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

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Marketing Food to Children and Adolescents The snack, candy/frozen desserts, dairy products, baked goods, and carbonated beverage categories accounted for digital expenditures ranging from $100,000 to $434,000, most of which was teen directed. The companies reported spending just under $5 million on youth-directed viral and word-of-mouth marketing. 40 With the exception of $392,000 that the QSRs reported as child directed, word-of-mouth expenditures were primarily teen directed. 41 Teen-directed word-of-mouth expenditures included $2 million for carbonated beverages, $1.3 million for dairy products, and about $811,000 for juice and non-carbonated beverages. 3. Packaging and In-Store Marketing The companies reported that they spent more than $195 million on packaging and in-store marketing to reach the youth audience. 42 In every food category, a total of more than $3 million was spent on packaging and in-store marketing to reach children. QSRs led spending in these two promotional categories with nearly $22 million directed to children, followed by companies producing snacks ($18.2 million), breakfast cereals ($14.3 million), carbonated beverages and candy/frozen desserts ($11.6 million each), and juice and non-carbonated beverages ($10.2 million). Relative to overall in-store and packaging expenditures for the reported brands, the child-directed expenditures for these two categories ranged from 5% for carbonated beverages to 70% for dairy products. 43 In the carbonated beverage category, nearly $90 million was spent on teen-directed packaging and in-store marketing for the reported brands, while teen-directed restaurant food expenditures totaled $280,000. The carbonated beverages’ $90 million in teen- directed expenditures represented 67% of teen-directed expenditures, and 46% of all youth-directed expenditures, for packaging and in-store marketing for the reported brands. Figure II.11 presents the top three food categories in terms of total costs on packaging and in-store marketing directed to youth ages 2-17. Dollars (in millions) 100 90 80 70 60 50 40 30 20 10 0 Figure II.11: In-Store and Packaging/Labeling Top 3 for Youth 18 91 22 22 Carbonated Beverages Restaurant Foods Snack Foods All Other 61
4. Premiums a. Re P o R T e d ex P e n d i T u R e s The companies reported $67 million to reach youth consumers through premiums, accounting for 4% of all reported youth-directed marketing expenditures. Far and away, breakfast cereals accounted for the largest expenditures on premiums. As shown in Figure II.12, cereal companies reported close to $40 million in child-directed premiums, representing 93% of all Expenditures for Marketing Food to Children and Adolescents expenditures on premiums for the reported breakfast cereal brands and 69% of child-directed premium expenditures across all food and beverage categories. For other food categories, companies reported no more than $4 million and as little as $450,000 on child-directed premium expenditures. Some companies explained that a cross-promotional partner, such as a toy or media company, often covered the premium costs, such as sweepstakes prizes or DVD rebates. In addition, as noted previously and explained below, the reported premium expenditures do not include the QSRs’ self-liquidating premiums (toys), which were a large component of child- directed marketing for QSRs. b. se l f-liquidaTing PR e m i u m s The Special Order instructed companies with expenditures for premiums directed to children or adolescents to deduct payments made by consumers for the premium item. As a consequence, premiums distributed as self-liquidating promotions – where the companies’ premium costs were entirely covered by the incremental revenue generated by the promotions – would not have triggered a reportable expense. Nevertheless, such promotions can be an important, indeed a critical, component of a QSR food marketing campaign directed to children. 44 According to data obtained from The NPD Group, in 2006, QSRs sold more than 1.2 billion children’s meals with toys to children ages 12 and under, accounting for 20% of all child traffic at QSRs. As shown in Figure II.13, the ten QSR chains responding to the FTC’s Special Order (the “Select QSRs”) 45 delivered more than 900 million of those meals. For those Select QSRs, Figure II.14 illustrates that children’s meals with toys accounted for nearly 38% of the meals served to children. Dollars (in millions) 45 40 35 30 25 20 15 10 5 0 19 40 Figure II.12: Premiums Top 3 for Children 4 4 Breakfast Cereal Snack Foods Prepared Foods & Meals 10 All Other
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