After I had purchased the item, and it went into the fridge, I actually looked at it. It was of course a Lunchable, a trademarked youth food item sold by Kraft Heinz (NASDAQ: KHC). It contained nothing that would constitute a healthy lunch, and had many other offenses so obvious as to need to be spelled out. Not because they are not immediately visible to the average person, but because they are so easily seen, and yet obviously disregarded as offensive, as this is a product made by what was once a reputable maker of healthy, wholesome foodstuffs.
I am predisposed to like Lunchables. I am not offended by the odd bit of candy slipped into a school lunch, and have often happily had a Capri Sun in a foil pouch, ever and often and most times without being reminded of the Beverly Hillbillies words “up through the ground come a bubbling crude” as I poke the pouch. Lunchables are also an odd spin-off product; they were formerly marketed as Oscar Meyer, and still use the trade dress Oscar Meyer colors of yellow and red. That is to be appreciated. In addition, it is a practical thing to occasionally have a school lunch put together, packaged, as there are times when parents don’t have all the “pieces” together (either literally or existentially), and so it is quite convenient to have a this treat available.
However, we do need to list the offenses, in light of the Kraft Heinz company motto:
A globally-trusted producer of delicious foods, The Kraft Heinz Company provides high-quality, great taste and nutrition for all eating occasions whether at home, in restaurants or on the go.
First, the Lunchable contained a Kit Kat bar, as if candy is needed in a school lunch. Secondly, there was no actual meat, and this form of cheese which was the protein, was not anything resembling the actual healthy cheeses Kraft once sold during its early days when James Lewis Kraft created a way to pasteurize cheese so it would keep longer on shelves, thereby enabling every household the opportunity to have cheese, cheaply. Third, the Lunchable requires copious packaging, from the box to the plastic grid where the pieces live, to the individual packaging of each item. Again, there is nothing wrong with packaging, it is just that this packaging is over the top, perhaps a bigger investment than the actual food. Fourth, the Capri-Sun is not milk. Very simply, schools should all offer milk to students, and milk needs to be part of school lunch.
Even worse, it included another company’s product in their product. The Kit Kat bar is a product of Hershey. This reminds me of those overpriced gift basket franchises; you buy lots of crap from other companies, stick them in a basket, and re-market it. It might be ok for some at holiday time, but the reality is that the person assembling and marketing the basket is really mostly helping the company that provided the items in the basket. Including a Kit Kat bar is rather lame and unimaginative for a company with the manufacturing, branding and marketing resources of Kraft Heinz.
Most offensive, however, is the whole thing, the idea that a group of adults would get together in a company room, and decide that these items should be sold to children. Certainly, I am part of the problem I suppose, as I bought the thing. But the reality is that when Lunchables were launched, they included simple items like bit of ham, a bit of cheese, crackers and other normal food items. Don’t get me wrong. There is nothing wrong with any of the items on their own. But when combined, and presented as lunch, they begin to reinvent what lunch actually is.
We know the issues with diabetes in the U.S., and what our eating habits do to us. But for a once-esteemed company that has a goal of “high-quality, great taste and nutrition” this does not live up to the market position or ideal. Now, I am not one to get all worked up about junk food. I am not opposed to sweet cereal, but it was always presented as part of an overall healthy breakfast. Certainly, it was hardly ever eaten that way, but at least when it was presented to consumers, it was not wholly offensive. This Lunchable gathered all the offensiveness and put it together into one thing.
There is perhaps the excuse that this product “sells” and so it needs to be sold because of that fact. But the reality is that anything with the marketing and packaging power of this product would sell, just because it is presented as so. Most of what is on a grocery shelf is there not because consumers want it, but because manufacturers think they can present it to consumers, and they will buy it because there are few alternatives. Individual agency is often used by companies to justify these products, but the reality is that corporate structure presents few alternatives, and so we have far less agency than we think, unless we move to a farm in Ohio and decide not take children into grocery stores.
Today, companies have become larger and larger, as the Justice Department no longer polices anti-trust laws. As these companies like Kraft Heinz conglomerate and become ever more powerful, they fire employees, and chase other products off the shelves. But this is their own undoing, as the myriad of healthy new product startups seen at any Whole Foods or on a Shark Tank episode prove that the “strategy” of consolidation will only result in the demise of many smaller, older brands as the larger brands get junked up. The reality is that a company can only manage a certain number of brands effectively, and when it merges too many, the smaller ones fall by the wayside.
Junked up. Our brands are junked up. Kraft did well for generations selling cheese. We still need cheese, and the market goodwill Kraft once had in dairy products is now lost to the Chobanis and Cabots of today. Egad! Chobani & Cabot sounds like a possibility. Please no more consolidation. Sorry “branding” people but repackaging, e-marketing and other tricks cannot make us buy that much more Jell-O and Maxwell House. We have all the Jell-O and Maxwell House we need, and the Oscar Mayer has been Aldied out of usefulness by Lunch Mate cold cuts.
Numbers Reflect Bad Decisions
Kraft was a great company. General Foods was a great company. Heinz was a great company, and they each made useful, wholesome products, each company’s products completely discrete, and sustaining a useful and job-creating marketing, manufacturing and distribution ecosystem of employees. Together, the mislaid misery of Kraft Heinz is the misery of the American consumer. Each company consolidation makes less consumers. The awful mix of products is not working. Need proof? In a quarter when the U.S. economy is strong, KraftHeinz is not. Here’s what is in their press release:
- Sales Down: Net sales were $6.4 billion, down 3.1 percent versus net sales for the year-ago period.
- Only gains from non food related reasons: Adjusted EBITDA declined primarily reflecting incremental gains from cost savings initiatives(2) that were more than offset by net sales declines in the United States and Canada versus the prior-year period and business investments in Rest of World markets. Adjusted EPS increased 15.1 percent versus the year-ago period to $0.84, primarily due to benefits from the refinancing of Series A Preferred Stock.
- Canada down 12 Percent! Canada net sales were $443 million, down 12.2 percent versus the year-ago period, despite a favorable 2.7 percentage point impact from currency.
It is not working. Yet Americans did not suddenly stop eating macaroni and cheese, cheese, ketchup and butter. Do not blame the consumer. Instead, we have come to the point where the returns of Monopoly no longer pay off. In the Parker Brothers (now Hasbro) game, at the point when one person owns everything from Mediterranean to Park Place, the rest of the players simply fold, and quit, and go about their way. Consumers are quitting, and stepping off that diminishing return Monopoly game board that is our grocery aisles. Far less stressful is Amazon.com, that will allow us the misery of our unsustainable choices in the privacy of our own home. We don’t want to play your packaging games any more.
After all, what was wrong with the elegant Philadelphia Cream Cheese package?
Sustainability is not just about recycling and the material environment. It is about institutions and their role. For capitalism to survive, we need companies that understand social capital, and their own brand capital of employees, history, factories, consumers and overall product goodwill. As companies rape and destroy these legacies, there is little left, and up comes a Chobani.
The solution? Kraft Heinz ought to check in with the Acton Institute, or read some Max Weber.