I Can't Eat That, I'm on a Lifestyle: Kraft Rebrands South Beach Diet

$250 Million Brand Shifts Positioning to Healthful Eating From Weight Loss

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Are you on a diet? Prepare to be on it the rest of your life.

For food companies marketing light, low-fat and calorie-control products, the problem comes when dieters reach their goal weights -- or give up trying -- and no longer need the products. But the country's largest food company has a solution: It's recasting its South Beach Diet food line as a "lifestyle" product.
This is not a diet. It's a healthy lifestyle, according to Kraft Foods.
This is not a diet. It's a healthy lifestyle, according to Kraft Foods.

Howard Brandeisky, VP-strategic marketing of the $250 million franchise, said South Beach products "aren't just for people looking to manage their weight but people looking to eat healthier and manage their weight as part of an ongoing lifestyle."

Diets less popular
It's also a nod to a societal shift in which diets are out and health is in. According to the Calorie Control Council, 29% of Americans this year claim to be on a diet -- down from 33% in 2006. Yet consumption of low-calorie and low-fat foods is on the rise, with 194 million of Americans reporting they eat them vs. 180 million in 2004. (Of course, it should be noted that the Calorie Control Council is a creation of the low-fat-food industry.)

Kraft jumped on the South Beach bandwagon in 2005, two years after the first South Beach book appeared on The New York Times' best-seller list. At the time, there was a lot of skepticism, given the marketer's lag time and the fact that the company was a relative newcomer to a category dominated by Weight Watchers Smart Ones and Stouffer's Lean Cuisine.

That made its initial success even more impressive. South Beach reached the critical new-product sales benchmark of $100 million during its first year and by mid-2006 passed the $250 million mark. But sales have slowed in the past year, according to Information Resources Inc.

The South Beach franchise is composed of cereals, snack bars, salad kits, sauces, dressings, crackers and frozen lunches, among other things. The most popular items are cereal bars, with $67 million in sales through Oct. 7, and single-serve frozen entrees, with $80 million in sales over the same period, according to IRI, excluding Wal-Mart (see chart).

Mr. Brandeisky declined to disclose recent sales for South Beach but said the brand is worth about $250 million to Kraft. That indicates its growth has stalled, despite fairly strong ad spending. According to TNS Media Intelligence, the South Beach brand got $24 million in measured media spending in the first six months of this year vs. $33.3 million in 2006.

But there might be opportunity to broaden its reach beyond the two-thirds of South Beach customers Mr. Brandeisky estimates aren't on the diet. It's been surprising, he said, to see South Beach's appeal to men.

"It is a man-friendly diet. ... One of the philosophies of the diet, within reason, is to eat until you're full," said Brett Kurland, a freelance TV producer who lost 25 pounds on the diet two years ago. "It's not like other diets with points, pieces of chicken the size if your fist."

Not coincidentally, Kraft's shift comes as the South Beach Diet's popularity wanes. "The South Beach Diet," published in April 2003, is one of the fastest-selling diet books of all time. But while still popular, it's no longer water-cooler talk.

"It's past its peak in popularity. It was really more popular when Atkins and low carb was in full swing, and that ended about a year ago," said John LaRosa, research director of Marketdata Enterprises. His research shows diets on the upswing -- 72 million Americans are on a diet now, he said, compared with 55 million a decade ago. The "Biggest Loser" and Sonoma diets are the rage these days, he said.

"All diets tend to fade over time," said Morningstar analyst Greggory Warren. "If you look at when Kraft got into this, it was a little late."

Mr. Warren said Kraft had to rebrand beyond the South Beach Diet to have true growth potential. "It was a decent opportunity and a strong launch when it came out," he said. "But when you're doing $250 million in sales and you're a $35 billion company, it doesn't make much of an impact."

DraftFCB has put together an ad campaign for TV, print, online, point-of-sale displays and promotion to break in January -- the traditional diet season. Mr. Brandeisky said the campaign is "still a work in progress," but it will "leverage the South Beach Living name and people who seek a healthy way of eating for life."

In other words, gone is the beautiful woman on the beach from the first round of ads. In its place will be food photography and a "compare-and-contrast approach" that goes beyond the conventional wisdom of what "diet" means, according to an executive close to Kraft.

Excluding Wal-Mart. 1. South Beach products were introduced in April. 2. 52 weeks ended Oct. 7, 2007.
Source: Information Resources Inc.
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