Bloomberg News

Supervalu War on Obesity Drowned Out by Kraft Marketing: Retail

December 13, 2011

Dec. 13 (Bloomberg) -- When Supervalu Inc. decided to put nutritional labels on its food, the U.S. grocery chain was determined not to play nanny to its customers, according to Chief Marketing Officer Julie Dexter Berg.

“We would never put a sign on Cheetos and say: ‘This is something you should not be buying,’” she said.

By not calling out unhealthy food, Supervalu’s labeling program may be setting itself up to fail, said Michael Jacobson, executive director at the Center for Science in the Public Interest, a Washington-based advocacy group. The labels won’t help win the war on obesity because they’re being drowned out by a marketing onslaught from the likes of Cheetos maker PepsiCo Inc. and Kraft Foods Inc., he said.

“People have habits and preferences, they trust brands,” Jacobson said in a telephone interview. Nutrition is “not nearly as visible as the big picture -- the brand name.”

With a record two-thirds of Americans overweight or obese, companies from Wal-Mart Stores Inc. to Supervalu are trying to avoid blame for the obesity epidemic, according to Jacobson. Two years ago, food companies including Kraft and Kellogg Co. pulled their own healthy labels following an investigation by the U.S. Food and Drug Administration.

Working with first lady Michelle Obama and her campaign to fight obesity, Supervalu is using color-coded labels to highlight foods rich in protein, say, or low in saturated fat. Wal-Mart has committed to lowering salt, sugar and fat in some foods. Walgreen Co. is selling fruits and vegetables at some of its drug store locations.

After being picked on for selling fatty, processed fare, many stores see healthy food labels as a must, said Brahm Ahmadi, chief executive officer of People’s Community Market, an independent grocer in Oakland, California.

‘Goodwill’

“To win goodwill among decision makers at all levels of government is probably seen as a good investment,” he said.

Supervalu’s food label system, dubbed nutrition iQ, began appearing in the Eden Prairie, Minnesota-based company’s Albertsons stores in 2009, after 13 months of testing and surveys of 7,000 consumers. The initiative has since expanded to the grocer’s Jewel-Osco, Cub, Acme, Shoppers, Hornbacher’s and Farm Fresh chains.

To qualify for one of 18 colored labels that call out certain health benefits -- pink means 100 percent fruit juice, dark orange means whole grains -- an item has to have low saturated fat, sodium and sugar. Other programs have used stars and scores from one to 100 to rate foods.

One problem with Supervalu’s existing labels is that they can be misleading, said Jennifer McCaffrey, a registered dietitian with the University of Illinois Extension and spokeswoman for the Illinois Dietetic Association.

Processed Eggs

At one of the chain’s Jewel-Osco stores, cartons of processed egg product received yellow and red tags to signify their health benefits as part of nutrition iQ, while regular eggs didn’t get any labels.

That may lead people to believe that egg products are better than actual eggs, “but that’s not necessarily the case,” McCaffrey said while holding a carton of ConAgra Foods Inc.’s Egg Beaters at a Chicago Jewel-Osco store. “Food doesn’t come in a vacuum.”

Less than one-third of consumers say they completely understand nutritional labeling programs, according to a 2011 study from the Arlington, Virginia-based Food Marketing Institute. Among those with access to health information at the supermarket, only 7 percent use it each time they shop, the study said.

Carolyn McGee, a 57-year-old housewife in Chicago, says she’s more concerned with price and doesn’t heed shelf or front- of-package nutrition claims.

‘Don’t Buy It’

“If I don’t think it’s good for me, I just don’t buy it,” said McGee, who was picking up frozen pizza, shrimp and hot sauce at one of Supervalu’s Jewel-Osco stores.

Nutrition iQ is affecting what consumers buy, Supervalu CEO Craig Herkert said in an interview. Healthy fare such as a certain whole wheat flour and pizza sauce are selling more briskly, he said.

Supervalu fell 0.5 percent to $7.44 at the close in New York yesterday.

Food labeling won’t be as effective as long as grocers remain reluctant to anger manufacturers by singling out “bad” foods, Jacobson said.

A European Union program to use red, amber and green circle warnings on foods with high salt, fat, sugar and calories died last year under pressure from lobbyists. The big food companies “went to war” on the “traffic-light” labels and legislators caved, Jacobson said.

‘Go to War’

“And they’d go to war here because they hate the idea of red dots on their food,” he said.

Supervalu didn’t design its labeling system with the aim of maintaining good relations with suppliers, CMO Berg said. The company doesn’t want to tell customers what to do.

The best way to get people eating healthy is to make the labels uniform from brand to brand and store to store, said Kelly Brownell, director of the Rudd Center for Food Policy & Obesity at Yale University in New Haven, Connecticut.

“There should be some uniform standard,” he said. “The industry has not proven itself trustworthy in doing this on its own.”

Food makers including Kraft, Unilever Plc and Kellogg called mayonnaise and Froot Loops cereal “Smart Choices” in 2009 before pulling the labels following the FDA investigation.

Kraft, which isn’t using a nutrition labeling system now, says it’s up to every company to decide what kind of nutrition program works best for its customers.

“The goals overall are to help people have the information they need,” said Susan Davison, a company spokeswoman.

Money Talks

Ultimately, money talks, and that means offering discounts for healthy fare, according to Brownell.

In Detroit, Jim Hooks is doing just that. The owner of independent market Metro Foodland awards points and $10-off vouchers to shoppers who buy items on its healthy rewards list, which includes pineapple and asparagus.

Supervalu’s Berg said the chain may give discounts to shoppers who buy produce and nutrition iQ items in the future. She declined to offer any timing on a rewards program.

Discounting nutritious food would be a tough sell for a large, publicly traded grocer, said Ahmadi, of People’s Community Market.

No doubt Hooks is “giving up some margin to do this,” he said.

--With assistance from Kevin Orland in Chicago. Editors: Kevin Orland, James Callan

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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