STOP REINVENTING THE MEAL

STEPHEN DOWDELL

The key to the future in frozen dinners may lie in repasts of the past

CAMDEN, N.J. -- The future of frozen foods may lie not with the new and exciting -- but rather with the old and reliable.

That's the way Kathleen MacDonnell, president of the Frozen Foods Group at Campbell Soup Co., sees the future shaping up, especially for frozen dinners and entrees.

Indeed, in MacDonnell's view, the industry's parade of new products, marching for several years now and accompanied all the while by "exciting" price promotions, will in retrospect probably have done more harm than good.

And as that parade passes by, both vendors and retailers are in danger of missing the consumers' underlying motivation for buying frozen meals, said MacDonnell in an interview with SN.

"Consumers don't turn to frozen food as experimental food. They use it as convenience food, as an emergency meal, as a meal you can rely on for feeding the teens and the husband. Let's face it, if you want to experiment, you don't go to the frozen food case -- you go to the restaurant," MacDonnell said.

"For some reason, we have this notion that new products bring excitement and new long-term growth for the category. That is only partly true. It brings excitement, but not long-term growth."

MacDonnell's formula for long-term sales growth starts with this: "Stop fussing with new products all the time. The industry has been on a new product-churning cycle for three years, but if you back over this time, most of those new products are not sustaining a lot of business today.

"Why not? Because new products are not the only way to grow this business, and not the best way, especially if we look now at the costs for the industry to develop new products and support them with advertising and new coupons and all the stuff that goes with an introduction. "When the dust settles, what you see is that the same top dinners that are selling the best consistently today look very similar to the foods that were selling best 30 years ago," she said.

Those "old reliables" include Salisbury steak, pot roast, turkey, fried chicken, and macaroni and cheese. In other words, "foods that people would have been making from scratch all the time 20 years ago, but now don't have as much time to do. If we focus on good product, with good value at a price that's reasonable every day, we will be better off."

Since assuming the post of president of the Frozen Foods Group in June 1993, MacDonnell has been trying to use this back-to-basics approach to guide the future of Campbell Soup's frozen food business. In essence, she said the company is fixing its mix to emphasize high-velocity and high-gross items as much as possible.

She sees that as a realistic approach in an era when frozen food departments are typically not growing by leaps and bounds, with the prospect likely for "category management" to become the operative term for more and more chains.

"We are saying to ourselves, if I only have 20 feet of freezer space, how am I using that 20 feet? You would be surprised at the answer -- that about half the items that we had in that space were at the mid- to low-volume range. "Over the last 120 days, we've been swapping them out for some high-velocity items that we'd lost oversight of the last few years because we continued to add new items, and more new items." It's a scenario she expects others in the industry, including retailers, to play out.

"What many retailers are telling me is that they are not going to increase freezer space that much. Some say they are, but that is because those chain recognize frozens as a likely high gross margin opportunity for the future. A lot of the others are saying they can't afford more new freezers, so they are going to have to maximize that freezer space they have already got. That means cutting out SKUs."

MacDonnell's theory is that if those cuts favor basic, long-established frozen meals, then real improvements in terms of absolute volume movement will follow.

She said her theory has time on its side; and demographics as well.

"Having looked at projections on population and demographics, I think I see that, over the 1990s, there will be a major age shift in demographics. The 40 to 64 age group will start to really balloon up in the second half of the decade, and the major users of frozen dinners and entrees are to be found in that age group," she explained.

"Many of them will have gotten the kids out of the house, and will still be leading busy lifestyles. So I believe we will see a major resurgence in the demand for frozen prepared meals starting within the next five years. I have looked at the demographics of our own business and that of the total category, and it is the mirror image of the group that is likely to be the focus of that big age shift.

"The frozen dinners and entrees business is now about $4.5 billion at retail. If you index volume for the total population at 100, then the volume of product the 40 to 64 age group uses is at about 125 to 130. In other words, they use a higher percentage of volume relative to the size of their age group."

To MacDonnell, this would suggest that retail buyers and merchandisers rethink the plans they have, or don't have, for adjusting freezer space in their stores.

"It looks like we have been through a downward cycle, and now is the time to come back again. The age shift is going to offer us new opportunities. Perhaps retailers should be building for this type of a future, instead of building just for today," she said.

The prospect of a much larger group of prime frozen food users emerging over the next five years could also accelerate the trend of back-to-basics re-evaluations for frozen food assortments.

"From the vendors side, it will make us more conscious of whether we are delivering the types of food that those people want," MacDonnell said.

"And again, I think that if they want to experiment, these people will go out to a restaurant. That means we ought to focus on basic foods that at the same time are good for you with regard to nutritional content, because this age group will also likely be more educated than in the past, better in tune with nutritional issues.

"It does not mean we have to make frozen health food; it means the food needs to start addressing demand for a more makeup," she said. In practical terms, it will likely lead to subtle but substantive changes in the choices of ingredients -- for example, choosing a less fatty oil that does not compromise a product's taste significantly.

"Making food healthier, without destroying taste, is going to be important. No. 1 is that, before we continue introducing more varieties that are more healthy, we should look at those products that are driving our volume now, and make sure they are as good as we can make them both in taste and in rounding out the health benefits.

"We sometimes do things too fancy, too slick, too experimental, and what people in the industry are starting to see is, that is not going to work in the long haul."