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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4. Premiums<br />
a. Re P o R T e d ex P e n d i T u R e s<br />
The companies reported $67<br />
million <strong>to</strong> reach youth consumers<br />
through premiums, accounting for 4%<br />
of all reported youth-directed marketing<br />
expenditures. Far <strong>and</strong> away, breakfast<br />
cereals accounted for the largest<br />
expenditures on premiums. As shown in<br />
Figure II.12, cereal companies reported<br />
close <strong>to</strong> $40 million in child-directed<br />
premiums, representing 93% of all<br />
Expenditures for <strong>Marketing</strong> <strong>Food</strong> <strong>to</strong> <strong>Children</strong> <strong>and</strong> <strong>Adolescents</strong><br />
expenditures on premiums for the reported breakfast cereal br<strong>and</strong>s <strong>and</strong> 69% of child-directed<br />
premium expenditures across all food <strong>and</strong> beverage categories. For other food categories,<br />
companies reported no more than $4 million <strong>and</strong> as little as $450,000 on child-directed premium<br />
expenditures. Some companies explained that a cross-promotional partner, such as a <strong>to</strong>y or<br />
media company, often covered the premium costs, such as sweepstakes prizes or DVD rebates.<br />
In addition, as noted previously <strong>and</strong> explained below, the reported premium expenditures do not<br />
include the QSRs’ self-liquidating premiums (<strong>to</strong>ys), which were a large component of child-<br />
directed marketing for QSRs.<br />
b. se l f-liquidaTing PR e m i u m s<br />
The Special Order instructed companies with expenditures for premiums directed <strong>to</strong> children<br />
or adolescents <strong>to</strong> deduct payments made by consumers for the premium item. As a consequence,<br />
premiums distributed as self-liquidating promotions – where the companies’ premium costs<br />
were entirely covered by the incremental revenue generated by the promotions – would not have<br />
triggered a reportable expense. Nevertheless, such promotions can be an important, indeed a<br />
critical, component of a QSR food marketing campaign directed <strong>to</strong> children. 44<br />
According <strong>to</strong> data obtained from The NPD Group, in 2006, QSRs sold more than 1.2 billion<br />
children’s meals with <strong>to</strong>ys <strong>to</strong> children ages 12 <strong>and</strong> under, accounting for 20% of all child traffic<br />
at QSRs. As shown in Figure II.13, the ten QSR chains responding <strong>to</strong> the FTC’s Special Order<br />
(the “Select QSRs”) 45 delivered more than 900 million of those meals. For those Select QSRs,<br />
Figure II.14 illustrates that children’s meals with <strong>to</strong>ys accounted for nearly 38% of the meals<br />
served <strong>to</strong> children.<br />
Dollars (in millions)<br />
45<br />
40<br />
35<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
0<br />
19<br />
40<br />
Figure II.12: Premiums<br />
Top 3 for <strong>Children</strong><br />
4 4<br />
Breakfast Cereal Snack <strong>Food</strong>s Prepared <strong>Food</strong>s &<br />
Meals<br />
10<br />
All Other