| Insights |
|
| Commentaries | |
For decades, the Big 3 U.S. automakers fiddled while Detroit burned. Ultimately, out-of-synch products, resistance to change and misreading of the regulatory climate in Washington contributed to their fall from glory. These same problems are now becoming evident in an unlikely place: the food industry.
If food companies don’t heed the lessons learned in Detroit, their ability to sustain profits will be severely tested by new mandated regulations and unsatisfied consumers.
While the industries are structurally different from each other, their behaviors are eerily akin. Confronted with pressing social and economic issues such as pollution, a shortage of fuel and rising rates of obesity, both industries have taken the same stance: defend the status quo at all costs.
Examining the behavioral parallels reveals some striking similarities:
To avoid the path taken by the auto industry, food corporations must decide NOW that they will break the cycle of profiting at the expense of their customer’s health. Without such a commitment, they are sure to be on the wrong end of severe regulatory measures limiting not only how they market their products but what they can actually sell. The cash cow machine is in jeopardy unless industry steps up and takes a leadership role in solving the obesity crisis.
By taking one major step, the food industry can avoid strict regulation, improve their customer’s well-being and augment their bottom lines. This involves making a commitment to reduce the calories food corporations sell by 10% by the end of the decade. And there is big incentive to do so; consumers will automatically put on less pounds, regulators will back off their punitive measures to tax, and corporations can improve profits via a “smaller is better” model.
Examples of how this can be accomplished include (1) 100-calorie snack packs, which research shows lower the caloric intake for eaters and offer higher profit margins for food marketers, and (2) “zero-sizing,” the promotion of no calorie beverages in large sizes to preserve profits.
Unless food companies trim down their product offerings in short order, they are doomed to follow in the Big 3 automaker’s footsteps.
Hank Cardello is CEO of 27ºNorth and the author of “Stuffed: An Insider’s Look at Who’s (Really) Making America Fat.” He is a former executive with Coca-Cola and General Mills and now chairs the Global Obesity Business Forum sponsored by the University of North Carolina at Chapel Hill.
To find out more about how 27ºNorth can help your organization, please contact us at:
27ºNorth
97501 Franklin Ridge
Suite 100
Chapel Hill, NC 27517
919-929-0102
919-929-0108(Fax)
![]()