Hot Pockets Fold in More Flavors

Hot Pockets, the go-to snack food for high schoolers and college-dorm denizens, is re-launching this summer with upgraded ingredients such as 100 percent Angus Beef, real cheese and pretzel bread. The Hot Pockets brand is owned by Nestle USA, headquartered in Glendale. The product – a bread pouch filled with meat, cheese and seasoning – is made in Chatsworth. The plant located at 9601 Canoga Ave. measures more than 170,000 square feet and was built in 1960. It was acquired by Nestle in 2002 and employs 418 people. (The Nestle plant is No. 6 on the Business Journal’s List of Valley manufacturers. See page 11.) New flavors, including its top-selling Pepperoni Pizza and classic Ham & Cheese, hit store shelves in early July. The new slogan simplifies it: “Better Taste. Better Quality.” But will the re-launch be successful? Changing any well-known product – even upgrading it – can cause a backlash. Hot Pockets Marketing Manager Kevin Holmes acknowledged that “change can sometimes make people uncomfortable.” That is why the company is offering a money-back guarantee to consumers who aren’t fully satisfied with the re-launched version of the 30-year-old snack. Another way the company is pacifying its fans is by selling the new Hot Pockets at the same price point as the original Hot Pockets despite the new gourmet ingredients. “We are the same price as we were a week ago, a year ago,” Holmes said. Two groups are specifically being targeted by this re-launch: Moms doing the household shopping and young, adult males of the millennial generation. The re-launch includes a re-design of the packaging and advertising materials. The Lean Pockets brand received a graphic redesign but the taste will stay the same. Holmes said that consumers were quite happy with the overall flavors of Lean Pockets, especially the pretzel bread crusts which even inspired one of the flavored crusts in the new Hot Pockets. “Quality improvements are predominately over the Hot Pockets brand,” said Holmes. Targeting the millennial generation – those born from 1980 to about 2000 – may be a tough sell, according to Marcia Schurer, president of the food consulting company Culinary Connections in Chicago. “Authenticity is very big to them,” she said. “This generation has been brought up with many more food choices than any other generation.” Bob Goldin, executive vice president at food sales tracking firm Technomic Inc. in Chicago, agreed. “The millennials love eating out. They haven’t really embraced cooking,” he said. Part of the company’s new marketing and advertising reach includes interacting with consumers via social media. The company has created digital videos showing on-the-street taste tests with celebrity chef Jeff Mauro “to get some authentic reactions from consumers,” Holmes said. A deal to produce videos in tandem with the comedy website Funny or Die has been finalized and they’ll start work on that project in August. The brand has a presence on social media sites Facebook, Twitter, Instagram and YouTube, and the company says it has been busy interacting with fans throughout the launch. Schurer cautioned that there is a downside to consumers sharing their opinions on social media. “The millennial generation will tell you very publicly, on their Facebook, on your Facebook, if they don’t like it,” she said. The team behind the brand has been working on this re-launch for a few years and Holmes said it was not spurred by dropping sales. With regards to the recession he said, “we didn’t feel much impact from that.” Goldin of Technomic counters that the entire freezer section of the supermarket took a dive in the recession. “The value frozen food category has been really, really hit hard the last couple of years,” he said. He added that future prospects look grim. “I certainly don’t see any growth.” The re-launch coincides with the brand’s 30th anniversary. Hot Pockets were introduced in 1983 and their health-conscious counterpart Lean Pockets debuted four years later. Originally a creation of Chef America Inc., established by brothers Paul and David Merage in 1976 and headquartered in Englewood, Colo., the privately held company created a variety of frozen food products such as Toasters Pizza Snacks before being sold to Nestle for $2.6 billion in 2002. Nestle owns other frozen food brands including Stouffer’s and Lean Cuisine. Since being acquired by Nestle, Hot Pockets has introduced a few new flavors but this marks its first total re-do in three decades. “Now we really want to focus on the quality of the product we’re providing and not just a culinary trend like a Panini,” said Holmes, referencing one of the more recent introductions to the Hot Pockets family. The re-launch has streamlined the brand but extensions like Hot Pockets Cheeseburgers and breakfast versions like Sausage, Egg & Cheese are still listed on the product website. As far as ingredients go, the meat, cheese and dough may have been revamped but many of the additives remain. “Artificial Butter Flavor” is featured under the list of ingredients on the new Hot Pockets box. As for whether the new flavors will be a success, Schurer believes that customer satisfaction is paramount. “The bottom line of anything with food is, what was your expectation, did the company deliver on your expectation and would you buy again,” she said. “That’s a successful product.” Holmes said, “Hopefully, we’ll be able to expand into some new ideas for Hot Pockets and Lean Pockets for what millennial customers are really looking for.” Goldin has yet to see marked innovation in the freezer case but believes Hot Pockets is taking a step in the right direction. “I think it’s important that they are doing something to improve the prospects of the business,” he said.