Authors: Michael Moss
The Big Three, as they came to be known, further solidified their hold on the cereal market in the late 1940s when Post, now owned by General Foods, became the first brand to make its cereal even sweeter by adding a candy coating. In 1949, they introduced a wheat-based product called Sugar Crisp, which caused an immediate sensation. Kellogg and General Mills, of course, then answered with their own concoctions: Sugar Corn Pops, Sugar Frosted Flakes, Sugar Smacks, Sugar Smiles, and Sugar Jets. The companies had in-house dieticians who raised concerns about the health implications of all this added sugar, but as the authors Scott Bruce
and Bill Crawford recount in their cereal industry chronicle,
Cerealizing America
, this voice of caution was quickly silenced. Jim Fish, a General Mills vice president for advertising at the time, told them, “It was overcome by marketing people who said, ‘We’ve got to be able to move into this area to survive!’ ”
By 1970, the Big Three controlled 85 percent of the cereal market. This put them in an enviable position as the decade got under way and the world’s appetite changed: The public’s enthusiasm for cereal was growing by leaps and bounds, thanks to a dramatic rip in America’s social fabric. Within a decade, 51 percent of women would be working outside the home, and when food manufacturers drilled into this data more deeply, they found even more promising news: The figure rose to 66 percent for women from twenty-five to forty-four. These women—many of whom had young children—had more money than time. Dinner was a struggle, of course, but breakfast was also a source of stress, a mad dash in which mothers tried to get everyone fed before the whole family flung itself out the front door. Convenience was key to starting the day. For the Big Three, this meant an opportunity to control the breakfast table like never before, but their power—in matters of sugar as well as money—had to be finessed.
W
ith cereal sales surging—from $660 million in 1970 to $4.4 billion by the mid-1980s—the first trouble the Big Three faced came from the fair trade watchdogs in Washington. Kellogg, Post, and General Mills had crammed the grocery shelves with so many of their own brands that there was no room for any significant competition. In fact,
they so completely controlled the cereal aisle that the Federal Trade Commission brought a complaint against the Big Three in 1976, accusing them of creating a shared monopoly in order to jack up cereal prices. Without even having a written agreement, the commission said, they were charging twenty to thirty cents more for each box of cereal than they would have been able to command had other companies been given space on the shelf to compete.
This had netted the companies $1.2 billion in consumer overcharges since 1958, and they stood to gain another $128 million each year unless the cartel was broken up. The case would not improve the FTC’s reputation as a bumbling champion of the consumer. Denying the accusation, the cereal companies mounted a vigorous defense and the antitrust action lumbered along for years, with the cereal companies outmaneuvering the FTC’s attorneys at every turn, until the commission voted in 1982 to drop its case.
On the more critical matter of what the cereal makers put
into
their boxes, there seemed to be no one in Washington willing to stand up to the Big Three. Indeed, Kellogg and its fellow manufacturers had a stalwart ally in the federal government—and, in particular, the Food and Drug Administration. The FDA was charged with overseeing the manufacture of cereal, along with all other processed foods except meat and poultry, which were controlled by the Department of Agriculture. It steadfastly refused, however, to see sugar as a threat to the public’s health. Moreover, it repeatedly declined to require food manufacturers to disclose, on their packaging, exactly how much sugar they were adding to their products. With cereals like Kaboom and Count Chocula, two General Mills brands, and Kellogg’s Sugar Frosted Flakes, the biggest seller of them all, parents could generally guess why their kids were lunging for the boxes at the breakfast table. But without specifics, sugar remained only a vague concern.
This all changed in 1975, when sugar—the keystone of the cereal makers’ fortunes—suddenly became a matter of vivid distress to consumers. Where Washington had failed to act, two men working on behalf of the public took the Big Three on themselves. One was
an enterprising dentist, Ira Shannon, with the Veterans Administration Hospital in Houston, who, alarmed by the exploding rates of tooth decay he’d seen in his young patients, decided that he’d had enough. (By one estimate, there were at any given moment one billion unfilled cavities in American mouths.) So the dentist took a trip to his local supermarkets, brought seventy-eight brands of cereal back to his lab, and proceeded to measure the sugar content of each with damning precision. A third of the brands had sugar levels between
10 percent and 25 percent. Another third ranged up to an alarming 50 percent, and eleven climbed even higher still—with one cereal, Super Orange Crisps, packing a sugar load of
70.8 percent
. When each cereal brand was cross-referenced with TV advertising records, the sweetest brands were found to be the ones most heavily marketed to kids during Saturday morning cartoons.
With the dentist’s report in hand, a second critic—who posed a much bigger threat to the cereal industry—took up the cause. His name was Jean Mayer, a Harvard professor of nutrition who later became the president and chancellor of Tufts University, and he was hugely influential in matters of diet, starting with poverty and hunger. As an advisor to President Richard M. Nixon in 1969, he’d organized the White House Conference on Food, Nutrition, and Health, which led to the introduction of food stamps and expanded school lunch programs for needy children. That endeared him to the food industry, since those programs expanded its market for sales.
But
what made Mayer an industry threat was his pioneering research on obesity, which he called a “disease of civilization.” He is credited with discovering how the desire to eat is controlled by the amount of glucose in the blood and by the brain’s hypothalamus, both of which in turn are greatly influenced by sugar. He became an early critic of sugar, which he saw as one of the most dangerous additives in food, citing its link to diabetes, and he hotly disputed the industry’s claim that sugar played a valuable role in food by delivering inexpensive calories. In 1975, taking his growing concern about sugar to the cereal industry, he penned a piece of advocacy journalism that newspapers around the country ran under the headline, “Is It Cereal or Candy?” In it, Mayer made his view perfectly clear. Citing the dentist’s report and the FDA’s abdication of its responsibility to protect the health of consumers, Mayer conceded one point to the industry. Many of their brands
were
, in fact, fortified with added vitamins and minerals. But the fortification was merely a ruse. Some candy bars had more protein than many cereals. Mayer dubbed them “sugar-coated vitamin pills” and
wrote,
“I contend that these cereals containing over 50% sugar should be labeled imitation cereal or cereal confections, and they should be sold in the candy section rather than in the cereal section.”
With Mayer continuing his crusade and parents looking at cereal with growing qualms, the Big Three, remarkably, didn’t push back.
Sugar took center stage at the 1977 conference of newspaper food writers and editors, where several food manufacturers scrambled to address the public’s concerns. The chairman of Gerber, for one, said that his company, under pressure from nutrition activists, had recently dropped two highly sweetened items from its lineup of baby foods, Blueberry Buckle and Raspberry Cobbler.
“We never said they were particularly nutritious,” he said. “We just said they tasted good.” Kellogg, in turn, was asked how its sugary cereals could even be called cereal—as in, food made from grain. The answer was provided by Kellogg’s vice president for public affairs, Gary Costley, who would go on to run the company’s North America division. “The candid answer is—to meet a lifestyle,” Costley replied. “Maybe we should quit calling them breakfast cereals and call them breakfast foods. These are mini–meal replacements. We don’t care whether it’s grain or not.”
But Kellogg was hardly throwing in the towel on sugar. Rather, Costley’s comments were revealing of another, more strategic shift that would define the company’s positioning for decades to come—decades that would be marked not by Kellogg’s supremacy but by its efforts to beat back a relentless assault on its dominance of the cereal market. Faced with growing consumer concern about sugar and with competition from manufacturers other than Post and General Mills, Kellogg would seek to bolster its sales by downplaying sugar. Some of these efforts were not so subtle. It de-sweetened the name of its leading brand, Sugar Frosted Flakes, by changing it to, simply, Frosted Flakes. The other manufacturers quietly dropped the word
sugar
from their brand names, too.
The deemphasizing of sugar would go deeper than the name on the box, however. The cereal industry would come to realize that the public’s anxiety about sugar required a reboot of its marketing schemes. Companies
couldn’t keep touting the sweetness of their cereals without hurting their revenue. Their advertising, so crucial to the success of their sales, needed more powerful, more hopeful themes.
At Kellogg, the strategy developed to draw the consumer’s attention to something other than sugar would evoke some of the creativity that its rival, C. W. Post, had used in his advertising copy a century earlier. The shift would also transform the essence of the company, empowering a breed of executive whose faith and expertise lay not in the product being sold but in the selling itself. And at Kellogg, the changes would come in the nick of time, just as the federal watchdogs, who had let sugar slide for so long, geared up for their own assault.
T
he battle in Washington over sugar began, oddly enough, with a pile of rotten teeth. In 1977, twelve thousand health professionals had signed petitions asking the Federal Trade Commission to ban the advertising of sugary foods on children’s television shows, and the consumer groups who had joined them decided to add a little theater of their own. They collected two hundred decayed teeth from pediatric dentists, bagged them, and sent them to the FTC along with the petitions for the advertising restrictions.
The FTC’s response caught the industry by surprise.
For much of its sixty-three-year history, it had been considered a dumping ground for political patronage, with a staff so inert and poorly qualified that it could manage only the most trivial of projects. But a housecleaning by the Nixon administration had attracted a cadre of young, idealistic attorneys, and they were finally starting to pick some serious fights with various industries over price gouging and deceptive advertising. In early 1977, President Jimmy Carter gave the FTC a new activist chairman, Michael Pertschuk, who had proven himself a staunch consumer advocate in his previous role as chief counsel for the Senate Commerce Committee. Pertschuk saw the children’s advertising issue as more than a worthy crusade; he saw it as an opportunity to galvanize the FTC. Here, at
last, was an issue that could connect with the public emotionally and become “the principal vehicle to demonstrate that we are serious.”
“As with cigarette advertising, we are not dealing with a single commercial or set of commercials that are allegedly deceptive or misleading, but rather with children’s advertising as a whole,” Pertschuk said. “The effect of which has been to shape the environment of the child in a manner which may well be unintended but which nevertheless raises certain clear and disturbing danger signals.”
Consumer advocates were asking only that the commission go after the marketing of sugary foods to children. The commission staff, however, laid out a set of recommendations that included a total ban on
all
advertising to children—for any product, food or otherwise. The Carter administration was not known for its political acumen, and indeed, this broad, far-reaching attack on advertising had a $600 million problem: Next to the salt, sugar, and fat in their formulas, advertising was far and away the most powerful tool the industry had to create allure. At times, it was the only thing that companies could use to distinguish themselves from their competitors.
Advertising’s power is particularly evident in the cereal aisle today, where high profit margins have led to severe overcrowding. In any given cereal aisle, two hundred cereal brands—and their spinoffs—compete for the shopper’s attention, so food manufacturers now spend nearly twice as much money on advertising their cereals as they do on the ingredients that go into them. But cereal makers were already large advertisers in the 1970s; taken altogether, advertising aimed at children for all types of goods generated $600 million in yearly revenue for media companies.
One man, arguably the most famous consumer activist of all, warned the FTC that any assault on this mountain of riches would be folly. This man, Ralph Nader, already legendary for his work in exposing the poor safety record of the Chevrolet Corvair, told FTC Chairman Pertschuk that the public’s concern about children’s advertising was simply not strong enough to win the fight to the death that industry would wage to preserve this kind of revenue.
“If you take on the advertisers,” Nader told Pertschuk,
“you will end up with so many regulators—with their bones bleached—in the desert.”
Pertschuk and the FTC, however, pressed ahead and ran smack into the industry’s most
formidable team of lobbyists. Tommy Boggs, of the Washington powerhouse firm Patton Boggs, assembled a group of thirty-two advertisers, food companies, and television networks to fight the commission’s proposals. In their battle with the FTC, they would be able to draw from a reported war chest of $16 million, which was one-quarter the size of the commission’s annual budget. Boggs’s group got Pertschuk disqualified from overseeing the commission’s hearings, claiming he had prejudged the matter, and actively worked to win the all-important media over to its side.