- Stent maker introduces first new U.S. food brand in 15 years
- Curate uses ingredients like quinoa, hemp seeds, chia seeds
Abbott Laboratories, the world’s largest maker of heart stents and adult nutritional beverages, is doubling down on the crowded $6.2 billion U.S. snack market with a line of six bars it hopes will grow into a new brand of wide-ranging products.
The Curate snacks -- including a chocolate-quinoa-hemp seeds bar and another one combining mission figs and balsamic vinegar -- will start selling this month, with additional children’s choices coming in April. While early research turned up more than 1,000 varieties of snack bars, Abbott is betting it can find a sweet spot by marrying health food with a taste that appeals to the masses.
For a company that already makes almost $7 billion a year from selling nutrition products such as the infant formula Similac, Ensure shakes and EAS sports bars, creating a line from scratch to expand in a relatively small market is an unusual strategy. Curate, Abbott’s first new U.S. retail brand in 15 years, was developed in seven months under Dustin Finkel, who joined in December 2014 as general manager of nutritious snacks with the task of revitalizing sales.
“This space has tremendous growth,” Finkel said in an interview. “They are allowing us to be a start-up business and brand within the company, and come up with novel ways to bring products to market fast. ”
‘Sweet & Tart’
While the initial sales are likely to be small -- a rounding error for a medical-device maker with 2015 revenue of $20.4 billion -- Abbott has a three-year plan to build Curate with offerings beyond traditional snacks, according to Finkel. Curate was created in Abbott’s existing labs, he said, declining to provide further details on costs, future products or sales targets.
Abbott shares rose less than 1 percent to $37.68 at 10:02 a.m. in New York. The shares have fallen 18 percent in the past 12 months through Monday’s close.
Abbott is taking on industry giants like General Mills Inc. and Kellogg Co., as well as more targeted brands such as Kind and Clif Bar. A July 2015 report from the research firm Mintel found that 94 percent of Americans snack every day. And while a third of them reported eating healthier snacks than they had a year earlier, 60 percent said they wanted more healthful options.
That’s the area Abbott is targeting with Curate, running under the banner “Crafted with Joy.” The Salted Decadence snack bar, for example, lives up to its name with dark chocolate and Marcona almonds, but it also contains hemp seed and quinoa, an ancient grain that’s been popularized as a healthy plant-based protein. The Dark & Tempting bars mix figs, hazelnuts, orange with sunflower kernels and balsamic vinegar, while the Sweet & Tart includes a blend of berries, almonds, quinoa, chia and flax seeds. Salted Decadence has 200 calories, 10 grams of sugar and 7 grams of protein. By comparison, the Chocolate Chip Clif Bar has 250 calories, 22 grams of sugar, and 10 grams of protein.
Upscale millennials are eager for products like Abbott’s new bars, according to Kurt Jetta, chief executive officer and founder of Tabs Analytics, a retail and consumer analytics firm. Still, Abbott will need patience to cultivate the line. Large corporations typically buy innovative, up-and-coming brands and expand their distribution, Jetta said. That’s what Abbott did in 2003 and 2004 when it acquired ZonePerfect and EAS, after the brands were embraced by dieters and athletes seeking high-protein, low-carbohydrate foods. By going straight to the masses with Curate, Abbott may have a harder time developing a following.
“The big companies typically don’t follow that template,” Jetta said.
‘Swings and Misses’
Abbott will also have to confront the same objections as its rivals: the wisdom of reaching for a packaged snack in the first place. While they’re healthier than candy bars, it’s debatable whether they’re a good food choice, said Marion Nestle, professor of nutrition, food studies and public health at New York University. In addition, Abbott is sticking with sweet and salty at a time when health-conscious consumers are turning away from sugars, said Carl Jorgensen, director of global consumer strategy and wellness at Daymon Worldwide.
“If you’re doing a me-too product and going head to head to established brands, that’s a tough proposition,” Jorgensen said. “You still see a lot of swings and misses in this industry.”
Still, Abbott can rely on a vast distribution system -- in outlets like grocery stores, gas stations and pharmacy chains -- to sell the new snacks. It will help gain traction for the company’s first nutrition brand introduction in the U.S. since Glucerna in 2001, a line that includes bars, shakes and snacks for diabetics who are trying to keep their blood sugar levels stable.
“They have great relationships with the supermarkets and the Wal-Marts of the world,” said Glenn Novarro, an analyst at RBC Capital Markets in New York who rates the shares outperform. “They have the shelf space. Why not fill it with new products?”