This week, Brazilian consumer protection agency Procon fined McDonald’s $1.6 million for targeting children with advertising and Happy Meal toys.While this will have little effect on the fast-food behemoth’s bottom line (the company spends $2 billion annually on advertising alone), a precedent has been set. More fines aimed at McDonald’s marketing could follow.
“This is not an isolated case,” urged Renan Ferraciolli, Procon’s top lawyer. “There’s no need to appeal as they do to children without the maturity or the rationality to enter the market as consumers.”
The Happy Meal is one of McDonald’s most successful marketing devices: Happy Meals are rumoured to account for around 10% of all sales.
But the Happy Meal has collected a range of enemies who want to see it die. Here are a few of them:
Childhood obesity has doubled, while adolescent obesity tripled, in the past three decades. In an unfortunate coincidence, the Happy Meal is 34 years old. Suspicion that these two things are related has led to growing action by consumer groups around the world.
These groups seek to tone down the intensity with which the products are marketed to children. According to a study from Yale University’s Rudd centre for Food Policy and Obesity, the average preschooler sees 1,000 ads for fast food each year.
In the past year, this girl probably saw around 1,000 ads for fast food.Bans on ads are a frequent occurrence in Europe, but in the U.S. they gain less traction. Last year, a San Franciso judge
dismissed a class-action lawsuit seeking to ban Happy Meal toys in California. But the lawsuit shows that concern is growing, and McDonald’s is increasingly the target.”McDonald’s must stop exploiting children at some point,” said Michael Jacobson, executive director of the centre for Science in the Public Interest. The centre, along with a mother of two young children, filed the anti-Happy Meal lawsuit.
Eventually, Jacobson believes, McDonald’s strategy “will seem as inappropriate and anachronistic as lead paint, child labour, and asbestos.”
The city of San Francisco:
In December of 2011, San Francisco put the Healthy Food Incentive Ordinance into effect. The Ordinance requires any meal offering a free toy with purchase to meet strict nutritional standards. Not surprisingly, the Happy Meal didn’t make the cut.
The ban was well-intentioned, but McDonald’s found a clever way around it. By charging a mere 10 cents for each toy (the proceeds of which go to the Ronald McDonald House Charity), the restaurant ensured that it could continue to market Happy Meals to children.
Clever marketing aside, the Ordinance and McDonald’s reaction illustrate the increasing tension between fast food marketers and health-conscious society.
Santa Clara County, California:
The ban on free toys in unhealthy meals had been introduced one year previously in another California jurisdiction, Santa Clara County.
County Supervisor Ken Yeager explained the reason for the ordinance, claiming that it “prevents restaurants from preying on children’s love of toys” to sell fast food, and that it “breaks the link between unhealthy food and prizes.”
Chile issued a similar law in June 2012, requiring fast food restaurants, cereal brands, and popsicle makers to eliminate the practice of including free toys, crayons, and stickers in their packages.Senator Giudo Girardi, the main political force behind the law, said that the San Francisco and Santa Clara ordinances inspired him to bring the law forward.
“These businesses know that these foods damage the health of children…They’re using fraudulent and abusive methods,” Girardi said.
In 2008, Malaysia released guidelines banning fast food ads from children’s TV programs and limiting fast food companies from setting up TV show sponsorships.
In a sign that such laws are serious for fast food chains, KFC reacted by changing their marketing outlook. “What we have done,” said marketing director Virginia Ng, “is stopped marketing to kids in anticipation of the global movement of marketing to children being unethical…We offer meals for families, but the toys and the rest of it, no.”
Is McDonald’s slipping?
Though it began offering healthier options, like apple slices in Happy Meals, in 2011, McDonald’s has stood its ground in the face of Happy Meal naysayers. “We are very proud of our Happy Meals and will vigorously defend our brand, our reputation and our food,” said spokeswoman Danya Proud.
McD’s is poised for change anyway, it appears.
Sales are persistently down in crucial Asian and European markets. Comparable store sales in Asia, the Middle East, and Africa were down 3.3% in Q1; in Europe, they were down 1.1%. Grim macroeconomic conditions and intensifying competition are cited as causes for the disappointing figures, and worries abound that stagnation is going to be a recurring theme for McDonald’s.
McDonald’s stock fell 8.6% in 2012, a figure that came with a CEO ouster and stale growth in emerging markets, the U.S., and Europe.
Having topped growth records in recent years, this year’s slowdown shows that times are changing for the restaurant chain. Matthew DiFrisco of Lazard Capital, a market research firm, rates McDonald’s as ‘Neutral’ — he believes its stocks will remain cheaply valued moving forward.
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