Top of the food chain at Kraft
NUTRITIONAL benefits, labelling, reduced sugar or sodium, marketing to kids, organic and functional foods, obesity and the issues around health and wellness are shaping up as the critical challenge for food manufacturers.
Kraft’s response to these issues has been extremely proactive; no surprise considering the company is owned by Altria Group (formerly known as Philip Morris), a company familiar with the risks of litigation.
In fact, the company appointed one of its most senior executives to head up the newly created health and wellness initiative in mid-2003 and Kraft reports growth of these new products at three to four times the rate of the overall product portfolio.
Friedmann, who worked on Kraft line marketing positions in the US and Mexico for 16 years, as well as several years with General Foods, discussed a newly finished Kraft study of 9000 people aged 18 to 71 in 18 countries that aimed to understand consumer knowledge and attitude towards diet and lifestyle.
According to Kraft, the study identified a disconnect between what consumers say they know and their actual behaviour – they think they know what a balanced diet is, but they are not able to put that into practice, mums understand there is a rise in childhood obesity, but think their own children are healthy.
FOOD: Your background is in marketing; does that mean Kraft sees health and wellness as a marketing issue?
Friedmann: No, I think the decision was really to put a relatively senior person in charge, who knew the organisation well and could help to make change happen, and that’s what I’ve been trying to do.
We work collaboratively with people from R&D, nutrition, corporate and government affairs, legal, really from a very broad range of the organisation.
FOOD: Have you identified any key trends?
Friedmann: I usually think of this in two broad areas: one is managing our policies and practices and the other, equally important, is managing our growth opportunities.
Growth opportunities really cut across every business we’re in, in every country.
One of the clearest trends has been the evolution from what I call ‘absence of negatives’– taking out calories, fat, sugar and sodium – to ‘presence of positives’.
More consumers are thinking in terms of wellness and they’re looking for products that give them more of those beneficial nutrients like fibre, Omega-3s and probiotics.
On policy and practices, the areas getting the most attention and where we focused a lot of our efforts over the last couple of years is marketing to kids and also improving nutritional labeling to give consumers better information.
It’s very easy to get very confused about nutrition, our research showed consumers are looking for food companies to make it easier for them to make smart choices when it comes to buying healthier foods.
That’s why we focused on developing the Sensible Solutions system as sort of a summation of the complete nutritional profile of that product.
FOOD: There is a lot of public interest, but the Federal Government hasn’t regulated on advertising to children yet. Have you completely phased out this kind of advertising?
Friedmann: We announced about a year ago that we would only continue to advertise products to kids that meet very specific nutrition standards.
We’ve started to put a flag on the outside of products that meet those standards in the US and Canada, and we’re extending that to other countries.
And as of the beginning of 2006, on a global basis, only products that meet those nutrition standards are the ones we advertise to kids age six to 11.
We believe in and will continue to pursue self-regulatory solutions and I think we’ve seen indications that this is what the Australian government is looking for.
But at the same time the industry needs to move forward on self-regulation.
We see momentum in Europe and North America and we expect that will grow and reach Australia.
It is in the food industry’s interest to address to come up with good self-regulatory solutions.
FOOD: How does ‘adding positives’ to an old brand/product compare with developing entirely new brands to satisfy these trends?
Friedmann: That depends on the situation.
Because our brands are quite well recognised and accepted by consumers, a lot of times we’ll try to build improved nutritional benefits into our existing brand, for example, putting a higher level of calcium into a slice of cheese or integrating more wholegrain into our biscuits.
Consumers expect a food company to continuously improve products; but we had a conversation this morning about what we call Big-T-Little-N – T being taste, N nutrition.
Consumers will always insist that product deliver on taste.
We spent countless hours taking trans-fatty acids out of many of our products; our goal was to make sure we preserved the taste of those products.
But to your point, sometimes a new brand makes sense.
We’ve launched a few new brands in other countries, some of which are in evaluation to bring into Australia, but a biscuit line that we’ve launched elsewhere in the Asia-Pacific area under the VelVeeta trademark because we felt that we wanted to make a different promise to people and it sort of made sense under that line.
We launched a line of South Beach diet products in the US, obviously it’s a very well known and popular diet with a strong nutritional foundation and that’s doing very well, with over US$100 million in sales in the first year.
Although it’s somewhere in between, our ‘100 Calorie’ packs were launched in the US last year.
We reformulated some of our popular biscuit items - Oreo, Chips Ahoy and Ritz - to go into single serve packs, each containing 100 calories.
The 100 Calorie pack is more the brand than anything, but our established brands provide the taste reassurance consumers are looking for.
FOOD: The ‘mainstreaming’ of organic food has become a major growth area, has Kraft experimented much with organics?
Friedmann: Experimented is probably the right word.
We acquired a business called Back To Nature in the US and we launched a line under that trademark primarily into the natural and organic food channel a couple of years ago and that’s doing fine.
But you’re very right; organics is of growing interest now in mainstream retail channels.
We’re trying to figure out our best strategy.
FOOD: Is growing the organics business and maintaining a sense of authenticity a big issue?
Friedmann: In most countries, ‘organic’ has a regulatory definition.
That’s been the big enabler for food companies like Kraft to get in, because when it wasn’t that well defined you didn’t feel you had a level playing field. But now organic criteria have been defined we can enter and be a player.
That regulatory definition provides the guarantee of authenticity.
FOOD: Functional foods are an equally growing market, what are you doing there?
Friedmann: People’s definitions of functional foods vary.
To me it is any food that delivers a defined physiological benefit based on its nutritional composition, so we would view something like an added-calcium cheese that serves a role in bone growth for kids as delivering a functional benefit.
Similarly, we market cereals with increasing incorporation of wholegrain and fibre that are able to claim a heart health benefit.
Obviously food companies, including Kraft, are going to continue to push the envelope there in delivering increased functional benefits.
FOOD: What is driving these dietary changes and how fast do the drivers change?
Friedmann: I think as we look at the drivers of concern and desire for change in what people eat, they’re very long lasting.
The overall demographic shift to an older population, the prevalence of obesity, which took 20 or 30 years to develop and will not be solved overnight, increased levels of disease, whether it’s diabetes or cancer or heart disease.
All those things have been there for quite a while.
It’s important that we help consumers to translate understanding and desire into action, so the more we can bring out foods that don’t compromise on taste but deliver against consumers increased desires to address those issues – getting older, getting fatter, getting sicker – the more we think that we’ll be able to help them lead happier lives.
4-May-2006