Food marketers latch on to health

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Major food-industry players bombarded Wall Street analysts with health and wellness initiatives to exploit the one sliver of growth amid generally gloomy earnings.

At the Consumer Analyst Group of New York meeting in Scottsdale, Ariz., last week, CEOs from Kraft Foods, Kellogg Co., Campbell Soup Co. and Hershey Foods rattled off new products and marketing that capitalize on health trends from carb-cutting to trans-fats avoidance. The focus on the high-growth health segment was a counterpoint to marketers' uncharacteristically modest presentations that acknowledged significant challenges for the food business.

"The dramatic expansion of healthier products is a result of food companies looking for incremental dollars, because that's what they're being judged on," said Matthew Patsky, portfolio manager with Winslow Management, Boston. Marketers are "looking at how to play [the wellness trend] without labeling any of their old products as bad."

There's good reason for caution: few health trends have long-term viability, said John Stanton, professor of food marketing at St. Joseph's University. "Every shred of evidence says there has not been a sustained health trend in terms of foods," he said, noting that low-fat, low-salt and low-calorie trends all peaked at two years and then declined.

Mr. Stanton said he asked a food executive why companies armed with that knowledge would still pledge to invest in healthier products. The response he said he received: "In the long run, it will be cheaper to offer those items to consumers even if they don't make money than to pay lawsuits for not giving consumers choices."

Kraft CEO Roger Deromedi, who recently outlined a "sustainable growth plan" to mollify analysts after repeated earnings target misses, said at the conference, "Low-carb diets, concerns about trans fat and obesity and greater demand for organic and natural products are requiring a shift in what we market and how we market it."

new Formulations

To that end, Kraft-criticized as being behind the curve in terms of innovation on the health trend-will introduce new formulations of its Nabisco Wheat Thins, Chips Ahoy!, Cheese Nips and Oreo that feature three grams or less of fat, zero grams of trans fat and 100 calories per serving. It also plans to introduce Triscuit crackers with no trans fat; Capri Sun Fruit Waves, the company's first 100% fruit juice; and an expanded array of offerings under its Back to Nature brand. Kraft is researching a DiGiorno pizza line dubbed Balance that features fewer carbs, calories and fat.

Kellogg trotted out a low-carb Special K (racing to get out on the heels of General Mills' Total Protein) as well as low-sugar versions of Frosted Flakes and Froot Loops and a plan to eliminate trans fats in a leading cereal and cookie brand. Increased advertising for Morningstar Farms from Publicis Groupe's Leo Burnett, Chicago, touts the low-fat, low-carb nature of its vegetarian products by comparing them to bacon and other high-fat foods. The tagline: "Low-carb diets meet common sense."

Hershey CEO Rick Lenny has set his sights on the snack- and nutrition-bar segment to broaden its confectionery lines with a weight management Smart Zone bar tied to Zone diet developer Dr. Barry Sears. For its base business, Hershey developed a line of sugar-free versions of its top-selling brands and next month plans to launch a 1 gram Sugar Carb brand.

Campbell said it will remove the trans fat from its Pepperidge Farm Goldfish by September and in March will introduce trans-fat-free Goldfish Crisps backed with a $10 million push from WPP Group's Y&R Advertising, New York.

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