Chips Are Down in Marketing Olestra

Procter & Gamble built its consumer products empire by shouting about brighter colors, whiter teeth and softer toilet paper. But with its ground-breaking olestra fat substitute, the nation’s premier consumer products company finds itself talking discreetly about subjects that would make even a master marketer blush.

Commercials now airing for the new fat substitute that gives salty snacks flavor and texture are bereft of corny jingles and characters like Mr. Whipple. P&G; instead relies upon real-life farmers who gently urge consumers not to load up on snacks with olestra but to “use your own judgment” about the controversial food additive used in chips now being shipped to Los Angeles grocery store shelves.

The uncharacteristically sober approach is driven in part by the unsettling government-mandated notice on the back of snack food packages that suggests that “olestra may cause abdominal cramping and loose stools.” Another reason P&G; is treading lightly is to avoid stirring up critics like the Washington-based Center for Science in the Public Interest, which has slammed olestra as everything from a “food industry fraternity prank” to a little-understood food additive that poses potentially dramatic health risks--allegations that P&G; has denied since the U.S. Food and Drug Administration approved olestra for salty snacks two years ago.

Nonetheless, with the chips making their way onto store shelves around the nation this month, P&G; and the center are again squaring off. Both organizations will hold news conferences today in Los Angeles in a bid to help shape media coverage of what promises to be a hard-fought battle for snackers’ stomachs.

Months before the chips were made available here, P&G; had dispatched senior scientist Greg Allgood to meet with dietitians and health professionals in California who could subsequently talk--occasionally with a speaker’s fee paid by P&G--about; medical research into snacks made with the synthetic oil.

The marketing giant also has begun giving out free samples in grocery store aisles, through mass mailings and with freebies like the snacks that members of the United Chambers of Commerce in the San Fernando Valley ate during their January lunch meeting--more than a month before the chips went on sale locally.

“It’s marketing, pure and simple,” said Gary Thomas, immediate past president of the United Chambers.

$500 Million and Counting

The stakes are high for P&G;, which already has spent $500 million and 30 years to research and develop the fat substitute. P&G; reportedly will spend $100 million more during the coming years to advertise the food additive that P&G; Chairman John Pepper believes will one day take its place alongside mega-brands like Tide, Charmin and Crest.

P&G; expects sales of olestra to hit $400 million by 2000, and industry analysts say total olestra revenue could swell to $3 billion as the additive is cleared for use in fat-laden foods such as onion rings, French fries and ice cream.

Food industry observers say P&G; is using Nutrasweet, the highly successful artificial sweetener also troubled by health concerns, as a role model. Under the stewardship of Monsanto Inc., Nutrasweet--Monsanto’s brand name for aspartame--has long dominated the $1-billion artificial sweetener market, overcoming adverse publicity from studies done in the mid-1970s associating it with cancer in rats.

Aware that it eventually will face competition, P&G; has named its brand of olestra Olean and licensed it to snack food competitors like Frito-Lay and Nabisco Inc. in order to help speed customer acceptance. That’s the strategy Nutrasweet used--getting its label on everything from soft drinks to chewing gum.

“While they’re hyping things a bit, there’s an enormous potential for substitutes that deliver what people expect when it comes to taste,” said Richard Linden, director of a fat-replacement project at Newtown Square, Pa.-based Arco Chemical Co., which is nearing completion of animal trials and soon will submit a food additive petition to the FDA.

P&G;, which makes Pringles chips, and Frito-Lay Corp., which sells Lay’s, Doritos and Ruffles chips, are fierce rivals in the snack food aisle. But the competitors have joined forces to promote olestra, in effect doubling the marketing prowess behind the fat replacement.

P&G; and Frito-Lay dished out more than 20 million servings of no-fat chips during two years of testing in such cities as Columbus, Ohio. And on Monday, Frito-Lay said it has sold 7.5 million bags of chips in 33 states--including 1 million in Greater Los Angeles--since it began rolling out its new Wow! fat-free line Feb. 10.

P&G; has been relying heavily on plain, old-fashioned product giveaways to boost sales.

When the Ralphs grocery chain began selling the chips in Southern California a week ago, it offered coupons for free samples--and stuffed discount coupons inside the free samples.

“They taste good,” said Mittzie Imazaki, an Irvine resident who ate the free sample while shopping at a Ralphs store in Irvine last week. Then she bought a discounted bag of chips for her husband.

Allgood said olestra delivers the taste consumers like because, unlike most fat replacements, Olean is a fat. But the calories typically associated with fat are avoided because the additive’s fat molecules are too large to be digested. So consumers get the taste of fat without the added baggage of unwanted calories.

Although media reports concentrate on the cautionary label found on olestra snacks, P&G;’s market research indicates that most snack food junkies are far more interested in the fine print that details fat and calorie content.

New York-based Prudential Securities Research predicts that many consumers will gladly pay a 40% to 50% premium for fat-free chips. Indeed, a 5-ounce bag of Lay’s fat-free chips costs $1.99, while a 9-ounce bag of Stater Bros. house brand costs 99 cents.

Health Concerns and Critics

Most of the battle over olestra has been waged over possible gastrointestinal discomfort. But snacks with olestra can also decrease the body’s ability to absorb some vitamins, prompting food companies to add more nutrients. Several researchers, including Walter Willett, chairman of the department of nutrition at Harvard University, maintain that more research is needed into possible long-term health effects. And the loudest voice has been that of the Center for Science in the Public Interest, which is holding a news conference today in Hollywood to denounce olestra.

The war of words between P&G; and the center has been going on for some time. In 1996, the center urged the FDA to use graphic words like “diarrhea, nausea, gas and bloating” on packaging labels.

As products fried in olestra made their way into test markets in Ohio and Indiana in 1996, the center aired television ads suggesting that consumers wouldn’t serve their pets food that might cause gastrointestinal problems. It offers an 800 phone number and World Wide Web site where consumers can weigh in with their opinions.

P&G; also offers a toll-free number and Web site. It is publicizing research by influential individuals and medical organizations, and is enlisting support from local dietitians who express interest in the science behind olestra.

“I do a lot of public speaking about health issues, and it’s important for me to be up to date on the latest research,” said San Francisco-based dietitian Faye Musk. “If I’m talking about a company’s product, it’s appropriate for them to cover my fee and expenses. And I’m very impressed with Procter & Gamble and its scientists. They’ve been very ethical.”

P&G;’s Olean Web site contains links to medical groups like the American Dietetic Assn., which describes olestra as “one of the many acceptable ways to reduce the amount of fat and calories in your diet.”

P&G; paid close attention to the 1981 introduction of aspartame, the artificial sweetener that Monsanto Co. sells as Nutrasweet--a food additive consumers rarely ask for by name.

“Having a recognizable brand name like Nutrasweet is important because, as consumers, we turn to familiar brand names to be comfortable,” said Mark Stiving, a marketing professor at Ohio State University who has reviewed some of P&G;’s market research.

Although olestra is now the market leader, the clock is ticking. “We have a good number of years of protection through more than 60 patents,” Allgood said. “But, yes, at some point, we’re going to have competition.”

In the end, olestra’s success or failure probably will be determined by how well the companies court consumers like Leslie Hough, a Santa Monica resident who just moved to Columbus, the city where P&G; and Frito-Lay conducted their most intensive market research.

Hough, who drinks bottled water, picks fresh vegetables and counts calories, said she’ll probably taste the chips and learn soon enough if gastrointestinal problems arise. But she’s more concerned about long-term health concerns.

“I’m really nervous about trying things that haven’t been on the market for a long time,” Hough said. “Beyond all the talk about diarrhea, they’ll have to convince me that they won’t be detrimental over a long period of time.”