Salt Sugar Fat (40 page)

Some consumers could restrain themselves when they opened a bag like this, sharing the cookies or saving some for later, Kraft told the FDA, citing its polling. But many people could not. “These products can reasonably be consumed as a single serving,” Kraft told the FDA. “What is the best approach to labeling products showing 2–4 servings? ‘Do the math’ for consumers.”

The honest labeling move by Kraft would have a powerful ripple effect. Within months of the 2003 meeting, the FDA was urging the entire
industry to consider adopting Kraft’s whole-content listing for foods with multiple-serving foods that were conducive to overeating, and by 2012,
the food industry was discussing even more changes. These included the reform that Kraft wanted to make but could not do without risking big losses in sales: putting a total calorie count on the
front
of food packages.

J
ohn Ruff had been forthright with me in discussing the team’s work. We met twice, and we also spoke on the phone, and he walked me through Kraft’s initial steps, noting the company’s willingness to restrain itself in marketing to kids and to be honest about the portion size deception. So I asked him about the bigger, much thornier problem with processed foods and obesity: the huge loads of salt, sugar, and fat that so many products bear.

I asked him if anybody asked the question, “ ‘What if some of these products are so tasty, people can’t resist eating them?’ Is it possibly part of the problem that you have just made this stuff taste so good that people can’t help but eat too much?”

“That was in constant discussion, and came up in many different forums,” Ruff replied. It was, he said, the toughest issue of all for the team to wrestle with. No one at Kraft, in his experience, had ever talked about formulating the company’s foods to be “addictive,” he said. But then, they didn’t have to use that particular word. It was a well-known and accepted fact that the entire company—from the food technicians to the package designers to the advertising copywriters—were pulling together to achieve one goal and one goal only. “You’re looking for the product that people like best,” Ruff told me. “We would talk about people ‘desiring’ foods, and at the end of the day, you make the best-tasting food you possibly can.”

Thus, it was with considerable nerve that Kraft in 2004 broached the topic of its product formulations.

Since its beginnings more than a century ago, the processed food industry
has viewed these formulations as a matter of inviolable corporate rights. The company chiefs, and the chiefs alone, could determine how much salt, sugar, and fat to put into their products, and if they deferred to anyone, it was their food scientists, who handled the specifics on bliss. But now, rethinking their culpability in the obesity crisis and wanting to do the right thing by consumers, Ruff and his colleagues pressed Kraft to act. The initiative they proposed in late 2003 was nothing short of heretical: In developing new products, Kraft’s food scientists and brand managers could no longer add all the salt, sugar, and fat they wanted. Kraft, in fact, set caps on each of these ingredients, along with calories, across every category of food it produced. The idea was to start shrinking the salt, sugar, fat, and calorie loads of its entire $35 billion portfolio.

Today, Kraft insists it remains committed to these caps. To get a closer look at this, I visited the company in 2011, toured its research and development laboratories, and sat down with top officials to discuss the status of the anti-obesity campaign, eight years after the launch. Among the people I talked to was Marc Firestone, the company’s general counsel, who came to Kraft from Philip Morris and returned to the tobacco company in 2012. The cabal of Kraft insiders who were pressing the company to fight obesity had considered Firestone an ally, but in our meeting he was restrained. For competitive reasons, he said he could not provide me with details on the caps Kraft placed on salt, sugar, and fat—either their actual amounts or any specifics on how the ingredient caps have held up over time.

But skeptics abound, especially among competitors who viewed Kraft’s anti-obesity initiative as a cunning maneuver—or as the vice president for communications at General Mills, Tom Forsythe, put it to me, “a bit of a stealing of a march by Kraft. I will say that was a nice PR play, but it put the company in a difficult spot. Let’s be honest, they’re a cheese company, and there’s a whole bunch of products that they were not going to make spiffy new healthy. So that was artfully written in a way that made them look good, but it had a lot of asterisks and or’s in key places.”

So I tried another approach with Firestone.

Back in 2004, I said, Kraft was saying it had managed to get something like 30 billion calories out of two hundred products. Do you know if there’s a corresponding figure now?

“In Capri Sun alone we took out 120 billion calories,” Firestone said. “But across the whole portfolio I can’t say, because I don’t think we’ve racked it up. We’ve looked at the amount of sodium we’ve taken out. Last year was six million pounds, and we’re going to add nine billion servings of whole grain between now and 2013, so those are things where we’ve got major initiatives.”

If those numbers sound impressive, consider what Michelle Obama
managed to wrestle out of the entire processed food industry in 2010, after asking for their help in fighting obesity. “I am thrilled to say that they have pledged to cut a total of one trillion calories from the food they sell annually by the year 2012, and 1.5 trillion calories by 2015,” she announced. “They’ve agreed to reformulate their foods in a number of ways, including by addressing fat and sugar content, by introducing lower-calorie options, and by reducing the portion sizes of existing single-serve products.”

The math on all this, however, is less compelling. If everyone in America consumed the standard 2,000 calories a day, or 730,000 a year, the 1.5 trillion in saved calories would reduce our collective eating by not quite 1 percent. It’s actually bleaker than that, according to some health policy experts. In reality, many of us consume far more than 2,000 calories, and processed foods make up a large part, but not all, of our diets. So the real drop in consumption from those 1.5 trillion calories is likely much less than that 1 percent. Still, it’s a start.

One of the most enthused supporters of Kraft’s anti-obesity initiative was the co-CEO, Betsy Holden, in what seemed like a striking turn in her career. Holden had risen quickly in the company after joining the desserts division of General Foods in 1982. She impressed everyone by her handling of brands like Cool Whip, and later, she was credited with innovations in the DiGiorno brand that turned the company’s pizza business into a $1-billion-a-year behemoth. By late 2003, however, Kraft was slumping on numerous fronts. Some new products, like Chips Ahoy! Warm ’N
Chewy, had flopped altogether. Reliable standbys, like Philadelphia Cream Cheese, were falling below expectations. That summer, a conference call with Wall Street analysts turned hostile when Kraft delivered the news that its operating income had come in below expectations and that the company would need to spend $200 million trying to regain its competitive position.

“Do you think there’s a bigger problem?” a Morgan Stanley analyst asked. “Because clearly you’re underperforming your peers.”

And what about all this talk about fighting obesity? asked an analyst from Prudential Securities. How was the company going to meet its projected sales growth of 3 percent if it was worrying about people’s waistlines? “You’ve obviously made a statement on obesity,” this analyst added. “But can you clarify the company’s efforts in achieving a volume increase? You’re going to try to grow your volume 2 to 3 percent domestically, it’s almost got to make us fat.”

Holden gamely replied that increasing the company’s profits and fighting obesity were not necessarily mutually exclusive. She evoked the industry concept of stomach share. Kraft, she said, was trying to get a larger share of what people ate, not get them eating more food per se. But Wall Street was not assuaged. Just as the anti-obesity initiative at Kraft was gathering steam, through the summer and fall of 2003, the price of Kraft’s shares started to fall, tumbling 17 percent for the year, compared with a 5 percent gain for its competitors.

Kraft’s financial slump came at the worst moment for one key player: the parent company, Philip Morris. After nearly two decades of ownership, starting with General Foods, the tobacco giant had decided to start pulling out of the food business, but it did not want to sell its millions of shares at the battered price. (The slumped stock and other considerations would lead Philip Morris to delay selling the last of its shares until 2007, when Kraft, once again, became an independent company.)

Holden’s career track at Kraft ended much faster than that. On December 18, 2003, Holden was
removed from her job as CEO and put into the less prestigious position of president for global marketing. The Kraft
officials I met held Holden in high regard and said that her removal stemmed in part from the awkwardness of having two CEOs, but eighteen months into the demotion, Holden left Kraft to spend more time with her kids.

Michael Mudd, the obesity initiative’s biggest champion and spearhead, would leave the company at the end of 2004 as well. The panel of experts he organized, including Ellen Wartella, had done its job well, helping him and his colleagues put the company on the road to doing the right thing by consumer health. This was a path-breaking achievement of which he was hugely proud. But Mudd felt increasingly frustrated by the rest of the industry’s refusal to follow suit, which isolated and put new pressures on Kraft—pressures that involved not thinking more about overweight kids but rather thinking more about returning to the basics of processed food. Namely, boosting the value of the company stock by selling more of the foods that people liked best.

O
n March 3, 2011, Kraft announced that a new era of fatty, sugary foods had come to India. The Oreo, which had never been marketed there before, was headed to the shelves of hundreds of thousands of stores throughout the subcontinent, backed by a media tour de force of TV commercials, billboard ads, and a brightly colored blue bus that roamed the country, from New Delhi to Mumbai, hailing kids to come aboard for Oreo games. The marketing had an educational theme: teaching the country’s population of 1.2 billion how to eat an Oreo properly.
“The ‘Twist, Lick and Dunk’ ritual has brought fun-filled moments of bonding to countless families across the world,” the company’s president for Southeast Asia and Indo-China said in a statement.

Fast on the Oreo’s heels was Tang, which Kraft introduced to India the following month with a campaign slogan:
“A refreshing drink that makes children happier and think more creatively.” Next up, in July 2012, was Toblerone, the triangular chocolate bar that Kraft made in Switzerland
and now sold in 122 countries. To understand how these blockbuster items arrived on the shores of India, where a surging rate of obesity is now worrying health care officials as much as malnutrition, we must go back to a time when things were looking decidedly bleak for Kraft’s cookies in American stores.

The year was 2002, and cookie sales were falling precipitously. Kraft hired researchers to find out what was wrong, and the word it got back was just short of cataclysmic: Shoppers confided that they were avoiding the entire cookie aisle, scared to death they would lose control, load up their carts, and rush home to, well, gorge.

“There was
a broad market change, for which the Oreo had become the poster child,” said Daryl Brewster, the executive who ran Kraft’s Nabisco division at the time. “The consumers who loved Oreos, who loved Chips Ahoy!, who loved all our cookies, were finding themselves afraid to go down the cookie aisle because they might buy some and eat it all. So we learned all we could about it, this buy-and-binge behavior. Sometimes what happens in snacking is people get overhungry. They open up the package and it could be Oreo’s, or it could be Lay’s potato chips. They open it up, they start eating and they don’t stop at one. They finish the bag. They have just consumed hundreds or thousands of calories, and now they’re guilty. They feel awful.”

This was no small matter for Kraft and Philip Morris. In its last food acquisition, in 2000, Philip Morris had paid $18.9 billion to acquire Nabisco, including the company’s debts, and Wall Street had applauded the move. Nabisco had $8.3 billion in annual sales from a lineup of rock solid heavy hitters, from Chips Ahoy! to Ritz Crackers to the mother of all cookies, the Oreo. Three years later, however, there was only doom and gloom.

The shopper’s fear of losing control was only part of the trouble, Brewster said. The Oreo was the subject of a lawsuit that took Kraft to task for continuing to rely on trans fats, a form of fat that was considered even more pernicious than saturated fat. (Today, trans fats have been widely reduced by the processed food industry.) Also, much of the country suddenly
seemed to be on the Atkins diet, which disdained anything sweet or otherwise loaded with carbohydrates—with cookies at the top of the things to be avoided.

But
all
would be lost if Kraft couldn’t get people to stop hurrying past the cookie aisle, so its Nabisco division got to work, and in late 2003 it came up with a move calculated to ease the minds of consumers who felt guilty just looking at Oreos. One of Brewster’s marketing specialists had the idea: Why not create a cookie package that seemed less threatening, that promised to give the eater some self-control? This concept of empowerment became known as the 100-calorie pack.

Starting with the Oreo brand, Kraft reformulated the cookie so that a handful amounted to only 100 calories. From a technical standpoint, this took some doing. The creamy filling was so rich they couldn’t make a dent in the fat. So they ditched the filling altogether, and added some creamy filling flavors to the chocolate wafers. Sales took off like a rocket. Not only that, but people returned to the cookie aisle in droves and started buying not just more Oreos but more of everything, including the full-fat versions.
“People who otherwise didn’t want to go down the aisle because they might buy Oreos also didn’t buy Wheat Thins or Triscuits, because they were afraid to go down there,” Brewster said. “All of a sudden now, they went down the aisle to get the 100-calorie pack, and were picking up some of the other products.”
^‡