Stuffed The Role of the Food Industry in

Stuffed: The Role of the Food Industry in Obesity Prevention

Key Messages • Food industry holds the keys to solving the obesity crisis • Your work is commendable, but falling short • Things you can do

Ø You represent the Defenders Ø I am here to try to help you understand: v. How the food industry thinks and makes their decisions v. How you can motivate and drive them to doing what’s best for the public good

Obesity Playing Field Perceived Roles Perpetrators v Food & Beverage Cos. v Restaurants Defenders v Government v Advocates v Researchers v Health Care community Victims v Consumers

Obesity Playing Field Primary Motivations Perpetrators v Sales v Market share v Profit Defenders v The public health v Advocacy Victims v Taste v Health (for some)

Obesity Playing Field Political Skews Perpetrators v CPG – Republican/Independent v Rests – Conservative Wing Defenders v Advocates/Researchers - Liberal/Democrat v Public Health Community - Varied Victims v Varied

Current Model Industry • Consumer health per se is not the primary driver Ø Must make money to survive and flourish Ø Not rewarded by their shareholders just for going healthier Ø Quarterly earnings pressures push short term agendas • Historically, industry resistant to change, especially restaurants • Positions have been passive and not proactive Ø “Offer healthy options” Ø “Consumers responsible for themselves”

Current Model Defenders • Skeptical of industry’s willingness to change – Perhaps jaded by industry resistance to proposed changes • Lack financial arrows in their quiver to educate the public

Current Model Defenders • Skeptical of industry’s willingness to change – Perhaps jaded by industry resistance to proposed changes • Lack financial arrows in their quiver to educate the public • Perceived as absolute/draconian – Good vs. bad foods – Bans – Taxation

The Defenders So many well-intentioned initiatives, so few victories Ø Education v Not enough $ to counter marketing budgets of large food corporations v Food Pyramid Guidelines difficult to interpret ü Emphasis on ingredients not end products ü Serving sizes still misunderstood ü Confusing – worst, not best foods at top (apex) v On-package nutritional labeling required by NLEA has not stemmed tide of rising obesity v Programs pushing fruits & vegetables have not increased frequency and consumption in the last decade

The Defenders Recent Initiatives v. School vending machine initiatives underway to replace/reduce high calorie beverages and snacks v. Trans fats banned in select municipalities and California v. Calorie counts on restaurant chain menu boards in New York City ü 80% of consumer experienced “sticker shock”

Current Model Consumers • Consumers challenged to change their behavior – Failed diets – Lack of exercise/movement – Stressed (time; mentally; physically) – Convenience Culture – Nutritionally confused – Most lack the discipline to say “No” (1) • Only a minority plans/is structured enough to follow through • Not an issue of “Should” – they know they should eat better Don’t Expect to Solve the Problem (1) Source: Myers-Briggs Type Indicator

Results: America Still getting fatter v No state recorded an obesity rate of 20% or higher in 1990; today only 1 state (Colorado) boasts an obesity rate under 20%! v Southern tier in more dire straights ü Obesity rates in every state except Florida and Virginia @ 25% or more ü The only 3 states with obesity rates exceeding 30% are in the South v Jury still out on newer initiatives

Implications Public health and regulatory initiatives are crucial…. but alone will not get the job done

Epicenter of the Problem WMCs

So How Do We Address This? Solving the obesity crisis requires a whole new mindset

So How Do We Address This? Solving the obesity crisis requires a whole new mindset q Industry must make $. . . RESPONSIBLY

So How Do We Address This? Solving the obesity crisis requires a whole new mindset q Industry must make $. . . RESPONSIBLY q Defenders focus on guidelines not howto’s; acknowledge corporations must make a profit

So How Do We Address This? Solving the obesity crisis requires a whole new mindset q Industry must make $. . . RESPONSIBLY q Defenders focus on guidelines not how-to’s; acknowledge corporations must make a profit q Consumers “healthier” cake passengers; let them eat

So How Do We Address This? Help the food industry profit from selling healthier food rather than penalizing them Ø They NEED to make a profit (NOT optional) Ø They are the best marketers Ø They have the most money Ø They can deliver the products consumers will buy Ø They have the organizational structure to execute

“If not out of altruism, then do it for greed” - Former NY Gov. Mario Cuomo

A Modest Approach Ø Defenders, with industry/associations, identify what the goals are v Set overarching Guidelines v With timelines or milestones v Provisions for non-compliance Ø Food industry figures out how to solve the problem

Primary Goal Ø Focus on reducing calories across company portfolios v. Other offenders like fat/sugars reduced by default Calories

(Dietary) Energy Policy Ø Example Guideline: A company’s weighted # of calories per product across its portfolio must be (X) within 5 years v. Comparable to Corporate Average Fuel Economy (CAFÉ) standards (Average 35 mpg by 2020) üWhy? Not enough automobile fuel (oil), too much dietary fuel (calories)

Case Examples Example #1 - School Vending Alabama has established Guidelines: Ø limit/remove soft drinks and high calorie beverages Ø replace with low/no calorie beverages

Case Examples Example #1 - School Vending Program Status (Nationally) Ø Beverage calories shipped to schools down 58% v Shift to waters, portion-controlled sports drinks and diet drinks Ø 65% of vending machines changed over Ø 79% of schools in compliance with national Guidelines

Case Examples Example #1 - School Vending Why This Works? Ø For Industry v Keeps them in schools ü Brand awareness & trial ü Source of high margin sales v Substitute beverage profits comparable to soft drinks Ø For Schools/Students v Source of needed revenues v Better for the kids

Case Examples Example #1 - School Vending Minneapolis District Test Ø # vendors increased from 4 to 16 v 13 bottled water and/or juice (high traffic areas) v 2 sports drinks v 1 soft drinks (limited hours) Ø Different pricing levels v Bottled water v Juice/sports drinks v Soft drinks $ 0. 75 $ 1. 00 $ 1. 25 Ø Result: CSD sales down; total vending profits up $4 K

Case Examples Example #2 – Controlled Calorie Packs Ø Early evidence that 100 calorie packs are effective v Center for Human Nutrition at the University of Colorado-Denver: “People ate 120 calories a day less when eating from 100 -calorie packs than when they were given the regular packages”

Case Examples Example #2 – Controlled Calorie Packs Suggest 100 -Calorie packs become de rigueur in snack aisles and school vending machines Ø Win for manufacturers v Higher gross margins per package v Sustained visibility in schools Ø Win for schools/students v Less calories per purchase v Provides revenue stream to schools

Case Examples Example #3 a – Restaurant Initiatives q “Zero-sizing” Ø Beverages highly profitable → reason for supersizing Price (32 oz. ) Cost Gross Profit $ 1. 19. 36 $ 0. 83

Case Examples Example #3 a – Restaurant Initiatives q “Zero-sizing” Ø Calories not a factor regardless of drink size Ø Opportunity to retain economics of larger-sizes

Can This Be Implemented? Key issue: Self-serve beverage dispensers prevalent in QSRs Solution: New Dispenser Unit Ø 100+ beverage options Ø Promotional dollars for Zero-sizing Ø Special code to only fill with Coke Zero or other low calorie drinks

Case Examples Example #3 b – Restaurant Initiatives q Healthier Beverages for Kids Issues: 1. Beverage options mostly high in calories § Accentuated by “free refill” policies 2. Nutrition often lacking

Case Examples Example #3 b – Restaurant Initiatives q Healthier Beverages for Kids Ø Branded product as base + Flavor ingredient(s) + Fruit garnish = New Beverage Ø ½ calories of equivalent beverages Ø Each contains a nutritional element e. g. , Calcium; Vitamin C

Case Examples Example #3 b – Restaurant Initiatives q Healthier Beverages for Kids Benefits Ø Premium price yields higher profits for restaurant Ø Company secures more occasions to sell its products Ø Parents pleased about child consuming a healthier beverage Ø Kids happy about the taste + fun

Case Examples Example #3 c – Restaurant Initiatives q Capping Combos Ø Combo meals a major source of excess calories v Value proposition that trades customer up to additional item purchase(s) Ø Drinks and fries are highly profitable

Case Examples Example #3 c – Restaurant Initiatives q Capping Combos Ø Opportunity to “cap” total calories in a Combo Meal v Example Guideline: Cap the calories at 750 ü Ensures bundled items don’t become “Weapons of Mass Consumption”

“Weapons of Mass Consumption” Example Monster Thickburger® Large Crispy Curls Soft Drink (32 oz. ) 1420 cals 480 cals 388 cals 2288 cals

Case Examples Example #3 c – Restaurant Initiatives q Capping Combos Ø Example v Little Thick Cheeseburger v Small Crispy Curls v Diet Dr. Pepper 470 cals 260 cals 730 cals

Case Examples Example #3 c – Restaurant Initiatives q Capping Combos Ø Example v Double Cheeseburger v Small Fries v Coca-Cola Zero 440 cals 230 cals 670 cals

Will Industry Go For This? Ø Must show them that not trying to truncate their profits v. Just want them to lower the calories for the public good Ø Must even the playing field – Guidelines must apply to all chains/large players Ø Don’t get caught up in the details

What Else Can You Do?

The Southern Block ØConsider forging a Southern Block to effect change v All Top 10 Most Obese states are Southern v Southern states > 35% of population v Fast food and soft drink sales skew disproportionately to Southern states Ø As a block, can influence what is sold in restaurants, grocery and convenience stores

The Way to Win-Win Ø Set overarching Guidelines to lower obesity rate Ø Package up win-win ideas for business v Show industry how they can still make $ ØLet the corporations figure it out how to implement ØIf they don’t do what they agree to do….

For More Information on These Ideas • From Harper. Collins/Ecco • Available 1/27/09 • Special Southern Obesity Summit rate (SOS@stuffednation. com)

Stuffed: The Role of the Food Industry in Obesity Prevention Thank You