined to eat processed foods” (86–87). Coca-Cola, nowadays, continues to present its research studies at various industry forums, generating considerable interest from the grocery and convenience stores. “Coca-Cola Bubbling With Ideas,”
SCP Daily News
, October, 13, 2006; “Using Shopper Research to Grow Sales,”
States News Service
, April 5, 2012. At a trade show in Dallas on April 30, 2012, Coke presented a study on checkout lanes that encouraged grocers to capitalize on “impulse buying” by increasing the use of beverage coolers. Soda, candy, and other items at checkout lanes currently total $5.5 billion in annual revenue but could grow to $7.2 billion with some simple improvements, the report said.

167
“Coke was doing it”
Jeffrey Dunn to author.

168
In 2005, the research arm
This report, “Convenience Teens: Building Loyalty with the Next Generation,” is offered to retailers through Coke’s marketing service on a highly restricted basis. The 41-page report, which I obtained a copy of, was copyrighted by the Coca-Cola Company in 2005. In conclusion, the report says of teens, “The social aspects of shopping are extremely important to them—namely, whether or not they feel welcome and like they belong. About technology: teens love it for what it can do for them, because it’s novel. They expect to refuel their devices the same way older shoppers expect to refuel their vehicles. Watch Out! Teens purchase the same items from other retailers that they buy at c-stores. For teens, convenience isn’t a store; it’s everywhere.”

169
a book arrived
H. Leighton Stewart et al.,
Sugar Busters!
(London: Vermilion, 1998).

170
The company’s strategy
Jeffrey Dunn to author; “Coca-Cola’s Marketing Challenges in Brazil: The Tubainas War,” Thunderbird School of Global Management; Yoffie,
Cola Wars Continue
; “Successful Retail Innovation in Emerging Markets: Latin American Companies Translate Smart Ideas into Profitable Businesses,” Coca-Cola Retailing Research Council, 2006. More recently, Coke announced that it would invest $7.6
billion in Brazil through 2016, adding three new factories for a total of fifty; its focus on Brazil exceeds even its interest in China, where Coke plans to invest $4 billion. Trefis Team, “Coca-Cola Pours into Brazil and China, Pushes PepsiCo Aside in the U.S.,”
Forbes
, April 10, 2012. Trefis, an analyst firm, estimates that Coke far outpaces the company’s other products, such as Diet Coke and Dasani water, as a measure of the value it brings to the company’s stock price. In second place, and surging, was Powerade, a sugar-sweetened sports drink.

171
wrote a letter
Jeffrey Dunn to author.

172
underwent a restructuring
In public forums and correspondence with the author, Coca-Cola has said that its strategies have embraced much of what Dunn was fighting for, including the marketing of water and a reduced emphasis on sodas in schools. “The world is changing, and we are too,” the company said at the Added Sugars Conference sponsored by the American Heart Association on May 5, 2010. Coke said it was expanding its lineup of no- and low-calorie products, improving its labeling with front-side calorie disclosures, and working to promote active, healthy lifestyles. Coke is also driving to put its products in the context of overall diet. “Misperception: Craving sweets is bad,” Coke says on its website. “You are literally born with it. Just remember: You may need to control your sweet tooth. Good health depends on a balance between calories you consume and calories you burn through physical activity. There is no such thing as a ‘bad’ food or beverage. If you love chocolate, ice cream or beverages that contain sugar, you can still include these in your diet—in moderation.” That said, Coca-Cola continues to come under fire from health advocates who contend that its tactics aimed at kids have evolved to emphasize social media. For a detailed critique, see Jeff Chester and Kathryn Montgomery,
Interactive Food and Beverage Marketing: Targeting Children and Youth in the Digital Age
, Berkeley Media Studies Group, 2007. At the same time, Coke continues to receive praise from grocers for being aggressive in marketing products like Sprite to kids, such as with TV ads during the 2012 Olympics. “Sprite Targets Teens
with ‘Intense’ Campaign,”
Convenience Store News
, July 30, 2012. “Sprite has a very specific teen target, so we’re looking for a crisp articulation,” a Coke marketing director explained. In its private discussions with marketers, Coke also continues to voice a strategy of driving consumption through various tactics. It has a program called “My Coke,” where kids can send out pictures of a polar bear holding a bottle of Coke through Facebook, where Coke’s own page has 47 million “likes.” Coke also has a rewards program called My Coke Rewards, which links consumption to free merchandise and donations to schools. Launched in 2006, the program is viewed as a resounding success. “We see a positive volume swing,” the program’s director said in the September 10, 2009, issue of
Colloquy
, a marketing trade publication. “My Coke Rewards members in general consume two to three times more than the typical U.S. household.” Perhaps the single most eye-catching item on Coke’s website today is a running tally of how many Coca-Cola drinks people have consumed in the day thus far. The number increases by some 25,000
each second
. The benchmark, Coke says, is from 2010: “1.7 billion servings daily.”

173
“You really don’t want them mad”
Ibid.

174
in his presentation
Jeffrey Dunn to author. I’m grateful to Dunn for sharing with me a copy of the presentation he made to the Madison Dearborn executives.

175
already agreed to buy
In July 2012, Madison Dearborn Partners announced it was selling the carrot farming operation, Bolthouse Farms, to the Campbell Soup Company for $1.55 billion.

176
twelve of the most senior
The reporting on this and other Philip Morris meetings benefited greatly from the records the company has provided to the Legacy Tobacco Documents Library (LT) at the University of California, San Francisco. These records range from the mundane—mailed
invitations to attendees, payment vouchers, and memos on room preparation—to the deeply insightful—meeting agendas, minutes, and presentations. For a description of the building, see “It’s Open House at Last at Altria’s Midtown Home,”
The New York Times
, September 9, 2008.

177
He was joined by
“Joseph F. Cullman 3rd, Who Made Philip Morris a Tobacco Power, Dies at 92,”
The New York Times
, May 1, 2004; “George Weissman, Leader at Philip Morris and in the Arts in New York, Dies at 90,”
The New York Times
, July 27, 2009.

178
When it finished merging
Stuart,
Kraft General Foods
; “Contents for Briefing Book Annual Meeting 1992,” LT. The briefing book contains a fount of confidential information about Philip Morris’s income and expenditures that year: the portion of its revenue derived from food (50%, compared with 42% for tobacco), its advertising expenditure ($2.4 billion), the cost of operating its fifteen corporate aircraft ($32 million), the sum it spent on lobbying fees ($4.8 million), and the R&D expenditures ($396 million).

179
“Cigarettes are much the same”
Geoffrey Bible to author.

180
a Nebraska man named Edwin Perkins
“Edwin Perkins and the Kool-Aid Story,”
Historical News
, vol. 31, no. 4, Adams County Historical Society, 1998; Bucher and Villines,
Greatest Thing Since Sliced Cheese
; Jean Sanders, “Edwin E. Perkins: Inventor and Entrepreneur, Kool-Aid King,” Nebraska State Education Association, 2008. Credit for Kool-Aid’s early success also goes to one of his salesmen. “Bob Maclean, Marketing Expert Who ‘Put Kool-Aid on the Map,’ ”
San Jose Mercury News
, February 21, 1994.

181
Americans would stir up
Kraft presentation to Philip Morris, June 18, 1996, in LT.

182
by not using promotional materials
For a discussion of the industry’s practices, see “Hearing on the ‘Targeting’ of Blacks, Hispanics, Other Racial Groups, and Women by Alcohol and Tobacco Company Advertising,”
House Committee on Energy and Commerce, Transportation and Hazardous Materials Subcommittee, March 1, 1990.

183
Adventures of Kool-Aid Man
See Comic Vine, a comic book retailer.

184
“Gain kid demand”
Kraft presentation to Philip Morris, February 26, 1990, in LT.

185
a mere 5 percent
Ibid.

186
won a coveted award
Philip Morris Quarterly Director’s Report, June 1992, marked “confidential,” in LT. The award was an Effie.

187
the company had trademarked
U.S. Patent and Trademark Office, registration no. 1,646,512, May 28, 1991.

188
“four clever ways”
The Tang ad was reported by the Center on Science in the Public Interest in its newsletter, 1990.

189
“To kids 6–12”
Kraft presentation to Philip Morris, February 26, 1990, in LT.

190
a few thoughts of their own
“Minutes, Corporate Products Committee Meeting, February 26, 1990,” in LT.

191
showing “excellent” results
Transcript, Philip Morris Annual Meeting of Stockholders, April 23, 1992, in LT.

192
Each of the major brands
Al Clausi interviews with author. The technical center is described in detail in a pamphlet, “Welcome to the General Foods Technical Center 20th Anniversary Open House,” General Foods, November 11, 1977.

193
fructose is much sweeter
Various Kraft and other food scientists to author. For a technical discussion of fructose and specifics on Kraft’s experimentation, see U.S. Patent No. 5,102,682, filed on April 7, 1992, Maurice Nasrallah, et al., on behalf of Kraft General Foods.

194
true power of fructose
John White, “The Role of Sugars in Foods:
Why Are They Added?” Added Sugars Conference, American Heart Association, May 2010.

195
“Fructose Team”
Philip Morris Product Development Symposium, December 5, 1990, in LT.

196
known as the “Patent King”
Fouad Saleeb to author; Bucher and Villines,
Greatest Thing Since Sliced Cheese
.

197
estimated that this move alone
Toni Nasrallah, “The Development of Taste/Cost Optimized Dry Mix Beverages,” Philip Morris Product Development Symposium, December 5, 1990, in LT.

198
Yale study made headlines
Jane Brody, “New Data on Sugar and Child Behavior,”
The New York Times
, May 10, 1990.

199
World Health Organization
I am grateful to Marion Nestle of New York University for being generous with her extensive files on this and other issues relating to nutrition policy and science. There was also widespread media coverage of the WHO proposal. “Commodities: WHO Proposal Worries Sugar Producers,”
Inter Press Service
, April 26, 1990.

200
He gave them a drug
Adam Drewnowski et al., “Naloxone, an Opiate Blocker, Reduced the Consumption of Sweet High-Fat Foods in Obese and Lean Female Binge Eaters,”
American Journal of Clinical Nutrition
61 (1995): 1206–1212.

201
experts now agree
Marion Nestle to author. For a fair-minded and detailed perspective from an industry consultant, see John White, “Straight Talk about High-Fructose Corn Syrup: What It Is and What It Ain’t,”
American Journal of Clinical Nutrition
88 (2008): 1716S–1721S; John White, “Misconceptions about High-Fructose Corn Syrup: Is It Uniquely Responsible for Obesity, Reactive Dicarbonyl Compounds, and Advanced Glycation Endproducts?”
Journal of Nutrition
, April 22, 2009.

202
pure fructose might be
K. L. Stanhope et al., “Consumption of Fructose and High Fructose Corn Syrup Increases Postprandial Triglycerides,
LDL-Cholesterol, and Apolipoprotein-B in Young Men and Women,”
Journal of Clinical Endocrinology and Metabolism
96, no. 10 (2011): 1596–1605.

203
for $155 million
“Contents for Briefing Book Annual Meeting 1992,” in LT. The document notes, “We agreed not to disclose the purchase price ($155,000,000).”

204
“staggering”
“A World of Growth in Store,” Philip Morris, 1995 annual report.

205
“Yes, you could”
Paul Halladay to author.

206
Eighteen days later
Kraft news release, January 26, 2007, and company officials to author.

207
sent consumption soaring
In its submission to the Effie Awards, Kraft said, “Capri Sun’s profit increased well beyond the 17.6% consumption increase, thanks to the double whammy of penetration and buy rate increases during a price hike.” Kraft won an Effie Award for this campaign.

208
Only two of the thirty-five
Stuart,
Kraft General Foods
.

209
had some strategies of its own
“Marketing Synergy,” 1989, in LT.

210
Bible told Kraft managers
Philip Morris Product Development Symposium, December 5, 1990, in LT.

211
they were back in front
Kraft Beverage Division presentation to Corporate Products Committee, June 24, 1996, in LT.

212
“The Beverage division”
“Minutes, Corporate Products Committee Meeting, June 24, 1996,” in LT.

213
“received extremely high scores”
Kraft Beverage Division presentation to Corporate Products Committee, June 24, 1996, in LT.

214
“revealed that African Americans”
Ibid.

215
“Consumers in these stores”
Ibid.

216
“Diabetics already represent”
Ibid.

217
Kraft went after a younger set
In response to my questions about this presentation, the company said, “Kraft is constantly evaluating the taste preferences of our consumers in order to deliver products that meet their varying preferences. As for advertising to tweens, we agree that food and beverage companies should voluntarily limit what they advertise to kids. That’s why, in 2005, we were the first company to change what we advertised to children under the age of 12. We stopped advertising to kids many of the foods and drinks they love, including Tang. And we were thrilled that many others in the industry followed our lead. Today, we advertise very few brands to children.” See
chapter 11
for more on Kraft’s efforts on nutrition.

218
“For Tang”
“Minutes, Corporate Products Committee Meeting, June 24, 1996,” in LT.

219
“an all-day affair”
Memos and agenda records, in LT.