The Economics Of Junk Food

2. The Economics Of Junk Food

2.1 Foods For Profit

Junk foods exist today for only one reason: they are highly profitable. Because they can be marked up so heavily over the costs of production, junk foods put millions of dollars into the pockets of manufacturers.

It’s a fact that the lowest-profit item in most grocery stores is the produce—the fresh fruits and vegetables—and that the highest mark-up comes from packaged, processed and junk foods.

Natural and traditional foods, like fruits, vegetables, nuts and seeds, are rarely advertised because they cannot be given a brand name or identity by a manufacturer. After all, a potato is just a potato, and worth only a few cents a pound. But if you slice that potato, boil it in oil, add a large dose of salt and preservatives, and package it a bright bag with a catchy name, then you have potato chips that can be sold for ten to twenty times the cost of the original potato.

Even twenty years ago, it was discovered that for every dollar spent on breakfast cereals (a sugary junk food), only a fraction went for the cost of the raw materials. Consider where the average junk food dollar goes:

For Each Dollar Spent On Junk Food…

• 12 cents goes for packaging
• 17 cents pays for the advertising and promotion
• 55 cents goes for processing and profit-markup
• 6 cents is for additives, preservatives and colorings
• 10 cents is for the actual food in the product

In contrast, for every dollar spent on produce and natural foods (like whole grains, nuts, seeds, dried fruits), about 65 cents goes for the actual food cost and the remaining for transportation and retail markup.

Not only does the consumer of junk and processed foods pay in terms of health and well-being, he is also spending 5 to 20 times as much as he should for the actual food.

Here’s another example: a popular “food” developed a few years ago was called “Shake ‘n Bake.” It was a food crust or covering put on chicken, fish and so on. It sold for $2.63 per pound. It was mostly wheat flour, with a few artificial spices and coloring, that could be purchased for 15 cents a pound for its raw ingredients. The consumer was paying the extra $2.48 for television advertising and promotion.

It’s the advertising and packaging that make junk foods so expensive and so profitable. In fact, without mass advertising, there would probably be no junk foods. An understanding of the junk food problem, then, requires an understanding of the advertising and promotion of this food.

2.2 Creating a Need

Of all the products sold in this country, food is the most ideally suited to manipulation and deception. The consumer has a limited ability to evaluate the effects of food processing on its nutritional value. He has no idea about the long-term effects of food additives on his health. He cannot verify any of the claims made by the advertising.

Food should serve one primary purpose: supplying the materials needed by the body for its health and
preservation. Junk foods cannot do this. In fact, they do just the opposite. In that case, it should be easily seen that there are no rational reasons to purchase or consume junk foods. There is no real need for them.

The manufacturers of these foods realize this. They also know that if they can create an imagined need for their products, they can get consumers to buy them. If you take a child that is raised away from the influences of television, peer influence, and deceptive advertising and ask him what he desires when he is hungry, he might respond with something like “an apple” or “a banana.” He most assuredly wouldn’t answer with “a Ding-Dong” or “Captain Chocolate Cereal.”

Unless a junk food is advertised, we know nothing about it. Having no innate need for it, we wouldn’t buy it. But if we are told that it exists and that we should probably try it, then we may fall prey to the advertising gimmicks of junk food salesmen.

Michael S. Lasky, author of The Complete Junk Food Book, has this to say about eating junk food and the power of advertising:

“We are all proselytized at an important age into consuming puppets of the junk food barons. Our parents inadvertently help them by buying their products as a form of ‘reward’ food. We grow up unaware that we have slowly acquired a junk food habit by the subtle forces of advertising. By the time we are capable of making a decision about junk food, we are already hooked from years and years of indulging in what we had been told by TV was good food.”

Actually, very little “good food” is advertised. Eighty percent of all food advertising is for blatant junk foods. Most of the remaining 20% is for convenience foods that are often little better than the candy, cakes, and snack foods which make up the majority of food advertising. In fact, out of the top 100 most heavily advertised food products, over 30 of them have absolutely zero food value, except for empty calories.

The majority of Americans receive almost all of their nutritional information from advertising. In other words, the typical person only knows as much about nutrition and good food as the advertisers want to tell him. When asked how good a job food manufacturers do in telling the public about good nutrition, a leading advertising executive for a convenience food company said: “The job of product advertising is to persuade and sell, not to educate.”

Studies have shown that it does not matter how nutritious a food may be or even how good it tastes. It is advertising alone that sells a food product, and it is primarily the junk foods and the nonfoods that are advertised the heaviest.

2.3 Partners In Crime

The manufacturers and advertisers of junk food are not the only ones to blame for our nation’s ill health. Economics dicates that chain supermarkets and grocery stores must also be aggressive partners with the producers of junk food.

Walk into any grocery store and what do you see? Outside of maybe one aisle for fresh produce and the milk and meat sections, the rest of the store is filled with packaged and convenience junk foods.

Consider these facts: Eighty percent of all food items sold in the supermarket did not exist ten years ago. In the past decade, over 9700 new items were introduced into grocery stores. The majority of these items are packaged junk foods which are characterized by a remarkable lack of nutrients due to overprocessing.

That’s right, your friendly neighborhood grocer is simply another of the links in the junk food chain—foods that the Senate Committee on Human Health and Nutrition say contribute to 6 out of 10 of the leading causes of death in this country.

2.4 Surviving The Supermarket Jungle

More than 50% of all purchases made in a supermarket are done on a whim. You don’t go to a grocery store with the conscious thought of buying frozen brownies or butterscotch chip cookies. The designers of supermarkets know this, and consequently they stack all of the high-profit junk foods in front of the consumer so it is impossible to avoid seeing them.

In a book called The Supermarket Trap, author Jennifer Cross says that even a person with a cast-iron will can fall prey to the junk food merchandising used in grocery stores. “The consumer’s senses become so blitzed by the sheer amount of food choices that everything becomes a blur. Logic and common sense fail us, and we choose food items solely because of attractive packaging or name recognition.”

The simple way to avoid such a trap is to buy only specific items from a supermarket. If you go into the store and head straight for the fresh produce department and come straight out, you can miss the cookies, candies and packaged foods that might beckon you. Most grocery shoppers make the mistake of pushing their basket up one aisle and down the other, exposing themselves to thousands of poor food choices and useless products.

Marketing studies have shown that from 70 to 90% of the time, the purchase of junkie favorites like candy, frozen desserts, snacks and chips occur because of an instored decision. People do not consciously go into a store to purchase useless and destructive nonfood items, but once they are inside, they become fair game for the promotion and advertising tricks of the store.

There are two ways to handle this situation. The best way is simply to refuse to ever buy or eat such products. If junk foods are never a part of your diet, you’ll never be tempted to buy them. Even if you eat them only on rare occasions, the potential for buying them will still remain. The second way is to make a list before you go shopping. Then refuse to buy anything not on your list, and always shop alone—without a spouse or begging children.