Every Food Trend Goes Against Slumping Hot Pockets, Even Government Spending

Courtesy Nestlé

Just about every major food trend is working against Hot Pockets, and Nestlé clearly knows it has a problem brand on its hands.

The company tried to revive its line of microwavable meat pouches last year with a foodie makeover, boasting of “premium cuts of meat” and “real cheese” in the new and improved version. But even these quasi-gourmet touches can’t mask the fact that Hot Pockets are processed food sold at a time when consumers are seeking freshness at the expense of frozen options. A beef recall earlier this year also hit Hot Pockets, putting the product at odds with increasing consumer focus on food safety.

Even a new marketing campaign developed with Funny or Die, the popular comedy video website, has failed to turn things around. Hot Pocket sales have continued to fall this year, according to data from IRI, a Chicago market research firm.

Now executives at Nestlé are pointing to another factor in the long-running Hot Pocket cold streak. A temporary boost in federal food-stamp assistance that was introduced in 2009 was allowed to expire in late 2013. Recipients of the Supplemental Nutrition Assistance Program (SNAP) benefits are ”a big part of the consumption of this particular product,” said Chris Johnson, executive vice president of Nestlé Business Excellence, during a sales call last week.

“For our Hot Pockets brand, it was not surprising to understand the value our products offered to the SNAP consumer,” said Molly Fogarty, Nestlé vice president for government relations, wrote in an e-mail. A two-pack of Hot Pockets costs about $2.50, she said, and the 12-count package, for around $11, is even more economical.

Reductions in the food-stamp program haven’t just affected Hot Pockets. Such large grocers as Wal-Mart Stores, which gets roughly 4 percent of its revenue from food stamps, have also said the SNAP reductions have hurt their U.S. business.

At Nestlé, meanwhile, other products have also been hit by lower levels of federal aid. “We’ve seen some softening of sales in the entire sandwich/snack category which are related to the SNAP reductions,” Fogarty said.

    Before it's here, it's on the Bloomberg Terminal.