Salt Sugar Fat: How the Food Giants Hooked Us (21 page)

As usual, the chief executive, Hamish Maxwell, took a seat at the table.
He was joined by two of his predecessors—Joseph Cullman III and George Weissman—who, though now in their seventies, continued to serve as high-level advisers. Cullman, the great-grandson of a German cigar maker, had set the stage for the company’s first diversification beyond tobacco when he bought the Miller Brewing Company back in the late 1960s. Weissman, a two-pack-a-day smoker and one-time reporter for the
Star Ledger
in Newark, New Jersey, had helped develop the masculine image for Marlboro cigarettes and famously said in 1978, when he became the company’s chief executive, “I’m no cowboy and I don’t ride horseback, but I like to think I have the freedom the Marlboro Man exemplifies. He’s the man who doesn’t punch a clock. He’s not computerized. He’s a free spirit.”

This month’s meeting was chaired by one of Maxwell’s direct reports, a fifty-two-year-old Australian-born financial manager named Geoffrey Bible. He wouldn’t take over the chief executive spot himself for another four years, but the job of chairing the meeting rotated among the executives. It was fitting that Bible should take the lead at this particular session, where much of the agenda would be devoted to company products other than cigarettes. Just one month earlier, Maxwell had asked him to immerse himself in—and gain some control over—the newest addition to the company’s roster of consumer goods: the vast and unwieldy division of processed food.

Thanks to its acquisitions of General Foods and Kraft, ten cents of every dollar that Americans spent on groceries now belonged to Philip Morris, which dramatically altered the balance sheets at the tobacco giant. Philip Morris was amassing mountains of cash from its cigarette sales and saw the food business as a way to diversify and put those profits to work.
When it finished merging the two food giants in 1989, their combined annual sales of $23 billion accounted for 51 percent of the total revenue at
Philip Morris. Food had not only become its largest division, the tobacco executives were suddenly also running the largest food company in the country, in charge of icons like Cool Whip, Entenmann’s, Oscar Mayer, Lunchables, Shake ’n Bake, Macaroni & Cheese, Velveeta, Jell-O, Maxwell House, Tang, and the Post cereal lineup of Raisin Bran, Grape-Nuts, and Cocoa Pebbles.

Once tidy and contained, the agendas of these monthly product meetings were now careening wildly through the aisles of the grocery store, and everywhere the Philip Morris executives looked, they saw battles under way with rivals intent on stealing their turf. In getting ready for this particular meeting, the food brand managers had spent days preparing strategy memos, sales charts, and testing reports, but the tone in the room remained low-key and cordial, as always. The Philip Morris executives were seasoned corporate brawlers, supremely confident in their ability to win the loyalty of consumers. The Marlboro brand had been a loser back in the 1940s, pulled from the market and taken for dead, before the Marlboro Man ads started running in the 1960s and turned the cigarette into the country’s—and eventually the world’s—top seller. Geoffrey Bible, moreover, had developed an empathy for the managers in the Kraft General Foods division (whose name was later shortened to Kraft Foods), who were in an endless struggle to fend off their many competitors. He had spent time in the field with their salesmen, and he came away awed by the challenges they faced, from the arduous task of convincing the grocers to give them space on the shelf to creating the emotional lures in their advertising and packaging that, along with the actual formulas, would compel shoppers to pick their products up.

I met Bible in late 2011 in the office he used in Greenwich, Connecticut, after retiring from Philip Morris in 2002. At seventy-three, he was twenty years older than Jeffrey Dunn, the former Coca-Cola executive, but both men had strong handshakes and deep tans and were careful eaters, avoiding too much of the kind of foods and drinks their companies sold. Where Dunn could exude laid-back California and Bible still had
traces of his Australian upbringing, they were also each known to their peers as fierce corporate gut-fighters with an instinct for the jugular and no tolerance for fools.

When Bible took a seat at his desk, the place where he monitors the stock market and engages in varied business activities, one artifact seemed conspicuous in its absence: There was no ashtray. He had smoked as much as a pack a day until 2000, when he stopped on his doctor’s advice. “We were very blessed in tobacco, because we had the biggest brand in the world,” he told me. “The trade was desperate to get our brand. Not the case in food. You were desperate to get
their
business. I was shattered to find the attitude of the buyers in these various grocery chains towards even large companies like Kraft and General Foods. It’s brutal stuff. ‘What are you doing in here? I told you to get out of my office the last time you came. That promotion was a disaster. Get out.’ You’d move from the meat buyer to the mayo buyer, and he’d say the same thing.”

The effort required in marketing food to consumers was, if anything, even more demanding and also very different from tobacco, which was promoted through idealistic imagery like the rugged cowboy in the Marlboro Man commercials.
“Cigarettes are much the same to look at, and their advertising and marketing is much more aspirational than it is for food,” Bible said. “In food you have to really find a way to convey the product better, and its worth. It’s much more, ‘This product is good for you because it has the following ingredients, or it has whatever pizzazz.’ And it’s got to have that product differentiation, that reason to buy it and consume it.”

With these challenges in mind, the Corporate Products Committee on that winter day in 1990 took mere minutes to work through the company’s plans for marketing Marlboros in Hong Kong and the L&M brand in Germany and spent only slightly more time with the new non-returnable 7-ounce bottles that Miller was introducing to the eastern and southern states; they wanted to make sure these regions were considered “strong 7 oz. markets.” The committee then turned its attention to food—specifically, a discussion of one of the most profitable parts of its lineup:
the beverages known as fruit drinks. Consumers were spending nearly $1 billion each year on powdered drinks, and the company’s own Kool-Aid, Country Time, and Tang brands were pulling in an 82 percent share. But as Bible and the other committee members opened their folders to examine the memos and charts that had been prepared on these beverages, the Kool-Aid brand seemed especially vulnerable. Kool-Aid was a throwback to the 1950s, when the flavored drink’s mascot, the smiling pitcher known as Kool-Aid Man, was created by ad execs to battle Coke and Pepsi with his warm and cuddly antics. Now, Kool-Aid looked to be fading fast into that storied history, as determined challengers were vying to shrink its take. It was the committee’s job to keep that from happening, and the Philip Morris executives listened quietly as the managers who ran the Kool-Aid brand presented the first in a series of plans that were breathtaking in both scope and strategy.

The schemes would all share one theme. Where some of these drinks were every bit as sweet as Coke, they wouldn’t be pitched like that, given the public’s increasing concern about its sugar load. In marketing these drinks to kids and their parents, the brand managers now working for Philip Morris would use something else to create allure. They would use fruit, or rather the intimation of fruit, to create an even more powerful image for their drinks: a chimera of health.

T
here was a touch of irony in tobacco executives coming to the rescue of Kool-Aid. The drink had been invented in 1927 by
a Nebraskan man named Edwin Perkins whose other creations included Nix-O-Tine, a horrible-tasting mixture of herbs and silver nitrate that became a popular cure for tobacco addiction. But there was a certain marketing genius in the development of Kool-Aid that Philip Morris would have appreciated, one that set the tone for the current efforts to revitalize the drink.

Perkins was a mercantile wholesaler, selling various products to grocers that included bottled flavorings for drinks. These were mediocre sellers
and cumbersome to distribute. So Perkins, who liked to tinker with mixes and powders, converted the flavorings into powders that could be easily shipped in packets. He called them Kool-Ade, later changing the spelling to Kool-Aid, and they were an immediate sensation. America readily took to the packets of artificial flavors, bright colorings, and sugar—until the Great Depression hit, after which sales skidded. By then, Perkins had ditched all his other products to focus on Kool-Aid, and with his company on the verge of bankruptcy, he came up with another inspired move: He slashed the price of his Kool-Aid packets from ten cents to five. And that did the trick. People no longer saw Kool-Aid as a frivolous luxury. At a nickel each, they saw the packets as an affordable way to enjoy soft drinks during the tough economic times. By 1953, when Perkins sold his company to General Foods, he was producing more than a million packets each day.

General Foods pushed Kool-Aid to far greater heights. Eventually,
Americans would stir up and drink 569 million gallons of the stuff a year, and Kool-Aid would come to dominate the company’s lineup of powdered soft drinks—a lineup that topped $800 million in sales. But the brand began to flag again in the 1980s. This time, it wasn’t the economy. Soda was killing it, as the juggernauts of Coca-Cola and PepsiCo lured more and more kids to their bottled drinks. On top of that, General Foods was outmaneuvered by its rival. In 1987, General Mills introduced a product called Squeezit, which was really just a novel form of packaging. With 23 grams of sugar per serving, this brightly colored drink was sweeter than Coke, and kids went wild. Sales hit $75 million in the first year, which prompted the managers of supermarkets to make room for every one of the dozen flavors that General Mills quickly turned out. Suddenly, Kool-Aid was getting pushed off the shelf. Sensing the urgency, Bible and the Philip Morris Corporate Products Committee made fixing it a priority.

To regain this lost turf, the Kool-Aid team invented their own squeezable bottle, with an added touch: It had a bendable neck, which made drinking all the more fun. They named it Kool-Aid Kool Bursts, and in a detailed memo presented to the committee members, the brand managers
laid out precisely how they would overtake General Mills. Much of the strategy involved promotion, including ways to target kids that Philip Morris executives themselves could no longer deploy in marketing cigarettes. Since 1965, the tobacco industry had sought to defuse the growing political pressure against smoking
by not using promotional materials that were aimed directly at kids, including, for example, comic books. That didn’t preclude General Foods from using these magazines to sell sweet drinks, however. Indeed, it had completed a hugely popular six-issue run of
The Adventures of Kool-Aid Man
, published by Marvel comics and distributed, for free, by General Foods. But the campaign for Kool Bursts would go a step further. General Foods had mass-mailing lists composed entirely of the names and addresses of children, in order to better target them with promotions. In their memo to the products committee, the Kool-Aid managers said they would put these lists to work on behalf of the Kool Bursts:
“Gain kid demand through targeted events using General Foods kid mailing list.”

But the real genius of their marketing plan was found in a contrivance that would appeal both to kids and moms. The drinks were made mostly with sugar, artificial flavors, and preservatives. In each plastic bottle, however, the company would add a splash of real fruit juice. It was barely half a tablespoon of juice,
a mere 5 percent of the total formula, company records reveal, but the Kool-Aid managers already knew that even a hint of fruit was worth a zillion times its weight in marketing gold.

Fruit’s value had been established three years earlier in repositioning another of the company’s stalwart sugar-based drinks: Tang. In 1987, soon after Philip Morris acquired General Foods, the beverage managers put Tang into little boxes, added two tablespoons of real fruit juice, decorated the cartons with pictures of fresh oranges and cherries, and rebranded them the Tang Fruit Box. The results were gratifying, and not only in terms of sales. In 1992, the Tang Fruit Box
won a coveted award from the advertising industry for an ingenious campaign that marketed the boxes as healthy and fun. The slogan was “Nutrition in Disguise,” which
the company had trademarked for use in “soft drinks and powders, syrups and concentrates
used in the preparation of soft drinks.” Besides the splash of real fruit juice, the “nutrition” part of this slogan was the added vitamin C, which had been a selling point for the original Tang. Moms who bought Tang Fruit Boxes were applauded for sneaking this good stuff into the hands of their kids via a drink that, to them, looked liked nothing but fun. This was compared to the other tricks parents use to disguise things like carrots, peas, and string beans in the food their kids ate or, as the ad called it,
“four clever ways a mom can disguise nutrition.”

Building on this fun-but-healthy theme, the Kool-Aid brand managers didn’t stop with adding a dash of juice. The Kool Bursts were engineered to evoke the image of fresh fruit in as many ways as possible: They were made in a variety of imitation fruit flavors, including cherry, grape, orange, and tropical punch, and they were given the most enticing imitation aromas that lab technicians could devise so that when the bottles were opened, they emitted powerful fruity smells. Even the bottles promulgated the mythology of health: Their plastic sides were embossed with the shapes of fruit. The managers promised the committee that these fruit-evoking attributes would appeal to kids and, most crucially, to their mothers.
“To kids 6–12, Kool-Aid Kool Bursts is the brand of beverage that is the most fun,” the managers said. “Fun means: the great taste of Kool-Aid, a burst of fruity aroma, and the most enjoyable package from which to drink. To moms, Kool Bursts is the brand of ‘Fun Bottle’ that they know their kids will love. Moms can feel better about Kool-Aid Kool Bursts because it’s from a brand they trust.”