Seattle Seahawks quarterback Russell Wilson is putting his money where his mouth is, becoming the second major American athlete to invest in a frozen-food startup called Luvo.
Luvo is a maker of frozen-food entrees that is being led by former Lululemon CEO Christine Day (LULU), selling a wide range of pizzas, burritos, and other entrees at major retail chains such as Kroger (KR). With a growth rate of about 50%, Day says Luvo meals are packed with vegetables, as well as being an excellent source of fiber, whole grains, and key nutrients that aren’t always found in the stale frozen-food aisle.
“[Luvo] isn’t just a nutrition story,” Day told Coins2Day. “There are so many different ideas we have about how we can disrupt the industry.”
One of the ways Luvo is generating buzz, besides a new national ad campaign, is through a brand ambassador program with major athletes who are also investors. Interestingly, Lululemon was also known for cultivating a connection with yoga pants shoppers through a similar-named program.
Wilson is a brand ambassador and holds stock in Luvo in a partnership that is structured to motivate athletes to have a more personal role in their investment in the food company. The other notable athlete that has signed on is retired New York Yankees baseball player Derek Jeter, who also serves as a brand development officer. Luvo won’t disclose how big their stakes are in the startup.
For Wilson, his decision to work with a food maker that focuses on lean proteins and other fresh ingredients is a personal one. Since his father passed away from complications with diabetes at the age of 55, he has been an advocate for staying fit and eating healthy foods.
Luvo was privately funded by investors such as Jeter and actress Jennifer Garner until the startup secured a recent undisclosed investment with Goldman Sachs (GS). After the financial firm took a stake, Day herself now owns 13% of the company. She calls the startup “well capitalized.”
But while Luvo is off to a fast start, questions remain as to why it would enter the frozen-foods category at all. Sales of frozen entrees, a more than $10 billion industry in the U.S., have slipped for three consecutive years as grocery shoppers turn to fresh foods that are found around the perimeter of the store. As Coins2Day previously reported, most of the sales declines can be attributed to weak demand for meals meant to aid weight loss.
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“The legacy players haven’t responded to what the consumer is looking for,” Day claims. “When I look at the aisle, I see 200 items that can be reinvented for what the consumer wants.” She points out that natural frozen food brands sold at retailers like Whole Foods (WFM) and Trader Joe’s are actually reporting impressive double-digit growth.
Like many food startups, Luvo is drawing a line in the sand when it comes to the ingredients it uses for the company’s meals. Meat and poultry are raised without hormones or antibiotics. Luvo uses organic ingredients as much as it can, and the meals are fewer than 500 calories each.
Sales trends in the food aisle have been changing as consumers are increasingly turning away from big established brands in favor of niche players. Like many newer food startups and restaurant chains, Luvo touts a mission statement that promises nutritionist-approved meals.
But healthier foods also come at a higher cost. A 15-meal Luvo variety pack sold on Amazon (AMZN) can cost more than $80. That is more than double what Amazon charges for a 12-pack of Nestle’s Stouffers. Data from food industry watchers like NPD Group suggest that a lot of customers talk a big game about wanting to eat fresher and healthier foods, but that they also aren’t willing to pay more for those items.
Day says the research she’s conducted indicates a shift is occurring, and that grocery shoppers, including many millennials, want fresher and healthier options.
“The consumer is changing and the consumer wants this food.”
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