Nestle USA president hails frozen foods turnaround

by Josh Sosland
Share This:
Search for similar articles by keyword: [Nestle]

Nestle Stouffer's Fit Kitchen
Nestle has revived its frozen foods business.

BOCA RATON, FLA. — The frozen meals category has stabilized over the past year due to a revival of the Nestle USA frozen foods business, said Jeff Hamilton, president of the Nestle Food Division, Nestle USA. In a Feb. 23 presentation, Mr. Hamilton described steps the company has taken to reinvigorate the frozen foods business and what will be required to sustain the success.

Mr. Hamilton addressed the Consumer Analyst Group of New York at the Boca Raton Resort and Club in Boca Raton.

Jeff Hamilton, Nestle
Jeff Hamilton, president of the Nestle Food Division, Nestle USA

With annual sales of $27 billion, the U.S. market is Nestle’s largest globally, Mr. Hamilton said. The United States accounts for 30% of Nestle revenues.

He listed the many large categories in which the company participates in the United States, including pet food ($26.6 billion), confections ($20.2 billion), frozen food ($17.4 billion, water ($8.4 billion), ice cream ($10.1 billion), baby food ($8.4 billion) and coffee and creamers ($3.7 billion). Nestle holds the No. 1 position in each of the categories, except confections (No. 4).

Mr. Hamilton devoted most of his remarks to the frozen prepared foods category, noting that the company’s sales at retail totaled $2.6 billion in 2016, of which Stouffer’s accounted for 60%, Lean Cuisine for 30% and Buitoni, 10%.

Between 2010 and 2014, frozen foods category sales declined to $7,107 million from $7,919 million, equating to a compound annual rate of sales decline of 2.7%.

Nestle Stouffer's, Lean Cuisine, Buitoni frozen meals
In Nestle's frozen category, Stouffer’s accounted for 60% of sales, Lean Cuisine for 30% and Buitoni, 10%.

Mr. Hamilton joined the business in April 2014, and he said at the time the category needed “bold change.”

To reverse the decline, Nestle made numerous adjustments to “better reflect consumer trends,” Mr. Hamilton said. These included reformulations with an aim toward cleaner labels, extending distribution to new geographic territories and leveraging digital and social media “to communicate more effectively.”

“Stouffer’s was pretty stable during the downturn of the category, but we thought there were opportunities for growth,” Mr. Hamilton said. Toward that end, Nestle reformulated Stouffer’s meat and sauce lasagna, reducing the ingredient list to 35 words from 83.

“Also important are the ingredients that go into the lasagna,” Mr. Hamilton said. “They are very similar to what you would use to make a lasagna at home.

Nestle Stouffer's reformulated lasagna
Nestle reformulated Stouffer’s meat and sauce lasagna, reducing the ingredient list to 35 words from 83.

“The other business that was the bigger challenge was Lean Cuisine, which had been declining double digits for many years. We knew we needed a bold pivot.”

The company has transitioned Lean Cuisine from a focus on low fat and low calorie to high protein, gluten-free, non-G.M.O. and certified organics designations.

Lean Cuisine has been segmented into a Comfort line with products such as meatloaf and mashed potatoes, and a Marketplace line, with products such as Ranchero Braised Beef.

The company also is introducing culinary recipes, such as Sweet & Spicy Korean-Style Beef and Mushroom and Spring Pea Risotto, versus older, more basic staple items, such as a spaghetti and meat sauce variety.

Nestle Lean Cuisine
Lean Cuisine has been segmented into a Comfort line and a Marketplace line.

The company has introduced a new tagline, “Feed Your Phenomenal.”

The moves have been successful, Mr. Hamilton said. After years of double-digit sales declines, the brand is growing again in high single digits.

The sales improvement underscores the continued relevance of frozen foods, Mr. Hamilton said, noting that frozen foods are well suited to benefit from numerous fundamental consumer trends:

1) “Perfect preservation,” freezing at the peak of freshness

2) Allowing for simple management of portion control

3) Supporting controlled intake of sodium and calories

4) Helping consumers understand and ensure nutritional balance

5) Convenience

6) Reducing food waste

The business case for frozen foods is strong, too, Mr. Hamilton said, noting that the frozen foods segment is large and profitable. High growth niches such as organic remain to be more fully penetrated.

“The e-commerce side of frozen has been slower to develop, mostly because of the ‘last mile,’” Mr. Hamilton said. “Last mile solutions tend to come first in ambient, then chilled, then frozen. Now we’re coming to frozen. Most importantly, both suppliers and retailers have renewed interest in this category.”

To sustain growth, Nestle must keep abreast of consumer trends, even staying “one step ahead,” Mr. Hamilton said. Increased participation in high growth segments and channels is needed. Longer term, he expects the category to generate low- to mid-single digit growth. 
Comment on this Article
We welcome your thoughtful comments. Please comply with our Community rules.

 

 


The views expressed in the comments section of Food Business News do not reflect those of Food Business News or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.