News Scrap

Kraft Heinz has stopped producing its popular Lunchables brand for low-income students receiving free and reduced-price meals through the U.S. Department of Agriculture’s school lunch program, citing low demand. The move, announced in a company statement, marks a setback for the Chicago-based food giant’s efforts to expand its distribution in the educational market, which it had targeted as a $25 billion opportunity.

“While many school administrators were excited to have these options, the demand did not meet our targets,” Kraft Heinz said. The company noted that its Lunchables products are no longer available in schools but could return at a later date. The school lunch program provides free or low-cost lunches to around 30 million children from low-income families across the U.S.

Kraft Heinz’s attempt to tap into this market faced hurdles, including criticism from consumer watchdog group Consumer Reports. In April, the group raised concerns about the sodium content of Lunchables offered through the program, questioning their suitability for students in kindergarten through high school. Although Kraft Heinz emphasized that “all Lunchables products are safe and made with quality ingredients” and that their decision was unrelated to Consumer Reports’ findings, the issue seemed to have cast a shadow over their school-targeted offerings.

CEO Carlos Abrams-Rivera acknowledged the brand’s struggles during an Oct. 30 call with investors, revealing a 15% drop in direct-to-shopper sales in the third quarter. Abrams-Rivera attributed some of the lingering challenges to “misleading” publicity, stating, “Rebuilding trust with families and kids just takes time.”

In addition to demand and public perception issues, Kraft Heinz faced supply chain difficulties when one of its suppliers was unable to continue providing a key ingredient for a popular Lunchables variety. The company has been working to revamp the brand, experimenting with new flavors like spicy nacho and adding fresh fruit options in recent years to appeal to changing consumer tastes.

The competitive landscape for Lunchables has also shifted, with new challengers entering the market. YouTube personality Mr. Beast recently launched a competing product called Lunchly, although it has faced its own setbacks, including reports of mold circulating on social media.