Authors: Michael Moss
Kraft was no stranger to this contest. Its product managers were turning out some of the most enticing, supersized, and cheapest items of all, from the fruit drink called Capri Sun (later “up-sized” to the Big Pouch) to the fat-laden Lunchables (expanded into the Maxed Out size) to the Cheese Stuffed Crust Supreme DiGiorno frozen pizza (with three meats added to with the extra cheese, delivering more than two days’ worth of the recommended maximum of saturated fat and sodium in a single pie weighing nearly two pounds).
“Build and defend,” was the rallying cry in Kraft’s internal pep talks. “Drive consumption.”
Inside this same company, however, a heretical view had emerged. Starting in the late 1990s, a small group of senior Kraft officials had been watching America’s massive weight gain with growing alarm. They didn’t buy the industry’s view that consumers were to blame for the obesity crisis by being slothful or lacking in willpower. The small group of insiders had a different take on America’s gluttony. Some were emotionally vested, believing that they had an ethical and moral imperative to help resolve the epidemic of obesity, for which their industry was in large part responsible. Others made a more practical argument: The consumer backlash on processed foods, when it came, would exact a heavy toll on the company’s profits.
“We were trying to convince senior management that we would be better off in the long run if we gave up a little to save a lot, in terms of our long-term business reputation and success,” said Kathleen Spear, a senior vice president and member of this cabal at Kraft.
The group got Kraft to empanel the experts, and it then used their testimony as ammunition in convincing Kraft to act. At first, the steps the company took were modest in scope, starting with urging restraint in the company’s marketing strategies. But that was just window dressing. In order to change the company, these Kraft officials quickly realized, they had to confront the fundamental nature—the heart and soul—of processed food.
Since its earliest days, Kraft had directed every last shred of its talent and energy toward making its products as enticing as possible. Central to this mission were the formulations of salt, sugar, and fat that made the products attractive. The bliss point was no abstraction. Kraft’s legacy was built on doing this bigger and better than any other manufacturer. Yet this was precisely where the Kraft officials concerned about obesity saw they would have to go: into the actual product formulations, and their loads of salt, sugar, and fat. What if these formulations were causing people to buy and eat
too
much? they asked. Could they find a way to help people ease up without killing off their own company?
Had federal regulators dared to ask these questions, they would have been branded as traitors to free enterprise. This was, after all, the most sacrosanct part of the business, the most staunchly defended. The insiders who worried about obesity had to tread very carefully in how they parsed the issue at hand: the desire created by their products.
“We’re a food business,” Spear recalled thinking. “We wanted people to delight in the taste of everything we made, particularly when it came to snacks and cookies. We were mindful that we were selling confectionaries and snacks and not rice cakes. It was never, ‘Gee, we ought to cut back on the allure.’ Rather, it was, ‘We ought to make sure we’re not directly or indirectly or subliminally encouraging overconsumption.’ ”
However the equation was approached, the idea of a food giant exploring the question of how to get people to eat less was astonishing, and in the coming months Kraft would dive more deeply into the psychology of overeating than any manufacturer had ever gone before. But as I examined this extraordinary moment at Kraft, it became apparent that there was yet another
force at play influencing the company’s decisions. For years, much of Kraft’s motivation in getting people to eat more of its convenience foods had come from the bosses at Philip Morris. The tobacco executives encouraged them to find ever more potent ways to attract consumers and then applauded the victories when sales surged. They even supplied Kraft with their own marketing apparatus and strategies that had been so successful in selling cigarettes—precisely the relationship that Ellen Wartella’s boys had disdained in trying to stop her from joining the panel on obesity.
But behind the scenes, in the private rooms where the most senior officials gathered to account for their actions and receive their guidance for going forward, a dramatic shift occurred. In this confidential setting, I discovered—from secret documents and interviews with officials who spoke publicly for the first time on these matters—the same tobacco-steeped overlords in New York who had spent their own careers promoting cigarettes and denying addiction did the unthinkable: They fell in with the cabal and began urging Kraft to make changes in response to the growing epidemic of obesity.
Salt, sugar, and fat may have been the formula that carried Kraft to the apex of the processed food industry, the tobacco men said. But just as nicotine had turned on them, becoming a yoke that sunk their profits, so too would salt, sugar, and fat become Kraft’s millstones, dragging the whole company down with them.
I
n 1925,
an advertisement began appearing in newspapers and magazines across America. It depicted a slim woman with short hair standing on a diving board, clad in a one-piece bathing suit, looking pleased with her herself. But next to her, in shadow, stood her future self: dowdy and obese. “This Is You Five Years From Now!” read the caption. “When Tempted to Over-indulge, Reach for a
Lucky
Instead.”
The ad, for Lucky Strike cigarettes, was made by American Tobacco, which was the first cigarette manufacturer to realize that obesity could be
used as a marketing cudgel. Until then, smoking had been an overwhelmingly male pastime. But in looking to expand sales, the cigarette manufacturers began pitching tobacco to women as an appetite suppressant. The industry eventually stopped making all health claims, deciding at a 1953 summit that some of the ads—especially those touting filtered smoke as “better for your health”—were hurting sales by implying that smoking posed risks. So when Philip Morris introduced its own brand for women, Virginia Slims, in 1968, it took the more subtle route of associating the cigarette with women of style, women who were elegant, successful, slim.
Only internally did Philip Morris spell out the unspoken allures, which included the brand’s weight-loss appeal. The marketing slogans it tested on focus groups included concepts like this: “A satisfying cigarette, specifically made to curb your appetite for food.”
As the health risks in smoking became more apparent, there was even a brief time when cigarette makers saw fat as a potential ally. Researchers had begun connecting lung cancer to diets high in fat, and the interest this generated among tobacco executives was understandable, given how it might take some of the heat off cigarettes. One study—funded by the National Cancer Institute—examined the dietary and smoking habits of people in forty-three countries and found a correlation between fat and lung cancer that might help explain why Japan—with its high level of smoking but low-fat diets—had less lung cancer than the United States.
“High fat diets may promote lung tumors by decreasing normal ability to destroy new cancer,” the study said. Any comfort this might have been to the tobacco industry, however, was especially short-lived for Philip Morris. When this study came out in 1986, executives there marked their copy “very confidential” before adding it to their files. Philip Morris was no longer just a tobacco company. It was on the way to becoming the country’s largest manufacturer of processed foods as well. This gave it a much different view of fat. The firestorm that would later envelop the tobacco industry was still only a string of scattered lawsuits and pesky critics that Philip Morris felt confident it could contain. In the 1980s, when it started buying the food giants, Philip Morris saw them less as a replacement for
tobacco than as an opportunity to supplement its own burgeoning stable of blockbuster brands. That said, the food brands did have an issue the Philip Morris executives quickly recognized as something they would have to deal with, just as they were having to deal with nicotine: saturated fat, which was starting to rival sugar as a public health concern. Within a few years, the top Philip Morris officials began referring to fat not as an ally but as a matter of concern that, like nicotine, needed careful tending.
In 1990, the battalion of attorneys who worked for Philip Morris gathered for a retreat in La Jolla, California, where the company’s general counsel, Fred Newman, issued a call to arms. The Marlboro brand, he said,
“ranks as one of the great product success stories of all time,” having skyrocketed from a 1 percent share of the cigarette market in 1954 to 26 percent that year; the number of smokers it had attracted equaled the population of New England plus the cities of Dallas, Detroit, and Washington, D.C. But as an expanding conglomerate, he added, Philip Morris was saddled with a slew of new consumer issues. “These concerns involve not just tobacco, but also alcohol, red meat, dairy products, saturated fat, sugar, sodium, caffeine, and other common ingredients in many of our products,” he said. “You already know a great deal about the challenges we face in the tobacco business—challenges ranging from excise taxes and disputes over labeling, marketing, and advertising restrictions to product liability. In the future, we can expect these challenges to also confront us in alcoholic beverages and food. And, as these brand categories come to represent larger and larger parts of our business, our need to protect our interest in them will also rise proportionately. Clearly, many of the people in this room will have a key role to play in building and maintaining our interests in these areas. Your actions on that ultimate battleground—the courtroom—will have impact all over the country. Growth from working together is the cornerstone of the future success of all the companies and brands of Philip Morris.”
That same year, in addressing the food-side managers at Philip Morris, the chief executive, Hamish Maxwell, said that they—like the company’s attorneys—would also have to be sensitive and responsive to a wide range
of public concerns.
“As new management coming into our companies, I’m sure you also have thought about public health concerns and some of the more controversial aspects of our business,” he said. “We want to respond to the whole range of consumer concerns. We’ve modified our food products to remove fat or lessen the calories, and we’ve developed lighter cigarette products.”
To be sure, in these early days of handling fat, Philip Morris viewed the public’s worries as entirely manageable. It merely had to deploy a strategy, used by the entire consumer goods industry, known as the line extension: When people clamor loudly enough for healthier products, enough so that they are willing to sacrifice some of the pleasure these products provided, companies produce a better-for-you formulation. Whether it’s low-tar cigarettes, low-calorie beer, or lower-fat potato chips, these healthier versions are no threat to the mainline products. In fact, if done right, they can boost sales for the original full-calorie and full-fat versions by attracting new shoppers to the overall brand. The food managers working for Philip Morris put line extensions in motion throughout the grocery store.
As for the mainline versions of its brands, Philip Morris showed little inclination to do anything but market these products with all the skill and vigor that had once made Marlboro such a resounding success. Having learned with cigarettes that being first was not as important as being quick and aggressive in responding to trends, Philip Morris urged this same tactic upon its food managers. If Americans were craving foods that were fast and convenient, Philip Morris wouldn’t try merely to best its competitors in the grocery store; it would aim to capture a piece of the huge market owned by the fast food chains, adopting their formulations and, in some cases, even their mega-brands. Among these achievements was an ultra-convenient meal called the Taco Bell dinner kit—a boxed set of tortillas, cheese sauces, and recipes that Kraft started selling in 1996 after acquiring the rights to the brand name. With clinical precision, Philip Morris touted these efforts to Wall Street.
“In order to continue to deliver strong financial performance, Kraft will need to respond to several major environmental trends,” the chief operating
officer, William Webb, told a gathering of investors and analysts in 1999. “First, consumers are becoming busier. Seventy-seven percent of women in the U.S. age 25 to 54 are now in the work force, versus 51 percent in 1970, and this is expected to increase to about 80 percent by the year 2010. As consumers have gotten busier, the number of meals prepared at home has declined. Since 1990 the average consumer is preparing one half of a meal less per week at home, preferring instead to eat out or take-out from restaurants or other food-away-from-home venues. Kraft is responding to this trend. For example,
we’re helping busy consumers with an extensive lineup of easy-to-prepare meal products like Taco Bell dinner kits, Easy Mac single-serve macaroni and cheese, and Lunchables lunch combinations; ready-to-eat snacks like Jell-O pudding, Handi-Snacks gels and Kraft cheese cubes; and ready-to-drink beverages like Capri Sun, Kool-Aid Bursts and Kool-Aid Splash. We also know that the number one question in America at 4
P
.
M
. is not, ‘How did the market do today?’ It’s, ‘What’s for dinner?’ And most consumers don’t have a clue.” The Taco Bell kits, he noted, had quickly reached $125 million in annual sales.
But even as Philip Morris pushed more fatty products into the American diet, its executives were tracking the public’s concern about how fat, as well as salt and sugar, related to obesity. And on this front the news was growing increasingly worrisome. Between the 1960s and 1980s, obesity rates had held fairly steady. Among children, it hovered around 5 percent. In 1980, however, the rates had begun to surge for all ages. Moreover, the media was starting to draw the public’s attention to the implications of the country’s weight gain. Philip Morris had long used tracking surveys to monitor issues of public concern, and when obesity was added to the list of questions in 1999,
the company’s polling identified it as a significant threat to the manufacture of processed food: Eight in ten people viewed obesity as a serious risk to public health. And while one in three cited “lack of exercise” as a cause, a far greater number of people, nearly half of the respondents, blamed “unbalanced diets.” In other words, too much fatty and sugary food.