Kraft struggles to find right recipe for meals

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While competitors such as ConAgra Foods and General Mills have seen major growth from new convenient meal entries in the last few years, Kraft Foods has failed to develop its own strong brand in the growing category.

Kraft recently pulled the plug on its Stove Top Oven Classics meal kits, has barely grown sales on It's Pasta Anytime!-a brand acquired nearly two years ago-and has shopped around at various agencies to find a creative positioning for its newest refrigerated meal-entry contender, Kraft FreshPrep.

"Meals has been a category with growth that Kraft has not found the right recipe for," said one Wall Street food analyst. "Although no one business will make or break the company, in an industry with so little growth, [companies] have to have all cylinders firing."

seeking adults

In 2000, meals comprised nearly 11% or $1.13 billion of Kraft's largest division, cheese, meals and enhancers, according to a 2001 Credit Suisse First Boston report. Kraft has certainly thrived with the division's leading meals brand, Kraft Macaroni & Cheese, which it has kept relevant through promotions and new product activities on both the base brand and newer teen-skewed Easy Mac, said Mary Kay Haben, group VP-president of cheese, meals and enhancers. But developing a similar quick-meal option for adult households has been tougher.

Kraft launched Stove Top Oven Classics (first tested as Stove Top Oven Creations) in 1999 with $15.5 million in media spending, according to TNS Media Intelligence/CMR. Recent data show the brand grew to just under $40 million in the $450 million dry dinner-mixes/add-meat category, an area that "became crowded quickly with low-priced competition," Ms. Haben said, and Kraft ceased distribution of the product due to lack of profitability.

In the meantime, ConAgra came along with its Banquet Homestyle Bakes kits with meat included, building the brand to nearly $100 million in its first year. Since then, General Mills has followed suit with Betty Crocker Complete Meals, its own with-meat varieties of the $350 million-plus Helper franchise. Kraft has yet to offer its own version.

minute rice entry

A new Minute Rice One-Skillet Dinner line, which requires consumers to add meat, will soon get advertising and is another attempt by Kraft to extend an established side dish brand into the meals segment. Minute Rice currently is with Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, Chicago, though the account has been inactive, a Kraft spokeswoman said.

In late 2001, Kraft purchased the shelf-stable pasta and sauce brand It's Pasta Anytime! from Borden Foods Corp. in an effort to reach one- and two-person households, which account for 60% of households in the U.S., Ms. Haben said. But while Kraft has expanded the brand slightly with new entries and distribution, sales have grown nominally from the $27.6 million in annual sales it showed under Borden.

leveraging technology

Ms. Haben said that the opportunity with It's Pasta Anytime! is not only to build the brand itself but to leverage the technology behind it to other meal brands, but that is something Kraft has not yet done.

Lehman Brothers analyst Andrew Lazar cites FreshPrep-dinner kits intended to be placed in grocer's meat cases-as Kraft's biggest hope for the success that has eluded it in new convenient meals. But so far Kraft has gone through a series of agencies and still has not determined a distinct strategy for the brand.

In tests last year under the FreshMade Creations name, Kraft used small independent shop Acme Idea Co., Norwalk, Conn., for advertising featuring Ms. Haben, but switched to WPP Group roster shop J. Walter Thompson, Chicago, to develop advertising for the national launch of FreshPrep. When the brand launched in March, TV and prints ads that ran were from Publicis Groupe's Kaplan Thaler, New York. Ms. Haben said current advertising support for the brand is actually a modification of the initial ads run in test by Acme, and Havas' Euro RSCG Tatham is consulting with Kraft on promotional ideas for the brand.

"We're going to stick with copy that was proven in the test market until we can find something that can push us into a stronger position," Ms. Haben said. "It's not unusual with a brand trying to establish itself in a new category to look at different creative strategies." The brand is expected to establish an agency of record, but Ms. Haben couldn't comment on when or who it would be. FreshPrep had sales of $11 million for the 52 weeks ended April 20, according to Information Resources Inc.

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