From: The New York Times
December 16, 2005
http://www.nytimes.com/2005/12/16/business/16food.html

Under Pressure, Food Producers Shift to Healthier Products
By MELANIE WARNER

For years, food companies have responded to criticism about the nutritional
quality of their products by maintaining that all food can fit into a
balanced diet. There are no bad foods, they argue, just bad diets.
That is starting to change. As major food producers face scrutiny over their
role in contributing to increasing childhood obesity rates, they are under
pressure to make fundamental shifts in the way they sell their products to
American children.

Kraft and PepsiCo have created rating systems to designate healthier foods.
McDonald's said it would begin printing detailed nutrition information on
its packaging in February.

Entertainment companies are also feeling pressure. Walt Disney said that
beginning in the next few months, it would remove characters like Winnie the
Pooh, Mickey Mouse and Chicken Little from candy and food products it
determined to be unhealthy for children. And in partnership with a major
supermarket chain, which Disney would not identify, the company will put
Mickey Mouse thumbs-up seals on items like bananas and on store-brand
products like pasta and juices.

A Disney spokesman, Gary Foster, said, "We wanted to give parents healthier
alternatives and help in reversing obesity trends."

None of these changes go as far as the Institute of Medicine, a leading
scientific advisory group, urges. In a report last week, an institute
committee of 16 nutrition and marketing experts called for sweeping changes
in the way the food industry markets its products to children. It added that
80 percent to 97 percent of the food products now aimed at children and
teenagers are of "poor nutritional quality."

The food industry is divided over how it should respond. General Mills and
Kellogg, which derive a large part of their revenue from products aimed at
children, are resisting changing many of their practices. Kraft and PepsiCo,
whose products are aimed at a broader section of consumers, seem more
willing to adapt. The Grocery Manufacturers Association, a large lobbying
group, is resisting the development of an industrywide rating system for
healthier foods - one of the leading recommendations in the institute's
report.

And Disney's efforts only go so far. Although it dropped an exclusive deal
with McDonald's, some movies may continue to use tie-ins to McDonald's and
other fast-food chains. Today, characters from "The Chronicles of Narnia:
The Lion, the Witch and the Wardrobe" start appearing in boxes of the
chain's Happy Meals.

So far, just one company, Kraft Foods, has significantly curtailed the
amount of unhealthy food it markets to children under 12. The rest of the
food and restaurant industry has yet to take any major steps in line with
the report's major recommendations. While companies have made some efforts
to reformulate products and introduce healthier offerings (removing trans
fatty acids, for instance), consumer advocates and nutrition experts say
that many of these attempts fall woefully short.

For instance, General Mills, the company that spends the most money
marketing packaged food to children, promotes the addition of whole grains
to its lines of cereal, even though many of these are 40 percent sugar and
aggressively advertised to children.

Earlier this year, General Mills tried to provide more nutrition information
by displaying icons in a product's "Goodness Corner."
But a consumer watchdog criticized the move because there are 26 different
icons, rather than a clear-cut rating system.

"I work in this area and I don't even know what some of those things are
referring to," said Margo Wootan, director of nutrition policy at the Center
for Science in the Public Interest, a nutrition advocacy group.
A spokeswoman for General Mills, Marybeth Thorsgard, declined to comment on
the Institute of Medicine's report, saying that the company had not had a
chance to read through the 600-page document.

But in a presentation this year, General Mills vigorously defended its
cereal.

"We strongly think that products like cereal can be advertised responsibly
to children," said Kendall J. Powell, the company's chief operating officer,
at an Institute of Medicine workshop in January. "Cereal eaters, including
kids who eat presweetened cereals, are getting a good start to their day."
Kellogg, the second-largest packaged-food marketer to children, also said it
did not want to comment on the Institute of Medicine's recommendations. In a
statement, a spokeswoman, Jill Saletta, said the company offered a "wide
variety of products" and "remains a committed partner in the fight against
obesity."

ConAgra Foods and Mars said they were focusing on developing healthier foods
rather than restricting marketing or rating their products. McDonald's,
Burger King, Wendy's and Nestlé had no comment on the report.
Kraft and PepsiCo also appear to be alone in supporting the idea of an
industrywide rating system for healthier foods.

"I think there may be an antitrust issue," said Stephanie Childs, a
spokeswoman for the Grocery Manufacturers Association. "Whenever people talk
about the industry getting together and deciding which products to sell, it
sounds to me like something we could get sued for."

Some legal experts said, though, that food companies were more likely to
face lawsuits if they did not think proactively and listen to criticism.
N. Louise Ellingsworth, a partner in the law firm of Bryan Cave, which has
worked in the past with food companies, said: "Sometimes, companies think
that by making changes you risk calling attention to yourself and focusing
on the problem. But for companies who don't act, their mistakes will become
obvious years later. The plaintiffs' bar is watching very closely, and
everyone's got a target on their back right now."

PepsiCo insists that its "Smart Spot" program for identifying healthier
products is more a shrewd business decision than a form of legal insurance.
The company said that sales from the Smart Spot products grew by 13 percent
in the first three quarters of the year, three times as fast as the rest of
its business. "We believe this is a huge business opportunity," said Brock
Leach, the chief innovation officer.

Although many nutrition and public health advocates have applauded Kraft and
PepsiCo for breaking with the rest of the food industry, they say that both
companies have yet to go the distance. Some of their children's products,
for instance, are hardly carrots and broccoli - sugar-free Kool-Aid with
artificial sweeteners, Kraft macaroni and cheese with processed cheese,
baked Cheetos and peanut butter Cap'n Crunch cereal.

And Pepsi has not stopped marketing its non-Smart Spot products like regular
Cheetos and Gatorade to children. It said that by early in 2006, half of all
its spending on advertising aimed at children would be for Smart Spot
products, an increase from 38 percent this year.

But Susan Linn, associate director of Judge Baker Children's Center, a
nonprofit group in Boston, asked: "What's the point of doing 50 percent? If
they were really concerned about children, they would stop completely."
Licensing of favorite characters also continues to be an enormously popular
and effective marketing tactic that not even Kraft is certain it wants to
abandon. The company, which features Dora the Explorer on its Nabisco Teddy
Grahams and Fairly OddParents on Cheese Nips crackers, said that its
licensing policy "is being discussed."

The question is not even on the table at PepsiCo. Mr. Leach called the focus
on marketing methods like character licensing "misplaced energy."
"Our point of view," he said, "is let's focus on making healthier products,
and that will eventually move the whole marketing mix."

While the members of the Institute of Medicine committee said they were
willing to trust the industry to make voluntary changes, they have warned
that if there is not significant improvement in the types of products
marketed to children after two years, they will press Congress to take
action.

J. Michael McGinnis, a senior scholar at the institute and chairman of the
committee, called for the creation of a division in the federal Department
of Health and Human Services to assess the food industry's progress.
Not surprisingly, food companies say that they, too, think self-regulation
can work and cite the Children's Advertising Review Unit, a group financed
by food, toy and media companies to monitor children's advertising.
But Elizabeth Lascoutx, director of the Children's Advertising Review Unit,
said the group did not concern itself with junk-food marketing. Its job, she
said, was to make sure that ads aimed at children were fair and accurate,
not to see if they featured healthful or low-calorie products.

"We don't set standards or get involved in good food, bad food issues," Ms.
Lascoutx said. "We're lawyers, not nutritionists."

Mr. McGinnis said he thought that the scope of the Children's Advertising
Review Unit should be expanded to include the nutritional quality of
children's food, though that recommendation is not part of the report.

€ Copyright 2005 The New York Times Company