Press-Republican

FYI...

March 20, 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.

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