Rebirth of Jello

Why Jell-O is aquiver

By Lorene Yue November 24, 2012

Jell-O, tired of quivering in the shadow of other snack foods, is about to embark on an aggressive campaign to reclaim its spot in American shopping carts.
The 115-year-old brand within Kraft Foods Group Inc.'s portfolio will undergo a complete overhaul, from packaging to the introduction of products to make it something “moms and kids are going to rediscover,” Kraft CEO Tony Vernon told analysts this month.
The company acknowledges it neglected its core audience—families—in favor of marketing to adults, but it is going back to its original focus. The brand was hugely successful when comedian Bill Cosby was its spokesman for nearly three decades starting in the 1970s. But Jell-O has been fading from consumers' radars in the past decade.
Only 10 percent of Americans say they have eaten gelatin in the past two weeks, down from 15 percent in 1998, according to market researchers at NPD Group Inc.'s Rosemont office.
Overall sales of Jell-O's ready-to-eat products, including pudding, have declined 18 percent in the past two years, according to Chicago-based SymphonyIRI Group. The category of refrigerated puddings, mousse, gelatins and parfaits is down 11 percent.
Theoretically, consumption should be increasing as a tough economy prompts more people to eat at home. But dessert has had difficulty growing as the third course becomes more of an afterthought, says Harry Balzer, NPD Group's chief industry analyst.
Instead, consumers are turning to versatile foods such as yogurt, granola and energy bars because they can be eaten at breakfast or lunch, as a snack or dessert, he says.
Mr. Vernon acknowledged in the third-quarter analyst call that yogurt is a formidable competitor. Consumption of Greek yogurt has nearly doubled in the past two years, with 32 percent of Americans saying they have eaten it at least once in a two-week period, according to NPD Group.
Kraft put a spoon in the market in 2010 by introducing a Greek yogurt line under its Athenos brand but abandoned the attempt less than two years later. One of the top-selling Greek yogurt brands, Chobani, got its start in a yogurt plant that Kraft sold. Kraft says it doesn't want to discuss details of its plans for Jell-O for several more weeks.
But Phil Lempert, editor of SupermarketGuru.com, a consumer products website based in Santa Monica, Calif., sees another reason for Jell-O's difficulties. “I think consumption has gone down because nobody pushed it, nobody marketed it,” he says.
Kraft spent $37.4 million in paid advertising on Jell-O in 2011, nearly half of the $69.5 million it doled out the year before, according to a report in Crain's sister publication Advertising Age.
“We saw it with Kraft Mayo,” says Erin Lash, equity analyst at Morningstar Inc. in Chicago. “They increased ad spending 50 percent and saw increased sales of 9 percent.”
Kraft also is trying to tap baby boomer nostalgia with a renewed focus on Jell-O molds that go beyond simple domes with spoonfuls of pineapple or fruit cocktail. Now it sells molds of racing cars and brains to appeal to children and plans to offer more options.
Consumer products experts say the company should apply the same strategy to Jell-O that it used to reinvent Philadelphia Cream Cheese. That brand's Philly Cooking Creme and chocolate-flavored cream cheese gave consumers a way to imagine the spread outside of breakfast and baking.
The strategy has succeeded in other product categories, such as tea. For decades, tea sales were dominated by loose leaf and single-brew bags. Now, companies have unleashed a wave of ready-to-drink beverages that have consumers purchasing tea in a completely different way.
“It's a great opportunity to really look at the ingredients and see what they can do to modernize the brand,” Mr. Lempert says. “The product can really meet the needs of the general public.”