Disney to expand into food business

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LOS ANGELES -- The Walt Disney Co. will make its first foray into the food industry with plans to introduce frozen meals and nutritionally balanced packaged foods by early next year, company officials said Monday.

Disney will roll out "comprehensive food products" like macaroni and cheese in the United States as early as spring 2005, said Gary Foster, spokesman for the consumer products division.

In Europe, carrot sticks already are available, and the company's European division is on the brink of launching a variety of food products, Foster said. A global launch will follow in 2005, he said.

The plans represent a significant departure from previous deals for other companies -- including Kellogg's cereals and Blue Bunny ice cream -- to market products under the Disney name.

Foster said Disney will likely work with major grocery chains to manufacture the products.

This will drive down the costs for consumers -- a strategy Disney's consumer products division is successfully pursuing in its electronics and apparel divisions, Foster said.

Foster would not identify the grocery chain Disney is in talks with. In the United Kingdom, Foster said Disney has partnered with Tesco, a major grocery store chain.

Disney recently partnered with Coca-Cola to make juices, but those products didn't sell as well as the company had hoped.

"As soon as we launched the products, the competition came in with lower prices," he said. "We really didn't do as well as we had hoped. We're looking at developing lower-price products."

That's exactly what the company has done with its electronics and apparel divisions in recent years. For example, Foster said, the company is working directly with Wal-Mart to manufacture its apparel goods.

The company already makes a number of food products, but the majority of them are through licensing agreements, like Kellogg's Honey Bees cereal.

Still, Phil Lempert of SupermarketGuru.com said Disney faces an uphill challenge. "Being in the food world is a very different business than producing movies or theme parks."