Marketing Food to Children and Adolescents - Federal Trade ...

Marketing Food to Children and Adolescents
13. Request for Information and Comment: Food Industry Marketing Practices to Children and Adolescents, 71
Fed. Reg. 10,535 (Mar. 1, 2006).
14. A copy of the FTC Special Order is attached as Appendix B.
15. As explained in Appendix A, in certain instances, the data obtained from the companies have been supplemented
by data purchased from third-party sources.
16. Prepared foods and meals were defined in Attachment A to the Special Order to include frozen and chilled
entrees, frozen pizzas, canned soups and pasta, lunch kits, and non-frozen packaged entrees (such as macaroni
and cheese).
17. Section 6(f) of the FTC Act, 15 U.S.C. § 46(f), constrains the FTC from disclosing publicly materials that
contain or constitute trade secrets or privileged or confidential commercial or financial information. See also
16 C.F.R. § 4.10(2).
18. As with the expenditure data, care has been taken to protect the confidentiality of this proprietary
information.
19. See Appendix A for a detailed discussion.
20. For example, a significant number of QSRs in the U.S. are independent franchisee-owned establishments,
rather than corporate-owned establishments. For most of the QSR companies that received the Special
Order, franchisee- and affiliate-owned restaurants far outnumbered company-owned restaurants in the
U.S., with franchisees and affiliates representing approximately 70-85% of the establishments in the QSR
systems. In addition, QSRs vary in their management of advertising funds, in some cases participating in
national and local cooperatives or programs to which corporate-owned and franchisee-owned establishments
contribute funds. Franchisees also may contribute to separate advertising funds in individual local
markets. Consequently, the reported expenditures generally do not account for local advertising expenditures
by independently owned franchisees. The Commission is confident, however, that the reported expenditures
for QSRs provide an accurate estimation of advertising costs by corporate-owned restaurants and advertising
expenditures by national cooperatives to which franchisees contribute funds.
21. 2006 Report at 10.
22. For several reasons, the total cost of marketing to youth reported here for 2006 is significantly lower than
some estimated numbers cited elsewhere, such as in the 2006 IOM Study on food marketing to children and
youth. See IOM Study, supra note 3, at 4-32 to 4-33. The IOM Study estimated that more than $10 billion
is spent per year “to market food, beverage, and restaurant products to children and youth,” including about
$1 billion to advertise directly to young consumers, primarily via television. Id. at 4-33. One source cited
for this estimate is James U. McNeal, The Kid’s Market: Myths and Realities 14-15, 141-44 (1999) (the
other source relied upon in the IOM study for this total – Kelly D. Brownell & Katherine B. Horgen, Food
Fight: The Inside Story of the Food Industry, America’s Obesity Crisis, and What We Can Do About It 100
(2004) – did not provide a citation for its estimate of $10 billion for food advertising to children). McNeal’s
estimates for the $10 billion figure encompass “annual marketing communications expenditures related to
kids as a market,” rather than marketing directed to youth specifically by members of the food and beverage
industry. McNeal at 14-15. For example, McNeal’s estimate of $4.5 billion spent on promotions, relied
upon by IOM, includes promotions for motels, airlines, and banks, as well as restaurants. See McNeal at
15, 156-57. Moreover, McNeal’s promotions estimate includes couponing, price packs, cash refunds, and
patronage rewards, whereas the Commission’s criteria for youth-directed food advertising excluded such promotions
(e.g., children stay or eat free) because they are directed to adults. In another example, IOM cited
McNeal’s $3 billion estimate for product packaging designed for children and youth. This figure, however,
likely covered all packaging costs, including packaging materials such as cardboard and plastic. By contrast,
the Commission’s Special Order requested only the costs of design and development of change-overs
in youth-directed packaging, not baseline costs of manufacturing or packaging materials that would have
existed regardless of whether the packaging featured youth-directed promotions. Notably, McNeal estimated
that “media spending” (including television, print, radio, and Internet advertising; direct mail; product placements;
movie theater advertising; and in-school advertising) for “advertising targeted at kids” totaled approx-
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