01 Dec 2014
Innovation: Frozen Assets
Can Christine Day get Americans to warm up to healthy frozen food?by Janelle NanosTopics:
Earlier this year, when former Lululemon CEO Christine Day (AMP 163, 2002) started her new role as CEO of Luvo, a frozen-food upstart with nearly $50 million in backing, she had to get acquainted with a few things. One of them was Yankees All-Star Derek Jeter, a fellow investor and business partner. The other was her microwave. Day was in the habit of cooking all her meals just as her mom had done when she was a child, but she had to believe in her own product—which meant that every plate of kale ricotta ravioli or red-wine braised beef and polenta had to meet her standards. She knew she was onto something when her son started snagging Luvo meals from the freezer after school.
“This is a space where the consumer is actually ahead of the food industry,” Day says. “We have the opportunity to disrupt the whole frozen-food aisle.” Day is well poised to lead such a disruption. As one of Howard Schultz’s first hires at Starbucks, she spent 20 years revolutionizing the coffee marketplace, eventually running its Asia-Pacific division. At Lululemon, she helped the yoga brand become a $10 billion–plus business by orchestrating its global expansion, then saw the company through a PR stumble during its too-sheer yoga pant debacle. “I think there is a lot of market share to be had around what she’s doing,” says former Starbucks colleague Wendy Collie, the president and CEO of the West Coast–based grocer New Seasons Market, which stocks Luvo meals.
Growth for the three-year-old Luvo, though, requires overcoming a few cultural hurdles. While frozen-food sales spiked at the outset of the recession, the industry has slumped as the economy has recovered, and Americans have started dining out again. Day also has to combat long-ingrained American stereotypes about frozen food. “People think ‘healthy’ is eating tofu and salad, but they don’t realize that you can get great nutrition from basic food,” she says, noting that calorie restrictions or bland presentations have led most people to associate ready-made meals with “sacrifice and denial.” With health-care advocates from the Mayo Clinic to Michelle Obama encouraging Americans to shop the perimeter of the grocery store—where most of the healthier items reside—more consumers are steering clear of the frozen-food aisle, thanks to the lingering associations that the meals are clogged with sodium and preservatives.
Frozen-food titans have been actively trying to reverse the stereotypes: ConAgra and Nestlé have decreased the sodium in their meals, and in May, eight frozen-food producers launched a three-year, $90 million marketing campaign with taglines such as “Freezing is nature’s pause button.” Luvo is hoping to stay at the crest of this trend by offering healthy, low-sodium meals that exceed expectations: It only sources meats from animals that have been fed an all-vegetarian diet and raised without antibiotics or hormones. There are no artificial colors and flavors. Almond or cashew milk is used in place of cream or butter. And instead of a tray, each dish is served in a paper pouch that emulates the French en papillote technique.
(Courtesy of Luvo)
Just as she did with Starbucks and Lululemon, Day wants to shape Luvo into a lifestyle brand, one that provides “nutrition solutions.” Luvo meals—most under 500 calories and trans fat–free—are currently in 6,000 stores, and a partnership with Delta Airlines was announced last spring. High-profile celebrity investors like Jeter and actress Jennifer Garner are helping to generate buzz, and Day anticipates a rapid expansion of menu items within the next few years. She plans to extend Luvo beyond the grocery aisle by building Luvo storefronts, micro-markets in office buildings, and partnerships with companies that want healthy meals for their late-night employees.
Day says the best evidence that she’s a believer in her product can be found in her mother’s freezer. Since stepping into her CEO role, she’s stocked it with Luvo meals, knowing they will provide her diabetic mom with complete nutrition. “In an ideal world, everyone would cook like my mom did,” Day says. But that’s not how things work in today’s world, where food needs to fit into ever-tighter schedules. Luvo, Day hopes, will offer a salve for this modern consumer: a healthy, real-world meal option.
Class of AMP 163