Kraft Food's Fight against Obesity

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Case Details:

Case Code : BECG025
Case Length : 15 Pages
Period : 1996-2006
Pub. Date : 2003
Teaching Note :Not Available
Organization : Kraft Foods
Industry : Food and Beverages
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Society can respond (to the obesity issue) in a simplistic, counter-productive, punitive way if it wishes, and if it does that, we do have a lot at stake."

- Michael Mudd, Senior Vice President (Corporate Affairs), Kraft Foods Inc., in January 2003.¹

"What people eat is ultimately a matter of personal choice, but we can help make it an educated choice. And helping them get more active is every bit as important as helping them eat better. By providing people with products and information they can use to improve their eating and activity behaviors, we can do our part to help arrest the rise in obesity."

- Roger Deromedi, Co-Chief Executive, Kraft Foods Inc. in July 2003.²

Kraft Foods in Trouble

In May 2003, Kraft Foods, the number one food company in the US and the world's second largest food company, saw one of its most popular products under attack. A lawsuit filed against the company claimed that its Oreo cookies contained trans fatty acids.³

The lawsuit alleged that Kraft Foods used hydrogenated vegetable oil in these cookies, which was detrimental to the health of consumers in the long run. Citing the possible health hazards, the lawsuit demanded a ban on the marketing and selling of Oreo cookies to children in California. Stephen Joseph (Joseph), the lawyer who filed the lawsuit in the general public's interest, also claimed that Kraft Foods did not even list the amount of trans fatty acids present in Oreo cookies on its pack. However, Kraft Foods had a different version of the story. Vice-President (Corporate Affairs) Michael Mudd (Mudd) said that the company had approached the US Food and Drug Administration (FDA) twice regarding permission for the inclusion of details about fats that were often connected with high cholesterol, diabetes and heart disease, on its products' labels.

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However, the FDA had not yet passed any such ruling and hence, the company was waiting for the same in May 2003. With criticism against junk/fast/snack food companies for jeopardizing consumers' health at an all time high in the US, the lawsuit was indeed unsettling for Kraft Foods.

Reportedly, many health and social welfare organizations were blaming food companies for the increasing problem of obesity in the US and Canada (the region is referred to as North America hereafter).

The problem of obesity had taken the form of an epidemic since the late 1990s (over 60% of adults were overweight). The number of obese people was growing at an alarming rate in the early 21^st century. Though analysts felt that Kraft Foods was not likely to be indicted, they said that the lawsuit might nevertheless affect its reputation and performance. Given these circumstances, it became imperative for Kraft Foods to undertake initiatives that could appease the critics.

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1] 'Pulls Ad for Oreos; Looks to Fund Public-Education Efforts,' www.adage.com, January 20, 2003.

2] 'Kraft announces plan to put healthier snacks in kids' lunch boxes,' www.sfgate.com, July 01, 2003.

3] Trans fatty acids are found in vegetable shortening and many processed food products. They cause the cholesterol level in the blood to rise, thereby increasing the chances of diseases [Cholesterol is a waxy fat-like substance found in the blood and in all body cells. It forms cell membranes, hormones and other needed tissues in the body. A very high level of cholesterol in the blood causes cardiovascular diseases and leads to heart attacks and strokes.]