FTC Releases Second Report on Food Marketing to Children and Teens

This post was written by John P. Feldman and Frederick Lah.

Days after announcing the new Children’s Online Privacy Protection Act, the FTC released its study, A Review of Food Marketing to Children and Adolescents: Follow-Up Report, on the food and beverage marketing practices directed to children and teens.  The report serves as a follow up to the FTC’s 2008 report on the same topic.  It was approved by the Commission by a 5-0 vote.

The FTC paints a generally positive picture about increased food company participation in the self-regulatory program, the Children’s Food and Beverage Advertising Initiative.  The FTC did note though that many companies with significant marketing to children have not yet joined the effort and that there are other areas where additional improvements should be made.  The results of the study were based on numbers from 2009 data.  Some of the highlights were:

  • Total spending on food marketing to youth ages 2-17 dropped by 19.5% since 2006, however spending on new media, such as online and mobile, increased by 50%.
  • Cross-promotional marketing linking foods with children’s movies and TV shows increased from 80 children’s movies and TV shows in 2006 to 120 in 2009.
  • Marketing to children of the most sugary cereals – those with 13 grams or more sugar per serving – was virtually eliminated between 2006 and 2009.
  • Drinks marketed to children and teens were slightly lower in calories in 2009 than in 2006, but still averaged more than 20 grams of added sugar per serving.
  • Food from fast food restaurants marketed to children and teens was lower in calories, sodium, sugar, and saturated fat in 2009, compared to 2006.
  • “Children’s meals” in fast food restaurants were more nutritious than other meals and main dishes directed to children ages 2-11.

This report marks the FTC’s ongoing efforts to get companies to advertise healthier and more nutritious foods to children and teens.  Last year, the FTC was part of an interagency working group, along with the CDC, FDA, and USDA, tasked with adopting voluntary principles to improve nutritional profiles of foods marketed to children.  While the working group did end up requesting comments on their proposed principles, those efforts eventually stalled and never fully materialized.  Despite the FTC’s good intentions, some may argue that it has no authority over these issues.  Nonetheless, companies who market food and beverages to children and teens should pay close attention to this report, as the FTC’s findings still help to inform about industry practices as a whole.

Prop. 37 and the Litigation Risks of Marketing "Natural" Foods

Prop. 37 (The California Right to Know Genetically Engineered Food Act) is a November 2012 California ballot measure that requires clear labels informing consumers if foods are genetically engineered.

Under Prop. 37, retail food in California is misbranded if it has been entirely or partially produced with genetic engineering and that fact is not disclosed. There are different disclosure requirements for raw agricultural commodity and for processed food. In addition, if the food is “genetically engineered” or “processed food,” as those terms are defined under the statute, the food may not, on its label, accompanying signage, or in any advertising materials, state or imply that the food is “natural,” “naturally made,” “naturally grown,” “all natural,” or any words of similar import that would have any tendency to mislead any consumer. The application of this section with respect to “processed food” is subject to some ambiguity as the definition of that term seems overly broad. Under Prop. 37, “processed food” means “any food other than a raw agricultural commodity and includes any food produced from a raw agricultural commodity that has been subject to processing such as canning, smoking, pressing, cooking, freezing, dehydration, fermentation or milling.” The issue with this definition is that it is not limited to genetic engineering. The plaintiffs bar may try to capitalize on this ambiguity by bringing claims over foods that meet the plain language of the definition – even where no genetic engineering is involved – such as frozen vegetables, cooked foods, dried fruits, and fermented vegetables, just to name a few.

There is plenty of debate over Prop. 37 in California, with both opponents and proponents campaigning for support. Litigation in California has also been active in this area. Recently, a California woman brought a class action suit against General Mills Inc. for its representation that its Kix cereal is “all natural” even though it contains genetically modified corn. A similar suit was also brought in California against The Quaker Oats Company. California is not the only state proving to be a fertile battleground on this issue. Just last week, Frito-Lay was hit with a class action complaint in Florida district court, alleging that the company deceptively marketed its bean dip as “all natural” when it actually contained genetically modified organisms. Plaintiff contends that Frito-Lay’s failure to disclose the presence of genetically modified organisms amounts to a material misrepresentation, and that such misrepresentations violate Florida’s Deceptive and Unfair Trade Practices Act and result in unjust enrichment.

Marketing practices over natural foods is clearly a hotbed for litigation. Companies selling food products should make sure that they’re keeping close tabs on their marketing practices for any goods they may represent as being “natural.” Prop. 37, if passed, is sure to represent a sea-change for many of these companies. We will be monitoring this area closely for developments.

FTC Signals Retrenching on IWG Proposals

After a swift left to the chin in early September from the Republican-controlled House Energy and Commerce Committee Chair, Rep. Fred Upton, David Vladeck, the FTC Director of the Bureau of Consumer Protection, testified before the Subcommittee on Commerce, Manufacturing, and Trade, and the Subcommittee on Health, October 12, 2011, discussing the International Working Group (IWG) and changes that are underway.

  • The tone of Vladeck’s statement bore a marked respect for, though not deference toward, advertising self-regulation. This is in contrast to his speech before the self-regulatory National Advertising Division of the Council of Better Business Bureaus October 3, 2011, in which he only mentioned in passing the positive role of self-regulation. In his statement before the Subcommittees, he made a much more significant effort to acknowledge the success that has been achieved to date by self regulation both in the form of the Children’s Advertising Review Unit (CARU) and the Children’s Food and Beverage Advertising Initiative (CFBAI).
  • Because there is no scientific link between marketing of food and obesity, Vladeck made it clear that the Commission is asking industry to take on a share of the responsibility for solving the obesity problem “regardless of whether or to what extent food marketing may have contributed to the problem of childhood obesity” in the first place. In other words, according to Vladeck, it is a proper role of government to pressure industry to help solve multi-factored social problems by not marketing (and therefore not selling) products that may have no relationship to the social problems that the government is seeking to address. Vladeck referred the Institute of Medicine (IOM) Report from 2008 to highlight the fact that marketing influences food and beverage preferences, purchase requests and short-term diets of children under 12 to support the Commission’s position that industry should use its marketing power to eat certain foods rather than other foods. One can interpret this initiative as simply government telling industry what to advertise and what to sell based on a stated political goal. “Children’s health is the ultimate goal, and marketing of more nutritious foods is one effective tool to help achieve that goal.” 
  • Vladeck, who famously dismissed the notion that the IWG proposals could raise First Amendment concerns last summer in a blog post, apparently has been convinced that there may be some validity to the First Amendment arguments made by academics and lawyers in the advertising field. He states, “Our commitment to finding the best balance between what is best for children’s health and what is workable for industry has guided this entire process. . . . .The Working Group’s proposal is strictly voluntary. The Commission recognizes that some forms of regulatory action could raise First Amendment concerns.”
  • After 29,000 comments and after new CFBAI guidelines, which go a long way toward achieving the government’s goal of restricting marketing behavior related to certain foods and beverages, the FTC is signaling significant changes to its proposals. Those changes include:
    • Limiting the scope of marketing to children to those aged 2-11, rather than the originally proposed 2-17. Vladeck: “It is often difficult to distinguish marketing designed to appeal to this age group from marketing directed to a general or adult audience.”
    • Limiting the scope of the marketing activities included within the proposals. Vladeck: “The FTC staff believes that philanthropic activities, charitable events, community programs, entertainment and sporting events, and theme parks are, for the most part, directed to families or the general community and do not warrant inclusion with more specifically child-directed marketing. Moreover, it would be counter productive to discourage food company sponsorship of these activities to the extent that many benefit children’s health by promoting physical activity.”
    • Eliminating recommendations regarding trade dress and brands. Vladeck: “The Commission staff does not contemplate recommending that food companies change the trade dress elements of their packaging or remove brand equity characters from food products that don’t meet nutrition recommendations.”
    • Eliminating recommendations regarding in-store displays and packaging of seasonal or holiday confections.
    • Adjusting the proposed audience share criterion for “traditional media marketing,” including television, radio, and print, from 30 percent children ages 2 to 11 years, to 35 percent – which is the same age criterion used by CFBAI.

The IWG proposal is not dead, however. Expect to see the revised version focused more specifically on traditional media and on online, digital, and social marketing. Also, the IWG proposal will still seek to press its recommendations in the area of advertising or product placement in movies and video games. Additionally, it will cover sweepstakes and premium offers. And, in the one remaining proposal that will cover children and adolescents, Vladeck signaled that the proposal will cover marketing activities in schools for both children and adolescents.

Thus, the IWG proposal will be scaled back significantly. One important lesson: Self-regulation is critical, but industry must be careful of using self-regulation so aggressively that it creates a blueprint for “voluntary” regulation by governmental bodies. Cooperation between government and industry that results in co-regulation is not self-regulation. With the FTC standing right beside self-regulatory efforts, tweaking self-regulation as it deems necessary to advance espoused governmental goals of protecting children, the augmented CFBAI standards may be likely to be the presumptive norm for governmental expectations (and enforcement?). Let’s hope that the blueprint we’re now working off of will build a structure we can all live in.

A Child's World without Advertising? E.U. Contemplates Ban on Advertising Directed to Kids

The global attack on advertising to children draws broad battle lines. As proposed by the European Parliament Committee on the Internal Market and Consumer Protection on July 19, 2011, the draft agenda for 2012 demonstrates a distrust of advertising generally, not just in relation to marketing of food products. The Committee has proposed a ban on all advertising on television and on “direct advertising towards children under the age of 12.” The European lawmakers are basing their proposal on the reasoning that “children are children” and not “consumers.” The report does not explain this rationale. 

What about teenagers? Are they “consumers”? Can they make informed choices? At what age exactly does one make “informed choices” about things like which toy to desire, which sneakers to admire, which brand of yogurt to crave, or which activity to yearn for? And, when does a person learn how to discern the difference between a commercial and non-commercial speech? Furthermore, is it possible to restrict advertising to just children under the age at which they cannot appreciate the persuasive nature of advertising? How many media are segmented so clearly that one can be assured that a ban targeting children under 12 will not restrict advertising to those 12 years old or older? 

These questions are the same as those that are being researched and discussed in the United States, most recently in the context of the Interagency Working Group Proposal on Food Marketing to Children, which includes a proposal to extend restrictions (not a ban) to marketing activities directed to those 17 years of age or younger.  The primary difference, mentioned by many commenters in response to the IWG’s request for comments, is that in the United States, commercial speech is protected by the U.S. Constitution. Without that civil right, Europeans are vulnerable to governmental intervention that can chill truthful, informative speech and deny members of a consuming public – including children and adolescents – exposure to a world with choices and persuasive forces. Proposals for advertising bans such as the one in Europe may promote an extension of childhood ignorance and deny children the tools and experience by which they, along with their parents, can begin to discover what it means to be a discerning member of society.

New Principles for Food Marketing Presented for Comment

This post was written by John P. Feldman and Michael L. Sacks.

The Interagency Working Group of Food Marketed to Children (“Working Group”) today has requested comments on proposed nutritional principles that it hopes will help in the fight against childhood obesity. The Working Group, established in 2009 by the FTC, FDA, CDC, and USDA at Congress’s request, hopes that by 2016 industry actors will meet its two-pronged self-regulatory vision: a marketing environment in which advertisers encourage kids to choose foods that make for a healthy diet; and a production environment in which food companies will police limits on the fat, sugar, and sodium content of their products marketed to kids.

In formulating its principles, the Working Group set its sights on the most heavily marketed foods to children and adolescents, ages 2-17: breakfast cereals, snack foods, candy, dairy products, baked goods, carbonated beverages, fruit juice and non-carbonated beverages, prepared foods and meals, frozen and chilled desserts, and restaurant foods. In a press release, the Association of National Advertisers, calling the proposals “sweeping” and “overly restrictive,” criticized the Working Group for inappropriately “treating teenagers as if they were young children” and employing “limited and outdated” data.

Despite these differences, the Working Group and Food Marketers can agree that these voluntary proposed principles respect industry’s preference for and progress in its self-regulatory efforts to keep our kids healthy.

Action item? Take time now to determine just how divorced from business reality these principles are for your company. If they end up suggesting that a formulation tweak would be all that it takes to be a poster child for the Working Group then go for it. If they suggest to you that it will be impossible or very costly to reformulate then get set to comment. Objective, quantifiable data is needed to make your comment useful. So, do the analysis as soon as possible and let's see if what they're imagining has any semblance of reason.

Cheerios - a Drug?

General Mills is the Food and Drug Administration's ("FDA") latest target. In case you think that you misread the previous statement, General Mills—manufacturer of the popular cereal "Cheerios"—received a letter addressed to its Chairman from the FDA May 5 claiming that the FDA has reviewed various Cheerios labels and found they contain "serious violations" of federal regulations. Cheerios is the best-selling cereal brand in the United States, with sales of $1.4 billion last year, according to General Mills.

In recent years, the FDA has begun cracking down on manufacturers who overstate the benefits of their products, amid increased demand for healthy foods. According to the FDA, General Mills is breaking federal regulations on two counts: they are marketing Cheerios like an "unapproved new drug" and misbranding the product by making "unauthorized health claims." What, in particular, has caught the ire of the FDA? The FDA said that the Cheerios product label promotes it like a drug intended for use in the "prevention, mitigation, and treatment of disease." The FDA's letter drew particular attention to phrases that say the product lowers cholesterol by "4 percent in 6 weeks," that it can also reduce bad cholesterol by 4 per cent, and that it is "clinical proven" to lower cholesterol. The letter does not address the veracity of General Mills' claims, but simply the point that by making such claims, the product is being touted and advertised as having the same medicinal effects as other cholesterol-lowering drugs, and therefore should go through the proper channels for obtaining drug approval.

On the positive side, the FDA's letter acknowledges that General Mills had observed regulations correctly in respect of a health claim associating "soluble fiber from whole grain oats with a reduced risk of coronary heart disease," but the two claims about lowering cholesterol go beyond that which constitutes permissible advertising. The FDA said that even if the cholesterol-lowering claim could be argued to be part of an otherwise permissible claim, the wording disqualifies it from use in the soluble fiber health claim.

An important development in this matter is the fact that the FDA cites text on one of General Mills' company websites (www.wholegrainnation.com) as constituting misbranding. According to the federal Food, Drug, and Cosmetic Act (the "Act"), an advertiser's website is considered to be part of the product labeling. The website in question says "heart-healthy diets rich in whole grain foods, can reduce the risk of heart disease." According to the FDA, the claim does not meet the requirements of the Act, which requires such assertions to state that "diets low in saturated fat and cholesterol and high in fiber-containing fruit, vegetable, and grain products may reduce the risk of heart disease." The Cheerios' labeling neither mentions fruits, vegetables and fiber, nor the need for the diet to be low in saturated fat and cholesterol.

The FDA's letter also refers to another labeling claim about reduction in cancer risk. The FDA said Cheerios' claim, which includes the statement "regular consumption of whole grains as part of a low-fat diet reduces the risk for some cancers, especially cancers of the stomach and colon," fails to meet the authorized format because, for example, like the aforementioned claim, it does not mention fruits and vegetables and fiber content, and again denies the public the chance to see the overall context of the healthy diet. The agency has also taken issue with the added phrase "especially cancers of the stomach and colon," which goes beyond what an authorized claim is allowed to say.

In a statement, General Mills spokesman Tom Forsythe defended the cereal's claims. "Cheerios' soluble fiber heart health claim has been FDA-approved for 12 years, and Cheerios' 'lower your cholesterol 4% in 6 weeks' message has been featured on the box for more than 2 years," he said. "The science is not in question. The scientific body of evidence supporting the heart health claim was the basis for FDA's approval of the heart health claim, and the clinical study supporting Cheerios' cholesterol-lowering benefit is very strong. The FDA is interested in how the Cheerios cholesterol-lowering information is presented on the Cheerios package and website. We look forward to discussing this with FDA and to reaching a resolution."

General Mills has been given 15 days to reply with an explanation of how they intend to "correct the violations" and to ensure that "similar violations do not occur." Will the day come when consumers need a prescription to purchase their next box of Cheerios?

When the world is reeling in a recession, Nigerian consumer group takes aim at food marketers

Nigeria’s Consumer Protection Council (“CPC”) is calling for a global ban on advertising for food that is high in fat, sugar, and salt, at least with regard to children’s advertising. According to an article in Africa News, CPC is calling on the World Health Organization to support a strong international code that would ban marketing low-nutrition food to children.

CPC is seizing the opportunity of this year's World Consumer Rights Day (March 15, 2009) to strongly urge the Nigerian Federal Ministry of Health to support a ban on radio or TV advertisements promoting “unhealthy” food between 6 a.m. and 9 p.m., and no marketing of unhealthy foods using news media (such as websites, social networking sites and text messaging). In addition, the proposed code would ban promotion of unhealthy foods in schools; free gifts, toys or collectable items that appeal to children to promote unhealthy foods; and the use of celebrities, cartoon characters or competitions to market unhealthy food.

This proposal is also supported by Consumers International (“CI”), the self-proclaimed global campaigning voice for consumers.

Why this Matters: This sort of international movement has the potential to turn a spotlight on what food marketers are doing outside of the United States. Clearly, the U.S. food and beverage marketers have done more than their fair share of retooling and shifting the messages toward “better for you” food, and there is strong self-regulatory oversight provided by the CBBB’s Children’s Food and Beverage Advertising Initiative (“CFBAI”). This is not satisfying the public interest groups that seek to trample commercial free speech and the responsibility of parents here in the United States, and it clearly isn’t satisfying the rest of the world. The CFBAI should engage in more international outreach so that the reactionary forces that threaten to undermine truthful and useful advertising, not to mention the sponsorship dollars for media content, do not take us down a path of unwise and unnecessary posturing, as appears to be going on in Nigeria.