AUGUST 1984 - VOLUME 5 - NUMBER 8
Twinkies, Wonder Bread, and Lite Beer
Multinationals and the Food System
The Fat of the Land is an investigation into what's wrong with America's food system --additives, processing, packaging, quality, advertising, and prices.
Most people have only a vague sense of what happens to food between the farm and the table. Except to some basic commodities, such as pfoduce, what happens is usually quite extensive, and often of questionable worth. Fred Powledge, in his eleventh book, traces this meandering path well. He begins by pointing out that of the approximately $298 billion Americans spent for food in 1982, only $84 billion went to farmers. He then asks, "Where does the $214 billion go? To the middlemen; packagers, distributors, processors, promoters, retailers, and others all add to (or detract from) the original product, and with each step the price increases. Powledge looks at each of these levels in-depth.
Americans, on average, consume roughly 1400 pounds of food a year. Because this figure has remained constant for years, manufacturers have looked for ways to increase their "share" of a particular market. Powledge examines the two most common ways to increase market share-differentiation and advertising. Differentiation means an endless variety of "NEW" and "IMPROVED" food items that rarely differ greatly from their forebearers. "It is axiomatic," Powledge notes, "that the more highly differentiated the foods, the more likely it is that their market will be highly concentrated." For example, the top three brands control 92 percent of the market share in salt, 93 percent in frozen dinners and 98 percent in cake frostings. The United States Department of Agriculture (USDA) calculated that in 1975, the largest two hundred food manufacturing companies held 81 percent of all the manufacturers' assets.
This concentration, Powledge asserts, promotes and protects the role of large corporations-domestics and multinationals. Concentration "isolates the `share' available in a market, putting it in the hands of the leading firms." Thus, barriers to entry are overwhelming, often available only to conglomerates. Powledge cites James D. Shaffer, a Michigan State agricultural economist, discussing the multinational grain conglomerate, Cargill Company, as "an intriguing example of vertical control": "Cargill is the largest private grain handler in the world and operates the largest beef-feeding organization in the U.S. . . . which sells to a wholly owned subsidiary of Cargill, which is the second --largest beef processor in the U.S., which in turn sells under contract to McDonald's, the largest fast-food chain in the world."
Advertising represents the final guarantee of profits for multinationals and other corporations in the food business. Willard Mueller, a professor at the University of Wisconsin, traced the history of Miller beer after its acquisition by Phillip Morris. Miller was then the fourth largest national brand of beer. Phillip Morris started pumping money into the Miller product. It purchased a Chicago brand of beer, called "Lite," and put millions of dollars into promoting it. "Ad expenditures shot from $525,000 in 1973 to $27.7 million in 1979," wrote Mueller. He added, "The Lite success story represents the ultimate achievement of advertising-created product differentiation-being able to sell a lower-cost product at a higher price. " ("Light" beer is simply beer with a greater percentage of water.)
Other multinationals, however, have not been so lucky with their advertising. ITT Continental Baking Company (part of the international conglomerate, probably best known for Twinkies and Wonder Bread) was the object of a 1979 consent order obtained by the Federal Trade Commission over the way ITT Continental was marketing its Fresh Horizons bread. The company claimed in advertisements that Fresh Horizons had five times as much fiber as whole wheat bread. The FTC said that this was "false, deceptive, and misleading," because the fiber in Fresh Horizons was "derived from wood, an ingredient not commonly used, nor anticipated by consumers to be commonly used, in bread." Moreover, even with the wood the bread did not contain "five times as much fiber as whole wheat."
Powledge goes on to discuss other problems in the marketing of food. A chapter titled "The $252 Billion Grocery Store" delves into the psychology used by stores to promote sales. Another chapter, "The Errant Guardian," exposes the harm done to the nation's inspection programs, especially for meat and poultry, under the Reagan Administration. "It did not take the new team long to get to work implementing the new administration's policy on discarding, defusing, and rewriting regulations and policies," states Powledge.
Finally, Powledge tries to provide some advice for the consumer. The first step, he says, is to be aware-aware of what has happened to food you eat since it has left the farm, of what the industry is doing to convince you to buy it, and of your own options. Cooperatives, he says, are gaining popularity as an alternative to the processed, packaged, artificial products that stock supermarket shelves. Direct marketing is another answer to the domination of "middlemen" in the business. The Greenmarkets of New York City are a good example of direct marketing. Farmers bring their products to several locations around the city and residents are able to purchase them without all the people who normally stand in the way of fresh, natural food. As Powledge concludes, "If people can realize the benefits obtained by eliminating four or five layers of middlemen and several thousand miles of needless transportation-and realize them fairly instantly, as when biting into a peach or slice of tomato while simultaneously pocketing the substantial difference in price-could this not lead to challenges of conglomerate concentration, monopoly overcharge, government collusion with manufacturers at the expense of consumers and producers, deceptive packaging and advertising practices, needless adulteration of basic foods with chemicals and flavorings? Could it not lead, in fact, to a challenge to the whole system as it now exists?"
Louis Nemeth is a Washington, D.C.-based freelance writer.