One Company Bucks Frozen Foods Decline
Literally and figuratively, frozen food is not a hot business. The meals are cold and sales are down. Consumers are shifting to fresher options. So the frozen food aisle may seem like the last place you’d seen innovation in your local grocery store.
Yet Atkins Nutritionals has somehow defied the trend. Its frozen meals were one of 12 products recognized in Nielsen’s 2015 Breakthrough Innovation report. To be honored, the products had to generate $50 million in U.S. sales in their first year, and 90 percent of their first-year sales in year two. The Atkins meals racked up $68 million in first-year sales, and grew 40 percent in their second year.
“The frozen food category does feel out of sync and off trend, and it appears to be a declining category,” said Rob Wengel, who co-authored the report. “Atkins found this circumstance where their consumer who already liked the Atkins diet was not in that frozen food aisle at all. They brought them a solution.”
Atkins Nutritionals realized that its community was struggling to prepare whole foods dinners from scratch. Many turned to a short list of staples, such as turkey burgers and chicken with green beans. This sacrifice, or compensating behavior in Wengel’s words, is the sign of a business opportunity — and Atkins seized it.
Within a year it was offering a range of 20 frozen meals that fit the Atkins diets. The meals weren’t as cheap as traditional frozen meals, but that wasn’t a problem.
“These consumers were not comparing our product with the other frozen offerings,” said Scott Parker, the chief marketing officer at Atkins Nutritionals. “We were competing with their same old boring dinners, so the competitive reference point and value proposition were totally different.”
Parker said that after the launch, one of its biggest challenges was just keeping up with demand.
The report, released last week, highlighted products that were initially launched in 2013 and have established themselves as successful since then. Nielsen waits a couple years to name the breakout products in consumer goods in order to be sure that the products have staying power.
After six years of work on the report and naming 74 winners, Wengel has become an innovation optimist. He sees a wealth of opportunities for companies selling packaged goods, a space that hasn’t fared well lately.
“Breakthrough innovation is accessible to really any company of any size in any category,” Wengel said. “When we look at the cross section of winners, you see them all.”
Wengel advises against trying to innovate around trends or demographics. (The word millennial, arguably the dominant buzzword of the 2015, appears not once in the 53-page report.)
He suggests that companies do in-depth studies of how consumers use products, so that they can better realize where opportunities lie.
For example, there’s much talk about the shrinking market for soft drinks. Yet three of the 12 products cited in the report are beverages: Monster Energy Ultra, Mountain Dew Kickstart and RedBull Editions. Rather than fear a downward trend, these companies grabbed new markets.
Mountain Dew Kickstart resulted from learning that Mountain Dew was popular in the mornings and that some customers were actually mixing it with orange juice. They wanted a pick-me-up, but not a full-blown energy drink. PepsiCo seized the chance to launch a product just for these customers. In Kickstart’s second year sales grew 50 percent to nearly $300 million.
