business news in context, analysis with attitude

There are numerous stories in the news today about obesity-related issues that suggest that retailers and manufacturers are getting the message about the nation's expanding waistline…and believe that there is money to be made in adjusting their products and marketing approaches.

  • AdAge reports that Wal-Mart is pressuring manufacturers to come up with new products that are low in calories and sugar. One of the results of this pressure: beginning this month, Wal-Mart will exclusively sell Mott's Hawaiian Punch Lite, which will have 60 percent fewer calories and 60 percent less sugar that the mainstream version. The product won’t be in other stores until next year.

    AdAge notes that Wal-Mart isn’t just being a good citizen in pushing for these new products. Marketing analyst Burt Flickinger tells the paper that Wal-Mart is facing same-store sales that are 'flat to slightly negative" for the first time in its history, has seen that fitness and diet is fertile ground upon which to build sales, and is focusing on diet-oriented foods and exercise equipment as a way of rejuvenating itself.

  • On the manufacturer side, Kraft Foods is scheduled to announce today a major global initiative to address obesity issues, with virtually every product in its considerable stable reviewed to meet stricter nutritional guidelines. Fat, sugar and calories will be reduced, as will portion size and makeup. A new line of Fun Fuel Lunchables, for example, will have yogurt and fruit juice instead of candy and soda.

    "We're doing this because we believe the rise in obesity is a public health challenge of global proportions," Betsy Holden, co-CEO of Kraft Foods, told USA Today. "It's an important issue, and we have an important role to play."

    Kraft also will announce that it will adjust its marketing practices. In-school marketing will be eliminated, vending machine products will be scrutinized to make sure they are appropriate for children, and marketing guidelines will be established to emphasize healthy eating and active lifestyles. The company even will establish a global labeling policy that will be implemented even in countries where it is not required.

    Kraft also says that it is working to eliminate — or greatly reduce — trans fat in all of its cookies and crackers.

    The process of phasing in these changes at Kraft is expected to take about a year.

  • McDonald's is testing a Happy Meal that replaces fries with fruit.

  • USA Today reports that "is within weeks of eliminating all artery-clogging trans fatty acids from its chips and snacks. And the CEO of its parent company, PepsiCo, has vowed that at least half of its new foods and beverages will be aimed at nutrition-conscious consumers."

KC's View:
There is a lot of legitimate speculation in the papers today about the "why" behind these marketing and manufacturing shifts, which a great deal of emphasis placed on concerns about lawsuits that could paint the food industry with the same brush and was used so effectively on tobacco companies.

Kraft, for example, is positioned as a unit of Altria, formerly known as Philip Morris, a company that has been plagued by serious legal defeats.

"You can't stop tobacco from being unhealthy," Sam Hirsch, an attorney whose obese clients filed lawsuits against McDonald's, tells USA Today. "But you can make food less unhealthy."

But you know something? We don't really care why manufacturers and retailers are making these kinds of shifts. They are good business at least in part because the increase in public awareness means that consumers are demanding them, or at least are expected to respond to them.

Do we think that America suddenly will get thin, and that we'll all suddenly stop craving Krispy Kremes? Nah…

In fact, it'll be interesting to see what Kraft's competition does in response to these moves. We suspect that some will make similar moves, while others will see the "indulgence market" as one in which they can make some headway.

But it's a beginning.