Salt Sugar Fat (30 page)

Those bankers, as Drane referred to the company’s accountants, would soon grow even more worried. A few months after the launch, Oscar Mayer merged with Kraft, where a cadre of Ivy League bean counters seemed to have one overriding thought: Blow this project up and shut it down before they all lose their jobs. Drane was asking for ten new production lines at $3 million each to meet demand, and the money men were terrified that the trays would turn out to be a short-term fad. If the sales crashed, they would be left holding more than a product that never turned a profit; they would own multiple factories with now-useless manufacturing lines.

At this point, Drane packed up his data and flew to New York City, where he appealed to a far different breed of executive: men who had seen some difficult product launches in their day and had laughed in the face of catastrophe. These were the leaders of Philip Morris, whose recent purchase of Kraft and General Foods had put hundreds of grocery items into their hands, more than fifty mega-brands in all. Bob Drane’s little trays were now their little trays.

The head of Philip Morris was Hamish Maxwell, a pack-a-day smoker who was viewed as a master tactician in marketing cigarettes. As the chief executive of the newly merged company, he needed to know that Lunchables had serious long-term prospects. A stickler for details, Drane
walked Maxwell through the early sales data showing that more than half of the buyers were returning for more, which, for new grocery products, was about as good as it ever gets. At the end of the meeting,
Maxwell turned to Drane and told him to worry no more.

“The hard thing is to figure out something that will sell,” Maxwell said. “If you’ve got something that’s selling, you’ll figure out how to get the cost right.”

So Drane walked out of the Philip Morris headquarters building on Park Avenue with the money he needed to expand and streamline the production and boarded the Philip Morris helicopter, which would take him back to the airport. The aircraft was parked at a heliport on the edge of Manhattan, for easy access by the tobacco executives, and it rose up over the East River with the city unfolding below him. “On the way out to New York, there had been a daily pounding from the Oscar Mayer sales force. ‘Hey, you finally got something right and everybody wants this and all you are telling us is you can’t achieve the production. We are really getting ticked off, and you are about to lose this thing,’ ” Drane said. “And now, instead of coming back with my tail between my legs, I’m up in the helicopter looking down on the Big Apple, feeling pretty good.”

Whether they fully realized its potential or not, the tobacco men in the coming years would do more than merely hand over the cash to exploit this gusher called the Lunchables. They would help turn the trays into a
processed food colossus, one that would break industry records by soaring to nearly $1 billion in annual sales. The little trays, by transforming bologna into a product kids were suddenly clamoring for, would also accomplish one of Drane’s own goals, which was to save the jobs of the Oscar Mayer workers who made the fat-laden meats that were running afoul of the public’s concern for its health.

Lunchables, however, would play a part in exacerbating those same health concerns. The trays created an entirely new category of food, one that exposed Americans, especially young kids, to the thrills of fast food that heretofore were the purview of restaurant chains like McDonald’s and Burger King. Back in the late 1980s, when Lunchables were first introduced, food manufacturers—despite their push for more convenient foods and their heavy reliance on salt, sugar, and fat—had not yet realized that they could mimic the fast food chains by making whole meals that were ready to eat at school, on the go. Even more remarkably, these fast food wonders could be sold through the grocery store and without the need for a microwave oven. “Chilled prepared foods,” this category was called, and it took the Lunchables to turn this light on. But the grocery makers embraced this conceptual breakthrough at the very moment when the power of these foods was becoming all the more problematic for consumers. Obesity began surging, and Bob Drane, who fathered the Lunchables with the best of intentions, would eventually have to face what he had wrought.

B
est known, perhaps, for the Wienermobiles that tour the country promoting its hot dogs, Oscar Mayer cherished its status as America’s favorite meat company. It cultivated a warm, friendly image (perfectly embodied in the iconic TV jingle “Oh, I wish I were an Oscar Mayer wiener,” which first aired in the 1960s) and a stout reputation for caring about the consumer. The company got its start in Chicago in 1883 as a champion of quality meats.
The founders were two Bavarian brothers, Oscar and Gottfried, who sought to distinguish themselves from the sordid practices that
tainted the industry, like letting rat poison fall into the sausage-making machines and bleaching weeks-old meat so it could be sold as new—
horrors that were later exposed by the muckraking journalist Upton Sinclair in his book
The Jungle
.

The Mayer brothers were among the first to put their names on packages of bacon, linked sausage, and lard as a means of avowing their product’s excellence; in the days before labeling requirements, many meat producers ducked scrutiny by remaining anonymous. They were also early participants in the principal reform that Sinclair’s exposé generated, a system whereby federal workers monitored and inspected meat plant operations, which started out as a program companies could join at their discretion.

Oscar Mayer’s strong commitment to sanitation helped establish its reputation through much of the twentieth century until one hundred years after its founding, when the company was faced with a public concern that went beyond the safety of its food. Red meat was increasingly being seen as unhealthy. A single slice of beef bologna, for instance,
has 3.5 grams of saturated fat, along with 330 milligrams of sodium, nearly a quarter of a day’s recommended maximum for most American adults.

Fat was becoming synonymous with cholesterol, clogged arteries, heart attacks, and strokes. And as a result, between 1980 and 1990,
red meat consumption fell more than 10 percent. During that same time, the consumption of poultry, which has less saturated fat, rose 50 percent. This signaled a potentially huge swing in eating habits, and no one worried more about it than Oscar Mayer.

“From 1986 to 1988, fat and sodium grew to be big issues in the hot dog and bologna category,” Tom Coffey, an Oscar Mayer manager for new product development, told Philip Morris officials in a confidential 1990 presentation. More and more people who worried about fat and salt were changing their diets to reduce consumption of red meat—or avoid it altogether.

The company’s first response to this crisis was to reformulate some of its meats to offer customers a version that was healthier than the mainline
product. Within a few years, it introduced a lower-fat bologna blended with turkey and hot dogs made with chicken instead of beef. But these were slow to catch on, and overall sales continued to slip.

The company also retooled its advertising to appeal to a broader audience. Bologna did not wear well with its fans; kids lost interest as they grew older. Oscar Mayer’s marketing department set up test panels to poll adults and found that men turned to ham, turkey, and roast beef.
On a scale of 1 to 10, men gave the bologna sandwich a meager 4 or 5—but there was a glimmer of hope. Bologna’s image seemed to be worse than the meat itself. When the marketing people handed out actual sandwiches to taste, the rating men gave to bologna rose to 8 or 9. Encouraged, Oscar Mayer sought to expand its market for bologna from kids to men by developing new ads that featured men loving bologna. At the same time, the company tried to reach more children. In 1995, they launched a promotion called
“Talent Search,” in which ten Wienermobiles were dispatched to fifty cities, where they looked for a child star to sing the company’s famous jingle.

“The early results of Talent Search are outstanding,” the Oscar Mayer unit president, Robert Eckert, told Philip Morris executives in the fall of 1995.
“We completed over 700 events and had nearly 45,000 kids audition. And, during the promotion, retail sales volume for participating products like Oscar Mayer hot dogs and bologna was up over 10 percent vs. last year.”

Oscar Mayer also worked on the cost of bologna to bolster sales. On one end, it zeroed in on the production side of things, looking for savings through various changes in the factories as well as in the formulations of its products. Like other food companies, Oscar Mayer was continuously seeking less expensive ingredients that could be substituted without diminishing the quality, and Eckert, in his presentation to the tobacco executives, assured his bosses that the company had been especially aggressive on this front: “90 percent of our products have been reformulated in one way or another over the past four years,” he said.

The other side to the cost equation was pricing, and the bologna managers at Oscar Mayer worked hard to outmaneuver their competitors.
They had to get the price of bologna low enough so people would buy more, but the price had to stay high enough to make a profit. By slashing the price of a pack of sliced bologna to $1.99, Oscar Mayer seemed to do fairly well: It held on to a 29 percent share of the bologna market. But this was a Pyrrhic victory. The company had a solid one-third share of a sinking ship. Through the 1990s, bologna sales in general—no matter what manufacturer—fell 1 percent each year; by 1995 the annual drop had accelerated to 2.6 percent.

Oscar Mayer had to face facts: People were falling out of love with bologna. What it needed was a new vehicle, something other than bread and mustard to draw people’s interest—something with enough pizzazz to overcome the growing hesitancy about the fat in red meat. This was the business of product developers, the people who toil away in laboratories and test kitchens looking for ways to repackage and present foods that fall out of favor. And fortunately for Oscar Mayer, its product developers had a head start. Just as the sales were growing stagnant in the mid-1980s, the product developers had cleared off their stations and gone to work looking for ways to sell the company’s luncheon meat, beyond the stacks of plastic-wrapped slices.

In late 1985, Oscar Mayer asked Drane to take the lead in finding a better way to repackage bologna and any of the company’s other meats that needed an overhaul. I met Drane at his home office and went through the records he had kept on the birth and development of what would become his solution to the company’s red meat problem: the Lunchables. Among the records he saved was a presentation, 206 slides in all, he had prepared to convey the project’s details to other food developers. With bologna sales only starting to slip, Drane told me, “Oscar Mayer was not in dire straights. It was literally like, ‘You guys go out and try to figure out how to contemporize what we’ve got. We are a famous lunch company and we have famous brands of lunch and so why don’t you concentrate on lunch and see what you get.’ ”

But Drane understood the changing dynamics—and the stakes for a company whose legacy was red meat. “Alarm bells ringing!” says the
twenty-sixth slide in his presentation. A brown bag lunch with bologna on Wonder Bread was depicted under the caption, “Lunch of the 50s,” next to another, “Lunch of the 90s,” which had a large question mark, which was followed by a photo of Drane with three of his team members in their white smocks with the red Oscar Mayer logo, arms folded and looking determined.

Drane’s first move was to try to zero in on how, exactly, Americans were feeling about lunch. He organized focus group sessions with the people who had been buying bologna: moms. As they talked, he realized the most pressing issue was not fat, it was time. Working moms and busy moms strove to provide healthy food, of course, and thus sales of lower-fat turkey were rising. But day in and day out, finding time to prepare any sort of food for their kids was increasingly difficult. The mothers spoke at length about the morning crush, that nightmarish dash to get breakfast on the table and lunch packed and shoes tied and kids out the door. He summed up their remarks for me like this: “It’s awful. I am scrambling around. My kids are asking me for stuff. I’m trying to get myself ready to go to the office. I go to pack these lunches, and I don’t know what I’ve got. They want them to be special, and I want to take care of them and, by the way, I like to take care of myself, but I might not have stuff in inventory.”

With his large, black-frame glasses and professorial demeanor, Drane did not rank as the company’s most ruthless executive. But this revelation from the moms brought out the shark in him. Drane smelled blood in the water—or, as he put it to me, “a goldmine of disappointments and problems.”

He assembled a team of about fifteen people with varied skills, from design to food science to advertising, and he enrolled this crew in what he called “Montessori School.” To bail out bologna, they couldn’t just copy some trick another food manufacturer had used. They needed to come up with something new and fresh, and this kind of challenge was right up Drane’s alley. For Montessori School, Drane developed a curriculum designed to help his team tap their imaginative powers.

Having set themselves up in Oscar Mayer’s headquarters building,
they got started by studying other vulnerable designs in consumer goods that underwent successful transformations, such as the boom box (which morphed into the Walkman), kids’ shoelaces (which became Velcro), and exploratory surgery (which gave way to the MRI). They took field trips to Krispy Kreme, the doughnut maker that, at that moment, was driving the country wild with its enthralling feature: It was served warm, the sugary glaze and fatty dough perfectly poised to deliver a double whammy of bliss. They pulled out their markers and brainstormed a wish list of attributes that would give their bologna sandwich replacement, whatever it may turn out to be, that level of power over consumers.
To keep their discussions lively, they used alliteration: “Faster, fresher, foolproof, fortified, flavorful, flexible, funner, and for me.”