Kraft Heinz removes Lunchables from school lunch program

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Dive Brief:

• Kraft Heinz’s Lunchables brand is no longer participating in the U.S. government’s school lunch program due to sluggish demand, the company said in an email to Food Dive.
• The two offerings, which had higher levels of protein and whole grains, were launched by the packaged food giant in 2023. 
• Kraft Heinz has been aggressively innovating several of its iconic brands, including A.1. Steak sauce, Philadelphia cream cheese and Crystal Light, to boost sales and keep its products competitive with fickle consumers. It has set a goal of generating $2 billion in incremental net sales by 2027. 

Dive Insight:

The U.S. government provides school lunches to roughly 30 million children who are from low-income families, or that meet other requirements.

Kraft Heinz was hopeful that entering schools would provide a way for the lucrative Lunchables franchise to increase sales and connect with younger consumers. The company changed two of its Lunchables — Turkey & Cheddar Cracker Stackers and Extra Cheesy Pizza Lunchables — to qualify for the country’s National School Lunch Program.

“While many school administrators were excited to have these options, the demand did not meet our targets,” Kraft Heinz said in a statement. “This happens occasionally across our broad portfolio, especially as we explore new sales channels. Lunchables products are not available in schools this year and we hope to revisit at a future date.”

Lunchables came under fire earlier this year after Consumer Reports found it and similar lunch kits contain “relatively high” amounts of lead, cadmium and sodium. The consumer watchdog urged the USDA to remove Lunchables from the school lunch program.

Kraft Heinz told Reuters that removing Lunchables from the school lunch program was not related to the Consumer Reports’ findings.

Still, the backlash has weighed on Kraft Heinz and the Lunchables brand.

During the company’s earnings call last month, CEO Carlos Abrams-Rivera told analysts that negative publicity from the consumer group “appears to be lingering longer.” Lunchables also was facing growing competition and was struggling to get a key ingredient from a supplier for one of its most popular offerings. Sales to consumers at retail were down about 15% during the quarter that ended Sept. 28.

“We recognize the moment right now is being more challenged because of the one challenge in this particular quarter, but we believe this is a brand that will continue to grow and continue to be a hugely important part of our portfolio,” Abrams-Rivera said.

Similar to other key brands in its portfolio, Kraft Heinz has been devoting meaningful resources to innovating Lunchables.

Last year, it launched Lunchables Grilled Cheesies for the microwave that uses technology to create a crispy outside and melty cheese inside similar to one prepared on an oven or stove. It also has partnered with Fresh Del Monte Produce to enter the produce aisle for the first time with its new fresh fruit products featuring pineapple, clementines, grapes and apples.