LUNCH BUCKET: HOT CATEGORY MELTS DOWN INTO PRICE WARS

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In 1988, three big ad agencies competed for what seemed a sure bet: the $15 million account for Dial Corp.'s Lunch Bucket, a line of single-serving meals that had rolled out nationally just a year earlier.

Portable, microwaveable and shelf-stable, Lunch Bucket seemed a perfect solution for consumers on the go, and sales were booming.

Bozell's Dallas office won the prize account. But within five years, the business dried up. Dial hasn't spent any money on measured media advertising since 1991, when spending had dropped to just over $3 million.

Lunch Bucket remains on supermarket shelves across the country, but it stands as an example of how brands deteriorate when caught in a category that grows too fast and in the wrong ways-when price becomes the playing field.

Lunch Bucket was the first of a barrage of microwaveable cup meals that hit supermarkets in the late '80s, a blitz representing some of the food industry's blue-chip marketers. As the segment's sales grew, to nearly $300 million at its peak-and $50 million for Lunch Bucket alone-the list of competitors also grew.

There was Hormel, Chef Boyardee and Campbell's Cup. Quaker Oats Co. tried Lunch for One, ConAgra moved its Healthy Choice brand into cups, and Nestle tested Libby's Diner. There were products for kids (Kids' Kitchen) and for dieters (Dial's own Light Balance).

Eventually, too many competitors fighting for too little space led to a price war that saw product prices fall to 99 cents, from $1.09-$1.29, and sale prices of two for $1.

"Everyone was investment spending; everyone wanted to be the lone survivor," says one food executive. "Even with the price war, Dial had the opportunity to stifle the competition, if they'd spent to keep the brand going. But they chose short-term profits instead, and let competitors get a foothold they never should have gotten."

Protecting its profits, Dial cut Lunch Bucket's ad spending to compete on price. But what it seems left with now, less than 10 years after it began testing Lunch Bucket, is no brand identity with consumers.

Lunch Bucket sales fell 30.5%, to $13.4 million, for the year ended June 19, according to Information Resources Inc., and the brand has lost distribution in many markets. The renamed light line, called Lunch Bucket Light 'n Healthy, added only $3.2 million in sales.

A Dial spokeswoman says only that the single-serving microwave meal category as a whole has seen sales decline-down 14.7% to $172 million, according to IRI.

The only products that seem to be growing in the category are those targeting kids, where low-priced pasta dinners have long been the standard.

But for Dial, the salad days are over. The spokeswoman adds, "The bottom line is that we're making money on Lunch Bucket, and will continue with the line."

So much for great expectations.

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