Food Manufacturers Under Pressure - CXN Has A Solution with Z-Trim
Good afternoon, and Happy Holidays;
As a reminder, we are two weeks away from what is certain to be a historic point in the history of food manufacturing as we know it. The very first piece of legislation is being imposed on January 1st, 2006; the Trans Fat Bill. From my understanding, there are another 65 bills in Congress right now and more are sure to be on the way. The World Health Organization has coined obesity a "staggering and global epidemic" with "no immediate solution in sight."
This GLOBAL EPIDEMIC is going to get bigger, before the trend begins to reverse. Z-Trim, originally developed by the USDA, is an all-natural, fat replacement food ingredient that can reduce up to 50% of the fats, calories & carbs, lower cholesterol, and increase dietary fiber. Recently, Circle Group Holdings, Inc. partnered with George Foreman Enterprises, Inc. and George Foreman will head up our international marketing campaign to expand awareness on a global level. Circle Group Holdings, Inc. is a publicly traded company with shares traded on the AMEX exchange under the symbol of CXN. I also want to take this opportunity to wish you and your family the happiest of holiday seasons, and a prosperous New Year!
Under Pressure, Food Producers Shift to Healthier Products
By MELANIE WARNER
Published: December 16, 2005
For years, food companies have responded to criticism about the nutritional quality of their products by maintaining that all food can fit into a balanced diet. There are no bad foods, they argue, just bad diets.
Tony Cenicola/The New York Times
That is starting to change. As major food producers face scrutiny over their role in contributing to increasing childhood obesity rates, they are under pressure to make fundamental shifts in the way they sell their products to American children.
Kraft and PepsiCo have created rating systems to designate healthier foods. McDonald's said it would begin printing detailed nutrition information on its packaging in February.
Entertainment companies are also feeling pressure. Walt Disney said that beginning in the next few months, it would remove characters like Winnie the Pooh, Mickey Mouse and Chicken Little from candy and food products it determined to be unhealthy for children. And in partnership with a major supermarket chain, which Disney would not identify, the company will put Mickey Mouse thumbs-up seals on items like bananas and on store-brand products like pasta and juices.
A Disney spokesman, Gary Foster, said, "We wanted to give parents healthier alternatives and help in reversing obesity trends."
None of these changes go as far as the Institute of Medicine, a leading scientific advisory group, urges. In a report last week, an institute committee of 16 nutrition and marketing experts called for sweeping changes in the way the food industry markets its products to children. It added that 80 percent to 97 percent of the food products now aimed at children and teenagers are of "poor nutritional quality."
The food industry is divided over how it should respond. General Mills and Kellogg, which derive a large part of their revenue from products aimed at children, are resisting changing many of their practices. Kraft and PepsiCo, whose products are aimed at a broader section of consumers, seem more willing to adapt. The Grocery Manufacturers Association, a large lobbying group, is resisting the development of an industrywide rating system for healthier foods - one of the leading recommendations in the institute's report.
And Disney's efforts only go so far. Although it dropped an exclusive deal with McDonald's, some movies may continue to use tie-ins to McDonald's and other fast-food chains. Today, characters from "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" start appearing in boxes of the chain's Happy Meals.
So far, just one company, Kraft Foods, has significantly curtailed the amount of unhealthy food it markets to children under 12. The rest of the food and restaurant industry has yet to take any major steps in line with the report's major recommendations. While companies have made some efforts to reformulate products and introduce healthier offerings (removing trans fatty acids, for instance), consumer advocates and nutrition experts say that many of these attempts fall woefully short.
For instance, General Mills, the company that spends the most money marketing packaged food to children, promotes the addition of whole grains to its lines of cereal, even though many of these are 40 percent sugar and aggressively advertised to children.
Earlier this year, General Mills tried to provide more nutrition information by displaying icons in a product's "Goodness Corner."
But a consumer watchdog criticized the move because there are 26 different icons, rather than a clear-cut rating system.
"I work in this area and I don't even know what some of those things are referring to," said Margo Wootan, director of nutrition policy at the Center for Science in the Public Interest, a nutrition advocacy group.
A spokeswoman for General Mills, Marybeth Thorsgard, declined to comment on the Institute of Medicine's report, saying that the company had not had a chance to read through the 600-page document.
But in a presentation this year, General Mills vigorously defended its cereal.
"We strongly think that products like cereal can be advertised responsibly to children," said Kendall J. Powell, the company's chief operating officer, at an Institute of Medicine workshop in January. "Cereal eaters, including kids who eat presweetened cereals, are getting a good start to their day."
Kellogg, the second-largest packaged-food marketer to children, also said it did not want to comment on the Institute of Medicine's recommendations. In a statement, a spokeswoman, Jill Saletta, said the company offered a "wide variety of products" and "remains a committed partner in the fight against obesity."
ConAgra Foods and Mars said they were focusing on developing healthier foods rather than restricting marketing or rating their products. McDonald's, Burger King, Wendy's and Nestlé had no comment on the report.
Kraft and PepsiCo also appear to be alone in supporting the idea of an industrywide rating system for healthier foods.
"I think there may be an antitrust issue," said Stephanie Childs, a spokeswoman for the Grocery Manufacturers Association. "Whenever people talk about the industry getting together and deciding which products to sell, it sounds to me like something we could get sued for."
Some legal experts said, though, that food companies were more likely to face lawsuits if they did not think proactively and listen to criticism.
N. Louise Ellingsworth, a partner in the law firm of Bryan Cave, which has worked in the past with food companies, said: "Sometimes, companies think that by making changes you risk calling attention to yourself and focusing on the problem. But for companies who don't act, their mistakes will become obvious years later. The plaintiffs' bar is watching very closely, and everyone's got a target on their back right now."
PepsiCo insists that its "Smart Spot" program for identifying healthier products is more a shrewd business decision than a form of legal insurance. The company said that sales from the Smart Spot products grew by 13 percent in the first three quarters of the year, three times as fast as the rest of its business. "We believe this is a huge business opportunity," said Brock Leach, the chief innovation officer.
Although many nutrition and public health advocates have applauded Kraft and PepsiCo for breaking with the rest of the food industry, they say that both companies have yet to go the distance. Some of their children's products, for instance, are hardly carrots and broccoli - sugar-free Kool-Aid with artificial sweeteners, Kraft macaroni and cheese with processed cheese, baked Cheetos and peanut butter Cap'n Crunch cereal.
And Pepsi has not stopped marketing its non-Smart Spot products like regular Cheetos and Gatorade to children. It said that by early in 2006, half of all its spending on advertising aimed at children would be for Smart Spot products, an increase from 38 percent this year.
But Susan Linn, associate director of Judge Baker Children's Center, a nonprofit group in Boston, asked: "What's the point of doing 50 percent? If they were really concerned about children, they would stop completely."
Licensing of favorite characters also continues to be an enormously popular and effective marketing tactic that not even Kraft is certain it wants to abandon. The company, which features Dora the Explorer on its Nabisco Teddy Grahams and Fairly OddParents on Cheese Nips crackers, said that its licensing policy "is being discussed."
The question is not even on the table at PepsiCo. Mr. Leach called the focus on marketing methods like character licensing "misplaced energy."
"Our point of view," he said, "is let's focus on making healthier products, and that will eventually move the whole marketing mix."
While the members of the Institute of Medicine committee said they were willing to trust the industry to make voluntary changes, they have warned that if there is not significant improvement in the types of products marketed to children after two years, they will press Congress to take action.
J. Michael McGinnis, a senior scholar at the institute and chairman of the committee, called for the creation of a division in the federal Department of Health and Human Services to assess the food industry's progress.
Not surprisingly, food companies say that they, too, think self-regulation can work and cite the Children's Advertising Review Unit, a group financed by food, toy and media companies to monitor children's advertising.
But Elizabeth Lascoutx, director of the Children's Advertising Review Unit, said the group did not concern itself with junk-food marketing. Its job, she said, was to make sure that ads aimed at children were fair and accurate, not to see if they featured healthful or low-calorie products.
"We don't set standards or get involved in good food, bad food issues," Ms. Lascoutx said. "We're lawyers, not nutritionists."
Mr. McGinnis said he thought that the scope of the Children's Advertising Review Unit should be expanded to include the nutritional quality of children's food, though that recommendation is not part of the report.
Matthew T. Mushlin
VP of Corporate Development & Relations
Circle Group Holdings, Inc.
AMEX Symbol: CXN
mushlin@sbcglobal.net
847-549-6002 office
847-549-6028 fax
Copyright 2005. This email contains forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted, or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the effect of government regulation, competition and other material risks described in the company's filings with the SEC.
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