What's the Problem?

What are some examples of ethics challenges that industry players experienced?

In an industry as personal as food and tobacco, there are naturally many ethical challenges companies face on a daily basis. There is a difference between buying clothing and purchasing food, something that you plan on putting into your body. People like to know exactly how their food was produced, what exactly goes in to it, and any other details before they sit down and take a bite. Through a bit of research, I found there are four categories which companies in this industry have to consider when looking at ethical matters. They are production of distribution, marketing, fair trade and justice issues, and the environmental effect. First, I will take a look at production and distribution in the food industry. Surely more than any other industry, the importance of sanitary conditions triumphs all other issues. If you sweatshirt was made in less than perfect sanitary conditions, that’s not too big of an issue, but if your chicken was not prepared in sanitary conditions, there is going to be a problem. Companies need to constantly monitor hygiene, quality control and health and safety of production. In the meat products industry, companies must keep a careful watch on animal welfare and treatment. In terms of produce and all things grown on farms, companies must consider the misuse of water resources and the impact on other farmers as well as the improper use of pesticides and other chemicals. Other issues include soil degradation, high transport costs and carbon emissions, and controversy over genetically modified crops.

Moving on to marketing, there are many challenges and ethical issues food and tobacco companies face. First, they must keep watch for marketing campaigns that could encourage or lead to obesity. Also, wasteful packaging or packaging that forces the consumer to purchase way more than needed. Other ethical marketing issues include aggressive campaigns toward the venerable (children) for less than healthy products. Concerning tobacco, the marketing dilemma seems obvious. These companies are promoting a product and trying to create a demand even though they know the harmful damages their products are proved to cause. With food products, it is vital that the packaging contains information pertaining to health benefits and costs. Failure to do such things could and should result in public scrutiny from the media and the consumers.

The next ethical issue in this industry is the topic of fair trade and trade justice issues. This includes paying a fair price to all input products involved in their product. This includes supporting local farmers and communities by inviting consumers to pay a slightly higher price which is passed on to these often underpaid producers. While driving down prices may be a benefit for consumers in rich developed countries but it is ethically inappropriate because it does not provide an adequate reward for the labor of the farmers and producers in underdeveloped country.

Finally on to the ethical issues associated with the environment. Companies in the food industry, which directly deal with the environment with the production of their product, should treat the environment with an attitude of respect and sustainability. This may include things such as policies that ban or evaluate the use of pesticides, antibiotics, herbicides and hormones. Other policies include those toward carbon emissions possibly with a preference toward locally grown products to decrease transportation. Companies also should avoid the destruction of traditional forests in order to create plantations. Lastly, companies in this industry need to have a respect for small farmers and their practices as well as awareness of overproduction and waste products.

In the news recently there has been an ‘event’ that pertains to ethical issues in this industry. It may be unthinkable, but one of the most delicious foods we enjoy, chocolate, comes from the labor of child slaves. Seventy to seventy-five percent of the world’s cocoa beans are grown on small farms in West Africa. There are an estimated 100,000 children working the fields, many against their will, to produce chocolate products enjoyed by developed nations. Ten years ago, US lawmakers took action to stop child labor in the industry and signed into law the Cocoa Protocol on September 19, 2001. While it is now illegal for children to work on these cocoa farms, an estimated 100,000 children are involved in the worst forms of child labor throughout Ivory Coast. Many of these children are smuggled in from Mali and Burkina Faso to work on the plantations. Because of economic problems and war throughout the region, there has been little progress on the issue in the last ten years. In reaction to these events, CNN invited 5 cocoa manufactures and 5 chocolate manufactures on air to talk about their stance on the issue. Six of them simply did not respond to the issue, including household names of Hershey and Nestle. Mars says they are deeply concerned and striving to reach a permanent solution to the issue despite the difficult task at hand. Kraft says it working with others to support the protocol. Others say the companies will release a joined statement in the days to come. A spokesperson for the company says the reductions in child labor are not enough. Through the various statements it seems like they are looking at this issue through a negative light and not with passion and desperateness to complete this task. It seems as if the companies do care about the unfair labor used to create their inputs, but are subconsciously aware of the fact that when this issue is fixed, the prices of cocoa will dramatically increase which will lead to an increase in their prices. The companies care about the issue, but almost seem to be milking the cheap labor as much as possible, considering costs more important than working conditions.

http://www.methodist.org.uk/downloads/ei_ethical_issues_relating_to_food_industry.pdf

http://thecnnfreedomproject.blogs.cnn.com/2011/09/19/the-human-cost-of-chocolate/

http://thecnnfreedomproject.blogs.cnn.com/2011/09/21/chocolate-cocoa-industries-response/

Role Models in the Food and Tobacco Industry.

In an industry so large in scope, it goes without saying that there exist more combinations of social corporate responsibility policies than one can count on a single hand; however, with so many notable companies, there are still a certain few that stand out.

Campbell Soup Company ranked second on the 2011 edition of Corporate Responsibility Magazine's "100 Best Corporate Citizens List". Dave Stangis, Campbell's VP of CSR, was named one of the 100 "Most Influential People in Business Ethics" in 2009 by Ethisphere Magazine. In 2009 Campbell launched a program called Reading Stars which gets company employees involved in tutoring students learning to read in Camden, New Jersey which is where Campbell headquarters is located. Campbell is also involved in the progression of the LGBT community and has launched ads in The Advocate, the nation's largest LGBT-interest magazine. Despite taking heat for ambiguity in their ad's intentions, Campbell claimed to simply respect and support all types of people with their products. Campbell's sustainability goals, which it hopes to achieve by the year 2020, include cutting "the environmental footprint of its product portfolio in half as measured by water use and CO₂ emissions per ton of product produced." Campbell also has goals to modify recipes and "measurably improve the health of young people in their hometown communities by reducing hunger and childhood obesity by 50%." Campbell's many social and ecological goals are what continue to keep its reputation up on the front of CSR.

Coca-Cola also has an above average reputation in CSR. Recently, after the horrific damage caused by natural disasters in Japan, Coca-Cola pledged 2.5 billion yen ($31 million at the time) in donations towards the relief and rebuilding efforts there over the next three years. Coca-Cola also is know for its many strides in the green movement. In 2007 Coke cut down the amount of water it used by 6% and also reduced its energy used for lighting by 50%. 85% of the containers distributed by Coke containing Coke products are 100% recyclable, the remaining 15% are environmentally efficient. Coke dedicates millions of dollars to initiatives for water conservation, education, and nutrition and fitness and has dedicated $451 million alone in support of global sustainable community initiatives. Coke was ranked 14th in 2011 on Corporate Responsibility Magazine's "100 Best Corporate Citizens List".

The tobacco end of the industry receives its own fair share of recognition for their efforts in CSR. Altria Group Inc., one of the world's largest tobacco corporations, came in at number 35 on Corporate Responsibility Magazine's "100 Best Corporate Citizens List". In September alone Altria offered financial assistance towards Hurricane Irene relief efforts in North Carolina and Virginia and Altria employees came together and donated $2.6 million to various non profit organizations. Altria has now started a cigarette butt litter prevention program with which they spread the word throughout the smoking community to dispose of cigarette butts in respectful and appropriate manners.

http://www.socialfunds.com/shared/reports/1297029284_Coca-Cola_09-10_Sustainability_Review.pdf

http://www.csrwire.com/press_releases/31867-Coca-Cola-Raises-Total-Pledge-to-2-5-Billion-Yen-US-31-Million-for-Relief-and-Rebuilding-Efforts-in-Japan

http://www.foodproductiondaily.com/Processing/Coca-Cola-reports-progress-in-reducing-environmental-impact

http://www.thecoca-colacompany.com/citizenship/package_design.html

http://www.foodproductdesign.com/news/2011/09/coke-awards-9-6m-in-grants-to-support-sustainabil.aspx

http://www.usbthinkingahead.com/2011/09/campbell-soup-company-sets-updated-sustainability-goals.html

http://www.thecro.com/files/100Best2011_List_revised.pdf

http://www.vault.com/wps/portal/usa/vcm/detail/Career-Advice/View-from-The-Top/At-Campbell-Soup,-Resolute-Belief-in-CSR-Redefines-HR-&-Recruitment?id=60019&filter_type=0&filter_id=0

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2378

http://causecast.org/business/altria-group-inc

http://www.csrpedia.com/programs/altria-cigarette-butt-litter-prevention-567

Mission and Values Statements

What are some interesting mission statements or values statements of some of the companies in your industry? What do their statements reveal about them?

Kraft Foods Company

Community Involvement

“Hunger and malnutrition are the greatest threats to health and well-being around the world. Nearly one in every six people doesn’t get enough to eat. As one of the world’s largest food companies, we’re committed to helping change that by fighting hunger and promoting healthy lifestyles.”

Employee Conduct

“Our global compliance and integrity program helps guide our employees to obey all applicable laws and regulations while conducting business around the world. It also emphasizes how important it is for us to act with integrity and make ethical decisions for our business, our shareholders, our employees and our consumers, because their trust and confidence is critical to our success.”

Sustainability

“Sustainability is about preserving our world -- land, air, water and people. At Kraft Foods, our sustainability journey has put us on a path that is making a real difference.”

    Kraft Foods is truly a company that adheres to corporate social responsibility.  Kraft goes beyond Adam Smith’s invisible hand of the free market and takes the social initiative to improve the community and society as a whole.  And this has been return in kind by consumers, making Kraft the second largest food company in the world.  Over the last 25 years, Kraft has donated $770 million in cash and food and pledging $180 million in the next 3 years.  According to a news release, Kraft Foods Foundation invested $10 million in fighting child malnutrition in Indonesia and Bangladesh by teaching locals farming skills, creating micro-enterprises, and providing nutrition education.  In addition, Kraft goes beyond a compliance-based ethics coded to an integrity-based ethic codes within all levels of management.  Kraft practiced fair hiring, with 43% of women, who earned a salary, in the work force.  Furthermore, Kraft is aware of the importance of our environment and taking steps to preserve it.  Kraft has reduced its energy usage; water consumption in manufacturing; waste produced; and its carbon footprint by 15%.  Kraft Foods goes to show that it is still a profitable business while being socially responsible.  http://www.kraftfoodscompany.com

British American Tobacco
“Our goals are to grow our brands and the value of the business, to improve productivity and to embed the principles of corporate responsibility around the Group.”

“At British American Tobacco, we are committed to acting responsibly at all times.  We take comfort and pride in knowing that we will do the right thing and behave in the right way. What is more, we see this as critical to the sustained high performance of our business in the long

term. It is therefore a key element of our business strategy.”

Core Beliefs  
• We believe our businesses should uphold high standards of behaviour and integrity  
• We believe that high standards of corporate social responsibility should be promoted
within the tobacco industry  
• We believe that universally recognised fundamental human rights should be respected  
• We believe the tobacco industry should have a voice in the formation of government
policies affecting it  
• We believe in achieving world class standards of environmental performance

When it comes to ethics and corporate social responsibilities, it is hard to think of how they apply to tobacco companies.  Millions of people have died from smoking alone.  When it comes to British American Tobacco (BAT), this company pledges honesty and integrity within strict standards.  On face value it looks good, but when it impedes with profits, that is another story.  According to research published in 2006 and posted on PLOS Medicine, “smuggling has been strategically critical to BAT's ongoing efforts to penetrate the Chinese market and to its overall goal to become the leading company within an increasingly global industry.”  This illicit trading has generated billions of U.S. dollars in sales, contributing to China’s image as having the world’s worst cigarette smuggling problem.  Not to mention, it also contributes to a rise in health problems to millions in China.  When it comes social responsibility for tobacco companies, values are mere words on a web page when profit and greed are the only motivators.   

http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO725ECW/$FILE/medMD8LACJK.pdf?openelement

http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO725ECW?opendocument&SKN=1

http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0030228#references

You Are What You Inhale: The Ethics of Tobacco Companies

Above, one of the new FDA images is displayed. Do you believe that tobacco companies should take it upon themselves to inform consumers about the adverse effects of tobacco use? Ethically, should'  companies strive to care for their clientele?

         When one thinks of ethics in regard to the food and tobacco industry, money laundering, and market manipulation do not often come to mind. However, with respect to ethical industries in the food and tobacco markets, product safety, ingredients and other substance matters do come to mind. As the cliché is often quoted, “you are what you eat,” or, with respect to the tobacco industry, “you are what you inhale,” it is important for individuals to be informed about the ingredients that are involved in creating said products. Also, consumers must understand the correlation between tobacco safety, as well as health information, in regard to ethics of said companies. Ethical challenges within the tobacco industry arise from the lack of concern that these companies have in regard to the usage of said products and the health of tobacco consumers. In current times, the tobacco industry has illustrated the ethical challenges which are present in its specific industry. As a whole, the tobacco industry has been facing an ethical dilemma conceding the information it provides to consumers on the ill effects of tobacco usage. 

           The industry’s ability to notify individuals of the products they are consuming, and how they can detrimentally affect the health of the users, is one of the most important ethical issues tobacco companies face. In current times, the U.S. Food and Drug Administration, or FDA, is requiring companies, within the tobacco industry, to place graphic pictures (seen above) and warning labels on tobacco products by the year 2012. According to the Wall Street Journal, “stem from a 2009 law that gave the FDA the authority to regulate tobacco." Although these images are to be required by next year, the tobacco industry has faced the federal government with steep opposition to said regulations. Five of the nation’s major tobacco companies have taken the federal government to court, stating that said labels violate their freedom of speech and the First Amendment to the United States constitution. While this debate is worked out in the district courts of the nation, one must address the ethical challenges that accompany the tobacco industry. Although said companies are not participating in illegal activities, is it not the responsibility of tobacco producers to warn consumers of the adverse health effects that accompany tobacco use? Ethically, producers should be morally bound to inform consumers about their products, even if the government does not mandate such action. A moral, and ethical, corporation would allow its consumers to understand the products that they are utilizing and, in this case, consuming. Although said strategy may hinder the company’s market share, they will at least be providing consumers with the truth about their products.

            As the federal government and tobacco companies advance their disagreement into court, millions of individuals will continue to consume toxic chemicals each and every day. It should be the responsibility of tobacco companies to inform consumers, especially young consumers, about the harmful effects that tobacco has on individuals. Private enterprise should not rely on the federal government to regulate ethics and morality; it should be the responsibility of the free market to participate, and lead, said actions.

Information on Heinz was provided by The Wall Street Journal’s Jennifer Dooren and can be accessed at: http://online.wsj.com/article/BT-CO-20110921-714003.html

Topic Number Two: Business Ethics and Corporate Social Responsibility

Greetings! In this week's blog postings, we will discuss the business ethics of the food and tobacco industry. We will also comment on the corporate social responsibility that companies, within the food and tobacco industry, provide for the communities, and nations, they serve. Our blog posts this week will aim to address the following questions:

• What are some current events in your industry? What is the impact of these events on the industry?
• What are key ethical issues this industry faces?
• What are some examples of ethics challenges that industry players have experienced?
•  Which companies in the industry stand out in regards to their view and actions in CSR?   What are some interesting mission statements or values statements of some of the companies in your industry? What do their statements reveal about them?

As always, we hope your enjoy our postings and encourage you to join our conversation by commenting on our musings!

Current Events

The food and tobacco industry has experienced many minor changes recently. For one, PepsiCo has recently had a rather major shift in management. Former head of Frito-Lay North America Snack Unit, Albert Carey, has been promoted to head of PepsiCo Americas Beverages. Investors have faith in the change and believe it will be prosperous for the company.(4)

Despite food prices continuing to rise, grocery stores have witnessed a general increase in profit; Kroger alone has experienced a 7.3% increase in profit. Most super markets have been able to accomplish this by keeping prices low in today's economy; however, if food prices continue to rise growth for these companies may slow.(3)

As things begin to look up for Brazil's sugar harvest, sugar futures decrease 5%. Prices are estimated to stay low compared to the six-month highs that were experienced in August. One of the older sugar traders in the UK hypothesizes that production growth could be led by Europe and Russia, who only make up about a fifth of the world's sugar production currently. Sugar production is 11% lower than it was last year but the production forecasts aren't low enough to stir the market.(2)

A handful of the nation's largest tobacco companies are taking legal action against the federal government right now due to the new warning laws that are set to take effect next year. The companies claim that the laws infringe on their first amendment rights by discouraging the sale of their lawful product. The FDA has not commented on the lawsuit but with recent laws that have been passed in the past several years restricting the sales of certain tobaccos, I would guess that the tobacco companies will lose the case and the new warning labels will still be seen on cigarette packs later next year as planned. The new labels may cause a significant decrease in smoking around the country, but I doubt enough to seriously hurt the industry.(1)

1. http://hmcurrentevents.com/cigarette-warning-ads-and-free-speech/

2. http://online.wsj.com/article/BT-CO-20110916-708325.html?mod=WSJ_FoodAndTobacco_middleHeadlines

3. http://online.wsj.com/article/SB10001424053111904836104576560592168959376.html?mod=WSJ_FoodAndTobacco_leftHeadlines

4. (http://online.wsj.com/article/SB10001424053111903927204576571062062787564.html?mod=WSJ_FoodAndTobacco_leftHeadlines)

Economics of the Food Industry

Although consumers spend about $790 billion in 2006 on food, the economics of the food industry is extremely profitable only to huge corporations.  The reason is that  profits gained per dollar from selling the products are low.  According to 1997 statistics from the Economic Research Service (ERA), the price for food that consumer paid nearly matches the cost of bringing the food to the consumer.  This includes labor, processing, packaging, storage, transportation, advertising, etc.  If one looks at the marketing bill provided above from the ERA, the profit margin gained is about 3.5% per dollar in 1997. Of the cost, the most extensive is labor.  According to the Food Marketing Institute, labor accounts for 60% of supermarkets' operating cost.Furthermore, in this highly competitive market, marketing plays an important rule in attracting consumers.  When one turns to television, one is almost instantly bombarded with advertisements to process food, such as Oreo cookies, Fruit Loops, magically delicious Lucky Charms cereal, instead of fresh produce.  So this is unsurprising that according to the Federal Trade Commission, this industry spent at least $1.6 billion annually in advertising to children via media, internet, and other outlets.

Process food is the most profitable sector for this industry.  First, fast food is inexpensive and appeals to a mass audience.  Second, they last much longer than fresh produces; thus, it is easier to store goods for later processing when bought in bulk from farmers.



http://www.ers.usda.gov/publications/aer780/aer780d.pdf

http://printfu.org/read/food-costs-continue-half-century-decline-8d7b.html?f=1qeYpurpn6Wih-SUpOGumqWnh7Le5cmUq9Tj5tyOt9Xj4c7a5NuFvMnR1p-s0-La6t_ejLPbyODR09WUpOGumK-P2eCRsdiumZaqlNPj59ri3bW81OLKlqPYqqOjkNqIsOCfoKiwh9zc2eCsmJ3r3eyby9nYpNTmz5TU4czho8zW0NnfztzO29uU1uHY0uTY3tDK353mydqKoO0

Revenue Growth: It's All About Innovation

Revenue growth from the food and tobacco industry is driven from a wide array of influences. Said factors include the amount of units that a business sells, the company’s ability to expand into new global markets, the costs of production, and lowered manufacturing costs. Said revenue growth is also influenced by specific nations' regulatory structure and by the demand for said product. Along with these factors, the most important factor, in my opinion,  which drives revenue growth is the ability for specific companies to evolve their products in order to appease the needs of the consumer. 

 Although each of the factors that influence revenue growth are extremely important, I felt it was appropriate to take this time to discuss the most important factor of driving revenue growth; the product itself. The most important factor that drives revenue growth is undoubtedly the ability for a company to redefine its product in order to meet the demands of the customer. For instance, if the markets, and the needs of the consumer, are evolving, specific products should also evolve to match the demands of the consumer. If a business refuses to do this, a new company may rise to challenge said business within this industry. Over the last few weeks, many corporations that belong to the food industry have started to alter their product lineups in an attempt to enhance their revenue. 

The first point I will make in this dialogue is taken from a Wall Street Journal article describing the Heinz Company’s ketchup packets. According to this article, Heinz, over the past three years, has been developing a more efficient and user-friendly ketchup packet that will cause consumers less frustration during the ketchup's consumption. The new packets, titled the “Dip and Squeeze Packets," will incorporate dual functionality into the product. As can be seen from the title, the  new packets will allow consumers to either dip food into the container or squeeze ketchup from said packet. The new product, aimed at increasing consumer satisfaction, has already starred to do just that, according to an internal study published by Heinz. However, the increased cost of these packets may be problematic to the corporation. As reported by the Wall Street Journal, “Early tests at Chick-fil-A show the potential cost problems: consumers took more ketchup with the new packets, according to Chick-fil-A surveys of about 50 restaurants over several months. But the survey also indicated that customers strongly preferred the new packets.” Although the new packets may cost more than the old ones, this innovation, in the long run, will aim increase the company's clientele in the future, including the possibility of a contract with McDonald’s. As said packets are rolled out, consumer satisfaction of the Heinz Company may increase due to the businesses innovation and concern for the consumer. In turn, said satisfaction will drive revenue increases for the Heniz Corporation. This market innovation will enable Heinz to meet the demands of the consumer while enticing more customers, and businesses, to use their product;  increasing revenue for the company.

 Heinz, however, is not the only company that is driving their revenue growth through product evolution. In an attempt to increase revenue, Coca-Cola is releasing new sizes of its Coke products to attract customers who are “counting both their calories and their pennies." In order to adapt to the evolution of the new, healthier, American lifestyle, Coke is changing its product lineup in order to drive revenue growth. Although Coke will incur increased costs, like that of Heinz, from higher packaging costs, consumers are predicted to spend more on an ounce of coke in smaller packaging, a factor which will also help to drive the revenue of the business.  Coca-Cola believes that introducing a 12.5 ounce, 85 cent can of soda, will attract a greater number of customers, as it did in Mexico. The strategy Coke is utilizing mirrors that of Coke’s Mexican-based bottling companies, which sell Coke in 30 varying sizes and containers. According to Sandy Douglas, the president of Coca-Cola America, "In the U.S.A., we're really just at the beginning.'' Over the next few years, as Coke continues to evolve its packaging, they will continue to meet the demands of the consumer and give them what they desire. In this instance, it is smaller, cheaper, cans of soda. If implemented correctly, this variation of product will greatly aid Coca-Cola's aspirations for continued revenue growth.

Although every product evolution is not successful, businesses must continue to gauge the opinions of consumers in order to understand their needs. By doing this, businesses can successfully provide a product, or service, which said consumers wish to have. For Heinz, it is revamped ketchup packages. For Coca-Cola, it is varying sizes of Coke that were not previously on the shelves. By adapting one’s product to appease customers, individuals will continue to buy a specific product and possibly, buy this product in a larger amount, or at an increased price, driving revenue growth for the company. Within the food and tobacco industry, companies are continuing to adapt their products, or create new products, that target the needs of consumers. Although there are many factors to driving revenue growth, the most important factor, in my mind, is a company's ability to provide products that customers want, and will consume, in their daily lives. In any industry, innovation is key. Even minuscule changes to a product, including its packaging, can alter consumer satisfaction and increase, or decrease, the demand, and revenue growth, of a specific product.

Information on Heinz was provided by The Wall Street Journal’s Sarah Nausser and can be accessed at : http://online.wsj.com/article/SB10001424053111904194604576578691502178606.html

Information on Cocoa-Cola was provided by The Wall Street Journal’s Mike Esterl and can be accessed at:

http://online.wsj.com/article/SB10001424053111903374004576578980270401662.html

Food for Thought

Preface: Many examples I will use come from a WSJ article posted below.

As in every other industry, the Food and Tobacco industry operates under the laws of capitalism and the free market. Market price and quantity are for the most part driven by consumer demand and producer supply. The entire industry is comprised of many other subsets of similar products. Throughout these specific subsets, the markets vary. Some markets, such as fresh produce or meats, are in perfect competition with no company or brand dominating the market. Other subsets, such as the soda market, are in an oligopoly, in which Coca Cola and Pepsi Co. dominate the market, together holding more than two-thirds of the market. Possibly more than other industries, the food and tobacco industry is extremely reliant on consumers. If consumers are suddenly receiving a lower income, they will immediately switch to a substitute or even an inferior good. For example, often in bad economic times more people seek low cost food such as hamburger, canned goods, or even fast food. Due to the recent economic events, consumers have showed a decrease in demand for sodas. Using the demand-supply model, when demand decreases, or shifts left, prices fall, this is exactly what Coke has done. This week, Coke will announce 12.5 ounce 89 cent bottles. Although these goods are ‘cheaper’ and thus more appealing to the penny saving customer, the customer is paying a premium on the per ounce price. They also plan to unveil mini cans, which appeal to those trying to save a dime as well as those health conscious customers, will the ‘less than 100 calories’ appeal. This brings us to an integral part of the Food and Tobacco industry; marketing. Perhaps more than any other besides fashion, this industry is all about branding. Coke, Pepsi, Nestle, Kraft, Kellogg, Tyson; all examples of household brand names known not only nationwide but worldwide. Marketing in this industry is much more than the product itself. It’s about associating your product with positive images. From Coca-Cola and Santa to Kellogg’s and Tony the Tiger, this industry controls more of our world than we even know. From cigarettes to cereal and liquor to lemons, the Food and Tobacco industry is one of the most diverse and complicated markets we have. Branding is fundamental and the consumer is the top priority.

http://online.wsj.com/article/SB10001424053111903374004576578980270401662.html

Welcome to our blog!

Hello and thank you for visiting our "Food and Tobacco Industry" blog! As students of American University's Kogod School of Business, we will be analyzing, researching and studying various market aspects of the food and tobacco industry. Topics we will discuss over the next few weeks will range from the economics of the industry to the business ethics of the food and tobacco business. This week's blog postings will focus on the economics of the food and tobacco industry to answer the following questions:

•   What are some current events in your industry? What is the impact of these events on the industry?
•   What are the basic economics of the industry? How do companies make money?  What are their costs?
•    What drives revenue growth in this industry?
•  Discuss supply and demand in the industry.

We hope you enjoy our blog. Thank you for visiting our page!