TORONTO — Christine Day makes for an unlikely frozen food evangelist.
The ex-Lululemon CEO acknowledges there is likely not a supermarket category in more desperate need of a makeover than frozen packaged meals, following years of sales declines and a consumer shift towards fresh, “real,” unadulterated groceries.
Moreover, the customer base Day is targeting with Luvo, a line of healthy frozen meals that she dubs “Frozen 3.0,” is the same cohort willing and able to pay $100 for Lululemon pants — most of whom would prefer a chia seed smoothie and heirloom tomato salad to a boxed frozen dinner.
“The first Swanson Hungry Man dinners were invented right after World War Two,” Day said in a speech in Toronto last week in which she acknowledged the hurdles faced by the Vancouver-based frozen food startup she joined as chief executive in 2014.
Many consumers now realize frozen and packaged food is low on nutrition and high in fat, salt and added sugars, and have opted for more ready-made fresh grocery items and restaurant meals rather than wait for the industry to come up with a better alternative.
Day, meanwhile, is calling for an overhaul of a meal invented in the NASA era when people were fascinated with technology and food “that could last a lifetime —Tang and Twinkies were invented.”
She hopes Luvo will help shift the category’s negative perceptions. Its line of frozen breakfasts, burritos and entrees such as turkey vegetable lasagne places an emphasis on vegetables, grains and protein-rich ingredients and its dishes contain lower-than-average salt, sugar and fat.
Day said that despite some growth among some natural frozen foods brands, there is predominantly “cheap food” in the frozen food aisle, both literally and figuratively: starchy, high-salt dishes with scant nutritional value. “(People) have chosen cheap food over food that actually nourishes our body and soul.”
Her mission is motivated as much by a deep desire to improve a North American diet that has led to increasing levels of obesity, diabetes and heart disease as it is to revive a category that deserves another chance for sustainability’s sake, given the amount of fresh food spoilage and waste in the grocery business. It’s personal one, too — Day’s mother has had diabetes for more than 20 years and lost a leg to the illness, among other complications.
“This is a movement,” Day said in her speech. “If I can engage you in the purpose of what I am doing around my brand, then you are actually loyal to my purpose, not just my product.”
Day comes to the healthy living movement with an impressive track record. She was a 20-year veteran of Starbucks before she took up the helm at Lululemon, and led the sportswear company through a period of robust international expansion and strong sales growth; revenue grew sixfold during her five-year tenure. Day also memorably steered the company through the biggest crisis in its history, a vast recall of poor-quality yoga pants.
Like Starbucks and Lululemon, Luvo is placing a strong emphasis on building a community of supporters around the brand and building ties through social media. Luvo, in which Day has a 15 per cent stake, has enlisted some notable supporters to do the same: the company’s brand development officer is former New York Yankees captain Derek Jeter; and Olympic swimmer Natalie Coughlin and Seattle Seahawks quarterback Russell Wilson are official brand ambassadors, part of a social outreach program to bring the food closer to athletes and coaches. A partnership with Adidas posts information and food tips from Luvo on the company’s website.
But the Luvo “movement” also presents an epic challenge, one that requires faith from a grocery industry well aware of where its consumers are going — and where they are not going.
“There are categories where the consumers are changing behaviour,” Loblaw president Galen Weston said last year during a call with financial analysts, citing a customer shift away from the centre of the store, where the crackers and cans and frozen meals reside, and into the fresh food areas — produce, deli and the growing ready-to-eat “home meal replacement” zone.
Canadian sales of frozen meals have fallen precipitously in the past five years on a constant-dollar basis to US$1.7 billion in 2015 from US$2.2 billion in 2011, according to data from market research firm Euromonitor, and the trend is accelerating: sales fell 11.7 per cent in 2015 after falling 6.4 per cent in 2014.
Getting Luvo into the hands of consumers is an entry-point hurdle. The frozen food aisle’s limits begin with the necessary visual constraints of glass-doored freezer cases, which inhibit customer discovery.
“How do you get this into consumers’ mouths?” said Steve Langford, a Toronto-based management consultant with experience in restaurant, pharmacy and food retail. Langford recently tried an Orange Mango Chicken dish by Luvo.
“I was surprised at how good the taste was,” he said, adding many consumers don’t associate frozen food with great flavour, something that could be helped by widespread product sampling, he said.
“But it is not that easy to (hand out samples) of a frozen product at the store level. There is nothing wrong with the package, but it doesn’t stand out to any degree and a box doesn’t show you the flavour within.”
On its website and various social media channels, Luvo touts its superior taste, crediting technology for flash freezing and an improved microwaving method, which steams the meals in a paper pouch. But Day acknowledged customer awareness is a key factor behind her product’s future success.
“We know the consumer is looking for this,” she said. “The biggest challenge is getting them to know that we have it. It’s a small company. I can’t spend millions of dollars on TV commercials.”
Beyond overcoming any negative customer assumptions about the taste and quality of frozen meals, Luvo will also have to convince them to pay more: Its entrees retail for about $7 at grocery stores across Canada, as much as double the price of some freezer-aisle meals.
That runs against the traditional metrics of the grocery industry, in which frozen food is regarded as a classic “football” category — one in which consumers shift readily from one brand to another based on price.
“Consumers are not loyal to the brands at all, and will switch in a nanosecond,” said Sylvain Charlebois, a professor at the University of Guelph’s Food Institute. “So value-adds are a difficult sell in frozen foods. If Day is trying to promote her brand, it will be challenging unless her price points remain attractive.”
Day notes that an average fast food meal costs more than $7 and a fast-casual meal from a chain such as Panera Bread averages above $10. “When you talk about what we are giving you, a complete meal that’s healthy for you for $7, it’s a bargain by comparison.”
But an even bigger hindrance might come from the grocery retailers themselves, despite Day’s assertion that Loblaw and others have been “really supportive” of her budding company.
“(Day) is up against a large number of negatives,” said Kevin Grier, a food industry analyst at Market Analysis & Consulting Inc. in Guelph, Ont. “She is going to have to overcome it with money or real brains, because the product itself is probably not going to be enough.”
Grocery retailers will want to see evidence that Luvo, as an expensive contender in the category, will be able to generate margins for them, Grier said, or they will stop carrying the product line very quickly.
Others note Loblaw isn’t about to cede its own place in the frozen food category any time soon, a consumer shift to fresh food notwithstanding.
Charlebois recalled a recent conversation with veteran food product developer Paul Uys, one of the creators of the in-house Blue Menu line of packaged and frozen foods at Loblaw, which debuted in 2005 as a lower fat and salt alternative to the retailer’s classic President’s Choice dishes. “Loblaw is very committed to its private labels, more so than any other retailers,” Charlebois said. “Going against Blue Menu is going to be extremely difficult.”
Day realizes the industry dynamics, but is optimistic about upcoming plans — creating family-style frozen products that people can mix and match to serve at shared meals, getting more space in grocery store freezer cases and expanding into foodservice.
“It’s the challenge of my career,” she said. “I am used to controlling the environment that we create the guest experience in, and I can’t here.”