Transferring Racial/Ethnic Marketing Strategies From Tobacco to Food Corporations: Philip Morris and Kraft General Foods

Abstract

Objectives. To investigate the transfer of marketing knowledge and infrastructure for targeting racial/ethnic minorities from the tobacco to the food and beverage industry in the United States.

Methods. We analyzed internal industry documents between April 2018 and April 2019 from the University of California San Francisco Truth Tobacco Industry Documents Library, triangulated with other sources.

Results. In the 1980s, Philip Morris Companies purchased General Foods and Kraft Foods and created Kraft General Foods. Through centralized marketing initiatives, Philip Morris Companies directly transferred expertise, personnel, and resources from its tobacco to its food subsidiaries, creating a racial/ethnic minority–targeted food and beverage marketing program modeled on its successful cigarette program. When Philip Morris Companies sold Kraft General Foods in 2007, Kraft General Foods had a “fully integrated” minority marketing program that combined target marketing with racial/ethnic events promotion, racial/ethnic media outreach, and corporate donations to racial/ethnic leadership groups, making it a food industry leader.

Conclusions. The tobacco industry directly transferred racial/ethnic minority marketing knowledge and infrastructure to food and beverage companies. Given the substantial growth of food and beverage corporations, their targeting of vulnerable populations, and obesity-related disparities, public policy and community action is needed to address corporate target marketing.

The rise in obesity rates has slowed in the US general population in 1999–2010, yet rates have continued to rise in certain populations.^1,2 Non-Hispanic Black and Mexican American women are at the greatest risk for obesity and related cardiometabolic disease.^1,3 Nutrition profiles are poorer among racial/ethnic minorities than Whites.⁴ Per-capita sugar-sweetened beverage consumption is highest among Black and Hispanic youths.⁵ A greater understanding of the drivers of obesity among underserved racial/ethnic groups is needed to address well-documented health disparities.⁶

Minority-concentrated neighborhoods have high exposure to food marketing,^7–9 including greater saturation of processed food and beverage advertising.^10,11 Blacks and Hispanics, particularly as children, are disproportionately exposed to television, print, and digital advertisements of hyperpalatable processed foods and beverages.^11–14 In the United States, food marketers spent $333 million on Black-targeted television and $787 million on Spanish language–targeted television in 2017 alone.¹⁵

Before the 1960s, US-based food and beverage company marketing campaigns largely ignored racial/ethnic minority groups because they were not considered viable market segments¹⁶ and for fear of alienating White majority consumers.¹⁷ By contrast, US tobacco corporations have a long history of marketing directly to racial/ethnic minority groups with culturally tailored brands.^18–20 Cigarette marketing and promotional campaigns^19,21–27 were combined with nonmarketing strategies, including public relations campaigns and targeted donations to influential advocacy groups, to expand tobacco use among specific racial/ethnic groups.^28–30

The largest US tobacco company, Philip Morris, was one of the first advertisers in racial/ethnic minority media.³¹ It developed positive corporate relationships with Black, Hispanic, and Asian stakeholders through partnerships with racial/ethnic minority media outlets,²⁵ financial sponsorship of racial/ethnic minority festivals and musical events,³¹ and corporate contributions to racial/ethnic minority leadership.^18,28–30 By the mid-1980s, 60% of the advertising in Black newspapers was sponsored by tobacco companies,^25,31 and a 2002 study found that Philip Morris gave financial and other resources to “virtually every African American leadership organization.”^28(p7)

Food industry practices have been compared with those of the tobacco industry,^32,33 and our previous study found that popular brands of sugar-sweetened beverages targeting children were owned and developed by major tobacco corporations.³⁴ We analyzed previously secret internal tobacco industry documents to find that, in the 1980s, Philip Morris acquired General Foods and Kraft, merging them into the largest food and beverage corporation in the world at the time.³⁴ In this study, we examined the racial/ethnic target marketing techniques of these tobacco-owned beverage and food corporations beginning in the 1980s. We found that tobacco executives directly transferred marketing expertise, personnel, and resources from their cigarette to their food and beverage enterprises. They combined target marketing with racial/ethnic minority events promotion, minority media outreach, and corporate donations to racial/ethnic minority leadership groups, launching a food industry leader.

METHODS

We searched publicly available tobacco industry documents in the University of California San Francisco Truth Tobacco Industry Documents Library between February 2017 and August 2018, beginning with broad search terms (e.g., “ethnic,” “Black,” “Hispanic,” “Asian,” “Philip Morris”) and narrowing with Boolean operators (e.g., “General Foods” and “Kraft”). These searches yielded more than 40 000 documents for analysis. Using snowball sampling techniques, we pursued key personnel, organizations, events, dates, and products that emerged from initial searches in subsequent searches or by viewing the documents by consecutive order by reference (Bates) numbers. We reviewed topically relevant documents in detail. To promote rigor, we triangulated with other sources, including materials gathered from business and trade databases (EBSCOhost, HighBeam Research), and Google and PubMed using similar search terms.

We used standard qualitative methods for documents analysis.³⁵ K. H. N. reviewed documents for relevance, prepared analytic memos to summarize, and organized the documents chronologically and thematically. We constructed a timeline to identify key events and dates, and types of marketing and promotional activities, and to build an understanding of how these activities were related to one another historically and conceptually. We all reviewed analytic memos to refine and focus research questions and to identify and interpret emergent themes. We repeated the iterative search process until we reached saturation of both keywords and documents. We analyzed approximately 5000 documents pertaining to the relationships between Philip Morris, General Foods, and Kraft, and racial and ethnic groups—79 that were most relevant.³⁵

RESULTS

Before acquisition by the Philip Morris Corporation (PMC), General Foods (GF) and Kraft, like most other food and beverage corporations (except for Coca-Cola and PepsiCo³⁶) relied on a single, undifferentiated mass-marketing approach. GF viewed targeting consumer segments “largely as an inconvenience.”^37(p1) A GF spokesperson argued that “market segmentation diverts funds and involves twice as much research and effort to launch as a national campaign.”^38(p32) Upon PMC purchase in 1985, GF ranked 15th among the top 25 corporations in Hispanic advertising.³⁸ GF confined its corporate giving and sponsorship to a few established national minority institutions.^39–41 Kraft did some advertising in the racial/ethnic minority media,^42,43 event sponsorships,^44–46 and racial/ethnic minority community engagement.^47,48 It ranked 12th in advertising to Hispanics among food and consumer products corporations³⁸ and did not have an racial/ethnic minority marketing department.³⁶

Minority Marketing at General Foods Under Philip Morris

In 1985, PMC, the parent corporation that owned Philip Morris USA (henceforth PM Tobacco) and Miller Brewing (a beer company), bought GF for $5.7 billion. PMC assured GF stockholders and executives opposed to the takeover that GF would continue its current operations without interference.⁴⁹ Yet, 1 year after PMC acquisition, GF’s annual report emphasized the role of marketing: “There’s a new attitude at General Foods, one that not only tolerates, but actively encourages innovation throughout the marketing organization.”^50(p12) It emphasized the growing racial/ethnic minority consumer market segment and the need to go “beyond the traditional mass marketing conventions.”^50(p12) A 1986 GF market research study on its sugar-sweetened beverage, Tang, concluded that Hispanic households had disproportionately high consumption and favorable market characteristics, such as large family size, young age distribution, poor education, product display responsiveness, and a preference for branded products and “sweeter products, [Hispanics] have less concern about salt, sugar or calorie levels.”^51(p20) The report recommended “Spanish ads, street fairs and cultural events.”^51(p22)

Two years later, in 1987, PMC replaced GF’s chief executive officer (CEO) and most corporate staff with tobacco executives.^52–54 PMC’s chief financial officer explained that “General Foods was not as aggressive as others in the food business. We felt we could re-energize the company.”^55(p6)

Disappointment with GF’s slow earnings growth led to PMC’s 1987 “Corporate Synergy Project.” PMC set up committees to identify shared activities across tobacco, alcohol, and food subsidiaries to increase sales,⁵⁶ consolidate media purchases, and increase advertising budgets.^57,58 Direct database marketing (consumer data–driven marketing communications) was viewed as the “single area that provides the best opportunity for synergy” because it “will lead to more effective targeted marketing efforts for each individual operating company.”^59(p10) GF’s new approach used grocery scanners to collect consumer data, including demographics, lifestyle characteristics, and purchasing patterns^37,60 on 199 million people.^61,62 This approach allowed GF to identify consumer segments based on race/ethnicity.^63,64

One synergy committee noted that corporate “sponsorship represents an important area for operating units [food, beer, and tobacco] to work together.”^65(p3) A detailed report proposed testing Miller and GF cross-promotions to “strengthen ethnic sponsorship programs through joint cooperation and involvement.”^66(p23) Hispanic events (e.g., festivals, soccer games) promoting Tang, Miller beer, and Marlboro cigarettes were considered but ultimately abandoned because of concerns about “real and projected negative consumer reaction.”^67,68(p1) However, PMC’s tobacco and alcohol subsidiaries would still share strategies with GF “as creative vehicles to solve marketing opportunities (i.e. target marketing).”^69(p1) PM Tobacco directed its racial/ethnic minority events consulting firm to share cigarette-marketing intelligence with GF, including the Black women–aimed “Jump Sister Jump” event,⁷⁰ and promotional strategies aimed at Asians.⁷¹

Synergy efforts also coordinated racial/ethnic minority media resources⁶⁸ by combining GF and Miller’s Hispanic broadcast buying,⁷² in addition to helping GF secure advertising discounts in JET, Ebony, and Black Enterprise magazines.⁷³ Strategic relationships with minority-serving organizations had been built by PM Tobacco’s staff who introduced GF executives to Black church groups.^74–76

Building Kraft General Food’s Minority Marketing Program

In 1988, PMC bought Kraft and then merged it with GF to create Kraft General Foods (KGF), then the world’s largest food company ($20 billion in revenues) with the largest total marketing budget (more than $8 billion).^77,78 Mike Miles, the CEO of KGF, who would later become PM Tobacco’s CEO,⁷⁹ wanted to “seek out synergies and opportunities . . . to maximize the benefits of combination.”⁸⁰ A corporate restructuring of PMC integrated tobacco, alcohol, and food subsidiaries⁸¹ to leverage resources, activities, skills, and personnel.⁸² The CEO of PMC told Fortune magazine that the goal was “persuading [the subsidiaries] to ask each other for advice. I want everybody to work together.”^79(p4,5)

In 1989, marketing and brand management were centralized at the PMC corporate level.^83–85 This led to creation of KGF’s minority marketing program, which combined target marketing with racial/ethnic minority media outreach, events sponsorship, and partnerships with racial/ethnic minority leadership groups.

Target Marketing

In 1989, PM Tobacco’s brand manager responsible for the Black market⁸⁶ noted that “Most brands marketed by Philip Morris Companies are available within predominantly ethnic minority markets, with some brands registering high per capita consumption (Kool-Aid, Kraft BBQ sauce, Miracle Whip, Dry package dinners, Menthol cigarettes).”^87(p1) PMC formed a corporate service group “to encourage and expedite effective marketing efforts across operating companies in key ethnic markets [and to] maximize corporate affairs, merchandising and key account synergy.”^87(p1) The group was to coordinate market research, develop marketing plans, and test new products for specific minority markets.^88,89

KGF’s Five-Year Plan established Kool-Aid’s key leverage area and strategic focus in “kids and ethnic marketing.”^50(p48) In 1989, KGF began to work with advertising agencies specializing in the Black and Hispanic markets.⁹⁰ One firm’s market research suggested that “Most Blacks want something sweet with their meals,” and that “Blacks generally prefer to buy Kool-Aid in its unsweetened form and add lots of sugar themselves.”^91(p4) The 1989 “Our Kind of Smile” Kool-Aid target marketing campaign^92,93 had the tagline, “How do you like your Kool-Aid?”^90,94–96 A prominent advertisement showed a Black mother holding an empty pitcher toward 2 smiling children with the captions, “Alright, who drank all the Kool-Aid?” and “Don’t worry, it’s only 1/4 the price of soda. So make another pitcher and keep them smiling!”⁹⁷

Outreach to Racial/Ethnic Minority Media

By 1989, KGF had been integrated into PM Tobacco’s contracts with Black and Hispanic television, print, and other media.^82,98 This gave KGF access and deep discounts because of PM Tobacco’s “clout.”^{68(p2),85(p1),98(p1)} Later that year, PMC Corporate Affairs took over all tobacco, alcohol, and food racial/ethnic minority media activities.⁹⁹ Following an analysis,¹⁰⁰ the CEO of PMC noted that “Philip Morris [Tobacco] has a long history of advertising its products through ethnic-owned media. We were among the first major corporations to do so,” and reminded all subsidiaries of “the continuing marketing opportunities that these media [outlets] provide.”^101(p1)

Before the PMC acquisition, GF’s contracting with racial/ethnic minority media was for “affirmative action,” but in 1989 KGF was positioned to assume “a more performance/sales return orientation.”^102(p1) In 1990, KGF pledged $7 million to Hispanic and $2 million to Black media.^{103(p10),104,105} In a speech to the National Hispanic Publishers Association, a KGF executive announced a new contract, saying, “As citizens, we at Kraft General Foods recognize the need for a free, informative Hispanic press. As marketers, we also value the large and attractive audience your publications reach.”^103(p10)

Corporate Sponsorship of Minority Events and Leadership Groups

In 1989, PMC consolidated all corporate-sponsored events into a single calendar of more than 600 political, sports, trade, and community events, noting that “The scope of activity is truly impressive and it represents significant opportunity for synergistic cooperation among the operating companies.”^106(p1),107 A Minority Business Development office was assigned the task of coordinating events across PMC’s tobacco, alcohol, and food subsidiaries,^108,109 including coordinating corporate sponsorships of Black, Hispanic, and Asian leadership groups such as the National Association for the Advancement of Colored People.^110–112

Minority Business Development office goals for racial/ethnic minority sponsorships were “building business opportunities, creating awareness of brands, and establishing a ‘goodwill’ presence within the Black/Caribbean and Hispanic communities.”^113(p1) Establishing a presence in minority neighborhoods through sponsored events was to overlay the national brand image.¹¹³ Table A (available as a supplement to the online version of this article at http://www.ajph.org) illustrates the nature and scope of racial/ethnic minority events sponsored by KGF, listing 219 events between 1989 and 1999, many cosponsored with PMC’s tobacco and alcohol subsidiaries. Marketing opportunities at events included signage, product sampling and test kitchens, entertainment, retail tie-ins, hospitality suites for local leaders, and advertising in racial/ethnic minority media.

The “Kraft Foods ‘Fully Integrated’” Minority Marketing Program

By 1996, KGF, now called Kraft Foods (KF), was 1 of the top 5 manufacturers using direct marketing (coupons, direct mail, retail promotion) and increasingly directed these materials toward Black and Hispanic households.¹¹⁴ KF maintained a database of millions of Black consumers and another of Hispanic-dominant stores serving 1 million households.^114,115 KF executives noted that “Increased ethnic marketing is very important to the growth of the Kool-Aid and Tang brands because African-American and Hispanic consumers already represent 30-35% of today’s consumption on these businesses.”^93(p35) In 1998, KF launched its first Hispanic-targeted Kool-Aid flavor, Mandarina Tangerine, with bilingual packaging and targeted advertising on Spanish-language networks. A senior brand manager noted, “This is the first time we’ve taken such a broad and complete approach to developing and marketing a product to the Hispanic market.” He added that developing specialty products for minority consumers was not usually the purview of large packaged food corporations, and that “we see this as a real opportunity to capitalize on the growth in the segment over the next 10-to-20 years.”^116(p30) Between 1999 and 2003, KF’s racial/ethnic minority advertising budget was projected to increase 7.7% anually.¹¹⁷

KF referred to its minority marketing program as “fully integrated” because it combined target marketing with racial/ethnic minority media outreach and the sponsorship of racial/ethnic minority events and organizations, as well as “relationship building” through public relations.¹¹⁸ Marketing and promotional activities before and after sponsored racial/ethnic minority events built brand visibility, sales volumes, and a positive corporate image in minority communities.¹¹⁸ Figure A (available as a supplement to the online version of this article at http://www.ajph.org), taken from a 1999 KF report, illustrates the “fully integrated” marketing approach (upper pane) and how KF applied the approach in a specific target marketing campaign, the “Black Family Reunion” (lower pane), a national festival to “celebrate family history, culture, traditions, and strengths.”^119(p23) KF partnered with the National Council of Negro Women and the Chicago Defender, a Black newspaper, to sponsor the event. Participants received product samples, coupons, and recipes for Kraft brand products, including BBQ sauce and Kool-Aid. The event was promoted in the Black magazine Ebony, on Black Entertainment Television, and in retail stores. Black community leaders attended and gave speeches¹²⁰ to crowds ranging from 2000 to more than 1 million (Table A, year 1999).

In 2004, following major US tobacco litigation, PMC changed its name to the Altria Group to deemphasize its tobacco business.¹²¹ In 2007, Altria spun off KF to increase the company’s value to shareholders. In 2012, KF broke into 2 companies: Kraft Foods and Mondelēz International. In 2019, Kraft Foods was owned by Kraft–Heinz.

DISCUSSION

In the mid-1980s, PMC acquired 2 existing firms to build the largest food and beverage corporation in the world: KGF. PMC directly transferred racial/ethnic minority marketing knowledge and infrastructure, developed in the tobacco business over decades, to its food and beverage subsidiary. PMC replaced high-level food executives with tobacco executives shortly after KGF’s founding and formed top-down management committees to instill racial/ethnic minority marketing approaches proven successful for cigarette marketing. Under a “corporate synergy program,” executives shared and coordinated information and resources to enhance racial/ethnic minority marketing across all of PMC’s tobacco, alcohol, and food subsidiaries. Eventually, all racial/ethnic minority media advertising contracts across these subsidiaries was centralized under PMC Corporate Affairs.

PMC owned KGF until 2007. Beginning in 1985, PMC transformed the food and beverage corporation from a broad mass marketer into a firm targeting racial/ethnic minority market segments by using culturally tailored communications and product lines. Its “fully integrated” marketing program combined racial/ethnic minority media outreach, direct marketing, events sponsorships, and relationship building through sponsorships of racial/ethnic minority leadership groups. Although these marketing strategies were not entirely new to the food and beverage industry, their combination into an integrated marketing program made KGF an industry leader. Although we did not study how KGF’s minority marketing program influenced the food and beverage industry as a whole, studies show that the smaller firms within an industry observe and model themselves on the larger ones, and KGF was largest at the time.^122,123

Most research on the role of food and beverage marketing in today’s rising epidemics of obesity-related diseases focuses on the content of advertisements.^9,124 There is limited research on the less overt promotional activities, including corporate-sponsored events, public relations, and corporate giving through corporate social responsibility programs. Our results underscore the importance of such activities for the inner workings of a major transnational food corporation’s marketing approach. In 2016, global spending on corporate sponsorships alone by Coca-Cola, PepsiCo, and Dr Pepper Snapple was $675 to $690 million,¹²⁵ suggesting sponsorships’ prominent role in the marketing approach of major corporations. Further research should explore how culturally tailored marketing, especially when integrated with less-overt activities, affects brand awareness and consumption of processed foods and beverages.¹²⁶

Our findings cast doubt on the intent behind corporate social responsibility programs, including sponsorship and philanthropic efforts launched by food corporations, to address obesity.³² Tobacco corporations use corporate social responsibility as part of a broader constituency-building strategy to influence policymakers and fight tobacco controls.¹²⁷ Similar tactics are being used by food and beverage corporations to fight public health regulations by co-opting communities most affected by the obesity epidemic. The public face for opposition to a New York City soda tax in 2013, for example, was led by prominent minority organizations, including the National Association for the Advancement of Colored People, in coordination with the industry’s lobbying group, the American Beverage Association.¹²⁸

The period described in this article coincided with a significant increase in obesity in the US population. The National Health and Nutrition Examination Survey shows that from 1980 to 2000, obesity prevalence among all American adults rose from 15.0% to 23.2% (1980–1994) and to 30.9% by 2000.¹²⁹ The rise in obesity was even more pronounced among Blacks and Mexican Americans who started with higher prevalence in the late 1970s (31.6% among Blacks and 26.6% among Mexican Americans vs 15.4% among Whites), and rapidly grew to 53.9% among Blacks and 42.3% among Mexican Americans versus 30.2% among Whites by 2003 to 2004.¹²⁹

The sharp obesity change during the 1980s correlated with a markedly higher energy intake,¹²⁹ which also coincided with significant structural transformations in the food industry—specifically, the growth of US-based food conglomerates with concentrated power over the global food supply.¹³⁰ In addition to PMC’s acquisition of KGF, its tobacco rival, RJ Reynolds Tobacco, merged with Nabisco Brands to form RJR Nabisco in 1985.¹³¹ By 1998, Kraft and RJR Nabisco were the first and ninth largest US food and beverage corporations, with a combined $40 million in annual sales.¹³⁰

Findings suggest the need for public health research focused on the ties between different unhealthy commodities industries, the leading risk factors for noncommunicable diseases globally.¹³² Previous studies found similar global patterning between tobacco, alcohol, and processed food and beverage consumption, suggesting a common set of determinants.^132,133 The similarities between the food and tobacco industries have been described by researchers who demonstrate the use of the “tobacco industry playbook” by food corporations.^32,33 This study shows that one reason for these similarities is the direct transfer of marketing strategies and infrastructure under cross-industry corporate mergers.

Limitations

The limitations of internal industry documents research have been previously discussed.³⁵ The study’s primary data source was the Truth Tobacco Industry Documents Library, an archive containing more than 14 million documents. In any historical–archival study, researchers can never comprehend past events exactly as they occurred because the record is inevitably incomplete. We mitigated against this limitation by triangulating Truth Tobacco Industry Documents Library documents with other primary and secondary sources to counterbalance the limited nature of the archive and contextualize findings.

Public Health Implications

The convergence of tobacco with other industries, through industry mergers and alliances, has important public health implications. For example, Altria’s $12.8 billion investment in 2016 in Juul e-cigarettes has given Juul access to Altria’s tobacco expertise, technology, and infrastructure for selling and promoting e-cigarettes to youths and fighting against local legislation and Food and Drug Administration regulation.¹³⁴ Our findings point to the need for cross-cutting research. Future analyses of the food and beverage industry would benefit from an historical perspective on the tobacco industry including the tactics it has used to promote products that undermine public health^135,136 and their significance for broader corporate strategies of diversification and investments into nontobacco industries.

The persistence of corporate target marketing practices in low-income, racial/ethnic minority communities^12,124 and the link between marketing environments and disproportionate obesity prevalence among African Americans and Hispanics^9,137 underscore the need for public policy and community action. Target marketing of vulnerable populations, already susceptible because of lifelong social and environmental stressors, may compound effects from harmful products prompting advocates to deem such practices as a social injustice requiring broader root-cause interventions.^29,138–140 Industry document research can foster increased awareness of corporate political activities, including corporate social responsibility, helping policymakers and advocates decipher the actions of food and beverage corporations. It can also inform counter-industry media campaigns that raise public awareness by exposing manipulative tactics in ways similar to the “Truth” campaign’s role in drawing public attention to the tobacco industry,¹⁴¹ as well as community-centered approaches to address food marketing and obesity.¹⁴²