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Posts Tagged ‘food marketing’

PepsiCo Unfairly and Deceptively Targets Teens with Its “Win from Within” Gatorade Campaign

Tuesday, May 8th, 2012

The Public Health Advocacy Institute has submitted a letter to the Federal Trade Commission (FTC) requesting that it use its authority under Section 5 of the Federal Trade Commission Act to investigate PepsiCo’s current “Win from Within” commercial television advertisement and commercial website for its Gatorade sports drink product featuring Michael Jordan’s performance during game 5 of the 1997 NBA Finals (hereinafter “Jordan Ad”) that he played while suffering from a fever and flu-like symptoms. This game is popularly referred to as the “Flu Game.”  The Jordan Ad depicts Mr. Jordan holding a Gatorade cup during the game and asserts that Gatorade was a key to his game-winning performance. Enforcement action is warranted because the Jordan Ad:

The “Win from Within” ad series is designed to target teens, and the campaign is intended to deliver sports nutrition information to teens. PepsiCo’s media buys for the Gatorade Jordan Ad also appear to target teens. The average U.S. teen (12-17 years) saw 1.85 of these ads during the first quarter of 2012, 22% more ads than adults saw. More than half of this exposure occurred on teen-targeted cable networks, including Adult Swim, Teen Nick, ABC Family, and MTV.

PepsiCo has put itself in the position of being a messenger of sports nutrition and health information to its core Gatorade product demographic of teens. There is already enormous pressure on teen athletes to win at all costs by practicing during extreme heat and playing through injuries. The Jordan Ad creates the distinct impression that so long as you are drinking Gatorade you should not sit out a game or stay home when you are seriously ill with a fever. This message contravenes the medical recommendations for people suffering from flu-like symptoms and fever and puts teens in danger. The FTC should order PepsiCo to engage in corrective advertising that advises teens to not engage in physical activity when they have the flu or are suffering from a fever, describes the dangers of competing in sports when ill, and clearly states that Gatorade is not intended to be used to enhance the athletic performance of teens who are suffering from the flu or a fever.

 

 

 

 



The Cost of McDonald’s Happy Meal Toys

Thursday, December 8th, 2011

By Cara Wilking, Staff Attorney

The passage of San Francisco’s Healthy Food Incentives Ordinance and McDonald’s recent decision to “comply” with the law by charging 10 cents in order to be able to include toys with meals that do not meet minimal nutritional criteria has engendered a lot of public debate. The following table summarizes information from a 2005 Massachusetts Appellate Tax Board decision with Happy Meal cost information from the period between 1999 and 2001:

Toy, Food, Condiment & Paper Costs to McDonald’s Restaraunts of Massachusetts (1999-2001) in US Dollars

 

Hamburger Happy Meal

Cheese-burger Happy Meal

4-piece McNugget Happy Meal

Happy Meal Toy Only

Toy cost

0.43

0.4299

0.4299

0.43

Food cost

0.3104

0.3561

0.4147

 

Condiment cost

0.0162

0.0162

0.0476 (average)

 

Paper cost

0.0434

0.0340

0.049

 

Total cost

0.8000

0.8362

0.9412

 

Menu Price

1.99

2.39

2.69

1.69

For the periods covered, McDonald’s reported that it paid its toy supplier 43 cents per toy. The total cost to McDonald’s for the toy and packaging of the Happy Meals was greater than the cost of food for each Happy Meal type. McDonald’s included a toy with every Happy Meal and sold the toys separately for a retail price of $1.69. The company  noted that it had a dedicated key on its registers in order to process separate toy sales.

In an issue advertisement run by McDonald’s explaining its 10 cent Happy Meal toy plan, the company wrote: “we feel a responsibility to our customers – including parents…who would like to have the option of purchasing…[a toy] separately for their kids.” In reality, prior to the ordinance all customers, including parents, had the option to purchase a toy separate from a Happy Meal. To comply with the letter and the spirit of San Francisco’s ordinance, McDonald’s could have stopped putting toys in with Happy Meals that did not meet nutritional criteria. Customers wanting to buy a toy separately, including parents, would then be treated as they always have been—rung up using the dedicated register key and charged the retail price of the toy.

The good news is that, as Michele Simon points out, there is an easy legal fix to the 10 cent toy strategy. In the short term, McDonald’s response amounts to an incredible missed opportunity to break away from a business model whereby the inedible portion of its children’s meals cost more to produce than the edible portion. The cost spent on toys could be spent to improve the nutritional profile of its children’s menu. The result could have been less trash in the form of discarded toys, a boon to fruit and vegetable producers all over the United States who supply McDonald’s, and, most importantly, healthier kids.

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Organizations that Care About Health Should Play No Part in the Soft Drink Industry’s Effort to Rehabilitate Its Public Image

Monday, June 20th, 2011

by Cara Wilking, J.D.

CLICK HERE DOWNLOAD THIS POST AS A PDF

INTRODUCTION

The United States has the highest per capita rate of carbonated soft drink consumption in the world at 736 eight-ounce servings or 46 gallons per person in 2009.[1] The soft drink industry is dominated by three major companies: The Coca-Cola Company (“Coke”), PepsiCo. (“Pepsi”), and Dr. Pepper Snapple (“DPS”).  Soft drink companies produce concentrate and fountain syrup, and are responsible for marketing existing products and developing new products. Bottlers mix concentrate from soft drink companies and mix it with sweeteners and water to produce bottled and canned beverages. The American Beverage Association (“ABA”) is the industry association representing the non-alcoholic beverage industry. While the United States still has the highest per capita consumption of carbonated soft drinks in the world, overall sales of full-sugar carbonated soft drinks have been declining in recent years. In response to this decline in sales, the soft drink industry has reinvigorated its efforts to engage the public via corporate social responsibility tactics designed to rehabilitate the image of its products.

SOFT DRINK INDUSTRY CORPORATE SOCIAL RESPONSIBILITY

As large corporations, Coke, Pepsi and DPS, all undertake corporate social responsibility (CSR) campaigns. Corporate social responsibility generally encompasses a company’s activities and value statements with respect to philanthropy, community, workplace diversity, safety, human rights, and environment. There are various reasons why companies pursue CSR including: organizational values, reaction to threats to transaction costs, brand and competitive positioning, marketing, publicity, and innovation.[2] Concerns generally motivating the soft drink industry’s CSR efforts are evident in The Coca-Cola Company’s 2009 Annual Report:

Consumers, public health officials and government officials are becoming increasingly concerned about the public health consequences associated with obesity, particularly among young people. In addition, some researchers, health advocates and dietary guidelines are encouraging consumers to reduce consumption of sugar-sweetened beverages, including those sweetened with HFCS or other nutritive sweeteners. Increasing public concern about these issues; possible new taxes and governmental regulations concerning the marketing, labeling or availability of our beverages; and negative publicity resulting from actual or threatened legal actions against us or other companies in our industry relating to the marketing, labeling or sale of sugar-sweetened beverages may reduce demand for our beverages, which could affect our profitability.

When faced with such public concern, CSR efforts aim at “legitimizing a corporation’s activities and increasing corporate acceptance.”[3] Philanthropy and cause-marketing campaigns are key parts of the soft drink industry’s CSR efforts.

Soft Drink Industry Philanthropy

Coke and Pepsi both have corporate foundations that make grants to non-profit organizations and institutions.  In 2008, the Coca-Cola Foundation Inc. made over $36 million in grants to organizations worldwide.[4] In 2009, the PepsiCo. Foundation, Inc. made $27.9 million in domestic grants.[5] In order to receive a grant, applicants must engage in work that meets the stated goals of the foundation, make an application and, once funded, follow the grant guidelines. The Coca-Cola Foundation and the PepsiCo. Foundation are required to publicly disclose grant recipients and total assets and expenditures to the Internal Revenue Service in order to maintain tax-exempt status.

Soft Drink Industry Cause-Marketing Campaigns

The use of cause-marketing campaigns is a growing trend facilitated by the rise of social networking online. Also referred to as “cause-related marketing,” cause-marketing traditionally has been defined as “a mutually beneficial collaboration between a corporation and a nonprofit in which their respective assets are combined to: create shareholder and social value; connect with a range of constituents (be they consumers, employees, or suppliers); and communicate the shared values of both organizations.”[6] Cause-marketing is distinct from corporate philanthropy because the corporate funds distributed “are not outright gifts to a nonprofit organization, so they are not treated as tax-deductible charitable contributions.”[7]

The Pepsi Refresh Project is an example of a cause-marketing campaign. Pepsi-Refresh is a program whereby members of the public submit ideas with a funding request and vote on whether or not to fund the concept. In 2010, PepsiCo pledged $20 million in funds for the Refresh campaign. This amount is distinct from its corporate foundation giving made through the PepsiCo Foundation and, as a marketing expenditure, is not subject to the same public disclosures required of private foundations. The underlying goal of the Pepsi Refresh cause marketing campaign is to sell more Pepsi products. When asked if Pepsi Refresh has been successful, Melisa Tezanos, Communications Director of PepsiCo Americas Beverages, replied:

Pepsi Refresh has been an overwhelming success. With over 2.8 billion (with a “B”!) earned media impressions, the project exceeded our internal benchmarks early in the year and we’ve seen an improvement in key brand health metrics. In fact, when Millennials, an important cohort group for Pepsi, know about the Refresh Project their purchase intent goes up.[8]

Ms. Tezanos clearly defines “success” not in terms of work done in the community funded by the program, but rather in terms of increasing the profile of Pepsi products and increasing sales amongst a key demographic. Social media is an important tool in cause-marketing campaigns as it facilitates the sharing of campaign materials that are embedded with product advertising and enables individuals to recruit other individuals to the campaign with relatively little effort.

ENSURING THE INTEGRITY OF YOUR ORGANIZATION’S HEALTH PROMOTION EFFORTS

The practical reality is that soft drinks are now for sale in almost every venue, e.g. hospitals, universities, youth centers, and public buildings via vending machines and on-site retail establishments.  In addition, corporate philanthropy by the soft drink industry and other private companies provides funding to a number of institutions and organizations that also have an interest in health promotion.  While organizations should re-examine traditional arms-length business relationships and donor/recipient relationships, emerging soft drink industry corporate social responsibility efforts that use cause-marketing and public relations tactics require special attention.  As part of a deliberate CSR strategy, these campaigns are embedded with product advertising, and often require participants to enlist other participants via social networking online. In addition, cause-marketing seeks to build an association between a company’s products and a trusted non-profit organization in order to build market share.  Organizations that care about health should establish a policy that identifies and distinguishes between traditional business relationships, corporate philanthropy and cause-marketing and should commit to not participate in cause-marketing campaigns that promote products, such as sugary drinks, that pose a public health threat.


[1] Beverage Digest, Special Issues: Top-10 CSD Results for 2009 (March 24, 2010), http://www.beverage-digest.com/pdf/top-10_2010.pdf.

[2] Michael J. Maloni & Michael E. Brown, Corporate Social Responsibility in the Supply Chain: An Application in the Food Industry, 68 J. Bus. Ethics 35, 36 (2006).

[3] Guido Palazzo & Ulf Richter, CSR Business as Usual? The Case of the Tobacco Industry, 61 J. Bus. Ethics 387, 390 (2005).

[4] The Coca-Cola Foundation, Inc., 2008 Form 990-PF.

[5] PepsiCo. Foundation, Inc. 2009 Form 990-PF.

[6][vi] The Foundation Center, Frequently Asked Questions, http://foundationcenter.org/getstarted/faqs/html/cause_marketing.html.
[7] Id.

[8] Christie Garton, Pepsi exec dishes on Pepsi Refresh, future plans for cause marketing, USA Today (Nov. 5, 2010).

 



Future of Obesity Litigation panel featuring PHAI’s Gottlieb and CSPI’s Gardner airs and is available online

Monday, February 28th, 2011

On January 21, 2011, Northeastern University Law Journal sponsored its third annual symposium.  This year, it was entitled “From Seed to Stomach,” and addressed legal and regulatory aspects of obesity and food safety.  The symposium was recorded for broadcast by CSPAN, which aired the material from February 25-28, 2011.

PHAI’s Executive Director, Mark Gottlieb, along with Stephen Gardner (Director of Litigation for the Center for Science in the Public Interest) appeared on a panel moderated by Stuart Rossman (Director of Litigation for the National Consumer Law Center) focused on the future of obesity litigaiton.  The 80 minute panel is archived on CSPAN’s website.  Topics addressed included the “cheeseburger bills,” the role of and use of arguments around choice and individual responsibility, consumer protection law, and the litigation against McDonald’s use of toy giveaways to sell Happy Meals.

Research upon which Mr. Gottlieb’s presentation was based was supported in part by the Robert Wood Johnson Foundation’s Healthy Eating Research Program (#66968) and by the National Institutes of Health (grant RO1 CA 87571).




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