How Kraft's Lunchables Is Evolving in the Anti-Obesity Era

With Sales Jumping Again, Brand Readies $20 Million Ad Effort for Healthful Line Extension

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Not long ago, it seemed that Oscar Mayer Lunchables -- that king of kids' lunches -- had finally met its match. Scorned by health critics and challenged by other brands, sales flattened throughout the 2000s, leaving some to wonder if the portable processed lunch would survive. "Have Lunchables become uncool?" read one headline in 2005.

Six years later, the 23-year-old Kraft Foods brand is not only surviving, but thriving, winning where it counts in this category -- the school lunch table. Critics are still complaining, for sure. In what looks to be a nod to those voices, Lunchables is pouring millions of dollars behind healthier varieties. The brand -- which once partnered with Taco Bell, and as recently as 2009 sold a calorie-packed line called "Maxed Out" -- is now touting a line extension filled with Dole fruit, which will be backed with what Kraft calls the largest ad campaign ever for the brand.

The more than $20 million effort, led by Dentsu's McGarryBowen, Chicago, is timed with the start of spring-field-trip season and features kids showing off "orange peel grins." Plans include TV and print ads, including a six-page spread in the royal-wedding issue of People magazine that Kraft estimates will have a 3.7 million circulation, as well as digital storefronts in Chicago, Los Angeles and New York. On one day in May, Kraft is planning what it says is the first coordinated media buy on Times Square, with every digital video billboard plugging Lunchables. The campaign will nearly match what Lunchables spent on measured media all of last year ($25.3 million, according to Kantar Media).

Kraft says Lunchables finished 2010 with its best-ever sales and growth trends. And the momentum seems to be continuing this year, as dollar sales jumped 11.56% to $569 million in the year ended March 20, with the brand commanding nearly 70% of the refrigerated meat, cheese, cracker and dessert category, according to SymphonyIRI, which does not include Walmart.

The growth comes even as efforts against childhood obesity gain steam, with luminaries such as First Lady Michelle Obama and celebrity TV chef Jamie Oliver making well-publicized calls for healthier eating at school. But Lunchables is still "all about the 'fun' -- and as a result kids eat it," food industry analyst Phil Lempert, who runs Supermarketguru.com, said in an email. "Kids love the size of the foods and feel that it is for them vs. what mom makes," he said. Parents "will be assured that their kids won't trade the lunch for something else."

"This is something consumers have been requesting and we're listening," said Lunchables brand manager Mindee Elam. "Fruit is the number one requested item that mom is already adding to the brown-bag lunch," she said. "It makes perfect sense ... for us to include that in our product."

But while health advocates give the brand credit for evolving, they say Lunchables is still not doing enough. The fruit versions range from 280 calories to 440 calories and 8 grams to 12 grams of fat, while other versions on store shelves have even higher fat contents, like a pepperoni pizza variety with 20 fat grams and a list of ingredients 402 words long. (A Big Mac, for comparison, has 540 calories and 29 grams of fat.)

The new Lunchables campaign is all about the fruit.
The new Lunchables campaign is all about the fruit.

"While I'm happy to see fruit in general on a kid's lunch tray, I feel a little bit like that is perhaps drawing in a parent more to think, 'Oh, this is good for my kid,' when in fact it is still an accompaniment to an unhealthful meal that is chock-full of chemicals and sugar," said Susan Levin, a registered dietitian and director of nutrition education for the Cancer Project, a nutrition education and research group, who reviewed the "Lunchables with Fruit" product line for Ad Age. The line, which builds on a previous limited rollout of fruit varieties, includes cups of Dole mandarin oranges and pineapple bits paired with varieties including peanut butter and jelly, pizza, and crackers with turkey, ham and cheese.

Rick Shea, a consultant and former Kraft marketer, said the brand might never "truly satisfy" its nutrition critics. But Lunchables is "the dominant player within a category essentially that they created. They are responding to overall nutrition and societal trends to provide better nutritious food," he said. "At the same time, they still recognize that Lunchables was created out of convenience -- that's its main benefit."

The four new lines bring the total number of Lunchables varieties to 36. The Taco Bell versions, introduced in 1997, were shelved long ago, in 2000. And in 2009, the brand discontinued the much-maligned "Maxed Out" line, including a ham-and-cheddar-cracker version whose 660 calories and 22 grams of fat earned it first place on a list of the "Five Worst Packaged Lunchbox Meals" by the Cancer Project. In 2008, Lunchables added small bottles of water to some meals. All told, Lunchables says it has reduced calories across all varieties by 14% since late 2007, while cutting fat by 10% and adding whole grain to crackers, pizzas and nachos.

The new campaign is all about the fruit. Print ads show one kid with a pineapple on his head and another sucking on an orange. The brand's Facebook page will encourage fans to upload photos that can be "fruitified" with orange grins or pineapple glasses and Kraft will donate 10 pounds of fruit to Feeding America for every upload. Lunchables' digital agency is Razorfish. Public relations is handled by Weber Shandwick and media by Publicis Groupe's Starcom MediaVest Group.

Lunchables' closest competitor is Armour Lunchmakers by Armour-Eckrich Meats. The brand, which offers versions such as bologna cracker crunchers and nachos with cheese and salsa, grew sales by 15.74% in the year ended March 20, according to SymphonyIRI, but remained a distant second, with 11.62% share. The company did not return calls for comment. Healthier alternatives such as yogurt have made some headway, but are still far behind Lunchables. For instance, sales of Yoplait Go-gurt by General Mills grew 13.46% in the year ended Feb. 20, but at $134.5 million, sales were still about one-fourth of what Lunchables took in.

This is not the first time Lunchables has made a nutrition play. Several years ago it launched a vitamin-fortified line called Fun Fuel, but it flopped and was discontinued. "It was ahead of its time," said a Kraft spokeswoman. "It was a 'better for you' line. Consumers vote with their wallets and they did not vote for a 'better for you line' at that time."

Time will tell if they are ready for fruit.

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