Industry sales, though improving, have lacked consistency. Now placed at $3.4 billion at retail, up 4%, according to Information Resources Inc., they dropped 5% in '92 and rose 14.5% in '93.
Consumers have grown wary of many products, believes Barbara Lawrence, managing director of food consultancy Lubin Lawrence, noting that take-out food is relegating frozen dinners to emergency food. She identifies part of the problem as an erosion in product quality and the lumbering response by marketers to do something about it.
Pervasive marketing tactics usually have centered on pricing, leaving the impression the goods are somehow tainted: If you give it away it must not be any good.
Troubles for the category surfaced in the late '80s when marketers began cutting prices. To retain margins, they went to smaller portions and less expensive ingredients like pasta and chicken. The tactic affected many brands, especially Campbell Soup Co.'s Le Menu. The premium Le Menu line stuck to its price points only to become too high end; the brand was discontinued in February.
Budget Gourmet, acquired by H.J. Heinz Co. last fall from Philip Morris Co.'s Kraft Foods, also lost its value distinction because of the trend, market share dropping as others entered its price range.
"There are some extended challenges in this category, and many brands must decide who they are to compete effectively," says Jeff Hill, managing director of Meridian Consulting Group.
Industry observers are watching Heinz's Weight Watchers and Budget Gourmet in particular to see how Heinz finds efficiencies and builds share.
A tune-up is in order. Weight Watchers has slid from 10.3% of the market to 7.5%, 1993 to '94. In the same period, Budget Gourmet fell from 11.2% to 10.5%, according to IRI.
Billing the Weight Watchers' brand as New Weight Watchers, Heinz reformulated recipes, unveiled new packaging and brought out an International Selections line. Advertising will concentrate on the late-winter period when dieting reaches its zenith.
Weight Watchers media spending plunged to only $400,000 in 1994 from $7.1 million. Heinz' new (as of 1993) marketing philosophy favors co-op programs with grocers over major media spending.
Budget Gourmet is being bolstered with an Italian Originals line and a 14-item 98% Fat Free Dinners line. A $2 million to $3 million campaign is planned this fall to challenged Healthy Choice in the healthful segment.
Campbell is attempting to reinvigorate its Swanson lines through product development, new packaging and advertising. While it's in a stronger position than Heinz' brands, many say it has suffered freezer burn.
"It has a lot of negative baggage to overcome," says Gary Stibel, principal with New England Consulting.
The Swanson brand rose 0.4 share points to a 12.4% share of market in '94. The Hungry Man dinner line was up about 20% in sales, says Sheryl Roth Rogers, VP-marketing in Campbell's frozen foods group.
Swanson began advertising for the first time in 10 years last fall, with a print campaign. It revisited the media this month, focusing on its most popular dinners' taste and value.
Stouffer's from Nestle tasted just a 2.6% sales increase in '94, while market share dropped for the year. By mid-1995, its 13.6% share of market was basically even with year-end figures.
Stouffer is "very high in fat and calories, and America doesn't eat that way anymore," says Ms. Lawrence. She points out that higher calories products like ConAgra's Marie Callendar's are doing well because they're segmented and not bound for the broad market.
However, Nestle's Lean Cuisine has been able to keep its line fresh, says Ms. Lawrence. By mid-'95, its share had risen to 15.1% from 14.5% six months earlier, according to IRI.
These two brands, with $49.5 million in media spending last year, accounted for more than a quarter of the category's advertising.
Marketers are taking a close look at taste and how to reduce fat without sacrificing flavor. "The days of `I'll sacrifice health for taste and taste for health' are over," says Ms. Lawrence.