Kraft Heinz sees a $25 billion opportunity—in schools

August 22, 2023

Across America this fall, school cafeterias will serve children familiar staples such as pasta and hamburgers. Some might also offer LunchablesKraft Heinz’s prepackaged meal kits—in a move that has raised concerns over adding processed, branded foods to school menus, reports The Wall Street Journal.

For Kraft Heinz, making the iconic yellow meals eligible for school lunch is part of a strategy of marketing its brands to a new generation of consumers. Shoppers for years had been gravitating toward upstart brands that promoted more natural and less-processed products. That changed during the pandemic, when many returned to familiar foods and big-name products.

Miguel Patricio, Kraft Heinz’s chief executive, and Carlos Abrams-Rivera, the company’s head of North America, said in an interview that the company identified schools as a key way to expand its food-service division; which it sees as helping drive supermarket sales too. Lunchables, already a billion-dollar business, were a natural fit.

“The kids have it and then they go to retail and they see it,” Abrams-Rivera said. “[It’s] a penetration machine,” Patricio added. In a quarterly report in May, the company estimated education food service as an untapped, $25 billion potential market.

Earlier this year, Kraft Heinz unveiled new versions of its turkey-and-cheese and pizza Lunchables, re-engineered to comply with federal guidelines for the National School Lunch Program. The company has been pitching the products to schools since last summer as a way for cafeterias to save on labor.

The move has drawn pushback from some child-nutrition advocates, school-meal officials, and others who see the products as a step backward for school-meal programs, as concerns grow over children’s nutrition and processed foods’ impact on health.

Since February, more than 100 people have submitted letters to the U.S. Department of Agriculture mentioning Lunchables, largely in response to the agency’s request for comments on proposed new school nutrition guidelines.

“While it’s brilliant marketing on the part of Kraft, we have sold out our kids for Kraft to build market share this way,” Barbara Whitaker, a mother from Washington State, wrote.  

Kraft Heinz said it made its Lunchables for schools more nutritious—introducing whole grains, adding protein, and cutting saturated fat. A spokesperson said the products can be part of a well-balanced school meal, with both varieties also offering a good source of calcium. She said improved nutrition is a pillar of Kraft Heinz’s current efforts—reflected in its global targets to limit sugar, sodium, saturated fat, and calories; and boost helpful nutrients across the company’s brands.

School lunch has been a battleground, with some pushing for years to make offerings healthier, fresher and more locally produced. The Biden Administration earlier this year proposed new rules under which schools will be required to gradually limit the amount of sugar and salt in meals served to children. This month, the Administration unveiled $30 million in grants to boost school nutrition in more than 250 small and rural communities.

Jo Dawson, a consultant and former child-nutrition programs director for the State of Alaska, said Lunchables could occasionally fill a need for some schools, such as those in small, rural towns where staffing shortages can be acute.

Some advocacy groups, including the Center for Science in the Public Interest and school-meal officials, said the potential addition of Lunchables to school lunch menus reflects a broken system for feeding children.

Jessica Willis, who manages cafeterias in a Mississippi school district, said she offers children scratch-cooked meals such as a gumbo or red beans and rice as often as possible, but that she would consider serving Lunchables on field-trip days.

“The goal is to give them the best we can,” Willis said. “Some days that may be a Lunchable.”

Child-nutrition advocates said Lunchables might be too good a deal to pass up for some underfunded and overburdened school cafeterias.

But not all school districts are on board. Public-school meals in New York City are largely freshly prepared and no longer include deli meat, according to a spokeswoman for the city’s Department of Education. The spokesperson said: “We will not be offering a prepackaged option like Lunchables in our schools.”

Research contact: @WSJ