Photo: By samanthabennett on Flickr
Hot Pockets, the once-trendy brand of molten cheese-filled microwavable turnovers, isn’t doing so well these days. Today, Nestle announced that it’s laying off 103 workers — about a sixth of its staff — from its Hot Pockets factory in California, according to the Tiffany Hsu at the LA Times.Just a month before these layoffs, Nestle cut the workweek at the plant from six to four days. There’s a second plant that makes Hot Pockets that is unaffected by the layoffs.
What’s causing the struggles? A few things:
The frozen foods industry as a whole is in bad shape — The ailing economy and rising prices for ingredients are taking their toll on the frozen foods industry. Frozen snacks suffered a 1.2% dip in revenue this year, along with a 5.9% dive in unit volume, according to Nielsen data.
As for Nestle, it’s feeling the squeeze along with everyone else. Its frozen foods segment stayed flat in 2011.
Customers aren’t quite connecting with the Hot Pockets marketing — Hot Pockets has changed its marketing a few times, hoping for something to stick. The Hot Pockets brand has significant name recognition (comedian Jim Gaffigan’s Hot Pockets routine has a near cult-like following), yet it hasn’t been translating into enough sales. After abandoning its long-time jingle, it went back to it in 2009 with the ‘Eat Freely’ angle, emphasising portability.
The big recent product extension for the Hot Pockets line was Hot Pockets Sideshots, which it advertised vigorously. The campaign for Sideshots earlier this year involved little talking mascots that ended up just creeping people out.
Competition has remained strong — A Nestle spokesperson confirmed to Hsu that “competition is continuing to be very heated.” Competitors like Kraft have remained strong, fighting back in the frozen food market throughout the economic downturn.
But it’s not all coming from food behemoths like Kraft. Back in 2009, consumer spending on freezing supplies began starting ramping up as the recession hit, introducing a new competitor into an already jam-packed industry.
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