Wants New Products to Address National Obesity Concerns

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NEW YORK (AdAge.com) -- Wal-Mart Stores is pushing manufacturers for new products in the low-cal, low-sugar arena as it seeks to
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increase revenues through high-growth categories.

The move, which includes the launch in July of Mott's Hawaiian Punch Lite only in Wal-Mart, is part of widespread mainstream interest in ways to counter increasing concerns over obesity.

"We have a lot of customers who are becoming more health-conscious and are looking for a light alternative, and we will continue to work to provide them with the selections they're requesting," a Wal-Mart spokeswoman said.

Urgent effort
According to Reach Marketing principal Burt Flickinger, Wal-Mart has previously pushed ahead with hard lines such as exercise equipment and workout tapes and now is looking to tap the consumer trend toward low-cal foods. The effort is especially urgent, Mr. Flickinger said, since Wal-Mart is facing comparative-store sales that are flat to slightly negative for the first time in its history.

"Wal-Mart is really focusing on getting on shelf as quickly as possible with major consumer news items," he said, "and light and low-cal certainly fits that profile."

Hawaiian Punch Lite from Cadbury Schweppes' Mott's unit features 60% less sugar and 60% fewer calories than regular Hawaiian Punch because it uses McNeil Nutritionals' Splenda no-calorie sweetener. Kent Wilson, vice president of marketing for Hawaiian Punch and Canada, said Lite is "a big idea for us" because of consumer trends and that it is a unique selling proposition for a children's product. The product caters to the increasing number of diabetic children as well as the growing concern of moms over the sugar and fat content of their children's diet.

Clamoring for Splenda
Hawaiian Punch Lite will launch in July in Wal-Mart and won't be available in other retail channels until January 2004. According to one food-marketing executive, Mott's introduction prompted questioning of other major children's beverage companies, including Kraft Foods, as to when they might develop a similar product -- specifically one with Splenda, which the executive said is popular with consumers because it has fewer negative associations than do other sugar substitutes.

Kraft is expected to launch a light version of its ready-to-drink Kool-Aid brand next year, most likely to include Splenda, expanding beyond its sugar-free powdered Kool-Aid offering. Splenda has been widely used in new products of late, with numbers rising well beyond 3,000 products worldwide, largely on manufacturers' increasing interest in the lower-calorie, low-sugar arena, said Anne Baxter Rewey, director of marketing for the franchise at McNeil.

Growing new-product launches
Overall, the numbers of product launches in the light category has grown lately, according to Mintel's New Product Database. In mass-merchandise channels, where the total number of new low-sugar products totaled 16 in 2002, the first quarter of 2003 saw the launch of 12 products positioned as low-sugar. Similarly, seven low-calorie products rolled out in the first quarter of this year vs. only one low-cal product last year.

Matt Patsky, an analyst with investment firm Adams Harkness & Hill, said Wal-Mart's push for more conventional food and beverage companies to create lower-calorie versions of existing products instead of carrying already-made offerings from healthier food companies is part of the paradox of today's "health" push.

"What Wal-Mart's customer base wants is to continue to eat what they're eating and have it be lower calories, and Splenda -- which is about low calories, not health -- is perfect for that," he said.

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