Nestlé Misses Out As Frozen Food Category Heats Up

10. May 2018.








Nestlé’s three-year plan to get millennials back into frozen food was only half-cooked when consumers in their 20s and 30s started returning to the freezer aisle of the grocery store.

The company has spent more than a year developing healthy bowl-style frozen meals, working with millennial focus groups to get the recipes right. At its $50 million research center near Cleveland, food technicians and packaging pros have spent longer than that working to increase the curb appeal of Nestlé’s frozen offerings.

Yet it could all be for naught: Demand rose while Nestlé supply held steady, and competitors were there, ready and waiting with the right product at the right time, to absorb those customers when the moment was ripe.

Reuters reports that Nestlé is now increasing capacity across multiple U.S. factories. The expansions include modifications to plants and a new line in its Jonesboro, Arkansas, factory. Will it be enough to win back customers, or will Nestlé’s competitors hold onto the market share they gained?

Where Nestlé Fell Short

Nestlé knew it needed to attract busy, health-conscious young adults. Indeed, investors had been pushing that angle for some time (that, or selling the frozen food business to focus on Nestlé’s core competencies).

Executives were confident that young adults would purchase frozen meals if they had healthier options at a better price point — and it turned out they were right, but competitors beat Nestlé to the punch when, in 2017, sales of freezer food began to climb for the first time in years.

Frozen food sales climbed 1.4 percent in 2017, according to Nielsen. That was largely driven by millennials, who spent 9 percent more on the category than the average household.

Meanwhile, Nestlé was still trying to get its supply chain in shape. It had brought on consultants, focus groups and international chefs to revamp its frozen menu to include items like Coconut Chickpea Curry and Sweet Earth Veggie Lover’s pizza.

But its manufacturers were not prepared for the demand that would erupt for the company’s Lean Cuisine and Stouffer’s Fit Kitchen meals, and rivals were ready to scoop up the customer base.

The Company Rallies

In the U.S., frozen meals and pizza comprised 14 percent of Nestlé’s 2016 sales. Globally, these items only accounted for 4 percent of sales. For Nestlé, those numbers were reason enough to keep at it, despite what investors might say.

The company teamed up with other food makers to expand its horizons. The freezers that formerly housed pizzas, lasagnas and little else now boast a wide selection of entrées featuring healthier, trendier ingredients like quinoa and cauliflower, as well as catering to customers with dietary restrictions.

The Frozen Category Heats Up

Perhaps one of the most important ingredients in Nestlé’s recipe for reaching younger shoppers? Price point. There’s a reason frozen food purchases are on the rise: Over-indebted, underemployed millennials need something inexpensive and low-prep to scarf down between their three gigs.

When consumers are spending hundreds of dollars of each paycheck on student loan repayments, sometimes fresh just isn’t an option. But that doesn’t mean millennials just want to eat junk. They eat junk because it’s there and it’s cheap and it’s easy.

Catering to this crowd with an option that meets those needs and satisfies their taste for healthier, more ethically sourced food? Now, that’s a recipe for success.

We will be happy to hear your thoughts

Leave a reply

Register New Account
Login to
Reset Password