Dairy Queen Orders Sodas Out of Kids' Meals

By Mike Esterl 

It's getting harder to sell a kid a soda.

American Dairy Queen Corp. said Thursday it would remove carbonated soft drinks from its children's menu in September, becoming the latest fast-food chain to make such a move amid obesity and health concerns.

In a twist, Dairy Queen is owned by Warren Buffett's Berkshire Hathaway Inc. Mr. Buffett is an avid Cherry Coke drinker and a loyal former Coca-Cola Co. board member. Berkshire Hathaway is the biggest shareholder in Coke, which derives about 70% of its sales from soda and is the leading beverage supplier to U.S. restaurants.

Dairy Queen confirmed that Coke is its biggest supplier. PepsiCo Inc. and Dr Pepper Snapple Group Inc. also supply Dairy Queen.

Children's meals represent the newest no-go zone for the soda industry, whose U.S. volumes have fallen 10 straight years as health-conscious consumers switch to water and other drinks. Coke, PepsiCo and Dr Pepper Snapple agreed to remove soda from schools in 2006 and say they don't market sugary drinks to children.

Restaurants have been feeling heat from consumer and public-health groups like the Center for Science in the Public Interest, the Alliance for a Healthier Generation and MomsRising.org to make children's menus healthier. First Lady Michelle Obama's "Drink Up" campaign also encourages Americans to drink more water.

McDonald's Corp. removed soda from its children's Happy Meals last July and promotes water, milk and juice as beverage choices. Wendy's Co. dropped soda last autumn and Burger King, owned by Restaurant Brands International Inc., made the move in February. The Subway, KFC and Olive Garden chains also don't promote soda with kid meals.

Explaining its move Thursday, Minneapolis-based Dairy Queen cited "concern regarding children's nutrition" and said it is working to offer "healthier options" on its menu. Dairy Queen already offers other beverage choices including milk and water for kid meals, and has been adding new food options including turkey wraps and bananas.

A Dairy Queen spokesman said the company, which has 4,800 U.S. outlets, didn't consult with Mr. Buffett or Berkshire Hathaway about the decision. Mr. Buffett's office didn't respond to a request for comment. Coke said it doesn't comment "on our customer's business."

Mr. Buffett told attendees at Coke's annual shareholder meeting last month that a quarter of the calories he has consumed over the past 30 years are from the company's namesake cola. "I've got to tell you, I feel healthy," added the billionaire investor, whose holding company owns 9% of the beverage giant.

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