9 Times Food and Beverage Companies Changed Their Slogans and It Failed Miserably
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If you’re trying to sell a product, it’s smart to give it a snappy slogan or motto, one that helps identify the product while also telling potential customers why they should buy it. These slogans for food and drink brands unfortunately fall into the latter category.
9 Times Food and Beverage Companies Changed Their Slogans and It Failed Miserably (Slideshow)
In the world of food and drink, the branding you establish around your company can make or break it. How is the package designed? What do the advertisements look like? What steps are taken to appeal to the target demographic? The cherry on top is the slogan, which in many cases is just as important as the name of the brand itself.
Think about the ones that have really worked. Wheaties: Breakfast of Champions. Maxwell House: Good to the Last Drop. Subway: Eat Fresh. These slogans have longevity. They’re short, to the point, and tell you a little something about what the brand’s goals are. Unfortunately, great slogans are hard to come by, and awful ones are a dime a dozen.
These brands most likely settled on these slogans out of desperation, because they certainly reek of it. Some failed because they inadvertently offended people, some failed because they were poor replacements for much better and more beloved slogans, and some failed because they were just awful. Read on for nine food and drink companies that probably should have given more thought to their new slogans before rolling them out.
Bud Light: Up for Whatever
In April 2015, Bud Light introduced a new slogan to correspond with a huge advertising push: “Up for whatever.” Tied together with the tagline “The perfect beer for removing ‘no’ from your vocabulary for the night,” it came across as incredibly tone deaf in a culture becoming more and more aware of the issue of sexual harassment on college campuses. Wrong slogan, wrong time.
Burger King was on to something good with their long-running slogan “Have it your way,” which emphasized the ability to customize your burgers. They inexplicably ditched it in May 2014, however, and replaced it with “Be your way,” which is essentially meaningless and has nothing whatsoever to do with Burger King or its food. “Self-expression is most important and it’s our differences that make us individuals instead of robots,” a spokesperson told The Associated Press in an attempt to explain it. Yeah, still not following.
Case Study : Red Bull Essay
[pic] FACULTY OF BUSINESS AND LAW MAITF VIETNAM ASSIGNMENT HAND-IN FORM I certify by my signature that this is my own work. The work has not, in whole or part, been presented elsewhere for assessment. Where material has been used from other sources it has been properly acknowledged and referenced. If this statement is untrue I acknowledge that I will have committed an assessment offence.
Student ID:77081201 Level of Study:MA Module Title:International Marketing Course Title:MA INTERNATIONAL TRADE AND FINANCE Module TutorJune Dennis Full text word count: 3,937 wordsStudent Name:Do Khac Huong Student Signature: __________________________________________ Date of Submission: Name of first marker:Mark: Name of second marker:Mark: 1. Introduction Red bull is a leading energy drink company in the world, with global sales of 3 million cans in 2006 accounting for 45% market share of the world energy drinks market. Since its foundation in 1984, Red Bull has made a significant expansion in international markets to over 130 countries and generated over €2.
6 billion in turnover throughout the world employing 3,900 employees globally.Red Bull devised an innovative marketing approach to mainly target at the young adult consumers seeking an energy boost. Red Bull targets at young adult consumer aged 16 to 29, young urban professionals and students. The market for energy drinks is characterised by the presence of specialised manufacturers as well as food and beverage giants. Key players in the marketplace include Pepsi, Coca-Cola, Danone, Hansen Beverage Company, Monarch Beverage Co. , Red Bull, Dark Dog, GlaxoSmithKline, Extreme Beverages, Taisho Pharmaceuticals and Otsuka Pharmaceuticals.In terms of market share, Gatorade and Red Bull lead the sports and energy drinks segments, respectively. Most of the soft drink multinationals (like Pepsi, Coca-Cola, Danone, GlaxoSmithKline) also cover the functional drinks market.
In the overall global soft drink market the Red Bull market share is small. According to Euromonitor it is 0. 8% in 2007. However, with the global sales of 3 billion cans in 2006 Red Bull reached a 45% market share of the world market in energy drinks. 2. International challengesThe 12C framework is used to identify and evaluate the key strategic challenges that Red Bull may face internationally in terms of functional drinks sector. The 12C framework consists of issues of country, channels, commitments, currency, communication, capacity to pay, caveats, contractual obligations, choices, consumption, concentration and culture/consumer behaviour. The 12C is a tool which is used to identify the constraints/bottlenecks when a firm enters a new international market.
The following part, each C will individually be used to evaluate the Red Bull strategies. . 1 Country Through the case study, banning from sales in countries such as Denmark and France or some certain states in Germany is a challenge to Red Bull market expansion strategies because of its unique ingredients. A rumour circulated that the taurine used came from bull’s testicles and Red Bull was liquid Viagra which gave the drink even more mystique.
Red Bull also faced many obstacles in gaining regulatory approval in several countries. Red Bull is functional drink so it is often controlled by regulations on food hygiene and safety in several countries.Some countries even use this regulation to protect their home companies doing the same business. The regulations may take time to get Red Bull into a new market or slowdown the process of market expansion in some countries or even in certain region. Red Bull used to face with the shortage of aluminium to produce cans in Europe, this leads to a fast drop of sales. 2. 2 Channels Red Bull identified its key growth strategy by increasing the international distribution. Red Bull uses network of local subsidiaries setup in key markets to manage distribution in any given region.
The subsidiaries are responsible for importing Red Bull from Red Bull GmbH in Austria and either setting up an independent distribution network or working with a partner such as in Australia where Red Bull Australia uses the Cadbury Schweppes’s distribution network. In this case, Red Bull Australia imports and sells on to Cadbury Schweppes which then sells to vendors in its network. Using an existing distribution network of a partner in certain countries helps Red Bull reduce quite a lot of distribution costs and quickly spread its sales in a new country.Red Bull uses its own way to set up the distribution network in the new markets by targeting small distributors who often become exclusively Red Bull distributors. Red Bull even hired teenagers and students, giving them vans to distribute the product. Small independent venues are also the first targets.
Red Bull would find the small bars, restaurants and stores and give them a small cooler from which to sell beverage. 2. 3 Commitments Barriers to Red Bull business can be placed in some countries. For instance, Denmark and France are countries where Red Bull is not allowed to sell its products.In some countries may set the barriers to prevent their home companies doing the same business by slowing down the process of granting the business licence to Red Bull. 2. 4 Currency Red Bull is selling their products in over 130 countries over the world.
Any change in the exchange rate in each country will result in the total revenue of Red Bull. Pricing also is influenced by changing in exchange rate in each country. The stability of currency in each country will help Red Bull design and manage its business efficiently.
2. 5 CommunicationRed Bull does not use the traditional advertising to enter a new market. Only after the product is in the market, Red Bull does the advertising serve as a reminder. Furthermore, Red Bull never uses print media because it is too dull and flat to express product. Television advertisements often are cartoon drawings using the “Red Bull gives you wings” slogan and are very carefully placed. Station and programming are carefully selected to maximise exposure to the target audience such as late night TV shows. Red Bull provides its product for consumption during long days of filming in Hollywood.
The company sponsors dozens of sport events, like the climbing of iced-down silos in lowa or kite sailing in Hawaii, as well as cultural events like break-dancing contests and rock music jam sessions. Red Bull sponsors some 500 athletes around the world. The local subsidiaries are responsible for local marketing content such as buzz marketing, local sponsorship and arranging media including TV, billboards and radio.
In addition to local marketing and advertising local subsidiaries also acquire marketing material from Red Bull BmbH and its exclusive advertiser, Kastner & Partner.Regarding to the cost of promotion, Red Bull spends relatively little in traditional print and TV advertising, instead of relying on sponsorship of extreme sports and giving away samples at local event. Red bull has invested heavily in building the brand. Red Bull spends about 30% of revenue on marketing while Coca – Cola spends 9%. 2. 6 Capacity to pay Pricing: Sales in key markets help drive the global positioning of the company, as well as providing the opportunity to sell Red Bull at a premium price over other brand.
A single can retails 2 euro which is up to five times the cost of branded soft drinks. The premium pricing is a feature of the energy drinks category. Since its launches the category has been positioned as providing product that not only refresh you, but give you energy and related brain power to make the most of your time. While it could never be said that energy drinks position themselves as healthy, which is the main reason why they can command a premium price.
The average price per litre for an energy drink across the world is US$5. 8 almost 4 times the average price of a litres of carbonates. The high price per litre of energy drink is attracting more competitors to join in this market which lead to the serious competition. Setting a high premium price can be an obstacle for Red Bull to expand to new market where the income per capita is low. In the new markets where soft drinks are popular at a low price and low income may cause difficulty for consumers to switch their consumption to new product at high price.
2. 7 Caveat Red Bull can be used with alcohol as a mixer.Cocaine was found in its ingredient and it may affect to Red Bull sale. This has been banned in some certain states in Germany and may be banned in other countries in the future. 2. 8 Contractual Obligation Red Bull is an energy drink so its products are subject to be controlled under regulations on food safety and security in many countries. As the beginning, Red Bull had to apply for a licence to sell in Austria. In each country, the differences in the regulation may allow Red Bull to sell its products or not.
For example Red Bull cola was banned from sales in some certain states in Germany.Red Bull has to follow the regulations, for example ingredient testing, brand registration…, in each market when it expands the sales in this market. The process of getting a licence to sell may take time and can loose the business opportunity in the market. 2. 9 Consumption Red Bull is sold as an energy drink to combat mental and physical fatigue.
In many markets, United Kingdom being a good example, the volume sold through on-premise channels is heavily impacted by energy drinks being sold as mixers with spirits, primarily vodka.Red Bull has a big market size accounting for 45%. The consumption of energy drinks is different from each regions and countries.
For example, in Western Europe, and the United Kingdom leads the way in volume terms, accounting for nearly half of the energy drinks consumed in the region. However, the Republic of Ireland and Austria have a higher per capita consumption figure, with Irish consumers drinking an average of 8 litres of energy drinks per year, hugely more than the regional average of 1. 6 litres per capita.Higher per capita figures in Austria can perhaps be explained by the fact that Red Bull originated there. The higher consumption per capita in Ireland and Austria where other energy originated there, is a fundamental clue for further potential of energy consumption in Western Europe and other regions or countries in the world. This is a challenge for Red Bull to design a proper marketing strategy to exploit these markets efficiently and encourage the consumption per capita in each regions or country. Asia Pacific is a potential market where Red Bull can focus on increasing the consumption per capita.
Emerging marketplaces like Indonesia, Vietnam and South Korea are potential markets with large market size, high population and young consumers. 2. 10 Choices The history of Red Bull has reported that Red Bull had to compete with Flying Horse and took Red Bull 4 years to reclaim the top spot in German market. Dozens of copycat competitors came on the market when Red Bull advancing sales spread in Europe. The market for energy drinks is characterised by the presence of specialised manufacturers as well as food and beverage giants. The key players in marketplace include Pepsi, Coca –Cola, Danone, Hansen beverage Co. Monarch Beverage Co. , Red Bull, Dark Dog, GlaxoSmithKline, Extreme beverages, Taiso Pharmaceuticals and Otsuka Pharmaceuticals.
In term of market share, Gatorate and Red Bull leads the sports and energy drinks segments respectively. Most of the soft drink multinationals also covers the functional drinks markets. Red Bull has its strengths in sports and energy drinks market share (45% market share of the world market in energy drinks). However, Red Bull is a young company and emerging in the functional drinks market. Red Bull product brands are limited and less competitive to beverage giants like Pepsi and Coca-cola. .
11 Concentration The functional drinks market consists of energy drinks, sport drinks and pharmaceutical drinks. The energy drinks generated 42,4% of total revenue of functional drinks. The market volume forecast reported that the functional drinks market can reach 15. 8 billion litres by the year 2013 in comparison with 10.
9 billion litres in 2008. Red Bull is selling energy drinks so that there is a challenge that Red Bull has to keep and gradually develop its stand in the functional drinks segments as Red Bull doesn’t have all functional drink products.Red Bull has been presenting in over 130 countries in over the world. However, Red Bull market share in Asia is 2,8 % while the total value of Asia Pacific functional drinks market accounts for 43% of global value. Red Bull targets their potential customers aged 16-19, young urban professionals, club goers and students and focus on traditional customers like truck drivers. The market segment of young people in the Asia pacific area is very potential because the population is the highest in the world and the young population percentage is very high.Asia pacific will become a prosperous market and also a challenge for Red Bull.
2. 12 Culture/consumer behaviour The first marketing trails of Red Bull failed miserably. The respondents did not like the taste and colour or the “simulates mind body’s concept”. In this case, many companies would have given up their plan or reformulated to make it more appealing to the consumers. Most of the consumers are young generation and club-goers.
With the characteristics of this targeted consumers will enable Red Bull to utilize marketing strategy described as word of mouth, viral marketing, underground and grassroots. . Should Red Bull change or retain current product mix In the beginning of 2003, Red Bull launched sugar free version. The drink taste of citrus and herds and is commonly used as a mixer in alcoholic drinks such as Red Bull and Vodka or as a base ingredient in the famous Jagerbomb. In April 2004, Red Bull introduced Red Bull Cola, described as 100% from natural sources, unlike those of Coca Cola, ingredients of Red Bull product are displayed on the can. Initially, the product was launched in Austria, Switzerland, UK, Italy, Ireland, US, Belgium and Luxembourg.Shortly, the cola product was banned in certain states of Germany because it was found to contain traces of cocaine.
This brand extension has received a mixed reaction from industry observers. Red Bull was described as a copycat product and did not bring new consumer benefits or represent a new product category. The cola’s strong & natural positioning could even be seen to represent a natural alternative to the core product. The company remains currently committed to the product. Red Bull also introduced the Red Bull energy shot in May 2009.This product has the same ingredients as the core products but it is more highly concentrated to give the same amount of energy as the 250 ml original. It is packaged in a hard plastic 59ml bottle that shares the same design features as the canned products. Its positioning is relevant both to the core Red Bull consumers and to the athletes.
This product can be seen to bridge the gap between two principal of functional energy drinks and sports drinks. First launched in the US in May 2009, and then entered the UK market in September 2009.Red Bull has introduced three new brands of Red Bull sugar free version, Red Bull Cola and Red Bull energy shot since 2003 and currently committed with these products.
This somewhat tells the success of product mix policies. So far, there has been no reason that Red Bull should change its current product mix policies. The product mix helps Red Bull to approach different types of consumers who have different preference/taste, to give consumers more choices, to target at different markets like developed countries and developing countries and to prompt its sales in international market.By product mix policies, Red Bull can quickly accelerate the domination of energy drinks market.
The development of different brands also means to support the recycle of core product (prolong the core product lifecycle). For example, Red Bull has changed the packaging from the core product to create the Red Bull energy shot and promoted new use of product by creating a free-sugar version as a mixer with alcohol. Product mix allows Red Bull to reduce marketing costs by using the same distribution network, sharing advertisement with core product.Using product mix also allows Red Bull to utilize all existing resources efficiently through making use of existing production line, research & development activities and human resources. In terms of competition power, the product mix policy helps Red Bull to consolidate its market segment, increase revenue then result in a quickly financial accumulation. In general, Red Bull should retain its current product mix. This is a right way that helps Red Bull become a leading energy drinks player and prompt its domination in the world functional drinks market.
. Identify and evaluate the company’s mode of market entry. What alternative strategies are relevant and why? Red Bull makes no difference in its entry mode using for the individual foreign market. This entry mode is called “Naive rule”. Red Bull has used type of the Hierarchical modes with foreign sales subsidiary mode. In this mode, the sales function is transferred to the foreign market. The subsidiary is responsible for its activities including importing and supplying in its region.
Red Bull subsidiaries will provide complete control of sales function where they are responsible for. Red Bull has a well developed net work of local subsidiaries set up in key markets to manage the distribution in any given region. These subsidiaries are responsible for importing Red Bull from Red Bull GmBH in Austria and either setting up an independent distribution network or working with partners. Red Bull GmbH will keep its marketing function at Austria. The local subsidiaries are also responsible for local marketing content such as buzz marketing.
The foreign sales subsidiaries import product from Red Bull GmbH in Austria at a price and sell Red Bull in local market so Red Bull may use the way of intra company transfer pricing to evade some taxes in the foreign countries. By setting up the sales subsidiaries in foreign countries, Red Bull may take advantage of tax in the foreign market where income tax is low. However the major reason for choosing sales subsidiaries is the possibility of transferring autonomy and responsibility to these sub-units. Red Bull can be closer to its customers. Suggested alternative strategies:Transportation costs, trade tariffs and non-trade tariffs can be factors that hinder the expansion of Red Bull to international markets. An alternative strategy, that may be relevant to Red Bull, is setting up production subsidiaries in combination with sales in given region.
Red Bull’s potential international markets in Asia like Japan, Indonesia, Thailand, South Korea and Vietnam. In developing countries, sales subsidiaries may be perceived as taking money out of the country and contributing nothing of value to the host country in which they are based.In those countries, Red Bull should not keep the sales subsidiaries for a long time.
Red Bull should change their entry mode by setting up the manufacturing or production base. Setting up production base helps Red Bull reduce transportation costs, avoid trade tariffs, avail lower local labour cost and other obstacles. The host country, where Red Bull is, can perceive Red Bull’s commitment and long term development if Red Bull sets up production base in their country. Red Bull may also receive tax incentive or preferential investment policies from the host countries.Red Bull can also release the pressure of controlling sales and production from the head office by decentralising to the country level. The business strategy can be adjusted to fit local context. Red Bull should establish production bases in the countries of large population and high percentage of youngsters like China, Indonesia, Thailand and Vietnam. 5.
Evaluate the company’s approaches to promotion and distribution and assess to what extent these approaches represent sources of sustainable competitive advantageMany products get into the public by doing large advertisement campaigns in newspaper and TV, tasting and giving away but Red Bull uses its own ways to get its products and brand into the public. Red Bull only does the advertisement when its products already existed in the market and the advertising acts as a reminder to the consumers. Red Bull never uses print media because it is dull and flat to express the product. Television advertisements are often cartoon drawings using the slogan “Red Bull gives you wiiings”.Every year the company sponsors dozen of extreme sporting events, like climbing of iced-down silos in Iowa or kite sailing in Hawaii, as well as cultural events. Red Bull sponsors some 500 athletes around the world. The promotion activities are also conducted by the local subsidiaries.
Stunts 5 - 10
Company: D.C. Comics
Year of the Stunt: 1993
The Stunt: Whether we're talking art or not, D.C. Comics is--yes--a business, generating approximately $40 billion in revenue each year. So it's not surprising that many people felt that releasing a comic book called The Death of Superman was a marketing stunt, given that nobody with half a brain really, truly thought this company was going to stop producing its most popular title, a hit since the Superman character was born in 1938. (According to a recent estimate published in Entertainment Weekly, since that time, Superman has generated some $4 billion in revenue.)
What Happened Next: The news media covered this development extensively, not quite as if a head of state had passed away, but seriously enough, and the comic book featuring his death sold out on the first day. As more issues were published, they kept selling out. In fact, millions of readers purchased not just The Death of Superman issue but numerous others that followed, including Funeral for a Friend and eventually--who would have guessed?--The Return of Superman.
Lesson Learned: If you have a popular product but feel that sales are stagnant or your customers' excitement toward the brand is weaning, it may not be a bad idea to tinker with it. "Well, not so fast," you're probably thinking. "Jump into a time machine and see how people felt about New Coke in 1985." But that wasn't a marketing stunt--it was a colossal business mistake that offered numerous marketing challenges, which Coke eventually conquered, by reverting back to its original formula. Businesses revamp their products all the time, whether it's coming out with a "new and improved" formula that truly is new and improved (unlike Coca-Cola's 1985 misfire). But more often than not, instead of replacing the product, companies now just add new varieties to their line. What Superman and other beloved brands can teach us is that if you can create some drama around your product--and tug at your consumers' emotions--you may just find that your potential for bringing in a profit is, well, super.
Company: Maui Beverages
Year of the Stunt: 2005
The Stunt: Because Maui Beverages isn't very well known, their PR department suggested something splashy to let people know how fun this company was. First, they changed the founding executive titles--from Chief Executive Officer to Chief Entertainment Officer--and the Chief Technology Officer to Chief Tasting Officer--giving their company a more lighthearted appeal. Then they set out to prove that they really were fun. Maui Beverages' PR company sent the founders, Mark Mahoney and Al Williams, to be hosts at an annual conference of food and beverage trade writers. They threw a huge party with a Jimmy Buffett-type "Caribbean island" theme and gave out lots of free sunglasses--as well as free samples of their product.
What Happened Next: Sure enough, after the title changes and the party, the company started getting a lot of positive press, which is directly affecting their bottom line: Their annual sales have gone from $6 million in 2004 to a projected $10 million by the end of this year.
Lesson Learned: A marketing stunt doesn't have to be something that nobody's ever done before, but you should "keep it fresh and exciting," says founder Mahoney. Maui Beverages wasn't the first company to throw a party--or to throw it for a group of people who could help get the word out about them. But what they did was creative and a much better strategy than hoping your company's silent and under-the-radar personality will somehow get people to notice you anyway.
Company: Del Monte Foods
Year of the Stunt: 2006
The Stunt: This ongoing stunt is part of a larger trend called advertainment--pure entertainment wrapped around a product with hopes of convincing consumers to purchase said product. Del Monte is currently airing a reality show for cats on Animal Planet. They've put up a Meow Mix House with webcams for people to look in and watch these cats in one room--from 10 shelters around the country--where they hang out and have various visitors (think Big Brother, but for felines). Every Friday, on Animal Planet, Meow Mix announces which cat has been "voted out," but in this case, that means being put up for adoption and receiving a year's supply of Meow Mix.
What Happened Next: So far, so good. Meow Mix's marketing director has been doing tons of interviews, and the brand is being associated with a worthy cause: cat adoption.
The Lesson: If you're going to look for inspiration for a marketing idea, why not borrow from popular culture?
Year of the Stunt: 1999
The Stunt: Half.com, a retail website known for having sharply discounted items, paid Halfway, Oregon, to adopt the name Half.com for their town for a year. In exchange, Halfway received $100,000, 20 new computers for the local school and other financial subsidies.
What Happened Next: The media picked up on it, Half.com became very well known, and in 2000, five months after the IPO, eBay bought the company for $300 million. Halfway, Oregon, was a little less fortunate. According to Halfway, Oregon's official website, "Half.com made many promises. Some of which were honored and others not."
The Lesson: Creativity works, and you can apparently talk anyone into anything, if you show them the money. It also helped that Halfway, Oregon, felt it was a winning situation for them, too, beyond the monetary reward: They were the first dotcom town in the nation--though not the first community to change their name to a brand name. That distinction goes to Truth or Consequences, New Mexico, which changed its name from Hot Springs in 1950, when radio personality Ralph Edwards was hosting a popular radio show called "Truth or Consequences." He'd said he wished a town loved the show enough to rename itself after the program--and if one would, he'd air a live program from the community. Hot Springs, anxious to shed its name, anyway, since people confused it with the town in Arkansas, jumped at the chance.
Companies: PokerShare.com and CasinoShare.com
Year of the Stunt: 2006
The Stunt: Another casino, unable to advertise in traditional media another amazing marketing stunt. Over Memorial Day weekend this year, with gas prices hovering around $3 a gallon, PokerShare.com and its newly launched CasinoShare.com gave away more than 8,000 gallons of gasoline to hundreds of New Yorkers. In a long, snaking line of traffic, New Yorkers lined up to receive $40 of free gas while free food was distributed and music blared.
What Happened Next: Before the morning rush hour had ended, the New York City Police Department shut down the stunt because the lines were wrecking havoc with traffic flow. Many people--including off-duty police officers and government officials--left empty-handed. But PokerShare.com and CasinoShare.com could hardly call their efforts a failure. The free gas stunt, conceived by Popular Culture PR, was popular enough to be held again in Los Angeles several weeks later.
Lesson Learned: Generosity is a selling point in a marketing stunt, but you have to tap into human nature and, if possible, current events. If the same company had given away $40 in PokerShare.com gift certificates, it's likely the media wouldn't even have noticed since coupon giveaways aren't exactly a breaking news item. And if PokerShare had handed out $40 in cash to just anybody on the street, they might have warranted a story from some local media outlet but, save a mugging or mobs, probably not generated a mention on the national evening news. But free gas when the headlines these days are all about the rising price of gas? This marketing gimmick wasn't just covered by the evening news, but also by Fox News, The New York Times, the Washington Post and other media outlets, reaching more than 9 million people.
Advertising is central to the marketing of the US food supply. Marketing is defined as an activity an organization engages in to facilitate an exchange between itself and its customers/clients.  Advertising is one type of marketing activity.  The US food system is the second largest advertiser in the American economy (the first being the automotive industry) and is a leading buyer of television, newspaper, magazine, billboard, and radio advertisements.  The reasons that the food advertising market is so large include the following: 1) food captures 12.5% of US consumer spending and so there is vigorous competition, 2) food is a repeat-purchase item and consumers' views can change quickly, and 3) food is one of the most highly branded items, which lends itself to major advertising.  Over 80% of US grocery products are branded. 
Advertising expenditures for US food products were $7.3 billion in 1999.  In 1997, the US advertising expenditures for various foods were: breakfast cereals – $792 million candy and gum – $765 million soft drinks – $549 million and snacks – $330 million. Total expenditure for confectionery and snacks was $1 billion.  In contrast, during the same year, the US Department of Agriculture spent $333 million on nutrition education, evaluation, and demonstrations.  Advertising budgets for specific brands of foods, beverages, and fast food restaurants are also revealing (Table 1). It is unclear how much money is spent on food advertising specifically directed at children and adolescents, but estimates are available for overall youth-oriented advertising in the US. It is estimated that over $1 billion is spent on media advertising to children, mostly on television.  In addition, over $4.5 billion is spent on youth-targeted promotions such as premiums, sampling, coupons, contests, and sweepstakes. About $2 billion is spent on youth-targeted public relations, such as broadcast and print publicity, event marketing, and school relations. In addition, roughly $3 billion is spent on packaging especially designed for children. 
The heavy marketing directed towards youth, especially young children, appears to be driven largely by the desire to develop and build brand awareness/recognition, brand preference and brand loyalty. Marketers believe that brand preference begins before purchase behavior does.  Brand preference in children appears to be related to two major factors: 1) children's positive experiences with a brand, and 2) parents liking that brand.  Thus, marketers are intensifying their efforts to develop brand relationships with young consumers, beginning when they are toddlers.  Marketers know that toddlers and preschool children have considerable purchase influence and can successfully negotiate purchases through what marketers term the "nag factor" or "pester power".  A child's first request for a product occurs at about 24 months of age and 75% of the time this request occurs in a supermarket. The most requested first in-store request is breakfast cereal (47%), followed by snacks and beverages (30%) and toys (21%). Requests are often for the brand name product.  Isler, et al, examined the location, types, and frequency of products that children ages 3-11 requested of their mothers over 30 days. Food accounted for over half (54%) of total requests made by children and included snack/dessert foods (24%), candy (17%), cereal (7%), fast foods (4%), and fruit and vegetables (3%).  Almost two-thirds (65%) of all cereal requests were for presweetened cereals. Preschool children made more requests than the older elementary school children. Parents honored children's requests for food about 50% of the time, soft drinks (60%), cookies (50%), and candy (45%).  These findings show that food advertisers spend large amounts of money targeting children, in an attempt to build brand loyalty and to persuade them to desire a particular food product, starting when they are toddlers.
Central to any discussion on food advertising to children is the nature of children's comprehension of advertising. Numerous studies have documented that young children have little understanding of the persuasive intent of advertising. [24, 31, 32] Prior to age 7 or 8 years, children tend to view advertising as fun, entertaining, and unbiased information.  An understanding of advertising intent usually develops by the time most children are 7-8 years old. Because of their level of cognitive development, children under 8 years of age are viewed by many child development researchers as a population vulnerable to misleading advertising.  The heavy marketing of high fat, high sugar foods to this age group can be viewed as exploitative because young children do not understand that commercials are designed to sell products and they do not yet possess the cognitive ability to comprehend or evaluate the advertising. Preteens, from ages 8-10 years, possess the cognitive ability to process advertisements but do not necessarily do so.  From early adolescence (11-12 years), children's thinking becomes more multidimensional, involving abstract as well as concrete thought. Adolescents still can be persuaded by the emotive messages of advertising, which play into their developmental concerns related to appearance, self-identity, belonging, and sexuality.
Big Food in health drive to keep market share
"A Mars a day", ran the advertising slogan for decades. Now the US manufacturer of the eponymous chocolate bar is telling consumers to eat some of its foods only once a week.
The family-controlled group said this month that people should limit themselves to eating its high-calorie Dolmio pesto and lasagne sauces "occasionally".
It is not alone. Switzerland's Nestlé, the world's biggest food group, exhorts customers to eat one slice only of its (six-slice) DiGiorno pizzas and load their plates with salad.
"Small and emerging brands are stealing market share." Getty Images
These developments are a significant change in an industry better known for super-sizing, rather than super- restraint. Going out of your way to sell less does not sound like a promising way to make more money. But they come as lawmakers and campaigners urge action over diet to tackle health concerns including the rise in obesity.
The World Health Organisation says people should eat less sugar and last month the UK slapped a tax on sugary beverages. In the US the Food and Drug Administration is expected to issue new guidelines urging people to lower their salt intake. Alongside such efforts to encourage healthier eating habits, Big Food is having to take drastic measures to appeal to a new generation of demanding customers who choose, increasingly, to buy from smaller upstart companies. It is this, say analysts, that is driving much of the change.
"Consumers - especially younger ones - are shunning traditional processed foods in search of simpler, organic, natural, fresher, less processed and more personalised options," says Nicholas Fereday, an analyst at Rabobank. "Small and emerging brands are stealing market share."
In the US, $US18 billion in sales shifted from large packaged goods companies to smaller businesses - those with annual revenues of less than $US5 billion - between 2011 and 2015, according to the Boston Consulting Group. That equates to a loss in market share of 2.7 percentage points for the big companies during the period.
In the past month alone, several companies have announced plans to reduce or eliminate ingredients such as artificial flavours and preservatives, sugar and salt. Nestlé said last week that its Dreyer's Ice Cream subsidiary has reformulated the recipes of many of its products to remove artificial flavours and high fructose corn syrup, blamed by some campaigners for a jump in obesity.
Coca-Cola also said it would launch its biggest marketing campaign in the UK in a decade. It is to spend $US10 million on Coca-Cola Zero to make the taste more like original Coke and rename it Coca-Cola Zero Sugar, after finding that many consumers did not realise the zero meant no sugar. The move appears to have been a first response to the UK's "sugar tax" rather than quenching consumers' thirst for natural ingredients. The new Coke, for instance, will still contain aspartame and acesulfame K sweeteners.
"They [the big food and beverage companies] are all scrambling. It feels like people are falling over themselves, there's much more activity going on," says Alexia Howard, an analyst at Bernstein Research, of efforts to address health concerns about ingredients.
One of the greatest challenges for Big Food in reformulating products lies in maintaining the same taste and texture with fewer unhealthy ingredients.
Fiona Dawson, global president of Mars food and drinks, says its target of reducing sodium by 20 per cent from its foods - on top of a 25 per cent reduction already achieved - will take five years. "We have to be careful to move consumers' palates, which is why it has to be done gradually," she says.
When Mondelez launched a Cadbury Highlights chocolate bar with no added sugar some years ago, the product failed because consumers said the chocolate did not melt warmly in the mouth.
Kraft Heinz has had more success in finding a replacement for the artificial flavouring in its Mac & Cheese, one of its best- known products. After three years of research, it eventually chose turmeric, annatto and paprika. But instead of advertising the changes, the reformulated product was quietly introduced in December last year. The company says that "almost nobody noticed" and it has since sold about 100 million packets.
Arthur Reeves, an analyst at Société Générale, says keeping quiet was "a neat method to try and minimise the flood of complaints other food companies have had to face when they have changed recipes - and the company is now advertising the change on front of pack".
That is a high-risk strategy, says Lynn Dornblaser, director of innovation and insight at Mintel, the market research group. "A company cannot pull that stunt more than once, otherwise they risk losing consumer trust - customers will start wondering what else they've changed without telling them," she says, adding Mars' decision to refrain from trying to change some of its foods "is a very smart move in being transparent".
Ms Dawson says that unhealthy fats, sugar or sodium will be reduced in more than 90 per cent of Mars' foods - excluding chocolates - which the company argues that consumers realise is an occasional indulgence. But Ms Dornblaser points out the move to "occasional" labelling on pasta sauces is not as bold as it seems, since "in the UK, only 4 per cent of consumers eat pasta sauce more than once a week".
When it comes to pizza, Nestlé's approach appears, at least in part, based on the idea of better to sell some pizza, than risk selling none at all. Its Pizza Portion Guide is aimed at "helping people to eat a healthier diet without necessarily making certain foods off limits".
David Katz, founding director of Yale University's Yale-Griffin Prevention Research Centre, challenges the idea that reformulating foods is about making them "meaningfully" healthier. He says "there are exceptions, of course . but more often than not, [companies] have made them less nutritious".
He adds that food manufacturers need to help consumers develop a taste for healthier products. "Taste buds prefer what they are used to. Food companies have played a central role in getting American taste buds used to . junk. So, that's what many people prefer. But that process can be reverse engineered. We can undergo taste bud rehab."
The Extraordinary Science of Addictive Junk Food
On the evening of April 8, 1999, a long line of Town Cars and taxis pulled up to the Minneapolis headquarters of Pillsbury and discharged 11 men who controlled America’s largest food companies. Nestlé was in attendance, as were Kraft and Nabisco, General Mills and Procter & Gamble, Coca-Cola and Mars. Rivals any other day, the C.E.O.’s and company presidents had come together for a rare, private meeting. On the agenda was one item: the emerging obesity epidemic and how to deal with it. While the atmosphere was cordial, the men assembled were hardly friends. Their stature was defined by their skill in fighting one another for what they called “stomach share” — the amount of digestive space that any one company’s brand can grab from the competition.
James Behnke, a 55-year-old executive at Pillsbury, greeted the men as they arrived. He was anxious but also hopeful about the plan that he and a few other food-company executives had devised to engage the C.E.O.’s on America’s growing weight problem. “We were very concerned, and rightfully so, that obesity was becoming a major issue,” Behnke recalled. “People were starting to talk about sugar taxes, and there was a lot of pressure on food companies.” Getting the company chiefs in the same room to talk about anything, much less a sensitive issue like this, was a tricky business, so Behnke and his fellow organizers had scripted the meeting carefully, honing the message to its barest essentials. “C.E.O.’s in the food industry are typically not technical guys, and they’re uncomfortable going to meetings where technical people talk in technical terms about technical things,” Behnke said. “They don’t want to be embarrassed. They don’t want to make commitments. They want to maintain their aloofness and autonomy.”
A chemist by training with a doctoral degree in food science, Behnke became Pillsbury’s chief technical officer in 1979 and was instrumental in creating a long line of hit products, including microwaveable popcorn. He deeply admired Pillsbury but in recent years had grown troubled by pictures of obese children suffering from diabetes and the earliest signs of hypertension and heart disease. In the months leading up to the C.E.O. meeting, he was engaged in conversation with a group of food-science experts who were painting an increasingly grim picture of the public’s ability to cope with the industry’s formulations — from the body’s fragile controls on overeating to the hidden power of some processed foods to make people feel hungrier still. It was time, he and a handful of others felt, to warn the C.E.O.’s that their companies may have gone too far in creating and marketing products that posed the greatest health concerns.
The discussion took place in Pillsbury’s auditorium. The first speaker was a vice president of Kraft named Michael Mudd. “I very much appreciate this opportunity to talk to you about childhood obesity and the growing challenge it presents for us all,” Mudd began. “Let me say right at the start, this is not an easy subject. There are no easy answers — for what the public health community must do to bring this problem under control or for what the industry should do as others seek to hold it accountable for what has happened. But this much is clear: For those of us who’ve looked hard at this issue, whether they’re public health professionals or staff specialists in your own companies, we feel sure that the one thing we shouldn’t do is nothing.”
As he spoke, Mudd clicked through a deck of slides — 114 in all — projected on a large screen behind him. The figures were staggering. More than half of American adults were now considered overweight, with nearly one-quarter of the adult population — 40 million people — clinically defined as obese. Among children, the rates had more than doubled since 1980, and the number of kids considered obese had shot past 12 million. (This was still only 1999 the nation’s obesity rates would climb much higher.) Food manufacturers were now being blamed for the problem from all sides — academia, the Centers for Disease Control and Prevention, the American Heart Association and the American Cancer Society. The secretary of agriculture, over whom the industry had long held sway, had recently called obesity a “national epidemic.”
Mudd then did the unthinkable. He drew a connection to the last thing in the world the C.E.O.’s wanted linked to their products: cigarettes. First came a quote from a Yale University professor of psychology and public health, Kelly Brownell, who was an especially vocal proponent of the view that the processed-food industry should be seen as a public health menace: “As a culture, we’ve become upset by the tobacco companies advertising to children, but we sit idly by while the food companies do the very same thing. And we could make a claim that the toll taken on the public health by a poor diet rivals that taken by tobacco.”
“If anyone in the food industry ever doubted there was a slippery slope out there,” Mudd said, “I imagine they are beginning to experience a distinct sliding sensation right about now.”
Mudd then presented the plan he and others had devised to address the obesity problem. Merely getting the executives to acknowledge some culpability was an important first step, he knew, so his plan would start off with a small but crucial move: the industry should use the expertise of scientists — its own and others — to gain a deeper understanding of what was driving Americans to overeat. Once this was achieved, the effort could unfold on several fronts. To be sure, there would be no getting around the role that packaged foods and drinks play in overconsumption. They would have to pull back on their use of salt, sugar and fat, perhaps by imposing industrywide limits. But it wasn’t just a matter of these three ingredients the schemes they used to advertise and market their products were critical, too. Mudd proposed creating a “code to guide the nutritional aspects of food marketing, especially to children.”
“We are saying that the industry should make a sincere effort to be part of the solution,” Mudd concluded. “And that by doing so, we can help to defuse the criticism that’s building against us.”
What happened next was not written down. But according to three participants, when Mudd stopped talking, the one C.E.O. whose recent exploits in the grocery store had awed the rest of the industry stood up to speak. His name was Stephen Sanger, and he was also the person — as head of General Mills — who had the most to lose when it came to dealing with obesity. Under his leadership, General Mills had overtaken not just the cereal aisle but other sections of the grocery store. The company’s Yoplait brand had transformed traditional unsweetened breakfast yogurt into a veritable dessert. It now had twice as much sugar per serving as General Mills’ marshmallow cereal Lucky Charms. And yet, because of yogurt’s well-tended image as a wholesome snack, sales of Yoplait were soaring, with annual revenue topping $500 million. Emboldened by the success, the company’s development wing pushed even harder, inventing a Yoplait variation that came in a squeezable tube — perfect for kids. They called it Go-Gurt and rolled it out nationally in the weeks before the C.E.O. meeting. (By year’s end, it would hit $100 million in sales.)
According to the sources I spoke with, Sanger began by reminding the group that consumers were “fickle.” (Sanger declined to be interviewed.) Sometimes they worried about sugar, other times fat. General Mills, he said, acted responsibly to both the public and shareholders by offering products to satisfy dieters and other concerned shoppers, from low sugar to added whole grains. But most often, he said, people bought what they liked, and they liked what tasted good. “Don’t talk to me about nutrition,” he reportedly said, taking on the voice of the typical consumer. “Talk to me about taste, and if this stuff tastes better, don’t run around trying to sell stuff that doesn’t taste good.”
To react to the critics, Sanger said, would jeopardize the sanctity of the recipes that had made his products so successful. General Mills would not pull back. He would push his people onward, and he urged his peers to do the same. Sanger’s response effectively ended the meeting.
“What can I say?” James Behnke told me years later. “It didn’t work. These guys weren’t as receptive as we thought they would be.” Behnke chose his words deliberately. He wanted to be fair. “Sanger was trying to say, ‘Look, we’re not going to screw around with the company jewels here and change the formulations because a bunch of guys in white coats are worried about obesity.’ ”
The meeting was remarkable, first, for the insider admissions of guilt. But I was also struck by how prescient the organizers of the sit-down had been. Today, one in three adults is considered clinically obese, along with one in five kids, and 24 million Americans are afflicted by type 2 diabetes, often caused by poor diet, with another 79 million people having pre-diabetes. Even gout, a painful form of arthritis once known as “the rich man’s disease” for its associations with gluttony, now afflicts eight million Americans.
The public and the food companies have known for decades now — or at the very least since this meeting — that sugary, salty, fatty foods are not good for us in the quantities that we consume them. So why are the diabetes and obesity and hypertension numbers still spiraling out of control? It’s not just a matter of poor willpower on the part of the consumer and a give-the-people-what-they-want attitude on the part of the food manufacturers. What I found, over four years of research and reporting, was a conscious effort — taking place in labs and marketing meetings and grocery-store aisles — to get people hooked on foods that are convenient and inexpensive. I talked to more than 300 people in or formerly employed by the processed-food industry, from scientists to marketers to C.E.O.’s. Some were willing whistle-blowers, while others spoke reluctantly when presented with some of the thousands of pages of secret memos that I obtained from inside the food industry’s operations. What follows is a series of small case studies of a handful of characters whose work then, and perspective now, sheds light on how the foods are created and sold to people who, while not powerless, are extremely vulnerable to the intensity of these companies’ industrial formulations and selling campaigns.
I. ‘In This Field, I’m a Game Changer.’
John Lennon couldn’t find it in England, so he had cases of it shipped from New York to fuel the “Imagine” sessions. The Beach Boys, ZZ Top and Cher all stipulated in their contract riders that it be put in their dressing rooms when they toured. Hillary Clinton asked for it when she traveled as first lady, and ever after her hotel suites were dutifully stocked.
What they all wanted was Dr Pepper, which until 2001 occupied a comfortable third-place spot in the soda aisle behind Coca-Cola and Pepsi. But then a flood of spinoffs from the two soda giants showed up on the shelves — lemons and limes, vanillas and coffees, raspberries and oranges, whites and blues and clears — what in food-industry lingo are known as “line extensions,” and Dr Pepper started to lose its market share.
Responding to this pressure, Cadbury Schweppes created its first spinoff, other than a diet version, in the soda’s 115-year history, a bright red soda with a very un-Dr Pepper name: Red Fusion. “If we are to re-establish Dr Pepper back to its historic growth rates, we have to add more excitement,” the company’s president, Jack Kilduff, said. One particularly promising market, Kilduff pointed out, was the “rapidly growing Hispanic and African-American communities.”
But consumers hated Red Fusion. “Dr Pepper is my all-time favorite drink, so I was curious about the Red Fusion,” a California mother of three wrote on a blog to warn other Peppers away. “It’s disgusting. Gagging. Never again.”
Stung by the rejection, Cadbury Schweppes in 2004 turned to a food-industry legend named Howard Moskowitz. Moskowitz, who studied mathematics and holds a Ph.D. in experimental psychology from Harvard, runs a consulting firm in White Plains, where for more than three decades he has “optimized” a variety of products for Campbell Soup, General Foods, Kraft and PepsiCo. “I’ve optimized soups,” Moskowitz told me. “I’ve optimized pizzas. I’ve optimized salad dressings and pickles. In this field, I’m a game changer.”
In the process of product optimization, food engineers alter a litany of variables with the sole intent of finding the most perfect version (or versions) of a product. Ordinary consumers are paid to spend hours sitting in rooms where they touch, feel, sip, smell, swirl and taste whatever product is in question. Their opinions are dumped into a computer, and the data are sifted and sorted through a statistical method called conjoint analysis, which determines what features will be most attractive to consumers. Moskowitz likes to imagine that his computer is divided into silos, in which each of the attributes is stacked. But it’s not simply a matter of comparing Color 23 with Color 24. In the most complicated projects, Color 23 must be combined with Syrup 11 and Packaging 6, and on and on, in seemingly infinite combinations. Even for jobs in which the only concern is taste and the variables are limited to the ingredients, endless charts and graphs will come spewing out of Moskowitz’s computer. “The mathematical model maps out the ingredients to the sensory perceptions these ingredients create,” he told me, “so I can just dial a new product. This is the engineering approach.”
Moskowitz’s work on Prego spaghetti sauce was memorialized in a 2004 presentation by the author Malcolm Gladwell at the TED conference in Monterey, Calif.: “After . . . months and months, he had a mountain of data about how the American people feel about spaghetti sauce. . . . And sure enough, if you sit down and you analyze all this data on spaghetti sauce, you realize that all Americans fall into one of three groups. There are people who like their spaghetti sauce plain. There are people who like their spaghetti sauce spicy. And there are people who like it extra-chunky. And of those three facts, the third one was the most significant, because at the time, in the early 1980s, if you went to a supermarket, you would not find extra-chunky spaghetti sauce. And Prego turned to Howard, and they said, ‘Are you telling me that one-third of Americans crave extra-chunky spaghetti sauce, and yet no one is servicing their needs?’ And he said, ‘Yes.’ And Prego then went back and completely reformulated their spaghetti sauce and came out with a line of extra-chunky that immediately and completely took over the spaghetti-sauce business in this country. . . . That is Howard’s gift to the American people. . . . He fundamentally changed the way the food industry thinks about making you happy.”
Well, yes and no. One thing Gladwell didn’t mention is that the food industry already knew some things about making people happy — and it started with sugar. Many of the Prego sauces — whether cheesy, chunky or light — have one feature in common: The largest ingredient, after tomatoes, is sugar. A mere half-cup of Prego Traditional, for instance, has the equivalent of more than two teaspoons of sugar, as much as two-plus Oreo cookies. It also delivers one-third of the sodium recommended for a majority of American adults for an entire day. In making these sauces, Campbell supplied the ingredients, including the salt, sugar and, for some versions, fat, while Moskowitz supplied the optimization. “More is not necessarily better,” Moskowitz wrote in his own account of the Prego project. “As the sensory intensity (say, of sweetness) increases, consumers first say that they like the product more, but eventually, with a middle level of sweetness, consumers like the product the most (this is their optimum, or ‘bliss,’ point).”
I first met Moskowitz on a crisp day in the spring of 2010 at the Harvard Club in Midtown Manhattan. As we talked, he made clear that while he has worked on numerous projects aimed at creating more healthful foods and insists the industry could be doing far more to curb obesity, he had no qualms about his own pioneering work on discovering what industry insiders now regularly refer to as “the bliss point” or any of the other systems that helped food companies create the greatest amount of crave. “There’s no moral issue for me,” he said. “I did the best science I could. I was struggling to survive and didn’t have the luxury of being a moral creature. As a researcher, I was ahead of my time.”
Moskowitz’s path to mastering the bliss point began in earnest not at Harvard but a few months after graduation, 16 miles from Cambridge, in the town of Natick, where the U.S. Army hired him to work in its research labs. The military has long been in a peculiar bind when it comes to food: how to get soldiers to eat more rations when they are in the field. They know that over time, soldiers would gradually find their meals-ready-to-eat so boring that they would toss them away, half-eaten, and not get all the calories they needed. But what was causing this M.R.E.-fatigue was a mystery. “So I started asking soldiers how frequently they would like to eat this or that, trying to figure out which products they would find boring,” Moskowitz said. The answers he got were inconsistent. “They liked flavorful foods like turkey tetrazzini, but only at first they quickly grew tired of them. On the other hand, mundane foods like white bread would never get them too excited, but they could eat lots and lots of it without feeling they’d had enough.”
This contradiction is known as “sensory-specific satiety.” In lay terms, it is the tendency for big, distinct flavors to overwhelm the brain, which responds by depressing your desire to have more. Sensory-specific satiety also became a guiding principle for the processed-food industry. The biggest hits — be they Coca-Cola or Doritos — owe their success to complex formulas that pique the taste buds enough to be alluring but don’t have a distinct, overriding single flavor that tells the brain to stop eating.
Thirty-two years after he began experimenting with the bliss point, Moskowitz got the call from Cadbury Schweppes asking him to create a good line extension for Dr Pepper. I spent an afternoon in his White Plains offices as he and his vice president for research, Michele Reisner, walked me through the Dr Pepper campaign. Cadbury wanted its new flavor to have cherry and vanilla on top of the basic Dr Pepper taste. Thus, there were three main components to play with. A sweet cherry flavoring, a sweet vanilla flavoring and a sweet syrup known as “Dr Pepper flavoring.”
Finding the bliss point required the preparation of 61 subtly distinct formulas — 31 for the regular version and 30 for diet. The formulas were then subjected to 3,904 tastings organized in Los Angeles, Dallas, Chicago and Philadelphia. The Dr Pepper tasters began working through their samples, resting five minutes between each sip to restore their taste buds. After each sample, they gave numerically ranked answers to a set of questions: How much did they like it overall? How strong is the taste? How do they feel about the taste? How would they describe the quality of this product? How likely would they be to purchase this product?
Moskowitz’s data — compiled in a 135-page report for the soda maker — is tremendously fine-grained, showing how different people and groups of people feel about a strong vanilla taste versus weak, various aspects of aroma and the powerful sensory force that food scientists call “mouth feel.” This is the way a product interacts with the mouth, as defined more specifically by a host of related sensations, from dryness to gumminess to moisture release. These are terms more familiar to sommeliers, but the mouth feel of soda and many other food items, especially those high in fat, is second only to the bliss point in its ability to predict how much craving a product will induce.
In addition to taste, the consumers were also tested on their response to color, which proved to be highly sensitive. “When we increased the level of the Dr Pepper flavoring, it gets darker and liking goes off,” Reisner said. These preferences can also be cross-referenced by age, sex and race.
On Page 83 of the report, a thin blue line represents the amount of Dr Pepper flavoring needed to generate maximum appeal. The line is shaped like an upside-down U, just like the bliss-point curve that Moskowitz studied 30 years earlier in his Army lab. And at the top of the arc, there is not a single sweet spot but instead a sweet range, within which “bliss” was achievable. This meant that Cadbury could edge back on its key ingredient, the sugary Dr Pepper syrup, without falling out of the range and losing the bliss. Instead of using 2 milliliters of the flavoring, for instance, they could use 1.69 milliliters and achieve the same effect. The potential savings is merely a few percentage points, and it won’t mean much to individual consumers who are counting calories or grams of sugar. But for Dr Pepper, it adds up to colossal savings. “That looks like nothing,” Reisner said. “But it’s a lot of money. A lot of money. Millions.”
The soda that emerged from all of Moskowitz’s variations became known as Cherry Vanilla Dr Pepper, and it proved successful beyond anything Cadbury imagined. In 2008, Cadbury split off its soft-drinks business, which included Snapple and 7-Up. The Dr Pepper Snapple Group has since been valued in excess of $11 billion.
II. ‘Lunchtime Is All Yours’
Sometimes innovations within the food industry happen in the lab, with scientists dialing in specific ingredients to achieve the greatest allure. And sometimes, as in the case of Oscar Mayer’s bologna crisis, the innovation involves putting old products in new packages.
The 1980s were tough times for Oscar Mayer. Red-meat consumption fell more than 10 percent as fat became synonymous with cholesterol, clogged arteries, heart attacks and strokes. Anxiety set in at the company’s headquarters in Madison, Wis., where executives worried about their future and the pressure they faced from their new bosses at Philip Morris.
Bob Drane was the company’s vice president for new business strategy and development when Oscar Mayer tapped him to try to find some way to reposition bologna and other troubled meats that were declining in popularity and sales. I met Drane at his home in Madison and went through the records he had kept on the birth of what would become much more than his solution to the company’s meat problem. In 1985, when Drane began working on the project, his orders were to “figure out how to contemporize what we’ve got.”
Drane’s first move was to try to zero in not on what Americans felt about processed meat but on what Americans felt about lunch. He organized focus-group sessions with the people most responsible for buying bologna — mothers — and as they talked, he realized the most pressing issue for them was time. Working moms strove to provide healthful food, of course, but they spoke with real passion and at length about the morning crush, that nightmarish dash to get breakfast on the table and lunch packed and kids out the door. He summed up their remarks for me like this: “It’s awful. I am scrambling around. My kids are asking me for stuff. I’m trying to get myself ready to go to the office. I go to pack these lunches, and I don’t know what I’ve got.” What the moms revealed to him, Drane said, was “a gold mine of disappointments and problems.”
He assembled a team of about 15 people with varied skills, from design to food science to advertising, to create something completely new — a convenient prepackaged lunch that would have as its main building block the company’s sliced bologna and ham. They wanted to add bread, naturally, because who ate bologna without it? But this presented a problem: There was no way bread could stay fresh for the two months their product needed to sit in warehouses or in grocery coolers. Crackers, however, could — so they added a handful of cracker rounds to the package. Using cheese was the next obvious move, given its increased presence in processed foods. But what kind of cheese would work? Natural Cheddar, which they started off with, crumbled and didn’t slice very well, so they moved on to processed varieties, which could bend and be sliced and would last forever, or they could knock another two cents off per unit by using an even lesser product called “cheese food,” which had lower scores than processed cheese in taste tests. The cost dilemma was solved when Oscar Mayer merged with Kraft in 1989 and the company didn’t have to shop for cheese anymore it got all the processed cheese it wanted from its new sister company, and at cost.
Drane’s team moved into a nearby hotel, where they set out to find the right mix of components and container. They gathered around tables where bagfuls of meat, cheese, crackers and all sorts of wrapping material had been dumped, and they let their imaginations run. After snipping and taping their way through a host of failures, the model they fell back on was the American TV dinner — and after some brainstorming about names (Lunch Kits? Go-Packs? Fun Mealz?), Lunchables were born.
The trays flew off the grocery-store shelves. Sales hit a phenomenal $218 million in the first 12 months, more than anyone was prepared for. This only brought Drane his next crisis. The production costs were so high that they were losing money with each tray they produced. So Drane flew to New York, where he met with Philip Morris officials who promised to give him the money he needed to keep it going. “The hard thing is to figure out something that will sell,” he was told. “You’ll figure out how to get the cost right.” Projected to lose $6 million in 1991, the trays instead broke even the next year, they earned $8 million.
With production costs trimmed and profits coming in, the next question was how to expand the franchise, which they did by turning to one of the cardinal rules in processed food: When in doubt, add sugar. “Lunchables With Dessert is a logical extension,” an Oscar Mayer official reported to Philip Morris executives in early 1991. The “target” remained the same as it was for regular Lunchables — “busy mothers” and “working women,” ages 25 to 49 — and the “enhanced taste” would attract shoppers who had grown bored with the current trays. A year later, the dessert Lunchable morphed into the Fun Pack, which would come with a Snickers bar, a package of M&M’s or a Reese’s Peanut Butter Cup, as well as a sugary drink. The Lunchables team started by using Kool-Aid and cola and then Capri Sun after Philip Morris added that drink to its stable of brands.
Eventually, a line of the trays, appropriately called Maxed Out, was released that had as many as nine grams of saturated fat, or nearly an entire day’s recommended maximum for kids, with up to two-thirds of the max for sodium and 13 teaspoons of sugar.
When I asked Geoffrey Bible, former C.E.O. of Philip Morris, about this shift toward more salt, sugar and fat in meals for kids, he smiled and noted that even in its earliest incarnation, Lunchables was held up for criticism. “One article said something like, ‘If you take Lunchables apart, the most healthy item in it is the napkin.’ ”
Well, they did have a good bit of fat, I offered. “You bet,” he said. “Plus cookies.”
The prevailing attitude among the company’s food managers — through the 1990s, at least, before obesity became a more pressing concern — was one of supply and demand. “People could point to these things and say, ‘They’ve got too much sugar, they’ve got too much salt,’ ” Bible said. “Well, that’s what the consumer wants, and we’re not putting a gun to their head to eat it. That’s what they want. If we give them less, they’ll buy less, and the competitor will get our market. So you’re sort of trapped.” (Bible would later press Kraft to reconsider its reliance on salt, sugar and fat.)
When it came to Lunchables, they did try to add more healthful ingredients. Back at the start, Drane experimented with fresh carrots but quickly gave up on that, since fresh components didn’t work within the constraints of the processed-food system, which typically required weeks or months of transport and storage before the food arrived at the grocery store. Later, a low-fat version of the trays was developed, using meats and cheese and crackers that were formulated with less fat, but it tasted inferior, sold poorly and was quickly scrapped.
When I met with Kraft officials in 2011 to discuss their products and policies on nutrition, they had dropped the Maxed Out line and were trying to improve the nutritional profile of Lunchables through smaller, incremental changes that were less noticeable to consumers. Across the Lunchables line, they said they had reduced the salt, sugar and fat by about 10 percent, and new versions, featuring mandarin-orange and pineapple slices, were in development. These would be promoted as more healthful versions, with “fresh fruit,” but their list of ingredients — containing upward of 70 items, with sucrose, corn syrup, high-fructose corn syrup and fruit concentrate all in the same tray — have been met with intense criticism from outside the industry.
One of the company’s responses to criticism is that kids don’t eat the Lunchables every day — on top of which, when it came to trying to feed them more healthful foods, kids themselves were unreliable. When their parents packed fresh carrots, apples and water, they couldn’t be trusted to eat them. Once in school, they often trashed the healthful stuff in their brown bags to get right to the sweets.
This idea — that kids are in control — would become a key concept in the evolving marketing campaigns for the trays. In what would prove to be their greatest achievement of all, the Lunchables team would delve into adolescent psychology to discover that it wasn’t the food in the trays that excited the kids it was the feeling of power it brought to their lives. As Bob Eckert, then the C.E.O. of Kraft, put it in 1999: “Lunchables aren’t about lunch. It’s about kids being able to put together what they want to eat, anytime, anywhere.”
Kraft’s early Lunchables campaign targeted mothers. They might be too distracted by work to make a lunch, but they loved their kids enough to offer them this prepackaged gift. But as the focus swung toward kids, Saturday-morning cartoons started carrying an ad that offered a different message: “All day, you gotta do what they say,” the ads said. “But lunchtime is all yours.”
With this marketing strategy in place and pizza Lunchables — the crust in one compartment, the cheese, pepperoni and sauce in others — proving to be a runaway success, the entire world of fast food suddenly opened up for Kraft to pursue. They came out with a Mexican-themed Lunchables called Beef Taco Wraps a Mini Burgers Lunchables a Mini Hot Dog Lunchable, which also happened to provide a way for Oscar Mayer to sell its wieners. By 1999, pancakes — which included syrup, icing, Lifesavers candy and Tang, for a whopping 76 grams of sugar — and waffles were, for a time, part of the Lunchables franchise as well.
Annual sales kept climbing, past $500 million, past $800 million at last count, including sales in Britain, they were approaching the $1 billion mark. Lunchables was more than a hit it was now its own category. Eventually, more than 60 varieties of Lunchables and other brands of trays would show up in the grocery stores. In 2007, Kraft even tried a Lunchables Jr. for 3- to 5-year-olds.
In the trove of records that document the rise of the Lunchables and the sweeping change it brought to lunchtime habits, I came across a photograph of Bob Drane’s daughter, which he had slipped into the Lunchables presentation he showed to food developers. The picture was taken on Monica Drane’s wedding day in 1989, and she was standing outside the family’s home in Madison, a beautiful bride in a white wedding dress, holding one of the brand-new yellow trays.
During the course of reporting, I finally had a chance to ask her about it. Was she really that much of a fan? “There must have been some in the fridge,” she told me. “I probably just took one out before we went to the church. My mom had joked that it was really like their fourth child, my dad invested so much time and energy on it.”
Monica Drane had three of her own children by the time we spoke, ages 10, 14 and 17. “I don’t think my kids have ever eaten a Lunchable,” she told me. “They know they exist and that Grandpa Bob invented them. But we eat very healthfully.”
Drane himself paused only briefly when I asked him if, looking back, he was proud of creating the trays. “Lots of things are trade-offs,” he said. “And I do believe it’s easy to rationalize anything. In the end, I wish that the nutritional profile of the thing could have been better, but I don’t view the entire project as anything but a positive contribution to people’s lives.”
Today Bob Drane is still talking to kids about what they like to eat, but his approach has changed. He volunteers with a nonprofit organization that seeks to build better communications between school kids and their parents, and right in the mix of their problems, alongside the academic struggles, is childhood obesity. Drane has also prepared a précis on the food industry that he used with medical students at the University of Wisconsin. And while he does not name his Lunchables in this document, and cites numerous causes for the obesity epidemic, he holds the entire industry accountable. “What do University of Wisconsin M.B.A.’s learn about how to succeed in marketing?” his presentation to the med students asks. “Discover what consumers want to buy and give it to them with both barrels. Sell more, keep your job! How do marketers often translate these ‘rules’ into action on food? Our limbic brains love sugar, fat, salt. . . . So formulate products to deliver these. Perhaps add low-cost ingredients to boost profit margins. Then ‘supersize’ to sell more. . . . And advertise/promote to lock in ‘heavy users.’ Plenty of guilt to go around here!”
III. ‘It’s Called Vanishing Caloric Density.’
At a symposium for nutrition scientists in Los Angeles on Feb. 15, 1985, a professor of pharmacology from Helsinki named Heikki Karppanen told the remarkable story of Finland’s effort to address its salt habit. In the late 1970s, the Finns were consuming huge amounts of sodium, eating on average more than two teaspoons of salt a day. As a result, the country had developed significant issues with high blood pressure, and men in the eastern part of Finland had the highest rate of fatal cardiovascular disease in the world. Research showed that this plague was not just a quirk of genetics or a result of a sedentary lifestyle — it was also owing to processed foods. So when Finnish authorities moved to address the problem, they went right after the manufacturers. (The Finnish response worked. Every grocery item that was heavy in salt would come to be marked prominently with the warning “High Salt Content.” By 2007, Finland’s per capita consumption of salt had dropped by a third, and this shift — along with improved medical care — was accompanied by a 75 percent to 80 percent decline in the number of deaths from strokes and heart disease.)
Karppanen’s presentation was met with applause, but one man in the crowd seemed particularly intrigued by the presentation, and as Karppanen left the stage, the man intercepted him and asked if they could talk more over dinner. Their conversation later that night was not at all what Karppanen was expecting. His host did indeed have an interest in salt, but from quite a different vantage point: the man’s name was Robert I-San Lin, and from 1974 to 1982, he worked as the chief scientist for Frito-Lay, the nearly $3-billion-a-year manufacturer of Lay’s, Doritos, Cheetos and Fritos.
Lin’s time at Frito-Lay coincided with the first attacks by nutrition advocates on salty foods and the first calls for federal regulators to reclassify salt as a “risky” food additive, which could have subjected it to severe controls. No company took this threat more seriously — or more personally — than Frito-Lay, Lin explained to Karppanen over their dinner. Three years after he left Frito-Lay, he was still anguished over his inability to effectively change the company’s recipes and practices.
By chance, I ran across a letter that Lin sent to Karppanen three weeks after that dinner, buried in some files to which I had gained access. Attached to the letter was a memo written when Lin was at Frito-Lay, which detailed some of the company’s efforts in defending salt. I tracked Lin down in Irvine, Calif., where we spent several days going through the internal company memos, strategy papers and handwritten notes he had kept. The documents were evidence of the concern that Lin had for consumers and of the company’s intent on using science not to address the health concerns but to thwart them. While at Frito-Lay, Lin and other company scientists spoke openly about the country’s excessive consumption of sodium and the fact that, as Lin said to me on more than one occasion, “people get addicted to salt.”
Not much had changed by 1986, except Frito-Lay found itself on a rare cold streak. The company had introduced a series of high-profile products that failed miserably. Toppels, a cracker with cheese topping Stuffers, a shell with a variety of fillings Rumbles, a bite-size granola snack — they all came and went in a blink, and the company took a $52 million hit. Around that time, the marketing team was joined by Dwight Riskey, an expert on cravings who had been a fellow at the Monell Chemical Senses Center in Philadelphia, where he was part of a team of scientists that found that people could beat their salt habits simply by refraining from salty foods long enough for their taste buds to return to a normal level of sensitivity. He had also done work on the bliss point, showing how a product’s allure is contextual, shaped partly by the other foods a person is eating, and that it changes as people age. This seemed to help explain why Frito-Lay was having so much trouble selling new snacks. The largest single block of customers, the baby boomers, had begun hitting middle age. According to the research, this suggested that their liking for salty snacks — both in the concentration of salt and how much they ate — would be tapering off. Along with the rest of the snack-food industry, Frito-Lay anticipated lower sales because of an aging population, and marketing plans were adjusted to focus even more intently on younger consumers.
Except that snack sales didn’t decline as everyone had projected, Frito-Lay’s doomed product launches notwithstanding. Poring over data one day in his home office, trying to understand just who was consuming all the snack food, Riskey realized that he and his colleagues had been misreading things all along. They had been measuring the snacking habits of different age groups and were seeing what they expected to see, that older consumers ate less than those in their 20s. But what they weren’t measuring, Riskey realized, is how those snacking habits of the boomers compared to themselves when they were in their 20s. When he called up a new set of sales data and performed what’s called a cohort study, following a single group over time, a far more encouraging picture — for Frito-Lay, anyway — emerged. The baby boomers were not eating fewer salty snacks as they aged. “In fact, as those people aged, their consumption of all those segments — the cookies, the crackers, the candy, the chips — was going up,” Riskey said. “They were not only eating what they ate when they were younger, they were eating more of it.” In fact, everyone in the country, on average, was eating more salty snacks than they used to. The rate of consumption was edging up about one-third of a pound every year, with the average intake of snacks like chips and cheese crackers pushing past 12 pounds a year.
Riskey had a theory about what caused this surge: Eating real meals had become a thing of the past. Baby boomers, especially, seemed to have greatly cut down on regular meals. They were skipping breakfast when they had early-morning meetings. They skipped lunch when they then needed to catch up on work because of those meetings. They skipped dinner when their kids stayed out late or grew up and moved out of the house. And when they skipped these meals, they replaced them with snacks. “We looked at this behavior, and said, ‘Oh, my gosh, people were skipping meals right and left,’ ” Riskey told me. “It was amazing.” This led to the next realization, that baby boomers did not represent “a category that is mature, with no growth. This is a category that has huge growth potential.”
The food technicians stopped worrying about inventing new products and instead embraced the industry’s most reliable method for getting consumers to buy more: the line extension. The classic Lay’s potato chips were joined by Salt & Vinegar, Salt & Pepper and Cheddar & Sour Cream. They put out Chili-Cheese-flavored Fritos, and Cheetos were transformed into 21 varieties. Frito-Lay had a formidable research complex near Dallas, where nearly 500 chemists, psychologists and technicians conducted research that cost up to $30 million a year, and the science corps focused intense amounts of resources on questions of crunch, mouth feel and aroma for each of these items. Their tools included a $40,000 device that simulated a chewing mouth to test and perfect the chips, discovering things like the perfect break point: people like a chip that snaps with about four pounds of pressure per square inch.
To get a better feel for their work, I called on Steven Witherly, a food scientist who wrote a fascinating guide for industry insiders titled, “Why Humans Like Junk Food.” I brought him two shopping bags filled with a variety of chips to taste. He zeroed right in on the Cheetos. “This,” Witherly said, “is one of the most marvelously constructed foods on the planet, in terms of pure pleasure.” He ticked off a dozen attributes of the Cheetos that make the brain say more. But the one he focused on most was the puff’s uncanny ability to melt in the mouth. “It’s called vanishing caloric density,” Witherly said. “If something melts down quickly, your brain thinks that there’s no calories in it . . . you can just keep eating it forever.”
As for their marketing troubles, in a March 2010 meeting, Frito-Lay executives hastened to tell their Wall Street investors that the 1.4 billion boomers worldwide weren’t being neglected they were redoubling their efforts to understand exactly what it was that boomers most wanted in a snack chip. Which was basically everything: great taste, maximum bliss but minimal guilt about health and more maturity than puffs. “They snack a lot,” Frito-Lay’s chief marketing officer, Ann Mukherjee, told the investors. “But what they’re looking for is very different. They’re looking for new experiences, real food experiences.” Frito-Lay acquired Stacy’s Pita Chip Company, which was started by a Massachusetts couple who made food-cart sandwiches and started serving pita chips to their customers in the mid-1990s. In Frito-Lay’s hands, the pita chips averaged 270 milligrams of sodium — nearly one-fifth a whole day’s recommended maximum for most American adults — and were a huge hit among boomers.
The Frito-Lay executives also spoke of the company’s ongoing pursuit of a “designer sodium,” which they hoped, in the near future, would take their sodium loads down by 40 percent. No need to worry about lost sales there, the company’s C.E.O., Al Carey, assured their investors. The boomers would see less salt as the green light to snack like never before.
There’s a paradox at work here. On the one hand, reduction of sodium in snack foods is commendable. On the other, these changes may well result in consumers eating more. “The big thing that will happen here is removing the barriers for boomers and giving them permission to snack,” Carey said. The prospects for lower-salt snacks were so amazing, he added, that the company had set its sights on using the designer salt to conquer the toughest market of all for snacks: schools. He cited, for example, the school-food initiative championed by Bill Clinton and the American Heart Association, which is seeking to improve the nutrition of school food by limiting its load of salt, sugar and fat. “Imagine this,” Carey said. “A potato chip that tastes great and qualifies for the Clinton-A.H.A. alliance for schools . . . . We think we have ways to do all of this on a potato chip, and imagine getting that product into schools, where children can have this product and grow up with it and feel good about eating it.”
Carey’s quote reminded me of something I read in the early stages of my reporting, a 24-page report prepared for Frito-Lay in 1957 by a psychologist named Ernest Dichter. The company’s chips, he wrote, were not selling as well as they could for one simple reason: “While people like and enjoy potato chips, they feel guilty about liking them. . . . Unconsciously, people expect to be punished for ‘letting themselves go’ and enjoying them.” Dichter listed seven “fears and resistances” to the chips: “You can’t stop eating them they’re fattening they’re not good for you they’re greasy and messy to eat they’re too expensive it’s hard to store the leftovers and they’re bad for children.” He spent the rest of his memo laying out his prescriptions, which in time would become widely used not just by Frito-Lay but also by the entire industry. Dichter suggested that Frito-Lay avoid using the word “fried” in referring to its chips and adopt instead the more healthful-sounding term “toasted.” To counteract the “fear of letting oneself go,” he suggested repacking the chips into smaller bags. “The more-anxious consumers, the ones who have the deepest fears about their capacity to control their appetite, will tend to sense the function of the new pack and select it,” he said.
Dichter advised Frito-Lay to move its chips out of the realm of between-meals snacking and turn them into an ever-present item in the American diet. “The increased use of potato chips and other Lay’s products as a part of the regular fare served by restaurants and sandwich bars should be encouraged in a concentrated way,” Dichter said, citing a string of examples: “potato chips with soup, with fruit or vegetable juice appetizers potato chips served as a vegetable on the main dish potato chips with salad potato chips with egg dishes for breakfast potato chips with sandwich orders.”
In 2011, The New England Journal of Medicine published a study that shed new light on America’s weight gain. The subjects — 120,877 women and men — were all professionals in the health field, and were likely to be more conscious about nutrition, so the findings might well understate the overall trend. Using data back to 1986, the researchers monitored everything the participants ate, as well as their physical activity and smoking. They found that every four years, the participants exercised less, watched TV more and gained an average of 3.35 pounds. The researchers parsed the data by the caloric content of the foods being eaten, and found the top contributors to weight gain included red meat and processed meats, sugar-sweetened beverages and potatoes, including mashed and French fries. But the largest weight-inducing food was the potato chip. The coating of salt, the fat content that rewards the brain with instant feelings of pleasure, the sugar that exists not as an additive but in the starch of the potato itself — all of this combines to make it the perfect addictive food. “The starch is readily absorbed,” Eric Rimm, an associate professor of epidemiology and nutrition at the Harvard School of Public Health and one of the study’s authors, told me. “More quickly even than a similar amount of sugar. The starch, in turn, causes the glucose levels in the blood to spike” — which can result in a craving for more.
If Americans snacked only occasionally, and in small amounts, this would not present the enormous problem that it does. But because so much money and effort has been invested over decades in engineering and then relentlessly selling these products, the effects are seemingly impossible to unwind. More than 30 years have passed since Robert Lin first tangled with Frito-Lay on the imperative of the company to deal with the formulation of its snacks, but as we sat at his dining-room table, sifting through his records, the feelings of regret still played on his face. In his view, three decades had been lost, time that he and a lot of other smart scientists could have spent searching for ways to ease the addiction to salt, sugar and fat. “I couldn’t do much about it,” he told me. “I feel so sorry for the public.”
IV. ‘These People Need a Lot of Things, but They Don’t Need a Coke.’
The growing attention Americans are paying to what they put into their mouths has touched off a new scramble by the processed-food companies to address health concerns. Pressed by the Obama administration and consumers, Kraft, Nestlé, Pepsi, Campbell and General Mills, among others, have begun to trim the loads of salt, sugar and fat in many products. And with consumer advocates pushing for more government intervention, Coca-Cola made headlines in January by releasing ads that promoted its bottled water and low-calorie drinks as a way to counter obesity. Predictably, the ads drew a new volley of scorn from critics who pointed to the company’s continuing drive to sell sugary Coke.
One of the other executives I spoke with at length was Jeffrey Dunn, who, in 2001, at age 44, was directing more than half of Coca-Cola’s $20 billion in annual sales as president and chief operating officer in both North and South America. In an effort to control as much market share as possible, Coke extended its aggressive marketing to especially poor or vulnerable areas of the U.S., like New Orleans — where people were drinking twice as much Coke as the national average — or Rome, Ga., where the per capita intake was nearly three Cokes a day. In Coke’s headquarters in Atlanta, the biggest consumers were referred to as “heavy users.” “The other model we use was called ‘drinks and drinkers,’ ” Dunn said. “How many drinkers do I have? And how many drinks do they drink? If you lost one of those heavy users, if somebody just decided to stop drinking Coke, how many drinkers would you have to get, at low velocity, to make up for that heavy user? The answer is a lot. It’s more efficient to get my existing users to drink more.”
One of Dunn’s lieutenants, Todd Putman, who worked at Coca-Cola from 1997 to 2001, said the goal became much larger than merely beating the rival brands Coca-Cola strove to outsell every other thing people drank, including milk and water. The marketing division’s efforts boiled down to one question, Putman said: “How can we drive more ounces into more bodies more often?” (In response to Putman’s remarks, Coke said its goals have changed and that it now focuses on providing consumers with more low- or no-calorie products.)
In his capacity, Dunn was making frequent trips to Brazil, where the company had recently begun a push to increase consumption of Coke among the many Brazilians living in favelas. The company’s strategy was to repackage Coke into smaller, more affordable 6.7-ounce bottles, just 20 cents each. Coke was not alone in seeing Brazil as a potential boon Nestlé began deploying battalions of women to travel poor neighborhoods, hawking American-style processed foods door to door. But Coke was Dunn’s concern, and on one trip, as he walked through one of the impoverished areas, he had an epiphany. “A voice in my head says, ‘These people need a lot of things, but they don’t need a Coke.’ I almost threw up.”
Dunn returned to Atlanta, determined to make some changes. He didn’t want to abandon the soda business, but he did want to try to steer the company into a more healthful mode, and one of the things he pushed for was to stop marketing Coke in public schools. The independent companies that bottled Coke viewed his plans as reactionary. A director of one bottler wrote a letter to Coke’s chief executive and board asking for Dunn’s head. “He said what I had done was the worst thing he had seen in 50 years in the business,” Dunn said. “Just to placate these crazy leftist school districts who were trying to keep people from having their Coke. He said I was an embarrassment to the company, and I should be fired.” In February 2004, he was.
Dunn told me that talking about Coke’s business today was by no means easy and, because he continues to work in the food business, not without risk. “You really don’t want them mad at you,” he said. “And I don’t mean that, like, I’m going to end up at the bottom of the bay. But they don’t have a sense of humor when it comes to this stuff. They’re a very, very aggressive company.”
When I met with Dunn, he told me not just about his years at Coke but also about his new marketing venture. In April 2010, he met with three executives from Madison Dearborn Partners, a private-equity firm based in Chicago with a wide-ranging portfolio of investments. They recently hired Dunn to run one of their newest acquisitions — a food producer in the San Joaquin Valley. As they sat in the hotel’s meeting room, the men listened to Dunn’s marketing pitch. He talked about giving the product a personality that was bold and irreverent, conveying the idea that this was the ultimate snack food. He went into detail on how he would target a special segment of the 146 million Americans who are regular snackers — mothers, children, young professionals — people, he said, who “keep their snacking ritual fresh by trying a new food product when it catches their attention.”
He explained how he would deploy strategic storytelling in the ad campaign for this snack, using a key phrase that had been developed with much calculation: “Eat ’Em Like Junk Food.”
After 45 minutes, Dunn clicked off the last slide and thanked the men for coming. Madison’s portfolio contained the largest Burger King franchise in the world, the Ruth’s Chris Steak House chain and a processed-food maker called AdvancePierre whose lineup includes the Jamwich, a peanut-butter-and-jelly contrivance that comes frozen, crustless and embedded with four kinds of sugars.
The snack that Dunn was proposing to sell: carrots. Plain, fresh carrots. No added sugar. No creamy sauce or dips. No salt. Just baby carrots, washed, bagged, then sold into the deadly dull produce aisle.
“We act like a snack, not a vegetable,” he told the investors. “We exploit the rules of junk food to fuel the baby-carrot conversation. We are pro-junk-food behavior but anti-junk-food establishment.”
The investors were thinking only about sales. They had already bought one of the two biggest farm producers of baby carrots in the country, and they’d hired Dunn to run the whole operation. Now, after his pitch, they were relieved. Dunn had figured out that using the industry’s own marketing ploys would work better than anything else. He drew from the bag of tricks that he mastered in his 20 years at Coca-Cola, where he learned one of the most critical rules in processed food: The selling of food matters as much as the food itself.
Later, describing his new line of work, Dunn told me he was doing penance for his Coca-Cola years. “I’m paying my karmic debt,” he said.
Cola or Uncola?
Question: Where can I buy Hires root beer?
Answer: Hires has a limited distribution in the United States, as its bottler now focuses on other brands like A & W Root Beer. The Hires brand is part of the company that owns Dr. Pepper. You can find it online on Amazon and Walmart.
Question: I am looking for Clander&aposs strawberry pop from the Fresno area. It may have been a strawberry water, and the spelling may be different. It was bottled sometime in the 1950s. Do you, the writer of this article, know about Clander&aposs strawberry pop?
Answer: Could you be thinking of Calandra soda? The Calandra Bros. had a locally-owned and operated bottling company in Fresno, California that began in 1909. They had the "standard" fruit flavors, and yes, strawberry was one. Calandra came in 9-ounce and 12-ounce glass bottles.
Question: Do you have information on the non-carbonated Chocolate Soldier?
Answer: Chocolate Soldier was a drink that was manufactured in the 1950s and 1960s by Citrus Products Company in Illinois. The drink was then made by the Monarch Beverage Company (Atlanta, Georgia 1966-1988). I&aposve seen pictures of the early (glass) bottles and cans of this beverage, as well as later packaging from the 1970s and 1980s. I am surprised that Chocolate Soldier disappeared, given consumers&apos love for chocolate everything. Yoo-hoo is still out there (produced by the Dr Pepper-Snapple group) from what I understand, the flavor is similar but different, if you know the original Chocolate Soldier taste.
Question: Do you remember a soft drink called Spook?
Answer: Spook was a drink similar to Kool-Aid it came in small translucent bottles in the shape of ghosts and available in various flavors. The concept reminds me of the small wax bottles with flavored liquid in them, but of course, you could not chew the Spook bottles. The "ghost" bottles had wide openings and screw-on caps. From what I&aposve learned, the drink was available in the 1970s shelved with like items in the drink aisles of grocery stores.
Question: Do you remember a lemon lime soda from the 50s and 60s called Veep?
Answer: Lemon Light Veep came from New York&aposs Coca-Cola bottler, from about 1958 to 1964, I believe. Cans were white, yellow and green bottles were clear green glass with the Veep branding image in yellow and white. The taste of Veep was much like today&aposs Sprite (which it later evolved into). One of the slogans for Veep was "Great thirst fixer, wonderful mixer."
I don&apost have specifics but Coca-Cola, NY was sued by a separate Coca-Cola Bottling business that had Sprite on the market -- one of them had to go!
Question: I am looking for information on a 7-oz. bottle with the word "DANA" on it. I also remember it had white diamonds printed on the bottle. I loved the grape drink but it was not carbonated around the mid 1970s. They also had a red creme soda, and possibly orange. What information is there about a DANA soda?
Answer: I&aposve seen photos and descriptions of this bottle clear glass with a large print font letter for each white diamond D A N A. The bottle says "Quality Beverage" and "Coca Cola Bottling Works of Cincinnati, Ohio." This indicates to me that it was a franchise bottler (but I don&apost have a time frame). They had the 7-ounce (7 5/8 inches tall) and a 12-ounce bottle (9 1/2 inches tall). Perhaps you can find out more by contacting the historical society in Cincy -- if they have one -- or the city&aposs library system.
Question: Any info on Golden Age Strawberry Soda? I recently found an unopened 12oz, peel top can. I&aposm having no luck finding any info about it.
Answer: I only know a few points about Golden Age products. There were a couple of Golden Age Beverages bottlers I could find Youngstown, Ohio and Houston, Texas. Golden Age beverages were made in the 1950s and 1960s glass bottles and steel metal cans. My suggestion is to contact the historical society in Youngstown -- if there is one -- or the library there to see if they have any information in their archive or older business directories (or on microfiche).
Question: There was a soda my grandmother used to like in the late 1950s. I thought it was called Kula Waii and I thought it was from Canada Dry. But I&aposve search for it and no luck. It was yellow and I think maybe it was pineapple. Had a pineapple on the label along with other tropical fruits.This was in New York. Does that sound familiar at all?
Answer: At first glance, no. But I did a search on eBay and found a vintage six-pack of green 7-ounce bottle soda called White Rock Kula Waii soda. The bottles are green with gold labels that have the name, and say "A True Fruit Pineapple Drink." The metal caps say White Rock Pineapple. There is a picture of a pineapple on the label! Go to eBay with this search phrase (I cannot paste the link here): "Vintage SIX PACK FULL 7oz WHITE ROCK KULA Waii
soda, pop, drink bottle." I hope it&aposs what you&aposre looking for! Don&apost wait too long, the listing is good for the next three days (at least).
Question: Hello, there was a chocolate drink from when I was a child in the 1960s, can you remember the name?
Answer: I have a couple of items you can Google for more info, although, for the moment, I&aposm not sure about their exact dates. Still, perhaps these will strike a note: Chocolate Soldier was packaged in tall bottles with the Nutcracker-like graphic printed in front. Cocoa-Marsh was a milk additive along the lines of Bosco. In the 1960s, the makers of Pepsi came up with a chocolate drink called Devil Shake. There was also a product called PDQ that turned milk into chocolate -- it was popular in the 1960s and 1970s.
Question: Have you ever heard of Chocolate Crush put out by Crush?
Answer: The Dr. Pepper/Seven-Up Snapple Group is the maker of Orange Crush and its family member of flavors (Diet Orange, Strawberry, Cherry, Grape, Pineapple, Peach, and Grapefruit). The company does not list "Chocolate Crush" in its product menu or history. I have come across a product called Chocolate Crush by an organization in the name of Gravely Brewing Company. Apparently, it is a concocted alcoholic drink. But because the makers of this beverage are using a registered trademark-protected product to market their drink, it wouldn&apost surprise me if Chocolate Crush finds itself being crushed by mounds of legal paperwork.
Question: Have you ever heard of a soft drink called "Get Up?" It was sold in Cincinnati, Ohio, in the 1950s.
Answer: I have never heard of that drink, but, as of this date, there is a "Get Up" soda bottle for sale on eBay. (I cannot verify its original authenticity). Here&aposs what I&aposve learned about "Get Up:" It was a non-alcoholic beverage lemon soda, and it was first released in 1934. Its trademark was registered in February 1935 by its parent company Golden Age Ginger Ale of Youngstown, Ohio.
Question: Was there a drink named B-Up?
Answer: B-Up was a lithiated lemon soda mixer produced by the Jefferson bottling Company in New Orleans, LA. 12-ounce bottles were clear green. The Jefferson Bottling Company created other products: Big Shot Root Beer, Big Shot Strawberry, Cola Hiball, Nu-Life Grape, and Dr. Up.
Question: What other sodas did Hires (Root Beer) make?
Answer: To the best of my knowledge, Hires Root Beer, created by Philadelphia pharmacist Charles E. Hires, was the only brand of soft drink in the original company. However, the brand&aposs contracted bottling facilities may have also produced and shipped sodas for other companies. After the Hires company was sold by the family in 1960, it underwent a number of ownership changes. Currently, the brand is owned by the folks who own Dr Pepper, but unless the market changes, don&apost look for Hires Root Beer to make a widespread comeback, any time soon.
Question: Where was Perry&aposs Pale Dry Ginger Ale made?
Answer: Perry&aposs Dry Ginger Ale, to the best of my knowledge, was produced, along with other sodas, by the Rochelle Club Beverage Corporation of Mount Vernon, New York. The plant was at Lafayette Avenue in New Rochelle. The company was
a complete family business that began in 1924 -- sweet history! The business closed in 1966. I&aposve seen photos of vintage bottles that were clear glass with red and white labels.
Question: Was there a bottled soft drink named "Par" (containing papaya) in the late 1930s or early 1940s?
Answer: The name "Par" does not strike a note, sorry. But there was (and still is) a cocktail mixer soda called "Compare" that hit the Italian market, starting in 1932. The manufacturer calls it a "unique and incomparable flavor."
Question: Was there a soda in the Denver area in the 50&aposs and/or 60&aposs by the name of Pepso, or something similar?
Answer: Sorry, but after checking my resources, I have no information on that. You might try contacting Colorado&aposs historical society or local bottling company histories in the Denver area the library is a good place to start. I would be surprised if any soft drink company could name a product "Pepso," because it is so closed to (trademark-protected) "Pepsi," but then, anything is possible.
Question: Was there a soda in the sixties called Veep?
Answer: Yes, until around 1964, "Lemon Light" Veep was produced by Coca-Cola (in New York). The can was green, yellow and white. Bottles were clear green, with the Veep logo in white with yellow font lettering. The lemon-lime flavoring of Veep was much like Sprite, which the product later became. One of the slogans for Veep was "Great thirst fixer, wonderful mixer."
The story is kind of strange. Coca-Cola, NY, which produced Veep, was sued by the separate entity of Coca-Cola Bottling which already had Sprite on the market (the products were too similar). I don&apost have a specific timeline for Veep, but the name was copyrighted-protected in 1958.
Question: In the late 1980s, a carbonated drink by the name of Sarasoda was available. It was a clear, light-tasting somewhat-citrus flavored drink that I really enjoyed, but I don&apost believe it was on the market for very long. I don&apost know how wide-spread it was, but Sarasoda was available in Edmonton, Alberta at that time. Have you heard of it? Do you know who manufactured it?
Answer: To the best of my knowledge, Sarasoda (spelled that way) was available in Canada in the mid-late 1980s to mid 1990s. It was available in cans and bottles. The manufacturers called it "non-alcoholic" but it did have about 9% alcohol in it, somewhat like a wine cooler. I&aposve never drunk Sarasoda but my research has come up with a supposed taste-alike in Rickard&aposs Radler, a malt brewed in Canada. Here&aposs a YouTube link to an old commercial: https://www.youtube.com/watch?v=ul8Tz3k9-wQ.
Question: Have you ever heard of Earl&aposs soda?
Answer: I&aposve seen soda bottles for Earl&aposs from Earl&aposs Pop & Coffee Co., Knox, PA. The green bottles held 6 and 1/2 fluid ounces.
Question: Do you remember Peer Cherry Cola?
Answer: I&aposve seen several pictures of old 12 oz. Peer Cherry Cola soda cans that are red, white and silver. They were made from steel (not aluminum) and had the pull top opening. I can&apost tell you the manufacturing location or sales dates, but the artificially-colored product was preserved with benzoic acid, ascorbic acid, and stannous chloride (yikes, sounds scary!). If you should find one of these cans with a manufacturing location printed on it, check with folks from that city&aposs historical society for any information they may have in their archives.
Question: Did you ever hear of a soda pop called Derby Up?
Answer: I&aposve seen pictures of carbonated drinks in typical soda cans called "Derby Cola," as well as marketing props (for CocaCola) for the Kentucky Derby that have logos printed on pop bottles. I&aposve found various types of "UP" soda logos, but not any for "Derby Up," nor can I find any documentation. It&aposs possible that this product was regionally produced and marketed. Perhaps one of my readers can chime in, in the comments section.
Question: Do you have any information on an Anchor soda bottle? The product was bottled by Society Beverages, Inc. in Dayton, OH in the 1950s and 1960s.
Answer: Although I&aposve never heard of a soda called Anchor (but that doesn&apost mean it didn&apost exist), soda bottles were produced by the Anchor Hocking glass company (Lancaster, OH) in the 1950s. Some were about nine inches tall and held one pint, 8 fluid ounces -- a rather odd amount for soda bottles back then. You might try contacting the folks at daytonhistory.org perhaps they can get you started.
Question: Back in the &apos50s or &apos60s in the New York area, I remember a cola called Giant. Have you ever heard of Giant Cola?
Answer: No, I haven&apost but it was fun to do a search of my resources and see so many cool pictures of old bottles-- unfortunately, not of Giant. A New York library may have documents archived (probably on microfiche if they haven&apost transferred them) which could yield to an advertisement (especially in one or more of NYC&aposs daily newspapers). The newspaper themselves may have some information in their morgues (archives). New York had a number of bottlers in the 1950s/1960s perhaps the historical society can help with your search.
Question: Have you, the author of this article, ever heard of Kula Waii by Canada Dry?
Answer: I had a question about Kula Waii recently (as noted on the Q & A of this article). I&aposd never heard of it, however, then -- and now -- I&aposve done a search on eBay and found vintage bottles of White Rock Kula Waii soda. I&aposve seen other pictures where the bottles are green with gold labels that have the name and say "A True Fruit Pineapple Drink." The metal caps on these seven-ounce bottles say White Rock Pineapple and there is a photo of a pineapple on the label. The picture I see on eBay right now is a clear bottle with a colorful label. The little information I have on this brand is that some are seven-ounce and some are quart-sized bottles of White Rock Beverages from New York they stem from the 1870s using natural spring waters. Also, I saw an ad that noted a time period of 1957-59. Local bottling companies would come and go, but perhaps historians in New York can dig up some more information.
Question: Do you have any information on Super Coola? It was made by, or called, C & C Super Coola.
Answer: C & C Super Coola was a cola made by the Cantrell & Cochrane Brewing Company -- I found notations for several manufacturing locations. C & C Super Coola came in 12 oz. cans and bottles . the bottles had corked-lined metal caps, as was common in the 1950s. The Super Coola line also produced various flavors such as black cherry, root beer, and orange soda -- some were sold in cans with a "cone" that sprouted from the top it was about 4 inches tall. Pictures of flat cans I&aposve seen have can opener holes (before pull-off tops). You can find some company history at its current location site of http://cccola.com/.
Question: Any chance Rondo will be coming back?
Answer: Rondo was a lightly carbonated citrus-flavored soda first produced by Cadbury-Schehweppes in 1978 and was sold primarily in cans of green and yellow with black font. There is a similar product (by the same company) called Solo it is sold in Australia. I have not found any information about whether Rondo will be reintroduced in North America, but you can contact CS to ask about it perhaps one of their current products has a similar taste.
Question: Would you know if Dr Pepper was ever sold in cans in the 1940s, even as a trial run? I cannot find information about this and do not think it was sold in cans until the 1960s.
Answer: I have seen photos of old Dr Pepper cans with the cone shaped tops and capped lids, but I don&apost know if any were made in the 1940s -- I don&apost think so, as I believe that gimmick was from the 1950s. To the best of my knowledge, the soft drink was only sold in bottles during the 1940s.
Question: Was there a green lime soda from Cotton Club?
Answer: Cotton Club released a soda called Fifty-Fifty (also branded as 50-50), which was half lime and half grapefruit. They also had something that was lemon-lime, but I can&apost think of the name of it. I&aposm a Cleveland girl, where my dad owned a vending company in the 1960s and 70s. We had a lot of pop machines and I drank a lot of Tropical Delite but never cared for the lemon-lime flavoring (and still don&apost!). You can still buy some CC flavors but they&aposre made by a company that bought out Cotton Club, about 20 years ago.
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Food ad tip #7: Be effective when asking for an action from your audience
You’ve created a great restaurant advertisement. You’ve placed it on the best platform available. But you’re not seeing results. What could possibly be missing?
According to Unbounce, More than 90% of visitors who read a headline also read the CTA copy, which is why it’s so important to ensure that your ad’s CTA is specific, creative and linked to the objective of your advertisement. Make it irresistible for your consumers to take action. Give people a reason to click!
Want to bring in more orders? Then ‘“Treat yourself now!” could do it for you. Announcing the opening of a new outlet? Then “Be the first in line” might be a good fit. A creative and effective CTA increases the chances of consumers taking action, as compared to a clichéd “Click Here”.
McDonald’s Quarter Pounder Deluxe ad entices consumers to “Make It Better”.
Question: CASE 17 CAMPBELL: HOW TO KEEP THE SOUP SIMMERING* At The First-quarter Earnings Call For The 2015 Fiscal Year, Denise Morrison, Campbell’s President And Chief Execu- Tive Officer, Said: We Were Encouraged By Our Organic Sales Growth Across Most Of Our Portfolio, Particularly In U.S. Simple Meals And Global Baking And Snacking. Our U.S. Soup Performance .
At the first-quarter earnings call for the 2015 fiscal year, Denise Morrison, Campbell’s president and chief execu- tive officer, said: We were encouraged by our organic sales growth across most of our portfolio, particularly in U.S. Simple Meals and Global Baking and Snacking. Our U.S. soup performance was driven by a stronger seasonal sell-in and the timing of our quarter end relative to the Thanksgiving holiday. Although our year is off to a solid start, we are facing some challenges. Our gross margin performance did not meet our expectations due largely to higher than anticipated commodity costs and supply chain costs. We have plans to offset gross margin pressure in the remainder of the year. We also are facing headwinds from currency. Despite these challenges, we continue to make progress strengthening our core business and expanding into faster-growing spaces.1 Denise Morrison, who formerly headed the company’s North American soup division, had taken over as CEO nearly four years ago. The change at the top for the company received a lukewarm response from investors, who were watching to see what drastic changes Morrison might have in store. Analysts suggested that Campbell may have missed an opportunity by picking insider Denise Morrison to lead t he world’s largest soup2 maker instead of br inging in outside talent to revive sales. By 2015, with Morrison at the helm, the Campbell Soup Company had launched more than 50 new products, includ- ing 32 new soups. This number was way up from prior years. Morrison also shocked experts with the $1.55 billion buy- out of California juice-and-carrot seller Bolthouse Farms, the largest acquisition in Campbell’s history.3 Despite the revitalization of its product line, however, the company still failed to accomplish an impressive comeback. Company Background Probably known best for its red-and-white soup cans, the Campbell Soup Company was founded in 1869 by Abram Anderson and Joseph Campbell as a canning and pre- serving business. Over 140 years later, Campbell offered a whole lot more than just soup in a can. In 2014 the company, headquartered in Camden, New Jersey, com- petitively operated in five segments: U.S. Simple Meals, Global Baking and Snacking, International Simple Meals and Beverages, U.S. Beverages, and Bolthouse and Food- service. In 2015 Campbell’s products were sold in over 100 countries around the world, and the company had opera- tions in the United States, Canada, Mexico, Australia, Belgium, China, France, Germany, Indonesia, Malaysia, and Sweden
The company was pursuing strategies designed to expand the availability of its products in existing markets and to capitalize on opportunities in emerging channels markets around the globe. As a first step, Campbell Soup Company, synonymous with the all-American kitchen for 125 years, acquired in 1994 Pace Foods Ltd., the world’s largest producer of Mexican sauces. Frank Weise, CFO at that time, said that a major motivation for the purchase was to diversify Campbell and to extend the Pace brand to other products. In addition, he said, the company saw a strong potential for Pace products internationally. Camp- bell also saw an overlap with its raw material purchas- ing operations, since peppers, onions, and tomatoes were already used in the company’s soups, V8, barbecue sauce, and pasta sauces.5 To help reduce some of the price volatil- ity for ingredients, the company used various commodity risk management tools for a number of its ingredients and commodities, such as natural gas, heating oil, wheat, soy- bean oil, cocoa, aluminum, and corn.6
Campbell Soup, a leading food producer in the United States, had a presence in approximately 9 out of 10 U.S. households. However, in recent years, the company faced a slowdown in its soup sales, as consumers were seeking more convenient meal options, such as ready meals and dining out. To compete more effectively, especially against General Mills’ Progresso brand, Campbell had undertaken various efforts to improve the quality and convenience of its products.
China and Russia
For the longest time, consumption of soup in Russia and China had far exceeded that in the United States, but in both countries nearly all of the soup was homemade. Within the past few years, however, with the launch of products tailored to local tastes, trends, and eating hab- its, Campbell presumed that it had the chance to lead the soup commercialization in Russia and China. “We have an unrivaled understanding of consumers’ soup consumption behavior and innovative technology capabilities within the Simple Meals category. The products we developed are designed to serve as a base for the soups and other meals Russian and Chinese consumers prepare at home.”7 For about three years, in both Russia and China, Campbell sent its marketing teams to study the local markets. The main focus was on how Russians and Chinese ate soup and how and Campbell could offer something new. As a result, Camp- bell came up with a production line specifically created for the local Russian market. Called “Domashnaya Klassika,” the line was a stock base for soups that contains pieces of mushrooms, beef, or chicken. Based on this broth, the main traditional Russian soup recipes could be prepared.
But after just four short years, Campbell pulled out of the Russian market that it had thought would be a simmer- ing new location for its products. Campbell’s chief oper- ating officer and newly elected CEO Denise Morrison said results in Russia fell below what the company had expected. “We believe that opportunities currently under exploration in other emerging markets, notably China, offer stronger prospects for driving profitable growth within an acceptable time frame,” Morrison said. When the company entered Russia, Campbell knew that it would be challenging to persuade a country of homemade-soup eat- ers to adopt ready-made soups. When Campbell initially researched the overseas markets, it learned that Russians eat soup more than five times a week, on average, com- pared with once a week among Americans.8 This indicated that both the quality and sentiment of the soup meant a great deal to Russian consumers—something that Camp- bell may have underestimated. As for China, a few years after Campbell infiltrated the market, CEO Denise Morrison was quoted by Global Entrepreneur as saying, “The Chinese market consumes roughly 300 billion servings of soup a year, compared with only 14 billion servings in the U.S.”9 When enter- ing the Chinese market, Campbell had determined that if the company could capture at least 3 percent of the at-home consumption, the size of the business would equal that of its U.S. market share. “The numbers blow your hair back,” said Larry S. McWilliams, president of Campbell’s international group.10 While the company did successfully enter the market, it remained to be seen whether Campbell had the right offerings in place to capture such a market share or whether China’s home- made-soup culture would be as disinclined to change as Russia’s was.
U.S. Soup Revitalization
In September 2010, Campbell launched its first-ever umbrella advertising campaign to support all of its U.S. soup brands with the slogan “It’s Amazing What Soup Can Do,” highlighting the convenience and health ben- efits of canned soup. The new campaign supported Campbell’s condensed soups, Campbell’s Chunky soups, Campbell’s Healthy Request soups, and Campbell’s Select Harvest soups, as well as soups sold in microwave- able bowls and cups under these brands.11 Despite other departments flourishing, the soup division continued to struggle.
Campbell Soup Company had begun moving atten- tion away from reducing salt in its products and focusing more on “taste adventure” as its U.S. soup business was turning cold. Campbell Soup was one of the first large U.S. packaged-food makers to focus heavily on decreas- ing sodium across its product line. The salt-reduction push was one of the company’s biggest initiatives of the past decade. “The company had pursued reducing sodium lev- els and other nutritional health initiatives partly to prepare for expected nutritional labeling changes in the U.S. But amid the attention on salt-cutting, management focused less on other consumer needs, such as better tastes and exciting varieties,” said former CEO Douglas Conant. “I think we’ve addressed the sodium issue in a very satisfac- tory way. The challenge for us now is to create some taste adventure.”12 Yet with Campbell reinventing its product offerings and revitalizing its soup line, Conant decided that his work was done and it was time to retire. He stepped down as CEO in July 2011 at the age of 60. Denise Morrison, for- merly president of the North America Soup division, took the reins as chief executive. At the time of her promotion, many were hesitant to accept her as the best candidate for the position. After all, the soup division, which had been her responsibility, had been losing steam and encounter- ing declining sales under her tenure. Yet the company rein- forced its confidence in her to do the job, and Morrison assured everyone that changes were on their way and a shift in focus was in the works. Morrison said that Camp- bell would bring both the “taste and adventure” back to its soups, with a new and expanded product line offering unique new flavors and “adding the taste back” by doing away with sodium reduction.
Firm Structure and Management
Campbell Soup was controlled by the descendants of John T. Dorrance, the chemist who had invented con- densed soup more than a century ago. In struggling times, the Dorrance family faced agonizing decisions: Should they sell the Campbell Soup Company, which had been in the family’s hands for three generations? Should they hire new management to revive flagging sales of its chicken noodle and tomato soups and Pepperidge Farm cookies? Or should Campbell perhaps become an acquirer itself? The company went public in 1954, when William Murphy was the president and CEO. Dor- rance family members continued to hold a large portion of the shares. After CEO David Johnson left Campbell in 1998, the company started to weaken and lose cus- tomers,13 until Douglas Conant became CEO and trans- formed Campbell into one of the food industry’s best performers. Conant became CEO and director of Campbell Soup Company in January 2001. He joined the Campbell’s team with an extensive background in the processed- and packaged-food industry. He had spent 10 years with Gen- eral Mills, filled top management positions in marketing and strategy at Kraft Foods, and served as president of Nabisco Foods. Conant worked toward the goal of imple- menting the Campbell’s mission of “building the world’s most extraordinary food company by nourishing people’s lives everywhere, every day.”14 He was confident that the company had the people, the products, the capabilities, and the plans in place to actualize that mission.
Under Conant’s direction, Campbell made many reforms through investments in improving product qual- ity, packaging, and marketing. He worked to create a com- pany characterized by innovation. During his tenure, the company improved its financial profile, upgraded its sup- ply chain system, developed a more positive relationship with its customers, and enhanced employee engagement. Conant focused on winning in both the marketplace and the workplace. His efforts produced an increase in net sales from $7.1 billion in fiscal 2005 to $7.67 billion in fiscal 2010.15
For Conant, the main targets for investment, fol- lowing the divestiture of many brands, included simple meals, baked snacks, and vegetable-based beverages. In 2010, the baking and snacking segments sales increased 7 percent, primarily due to currency. Pepperidge Farm sales were comparable to those a year earlier, as the additional sales from the acquisition of Ecce Panis, Inc., and volume gains were offset by increased promotional spending. Some of the reasons for this growth were the brand’s positioning, advertising investments, and improvements and additions in the distribution system. Conant also secured an agreement with Coca-Cola North America and Coca-Cola Enterprises Inc. for distribution of Campbell’s refrigerated single-serve beverages in the United States and Canada through the Coca-Cola bottler network.16
In fiscal 2010, the company continued its focus on delivering superior long-term total shareowner returns by executing the following seven key strategies:17
? Grow its icon brands within simple meals, baked snacks, and healthy beverages.
? Deliver higher levels of consumer satisfaction through superior innovation focused on wellness while providing good value, quality, and convenience.
? Make its products more broadly available and relevant in existing and new markets, consumer segments, and eating occasions.
? Strengthen its business through outside partnerships and acquisitions.
? Increase margins by improving price realization and companywide total cost management.
? Improve overall organizational excellence, diversity, and engagement.
? Advance a powerful commitment to sustainability and corporate social responsibility.
Another major focus for Conant and Campbell Soup was care for their customers’ wellness needs, overall prod- uct quality, and product convenience. Some of the main considerations regarding wellness in the U.S. market were obesity and high blood pressure. For example, building on the success of the V8 V-Fusion juice offerings, the com- pany planned to introduce a number of new V8 V-Fusion Plus Tea products. In the baked snacks category, the com- pany planned to continue upgrading the health credentials of its cracker (or savory biscuit) offerings. Responding to consumers’ value-oriented focus, Campbell’s condensed soups were relaunched with a new contemporary packag- ing design and an upgrade to the company’s gravity-fed shelving system.18
In 2011, after 10 years leading the company, Conant retired. His successor, Denise Morrison, had worked for Conant for quite some time, not just at Campbell but at Nabisco as well as earlier in their careers. In August 2011, on her first day as CEO, she was set on employing a new vision for the company: “Stabilize the soup and simple meals businesses, expand internationally, grow faster in healthy beverages and baked snacks—and add back the salt.”19 With the younger generation now making up an increasingly large percentage of the population, Morrison knew that the company had to change in order to increase the appeal of its products. At that time, the U.S. population included 80 million people between the ages of 18 and 34, approximately 25 percent of the population. Early on in her role as chief executive, Morrison dispatched Campbell’s employees to hipster hubs—including Austin, Texas Port- land, Oregon London and Paris—to find out what these potential customers wanted. 20st To build employee engagement, Campbell provided manager training across the organization. This training was just one part of the curriculum at Campbell University, the company’s internal employee learning and development program. Exemplary managers built strong engagement among their teams through consistent action planning. The company emphasized employees’ innovation capabilities, leadership behavior, workplace flexibility, and wellness.
In her new role, Morrison said she planned to “accelerate the rate of innovation” at the company. Morrison planned to grow the company’s brands through a combination of more healthy food and beverage offerings, global expan- sion, and the use of technology to woo younger consumers. While innovation isn’t a term typically associated with the food-processing industry, Morrison said that innovation was a key to the company’s future success. As an example, she cited Campbell’s development of an iPhone applica- tion that provided consumers with Campbell’s Kitchen recipes. The company’s marketing team devised the plan as a way to appeal to technologically savvy, millennial- generation consumers, Morrison said.21 Yet more than a few years into her governance, analysts still had a lukewarm response about Morrison taking over. They still expressed their doubt about whether Morrison was the right choice, rather than some new blood as a CEO replacement.
The U.S. packaged-food industry had recorded faster current-value growth in recent years mainly due to a rise in commodity prices. In retail volume, however, many cat- egories saw slower growth rates because Americans began to eat out more often again. This dynamic changed for a couple of years when cooking at home became a more popular alternative in response to the recession and the sharp rise in commodity prices in 2008.22
After years of expansions and acquisitions, U.S. packaged- food companies were beginning to downsize. In August 2011, Kraft Foods announced that it would split into two companies: a globally focused biscuits and confectionery enterprise and a domestically focused cheese, chilled processed-meats, and ready-meals firm. After purchasing Post cereals from Kraft in 2008, Ralcorp Holdings spun off its Post cereals business (Post Holdings Inc.) in February 2012.23
Though supermarkets were the main retail channel for buying packaged food, other competitors were gain- ing traction by offering lower prices or more convenience. The recession forced shoppers to consider alternative retail channels as they looked for ways to save money. A big beneficiary of this consumer trend was the discount- ers, which carried fewer items and national brands than super marketsbutofferedlowerpricesinreturn.Forexam- ple, dollar store chains Dollar General and Family Dollar expanded their food selections to increase their appeal. Drugstore chains CVS and Walgreens expanded their food selections as well, especially in urban areas, to leverage their locations as a factor of convenience. Mass merchan- diser Target continued to expand its PFresh initiative, fea- turing fresh produce, frozen food, dairy products, and dry groceries.24
The increasing availability of refrigeration and other kinds of storage space in homes influenced the demand for packaged goods in emerging markets. However, for con- sumers who lacked the ability to preserve and keep larger quantities, U.S. companies began selling smaller packages, with portions that could be consumed more quickly
Campbell operated in the highly competitive food industry and experienced worldwide competition for all of its prin- cipal products. The principal areas of competition were brand recognition, quality, price, advertising, promotion, convenience, and service.
Nestle? was the world’s number-one food company in terms of sales, the world leader in coffee (Nescafe?), one of the world’s largest bottled-water (Perrier) makers, and a top player in the pet food business (Ralston Purina). Its best-known global brands included Buitoni, Friskies, Maggi, Nescafe? Nestea, and Nestle?. The company owned Gerber Products, Jenny Craig, about 75 percent of Alcon Inc. (ophthalmic drugs, contact-lens solutions, and equipment for ocular sur- gery), and almost 28 percent of L’Ore?al.26 In July 2007 it purchased Novartis Medical Nutrition, and in August 2007 it purchased the Gerber business from Sandoz Ltd., with the goal of becoming a nutritional powerhouse. Furthermore, by adding Gerber baby foods to its baby formula business, Nestle? became a major player in the U.S. baby food sector.
General Mills was the U.S. number-two cereal maker, behind Kellogg, fighting for the top spot on a consistent basis. Its brands included Cheerios, Chex, Total, Kix, and Wheaties. General Mills was also a brand leader in flour (Gold Medal), baking mixes (Betty Crocker, Bisquick), dinner mixes (Hamburger Helper), fruit snacks (Fruit Roll- Ups), grain snacks (Chex Mix, Pop Secret), and yogurt (Colombo, Go-Gurt, and Yoplait). In 2001 it acquired Pillsbury from Diageo and doubled the company’s size, making General Mills one of the world’s largest food com- panies. Although most of its sales came from the United States, General Mills was trying to grow the reach and position of its brands around the world.
The newly independent Kraft Foods Group was spun off by Mondele?z International (formerly Kraft Foods Inc.), divid- ing the North American grocery from the global snacks business in 2012. Kraft Foods Group was the fourth-largest consumer packaged-food and beverage company in North America. Its most popular brands included Kraft cheeses, beverages (Maxwell House coffee, Kool-Aid drinks), convenient meals (Oscar Mayer meats and Kraft mac’n cheese), grocery fare (Cool Whip, Shake N’ Bake), and nuts (Planters). While Mondele?z was focused on growth overseas, Kraft Foods Group was looking to resuscitate its business in North America.2
H. J. Heinz had thousands of products. Heinz products enjoyed first or second place by market share in more than 50 countries. One of the world’s largest food pro- ducers, Heinz produced ketchup, condiments, sauces, frozen foods, beans, pasta meals, infant food, and other processed-food products. Its flagship product was ketchup, and the company dominated the U.S. ketchup market. Its leading brands included Heinz ketchup, Lea & Perrins sauces, Ore-Ida frozen potatoes, Boston Mar- ket, T.G.I. Friday’s, and Weight Watchers foods. In 2013 Heinz agreed to be acquired by Berkshire Hathaway and 3G Capital.29
In the 2014 fiscal year, Campbell’s sales from continu- ing operations increased 3 percent to $8.3 billion, driven by acquisitions and an additional workweek in the year. Organic sales declined 1 percent, while adjusted earn- ings per share (EPS) from continuing operations increased 2 percent to $2.53.
In the U.S. Simple Meals segment, sales were up 3 percent versus sales a year earlier. This compared to a 5 percent increase in fiscal 2013. The growth came from higher sales of Prego pasta sauces and Campbell’s dinner sauces. How- ever, sales declined in U.S. Soups as growth in Swanson broth was more than offset by declines in ready-to-serve and condensed soups.
The Global Baking and Snacking segment grew 7 percent (versus 4 percent in fiscal 2013) driven by mar- ginal growth at Pepperidge Farm and continued gains in Goldfish crackers, fresh bakery items, and the Indonesian market.
The U.S. Beverages business saw a continued decline in sales, and the company initiated turnaround plans to jump- start the business.
delivering economic, environmental, and social perfor- mance. Launched in 1999, the DJSI tracked the financial performance of leading sustainability-driven companies worldwide. In selecting the top performers in each busi- ness sector, DJSI reviewed companies on several general and industry-specific topics related to economic, envi- ronmental, and social dimensions. These included corpo- rate governance, environmental policy, climate strategy, human capital development, and labor practices. Campbell included sustainability and corporate social responsibility as one of its seven core business strategies.30 Campbell’s Napoleon, Ohio, plant implemented a new renewable energy initiative, anchored by 24,000 new solar panels. The 60-acre, 9.8-megawatt solar power system was expected to supply 15 percent of the plant’s electricity while reducing CO2 emissions by 250,000 metric tons over 20 years.31
Additionally, Campbell employees volunteered an aver- age of 20,000 hours annually at more than 200 nonprofit organizations. Supported by local farmers and Campbell, the Food Bank of South Jersey was earning revenue for hunger relief from sales of Just Peachy salsa. The salsa was created from excess peaches from New Jersey and was manufactured and labeled by employee volunteers at Campbell’s plant in Camden.32
A new food-rating system unveiled in 2009, the Affordable Nutrition Index (ANI), analyzed both nutrition and the cost value of food, making it easier for consumers to find budget-friendly, nutritious foods. Dark-colored vegetables, certain fruits, and vegetable soups were among the most affordable, nutritious foods. “In today’s economy, more people are making food choices based solely on cost, so it’s important to guide them on ways to get nutritious options without hurting their wallets,” said Adam Drewnowski, PhD, a professor at the University of Washington. “It is important to identify a wide range of affordable, nutritious choices that can help people build a balanced diet that fits their lifestyle and budget.”33
As for Campbell, its advertising campaign failed to assist the company in gaining the expected traction in the ready-to-serve soup business. Campbell planned to correct this by introducing new products into what many considered a rather ordinary product line. But if the economy continued to improve, would Campbell’s name still resonate with American consumers or would con- sumers venture back to restaurants? Would Campbell’s soup simmer to perfection, or would the company be in hot water?
IE:INBOUND LOGISTICS,OPERATIONS,OUTBOUND LOGISTICS,MARKETING/SALES,SERVICE,PROCUREMENT,TECHNOLOGICAL DEVELOPMENT,HR,GENERAL ADMIN) THEN CONCLUSION OF VALUE CHAIN.
3)HOW DOES EXTERNAL ENVIORNMENT AFFECTS CAMPBELL STRATEGY
4)CAN INTERNAL ENVIORNMENT SUSTAIN COMPETITVE ADVANTAGE?(USE VALUE CHAIN+RESOURCE BASED VIEW
5)ISSUES CAMPBELLS FACED (INTERNAL/EXTERNAL)
6)SOURCES OF CAMPBELLS COMP ADVANTAGE?(BUSINESS LEVEL STRATEGY)(DIFFERENTIATED OR DIVERSIFIED)