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To Fight Obesity, Give Industry a Carrot

Hank Cardello

If we are to believe, as one Tea Partier from Toledo, Ohio proclaimed, that “being obese is one of our American core values,” then heart attacks, strokes, and diabetes must also be inalienable rights. Obesity is now a national burden with a cost of $147 billion, and two-thirds of the nation’s adults either overweight or obese. And while many attempts have been made to thwart the expansion of America’s collective girth, no regulatory measure or consumer prodding has proven effective. It’s time to change the playbook and look to the food marketers as our last, best hope.

Obesity wasn’t always a front and center issue. In the early days of my career as a marketing executive with General Mills and The Coca-Cola Company and as president of Sunkist Soft Drinks, products like cake mixes and soft drinks had an innocent aura about them. We were the “good guys“everyone loved our products. In fact, the Centers for Disease Control and Prevention did not even start tracking state obesity rates until 1985, when no state exhibited an obesity rate of more than 20 percent.

Today, however, the news is different. No state displays an obesity rate under 20 percent except for Colorado, and soft drink and fast food marketers have shared with me that they feel they “have a target on their backs.”

How did things change so radically? Simply stated, food companies and restaurant chains discovered that selling larger sizes, bigger portions, and combo meals enhanced their profit margins, while consumers demanded more for their food dollar and didn’t turn down those oversized servings.

Compounding this situation is an unacknowledged personality clash. In Stuffed: An Insider’s Look at Who’s (Really) Making America Fat, I highlight that public health advocates and food activists spar with marketers because they don’t understand each others’ motivations. The debate closely resembles the polarized political process Americans just witnessed surrounding the recently passed health care bill. It’s classic Right versus Left.

The standard reply advanced by food industry mouthpieces is that consumers are offered plenty of healthy choices and should take personal responsibility for what they eat. Activists should get lost because they don’t understand how companies work and the pressures executives are under to meet quarterly earnings targets.

Conversely, advocates and regulators believe food marketers have acted irresponsibly by promoting foods and beverages that are inherently of poor nutritional quality, and that these offenders must be held responsible for marketing sugary soft drinks, fatty fast foods, and salty snacks. This latter argument seems to be gaining traction as new measures to tax, ban, and/or limit food products have surfaced.

A case in point: soda taxes. The argument for taxing sugared soft drinks and beverages is based on projections that a 10-percent tax would lower consumption by a corresponding 8 to 10 percent. Perhaps more importantly, it would generate $150 billion in revenues over 10 years for starved government treasuries. In New York City, the epicenter of the soda tax confrontation, newspaper polls indicate that over 70 percent of citizens support such a measure. Pretty compelling, except for one missing ingredient: there is scant evidence that obesity rates would decline.

For instance, one landmark study involving researchers from the University of Michigan, the University of Wisconsin-Madison, and Yale University has shown that taxing soft drinks, even at the level of cigarettes, “would not substantially combat the obesity epidemic.” Another university study noted that a 10-percent tax would net only an average weight loss of a miniscule 0.2 pounds per person. Hardly justification to strip Americans of their favorite treats.

The taxation model receives its main thrust from the presumption that certain foods like soft drinks and candy are inherently harmful regardless of the quantities consumed, much like cigarettes. This logic misses the big picture. The real culprits, no matter what the source, are excess calories.

Unlike the single-minded focus behind President Kennedy’s charge to “put a man on the moon by the end of the decade,” attempts to abate the obesity crisis have been diffuse. It’s time to acknowledge that obesity is a supply problem: there are simply too many calories looking for too few mouths. Since 1970, the number of calories available for each of us to ingest has increased by a whopping 30 percent. What went up must now come down.

No one is better equipped to deal with depleting this overabundance of calories than companies like Coca-Cola, General Mills, and Kraft. Taxing is not the way to motivate these marketing machines to help solve the problem. A better approach than treating food marketers as pariahs is to offer them incentives to sell fewer calories.

While this direction may not appeal to those who believe the food purveyors are to blame for our obesity ills, it is important to consider the end game: fixing America’s obesity crisis. Should we not place our energies on the solution rather than regurgitating past transgressions?

One initiative I am advancing is the “20 by ’20” program, designed to reduce the supply of calories 20 percent by the year 2020. It would offer all packaged food marketers and restaurant chains a straightforward quid pro quo: keep your tax deductions for advertising in exchange for lowering the number of calories per serving you sell. Specifically, food manufacturers and restaurant chains must lower their calories sold by 2 percent each year for 10 years in order to retain their deductions for advertising. And those deductions are formidable, with $15 billion spent annually.

So if the makers of items like Pepsi, Lunchables, and Monster Thickburgers lower their calories by 2 percent per year, they get to keep their deductions. If they lower them by 10 percent or more in a given year, they receive a 25-percent bonus on deductions. But do less or spew more calories on the consuming public, and companies will see a reduction in their precious deductions.

From a corporate perspective, having the flexibility to determine which products to change or promote offers a huge advantage over a government imposed one-size-fits-all tax mandate. And progress would be easily tracked, since every company knows how much of each individual product it sells and the calorie content (one of the side benefits of those bar codes on the label).

This approach bridges the divide between the altruistic motives of those trying to improve the public’s well-being and the profit motive intrinsic to corporate success. Unfortunately, for the better part of two decades, attempts to shape wellness policy have gone against the behavioral DNA of both consumers and marketers. Instead of fighting the basis of a corporation’s existencemaking moneythrough taxing, “20 by ’20” works by aligning corporate behavior with the public’s health needs.

Despite the ease and flexibility of the program, what motivation do food marketers have to go along with this? I can think of three strong reasons:

1. An opportunity to get ahead of regulators and avoid more draconian measures like soda and “fat” taxes.

2. A demonstration to the new “well/fair” consumerthose who purchase on the basis of corporate responsibility, pay attention to well-being, and are open to regulatory intervention – that the marketers are walking their talk and care about their customers.

3. An ability to improve bottom-line profits.

The reaction so far has been encouraging, but there is still a way to go. Certain Senate and House groups have received the proposal positively, since many prefer not to tax their corporate constituents. More enlightened packaged goods marketers understand that something must be done about obesity and recognize that it would actually be beneficial to take a proactive stance. Others resist on grounds that they are against any form of regulation. One industry association director, for example, responded positively to the program’s flexibility but could not support the initiative since it “implied blame.”

It is time that food marketers recognize that becoming part of the solution to obesity presents them with one of the biggest opportunities in decades. It’s just good business

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