Caitlin Syrett posted a photo on Coles’ Facebook page with a plea to remove Krave—a new junk cereal—from their shelves.
“Coles has the opportunity and obligation to support healthy eating in Australia.”
A mini-ruckus ensued in the comments, with arguments centering around:
- Supply and demand vs corporate control.
- Individualism vs altruism.
- Individual/parental responsibility vs corporate responsibility.
“I disagree! If you don’t want to eat it don’t buy it. Supermarkets are not responsible for what goes in ones mouth – it’s up to the individual, and parents in regard to children. Also if it doesn’t sell Kelloggs won’t keep it around for long… Consumers decide what our supermarkets provide” is a representative comment.
You must be tripping.
At the duopoly your choice is the oligopoly
The current global food market is not one where a vast number of sellers compete; it’s an oligopoly. Only a handful of multinational corporations with a market value of billions of dollars dominate sales.
In the cereal sector there are four heavyweights: General Mills, Kellogg, Post and Quaker Oats.
The Kellogg company (estimated value $18.8 billion dollars) is the leading cereal producer with 33.6% of the global cereal market. As of 2010, their products were manufactured in 17 countries and marketed in more than 180 worldwide. They own 7 of the 10 leading global cereal brands.
Wesfarmers (parent company of Coles) has an estimated value of $35.49 billion dollars. Woolworths isn’t far behind at $33.3 billion dollars. They’re ranked 2nd and 4th for food retail in Forbes world’s biggest public companies. Of every dollar Australians spend in shops, 40 cents goes to these two corporations.
Over thirty years, Coles and Woolworths’ supermarket market share has close to doubled; they account to around 80% of the market.
With aggressive plans for expansion.
In a Choice survey, 78% of respondents said they shop at Coles or Woolworths because “they felt they had few other options available to them.”
Shareholder profits drive global food supply
In shareholder capitalism, the corporation’s singular goal is shareholder value maximization. Kellogg’s performance has been lacklustre in recent years, partly due to the maturation of the cereal sector. They also face stiff competition from their branded and private-label competitors.
In shareholder capitalism, growth must come from somewhere. Kellogg could grow profits through the strategic acquisition of companies; they did this by acquiring Pringles. They could position (or reformulate) their products to be eaten on many occasions; they create cereal snack bars to this effect. They could also develop new products or reach untapped markets.
Shareholder profits drive global food demand
Kellogg’s product lines are designed for specific demographic segments. Traditionally, the cereal segments were children, adults and the entire family.
An underexploited demographic was the teen/young adult. According to Landor, teenagers were rejecting the cereals of their childhood as they grew older and opting instead for bread. To prevent teenagers from “dropping out” of cereal consumption, Kellogg developed Trésor, a chocolate- and hazelnut-flavoured cereal for the European market. It sold well.
“One of our key strategies for growth in the US and overseas has been to leverage popular brands from one region to another,” said Margaret Bath, Kellogg’s senior vice president research, quality and technology.
Trésor was rebranded as Krave. Krave’s brand personality is offbeat and irreverent to appeal to a certain psychographic profile.
In early 2010 it was launched into the UK market. With an advertising budget of £4 million pounds, Krave reached youth audiences through television, digital marketing (including social media), outdoor display as well as product sampling in universities and festivals.
Krave is now sold in Ireland, France, Italy, Spain, the United States and Mexico. It has recently arrived in Australia and New Zealand.
Exclusive to Coles.
Historically, the relationship between manufacturers and retailers is tense due to differences over margins, shelf-space, discounting and private-labels. With consumer insights and in-store marketing, a Coles and Kellogg collaboration should equate to lucrative category growth and increased sales. More variants of Krave (e.g. different flavours and snacks) may be in the pipeline.
Krave may be the first of more junk cereals to come.
Consumer choice is an illusion
The hedonistic youth segment was targeted for Krave. When making food choices, they’re not motivated by health. And whilst parents can refuse a plea to buy the cereal, teens are likely to have some form of disposable income to make their own purchase. This probably isn’t news for Kellogg.
So in effect, when a teenager ask for or buys Krave it is not entirely of their choosing. Their choices are constrained by the food market oligopoly, our duopoly, manipulated by marketing and a hefty advertising budget.
Personal responsibility is a misnomer when the food market is not free, but failed. It is a misnomer when corporations profit by harming human and planetary health. Corporations share a great deal of the responsibility with us.
Personal responsibility, my ass.
Food Quality and Preference: John Dawson, Retailer activity in shaping food choice, Vol. 28, 2013.
Seth’s Blog: Seth Godin, The perfect crime, June 24, 2013.
Sydney Morning Herald: Amy Corderoy, Trading health for even fatter profits, February 16, 2013.
The Conversation: Alessandro R Demaio, Climate Change and Obesity?, January 4 2013.
Grist: Tom Laskawy, App, crackle, pop: Junk food marketers target your kids online, 7 Jan 2013.
The Conversation: Claire Parfitt, Confronting corporate power in the food system, 11 September 2012.