The Commercial-News, Danville, IL

Community News Network

March 13, 2014

Lean Cuisine sales drop as consumers shun freezer

LONDON — Nestle's Lean Cuisine is being hit by concerns that the low-calorie frozen dinners it pioneered are unhealthy and too expensive, a lethal one-two punch for a product targeted at budget-conscious dieters.

Two-fifths of U.S. adults say frozen dinners have little nutritional value, according to researcher Mintel. Lean Cuisine sales have dropped by more than a quarter in the past five years.

Nestle has responded by offering discounts, creating new products and backing research that promotes frozen food as nutritious. Still, Lean Cuisine revenue declined 11 percent last year, to $987 million, according to market researcher IRI.

"It's a health and wellness issue, not just an economic one," said Alexia Howard, an analyst at Sanford C. Bernstein. "The category is not coming back no matter how heavily they promote it."

For Nestle, Lean Cuisine's struggles are contributing to a company-wide decline in sales growth - which hit a four-year low in 2013 - and threatening management's goal of becoming "the world leader in health and wellness." Nestle says its frozen foods use quality ingredients and are little different from freshly made meals.

Lean Cuisine's competitors in the $2.5 billion low-calorie segment of the frozen meal market are similarly hurting. Sales of Healthy Choice by ConAgra Foods have declined 16 percent over the past year, and those of H.J. Heinz's Weight Watchers are down 13 percent.

With Lean Cuisine, Stouffer's dinners, Hot Pockets sandwiches as well as pizza and ice cream, Nestle controls the biggest share of the freezer space in North American supermarkets. Frozen food is Nestle's second-biggest business in the U.S., a region that accounts for a quarter of the $104 billion in sales booked last year by the Swiss company.

Sixty years ago, Swanson introduced its frozen "TV dinners" and forever changed the family meal. Frozen entrees grew steadily as more women entered the workforce, expanding beyond turkey and fried chicken to Italian and Asian cuisine. In 1973 Nestle bought Stouffer, then in 1981 it unveiled Lean Cuisine, a lower-calorie version of Stouffer's meals. Sales in the first year tripled projections, forcing Nestle to ration supplies to retailers.

"We think it is the most exciting thing that has ever happened in the food business," Alan MacDonald, president of Stouffer's, told The New York Times in 1982.

With sales booming, Nestle and its competitors raised prices. After the economy sputtered in 2008, cash-strapped consumers started cooking more from fresh ingredients and saving leftovers for lunch, cutting into sales of frozen meals.

"It's not hard to make stuff from scratch," said Catherine Smith, 38, a mother of two in Charlottesville, Va. "I know what I'm putting in the food. It's less processed and it tastes better."

Nestle at first chalked up the decline to Lean Cuisine's price, usually around $3 a meal, and set about offering discounts. Half of Lean Cuisine's sales now come via some sort of deal, according to market watcher Nielsen, well above the 30 percent average for all foods. The coupons hurt profit margins, which have contracted for the last two years in the Nestle business unit that includes frozen meals.

Although freezing is an effective way to preserve food, "there is a certain perception that it's somehow artificial," Chris Johnson, head of Nestle's Americas region, told investors last year.

Making things worse is the "long and scary" list of ingredients in frozen meals, which include preservatives like potassium sorbate, calcium propionate, sodium tripolyphosphate and sorbic acid, according to Eric Decker, head of the food science department at the University of Massachusetts Amherst.

Nestle's frozen foods use "the same quality ingredients our consumers purchase when cooking from scratch," said Nestle spokeswoman Roz O'Hearn.

Salt is the biggest concern among consumers, according to a survey by Bernstein Research. Early versions of Lean Cuisine averaged 1,000 milligrams of sodium, or two-thirds of the recommended daily intake for more than half of American adults. The 130 varieties of Lean Cuisine now average 600 milligrams, and in 2010 Nestle pledged to reduce sodium by a further 10 percent by 2015 through what O'Hearn calls a "slow and steady approach."

That's not fast enough for some. "My grandmother says your meals are good but I don't understand why they have soooo much sodium and they're supposed to be healthy," Shayna Harris wrote on Lean Cuisine's Facebook page. Bernstein Research says mothers are more concerned about the healthiness of frozen meals than any food item other than soda and sweet snacks.

Nestle has responded with Lean Cuisine meals designed to be added to a salad for a quick dinner or lunch at the office. Dubbed Salad Additions, they include dressing and toppings like crispy noodles. To capture shoppers' attention, Nestle convinced Kroger to put freezer cases in the produce section of some of its supermarkets. O'Hearn said the new products are "more closely associated with freshness" by consumers. She declined to provide sales data.

Not all frozen-food purveyors are struggling. Sales of Amy's Kitchen's organic, vegetarian meals like black bean veggie enchiladas rose 13 percent to $240 million in the year ended Feb. 25, according to Nielsen. Hillshire Brands, the meat business spun out of Sara Lee Corp., will take its Jimmy Dean brand beyond breakfast this year with smoked bacon mac & cheese. And Iglo Group Ltd., Europe's biggest frozen-food company, is helping retailers redesign freezer aisles to look like restaurants or fish markets.

"People want to be inspired to eat food," said Iglo Chief Executive Officer Elio Leoni Sceti, "not a bag of ice."

If Nestle can't turn around Lean Cuisine, it should consider selling the business, says Rob Dickerson, an analyst at Consumer Edge Research. Nestle CEO Paul Bulcke has said the company will no longer tolerate poor performers, and has sold PowerBar energy snacks and most of Jenny Craig diet centers.

"Frozen food isn't dead; it's just that consumers haven't been given what they want," Dickerson said. "Nestle needs to decide whether it will reinvigorate their part of the frozen category. If it's not worth the investment, it's got to go."

 

1
Text Only
Community News Network
  • The Simpsons still going strong

    The groundbreaking animation first hit the air Dec. 17, 1989, but the family first appeared on television in "The Tracey Ullman Show" short "Good Night" on April 19, 1987.

    August 21, 2014

  • Police chief resigns over racial slur repost to Facebook

    A repost on his personal Facebook page of a racially-charged comment by the original poster of a comedy video has forced the police chief of an Oklahoma city to resign his office.

    August 21, 2014

  • Does Twitter need a censor?

    Twitter decided last year to make images more prominent on its site. Now, the social network is finding itself caught between being an open forum and patrolling for inappropriate content.

    August 21, 2014

  • sleepchart.jpg America’s sleep-deprived cities

    Americans might run on sleep, but those living in the country's largest cities don't appear to run on much.

    August 20, 2014 1 Photo

  • Who should pay for your kids ACT?

    Thirteen states paid for 11th-grade students in all public high schools to take the ACT college admission test this year, with several more planning to join them in 2015.

    August 20, 2014

  • Pets.jpg Why do people look like their pets?

    As much as we might quibble over the virtues and vices of Canis domesticus, however, and over whether human nature is any better or worse than dog nature, even dog fanciers don't usually want to look like a dog.

    August 20, 2014 1 Photo

  • Ice bucket challenge trending up

    Internet trends are a dime a dozen these days. Everything from Tebowing to planking to the cinnamon challenge can cause a wave of social media activity that can last for weeks before fizzling out.

    August 19, 2014

  • Africa goes medieval in its fight against Ebola

    As the Ebola epidemic claims new victims at an ever-increasing rate, African governments in Sierra Leone, Guinea and Liberia have instituted a "cordon sanitaire," deploying troops to forcibly isolate the inhabitants in an area containing most of the cases.

    August 18, 2014

  • Democrat? Republican? There's an app for that

    If you're a Republican, you might want to think twice before buying Lipton Iced Tea, and forget about Starbucks coffee. If you're a Democrat, put down that Reese's Peanut Butter Cup, and throw away the cylinder of Quaker Oats in your pantry.

    August 18, 2014

  • Five myths about presidential vacations

    In the nuclear age, presidents may have only minutes to make a decision that could affect the entire world. They don't so much leave the White House as they take a miniature version of it with them wherever they go.

    August 15, 2014

E-edition
AP Video
Furry Roommates: Dorms Allowing Cats and Dogs Chase Rice Defends Bro-Country 'Jersey Shore Massacre' Pokes Fun at MTV Series Raw: Wash. Mudslides Close Roads, Trap Motorists DC's Godfather of Go-Go Honored Ukraine Calls Russian Convoy a 'direct Invasion' Girl Meets Her 'one in the World' Match Coal Gas Boom in China Holds Climate Risks Japan Landslide Rescuers Struggle in Heavy Rain Raw: Severe Floods, Fire Wrecks Indiana Homes Endangered Red Wolves Face Uncertain Future Raw: Russian Aid Convoy Arrives in Ukraine Okla. Policeman Accused of Sex Assaults on Duty Dominican Republic Bans Miley Cyrus Concert Raw: Israeli Air Strike in Gaza Raw: Bodies of MH17 Victims Arrive in Malaysia Attorney: Utah Eatery Had Other Chemical Burn
NDN Video
School serves diabetic girl trashcan pizza Battle of the Butts at the 2014 MTV VMAs! Four-Year-Old Reviews Exclusive Restaurant's $295 Fixed Price Menu Mariah Orders Nick Cannon to Stay Quiet About Divorce Details U.S. Military Strategy Against ISIS The London Zoo holds its annual animal weigh-in VIDEO: Goliath Grouper eats shark in one bite Rapper Almost Walks Off CNN Over Ferguson Coverage 2 American Ebola Patients Released From Hospital Whoa! Jimmy Fallon Shaves Jared Leto's Beard US Mission to Rescue Hostages in Syria Failed Reggie Jackson's ALS Ice Bucket Challenge Amazing Encounter With Sea Otter Caught on Video Motorcyclist Sticks Landing Sicilian hilltop homes on sale for one euro Are Mariah Carey and Nick Cannon Breaking Up? Joel McHale Interviews Chelsea This 'Breaking Bad' Reunion is the Most Hilarious Thing You'll See All Day! President Obama talks about who James Foley was Nicki Minaj Unleashes Her 'Anaconda' On the World
Must Read