Today, growing health concerns about fast food and sugary beverages are forcing companies that sell processed food, fast food and beverages to confront a similar problem in the United States. In response, they’re relying on Big Tobacco’s look-abroad strategy from the 1990s. The Swiss food giant Nestlé is making an incursion into rural Brazilian communities, KFC is setting up shop in parts of Ghana, and PepsiCo and Coca-Cola are relying on consumers in emerging economies for a growing share of their profits.
In some cases, host governments have welcomed these companies, easing their entry into the market. In India, for example, the government is encouraging food and beverage manufacturers to make a grab for its 1.3 billion customers. But while recruiting these companies might make economic sense today, their history in the United States suggests that it is likely to contribute to serious public-health consequences that could reverse emerging economies’ gains in life expectancy.
Beginning in the late 1960s and early 1970s, McDonald’s and other fast-food chains saw markets in suburbs and along highways become increasingly saturated. They responded by aggressively expanding into urban, predominantly African American areas and launching advertising campaigns targeting black consumers.
While this strategy allowed fast-food chains to continue growing domestically for several more decades, it also contributed to the transformation of African American diets in ways that played a role in disproportionately high rates of obesity among African American women and children today.
Fast-food companies opened restaurants in urban African American communities for many reasons. Most of the major chains — KFC, Burger King, Pizza Hut, Subway and Wendy’s — were established in the 1950s and 1960s, and soon became household names through national advertising campaigns. So urban areas, with dense populations and the potential to generate lots of traffic, were untapped markets brimming with potential consumers who knew about McDonald’s and Burger King, but did not yet have those restaurants in their neighborhoods.
Government programs also aided in the expansion of fast-food companies into urban African American communities. Fast-food franchisees were eligible for Small Business Administration loan guarantees, and following the urban riots of the mid-to-late 1960s, the federal government sponsored programs to promote urban renewal and minority entrepreneurship.
Fast-food companies made sure that the minority franchise owners they recruited availed themselves of these programs. These government initiatives relieved fast-food companies from having to provide financing assistance themselves, and they also meant that the Small Business Administration would be there to bail out franchises if they went out of business.
Market-segmented advertising campaigns accompanied fast food’s expansion into minority communities. In 1971, McDonald’s became the first of the major chains to hire a black ad agency to help them reach African American consumers, and other chains soon followed. McDonald’s and its rivals would subsequently barrage African American consumers with ads in black magazines and on radio and television programs.
By 1990, McDonald’s, Burger King and Wendy’s dedicated one-fifth of their advertising dollars to African American consumers. This investment paid off. According to one report in 1998, McDonald’s and Burger King derived 25 and 30 percent of their domestic profits respectively from minority customers.
More recently, a number of studies have revealed that fast-food companies direct considerably more advertising to African American children and adolescents than to their white counterparts. Combined with the easy availability of fast food in many urban minority neighborhoods, this targeted marketing helped to reshape African American diets in ways that have been implicated in the contemporary obesity epidemic.
In the years immediately before fast-food chains entered black communities, African American diets, which included staples such as legumes, root vegetables and greens, were generally healthier than white Americans’ diets. Dietary surveys revealed that in 1965, African Americans satisfied dietary recommendations for fat, fiber, fruits and vegetables at a rate twice that of whites.
But over the next three decades, coinciding with the rise of fast food in their neighborhoods, a transformation took place. By the 1990s, studies found that African Americans were now more likely to consume unhealthy diets than whites. After two decades of fast food’s expansion into inner cities, urban minority neighborhoods were developing not into food deserts but “food swamps,” where fast food and bodegas proliferated, but supermarkets offering affordable healthy foods were scarce. This food environment helped to facilitate diets that traded in fresh fruits and vegetables for processed items higher in fat, sugar and salt.
This dietary shift has contributed to high rates of obesity among African Americans. According to the most recent figures from the Centers for Disease Control and Prevention, 82 percent of African American women are overweight or obese, compared to 63.5 percent of white women, while rates of obesity among black and white children are 21.4 percent and 13.6 percent, respectively. (Recent data indicates that while African American men are no more likely to be obese than white men, they do have higher rates of diet-related diseases such as diabetes and heart disease.)
While fast food is certainly not the only cause of obesity, just last month a British study published in the Journal of Public Health found that children who lived near fast-food outlets were more likely to gain “significant weight” in their elementary school years than their classmates who were not surrounded by fast food.
These patterns linking obesity and proximity to fast food are likely to be replicated in the emerging markets where fast-food chains are now multiplying. Just as heavy advertising informed urban African American consumers’ “choice” to consume fast food, food and beverage companies’ marketing efforts are already prompting Brazilians and Ghanaians to abandon their healthier, traditional diets for Western foods advertised as modern and high-status. So while emerging markets help keep multinational food and beverage companies thriving today, their strategy, like Big Tobacco’s decades ago, will exact a potentially devastating cost in the future.