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