Perishables Buyer December 2011

16

DELI: Pinpointing The Products That Sell

19

SEAFOOD: Coming To Grips With An Uncertain Sourcing Stream

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ROUNDTABLE: The Future Of Perishables Packaging

DEC11 vol.1 iss.3

DO SHOPPERS TRUST YOU?

Here's How Your Perishables Can

Earn It also

www.PerishablesBuyer.com

inside Retailer Profile—Fresh & Easy

CATEGORY UPDATES: + Bakery

+ Meat

+ Dairy

+ Produce

+ Foodservice + Frozen

+ Refrigerated

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TABLEOFCONTENTS

This Month's

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Cover Story

The Comfort Zone Consumers want to be confident that their stores’ perishables will always be fresh, safe and high quality. Experts detail how retailers can gain—and regain—such trust.

CATEGORY SPOTLIGHTS

RETAILER PROFILE

16

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Deli The Right Stuff

A Fresh Approach

Deli operators can prosper by leveraging the products that sell. Pinpointing those items requires resolve. 19 Seafood A Product Puzzle

Changing global seafood demand is making sourcing more complex for merchandisers.

Departments 8 editor's note 37 category updates 45 numerology 46 ad & company index 4

Fresh & Easy Neighborhood Market is working to attract the growing base of shoppers who are seeking quick, healthy and affordable meals. Five years after its launch, the chain still is trying to establish an economic foothold.

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ROUNDTABLE

32 Make It Work

Perishables packaging has to deliver on features promised, such as resealability, all the while being environmentally friendly and informative. Here’s a look at what’s ahead for packaging.

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December 2011 • Perishables Buyer

TM

Serving Suggestion

®, TM, ©2011 Kashi Company

Ask your Kashi® product representative about our in-store programs.

WEBTOC

This Month on

.com

Feature >> A STANDOUT STRATEGY

The merchandising of private label perishables can be an effective retail differentiator. But operators must have the right implementation strategies.

Retailer Profile SOUTHERN HOSPITALITY

A heavy emphasis on customer service— and marketing pertinent products—is making Publix Super Markets Inc. a prime perishables destination.

Bakery SWEETENING HOLIDAY SALES

In-store bakeries are well-positioned to attract shoppers seeking desserts for the holidays. To maximize revenues, operators must leverage strategies to grab business from the center store and outside retailers.

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» VOL. 1, ISS. 3 PUBLISHER Brion Palmer Group Publisher EDITORIAL Rich Mitchell Editor-In-Chief [email protected] John Frank Editorial Director [email protected] Betty Vandenberg Art Director Scott Hilling Senior Art Director ADVERTISING Brion Palmer Group Publisher [email protected] 847-405-4072 Peter Hansen Regional Sales Mgr. [email protected] 847-405-4033 Jill DeVries Corporate Reprint Mgr. [email protected] 248-244-1726 Rosemary Weiss Advertising/Production Mgr. [email protected] 847-405-4021 SUPPORT SERVICES Drew Matthews Marketing Mgr. [email protected] AUDIENCE DEVELOPMENT Peggy Perez Audience Development Mgr. Stacey Noocha Multimedia Coordinator Carolyn M. Alexander Audience Audit Coordinator

CORPORATE DIRECTORS John R. Schrei Publishing Rita M. Foumia Corporate Strategy Ariane Claire Marketing Vincent M. Miconi Production Lisa L. Paulus Finance Michael T. Powell Creative Nikki Smith Directories Marlene J. Witthoft Human Resources Scott Wolters Events Beth A. Surowiec Clear Seas Research

December 2011 • Perishables Buyer

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Deli

Foodservice

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ADVERTORIAL

The Greater From its home base in Cincinnati, the fourth generation of the Graeter family is taking its premium, hand-packed ice cream to grocery stores nationwide

Photos by Vito Palmisano

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Brothers Robert and Chip Graeter flank their cousin Rich Graeter. The three assumed ownership of the company in 2007.

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n Jan. 1, 2004, Richard A. Graeter and two of his cousins, the brothers Robert and Chip Graeter, woke up as owners of Graeter’s Manufacturing Co. They bought the 140-yearold company from their aunt and fathers, who were the third generation to run the Cincinnati-based ice cream processor. The third generation maintained the quality of the product during its stewardship of the company. Now it was the fourth generation’s turn to make its own mark on the business. What would they do? Should they build more company-owned scoop shops? Expand the franchising operation beyond Ohio and Kentucky? Develop (or drop) the bakery and confectionery business? Or venture far beyond their Cincinnati roots to new markets? The Graeters considered all of those options. A series of management retreats and strategic planning sessions, facilitated by two outside consultants, led them to decisions that have placed the company’s super-premium, handmade ice cream in more than 5,000 grocery stores in 43 states, including Alaska. But that didn’t happen overnight. It took hard work, money, confidence, strategic partners and the power of social media to bring the company to where it is today. Key to the company’s successful nationwide expansion was the building of a 28,000-square-foot

December 2011 • Perishables Buyer

ADVERTORIAL

Good manufacturing facility, which opened in 2010. The new plant, recognized as Dairy Foods 2011 Plant of the Year, incorporates state-of-the-art equipment while preserving the tradition of the French pot method at the heart of Graeter’s quality. All of those factors have built Graeter’s

The Scoop on Graeter’s • Founded in Cincinnati in 1870 by Louis and Regina Graeter. • Produces ice cream with the French pot method, which is similar to using a handcranked maker. • Pints and 56-ounce packages are handpacked.

annual sales to about $30 million. Ice cream accounts for roughly $26.3 million, bakery $3.5 million and candy $1.2 million. Graeter’s ice cream is part of the DNA of anyone who has lived in Cincinnati. Rich Graeter claims that his ice cream outsells Ben and Jerry’s and Häagen-Dazs combined in

Graeter’s supports The Cure Starts Now Foundation, which is working to find a cure for pediatric brain cancer.

• Sells nine original flavors: black cherry, butter pecan, caramel, chocolate, coffee, cookies and cream, Elena’s blueberry pie, strawberry and vanilla. • Elena’s Blueberry Pie ice cream was created by a Graeter’s customer to honor Elena Desserich and to benefit The Cure Starts Now Foundation, a Cincinnati-based nonprofit organization whose mission is to educate, aid and fund the research for a cure for pediatric brain cancer. Elena died at age 6 of brain cancer. • Sells 11 “signature chip” flavors, including black raspberry chip, coconut chip, mint chocolate chip and toffee chip. • Makes three sorbets: lemon, raspberry and strawberry • Gives a free Frosty Paw treat to dogs who visit a Graeter’s retail store on the first Tuesday of every month.

Cincinnati, the only place in the United States where that happens. Whether by design or coincidence, the city is headquarters to quite a few retail businesses and consumer packaged goods companies; among the most notable: Procter & Gamble, Macy’s (formerly Federated Department Stores) and Kroger. Management trainees at these companies developed a fondness for Graeter’s ice cream, and as they were promoted and dispersed throughout the country, they kept a spot in their heart (but not their freezers) for the product. The same holds true for any number of alumni from the region’s colleges. Ex-pats could satisfy their cravings only by returning to the Queen City or ordering the product from Graeter’s thriving mail-order business. The Graeters decided to tap this pent-up demand and grow the business by selling more ice cream in the Cincinnati region. The management www.PerishablesBuyer.com

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ADVERTORIAL

Some of the executive team gather in the lobby. From left: George Denman, Bob Graeter, Tom Kunzelman, Chip Graeter, Paul Porcino and Rich Graeter.

retreats helped them reach that decision. It was the first of many steps that led eventually to national distribution. At one of the first retreats, management consultants Paul Porcino and Robin Guiler charged the executives with the tasks of identifying the costs that went into manufacturing ice cream, baked goods and candies, and then allocating the costs to determine the profit margins in each line of business. The analysis showed: • Company-owned stores had high sales but low profits. • The ice cream division was subsidizing the bakery and confectionery product lines, which were unprofitable. • The best growth opportunity was in ice cream sales to grocery stores, which had higher profit margins.

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A Tighter Ship The decision to pursue the higher-margin grocery business meant the Graeters would have to make more ice cream. Porcino and Guiler told the Graeters that they could make more ice cream in the 75-year-old Reading Road facility if they improved their manufacturing processes. “They either didn’t believe that was possible or didn’t trust us,” Porcino recalls. “In effect, they told us to prove it.” Drawing on her background in manufacturing, Guiler began to tighten up the ship. She had the company set production goals, identify performance indicators and establish standards of conduct (including attendance). In effect, Graeter’s was remaking the culture at the Reading Road manufacturing facility. “In six months, we stabilized daily pro-

duction and increased it,” Porcino says. Output shot up by more than one third to almost 300,000 gallons annually. Graeter’s began producing more volume than it could sell. It needed more customers. Kroger’s had been carrying the ice cream in its Cincinnati-area supermarkets. Rich Graeter said Kroger’s sales team told him that the shopper who has Graeter’s ice cream in her shopping cart is the grocer’s most valuable customer. In addition to appealing to upscale shoppers, the data also revealed that — paradoxically— Graeter’s appeals to women watching their waistline (the rationale being that after a strict diet and hard exercise, they have earned a reward and it’s going to be a satisfying, highfat one.) Graeter also points out that he makes ice cream for adults, not for children (although Graeter’s December 2011 • Perishables Buyer

ADVERTORIAL

lineup does include several kid-oriented flavors too, like the very popular Cookie Dough Chocolate Chip). Graeter doesn’t remember who asked whom first, but following a fateful meeting with the Kroger sales team, the decision was made to test Graeter’s in a new market. Because of its high index for super-premium ice cream, Denver (where the chain is known as King Soopers) was chosen. Graeter’s passed the test. Next up was Kroger’s Texas division with stores in Houston and Dallas. The Atlanta division was the following year. Based on the successes in these markets, the Kroger team was ready to take Graeter’s to its re-

Pints had to be sent to another local ice cream company to be repacked into cartons, palletized and then stored. If Graeter’s was going to expand, it needed a new plant with space to package and store its ice cream. So Rich Graeter went looking for a new location and the financing to build a new facility. After looking at sites in Kentucky and Indiana, Graeter struck a deal with the city of Cincinnati to build a new plant from the ground up on vacant city property, financed by a $10 million municipal bond package.

Grocery Expansion Having secured shelf space in Kroger

The Keys To Continued Success Paul Porcino, who consulted with Graeter’s management, outlines the keys to Graeter’s continued success: • Commitment to the grocery customers. Graeter’s has to keep its customers’ confidence by demonstrating that it can supply product on time. • Maintain devotion to product quality. After all, there is no marketing advantage like a product advantage. • Let the product speak for itself. Backed by hundreds of thousands of “Fanbassadors,” Graeter’s has outspoken fans in all the right places. • Grow without compromise and avoid the pitfalls that come with big spurts in production. Graeter’s old-fashioned French pot process will always remain a constant.

maining divisions (nearly 2,400 stores). With the national distribution deal in hand, Graeter’s now had to fulfill its commitments to its most valuable customer. It had to be able to ship enough ice cream to satisfy the needs of Kroger’s stores nationwide. But production wasn’t the only problem. While the plant could handle the increased demand, there was simply no space to store the finished ice cream. Freezer space was the constraining issue; the number of pallet spaces it had was zero. Pints were packed in cardboard boxes and hand carried into the freezer (the forklift would not fit through the door). www.PerishablesBuyer.com

well during the holidays. “We love it,” he says. “Our customers are well-traveled and they gravitate to it.” Dunnhumby data from Kroger further backs up Porcino’s recommendation to pursue the highermargin grocery business. Most notably, data shows that Graeter’s has no substitute in the super-premium ice cream category and, in fact, has the highest brand loyalty The new corporate offices and manufacturing of any super-premium brand (with facility opened in 2010. Dairy Foods named a repeat rate of plus 50 percent). the new facility its 2011 Plant of the Year. With an average transaction size of two pints, consumers are still willing to pay a premium price for Graeter’s. stores, Graeter’s sought more new custom“Our brand is able to drive excitement ers so that the investment in the new plant to the category in a tough economic time,” would pay off. VP of sales and marketing said Denman, “We’re seeing double-digit George Denman says he is now “filling in growth in a category marked by flat to dethe holes” and focusing on upscale groclining sales.” cers, like Sunset Foods in Chicago’s pricey Graeter’s growth year-to-date is promNorth Shore suburbs. ising. According to IRI data, total sales for Sunset co-owner John Cortesi learned of Graeter’s are up 30.4 percent in 52 weeks endthe brand from a sister who lives in Cincinnaing October 2, 2011, and unit sales are up 28 ti. He wanted to be the first grocer in Chicago percent. Unit sales for the super-premium ice to carry Graeter’s ice cream. Sunset Foods cream category as a whole are down 2 percent. promotes it with in-store sampling, signage Graeter’s is projected to be on shelves in and prominent display on weekly circulars. more than 7,000 grocery stores by Spring 2012. Cortesi says he expects the ice cream to do

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ADVERTORIAL

A production worker uses a paddle to stir the ice cream mix in a French pot. A spindle turns the pot, which is surrounded by a calcium chloride mixture cooled to -15°F.

Management Philosophy When Rich Graeter worked for his father (Dick), the two didn’t always agree on the strategic vision for the company. Author Robin Davis Heigel documents the friction in her book, “Graeter’s Ice Cream: An Irresistible History.” Rich has his own way of managing. He is a fan of Jim Collins’ business books, including “Good to Great” and “Built to Last.” Collins’ Hedgehog Concept refers to a product that a company is passionate about, which ultimately leads the company to outshine its competitors. The mission of Graeter’s is “to make the best ice cream you ever tasted,” says Graeter. When Collins writes of “clock building,” he refers to building a core value system and creating a company that can pros-

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per beyond the presence of any single leader and through multiple product life cycles. Rich Graeter talks about keeping the business “forever,” by which he means that the Graeters do not want to sell the business. They want to keep it in the family. Graeter and his cousins are out to make sure that happens.

An Efficient Marketer Despite being a national brand, Rich Graeter acknowledges that his company is still a relatively small player with limited means. So the company has to be creative and strategic in its marketing and advertising. By leveraging its passionate fan base, Graeter’s has been able to grow in a unique, grassroots way. Graeter’s fans, dubbed “Fanbassadors,” are honored to

share Graeter’s with friends and family and are willing to risk their reputation for the ice cream brand they love. Just weeks ago, Graeter’s kicked off a pilot program aimed at formally identifying and naming its so-called Fanbassadors. Five key markets were identified and 100 fans in each market were selected by questionnaire in order to be named a Fanbassador; each was tasked with holding an ice cream social for 3050 guests, thus sharing their love of Graeter’s. Fanbassadors received ice cream social kits— coupons, history brochures, giveaways and party décor. The pilot test is estimated to drive 25,000 new fans to Graeter’s base, including Facebook, by the beginning of 2012. “Our goal is to take this program into 2012 December 2011 • Perishables Buyer

ADVERTORIAL

to create fans in our expansion markets,” said Denman. Additionally, direct mail, public relations, appeals to bloggers and award-winning social media campaigns, along with limited advertising keep the brand in front of the public. Graeter’s and Facebook seem to be made for each other. The social medium allows Graeter’s ice cream fans to connect and share their love for the product. In late October, the company had more than 137,000 “likes.” Graeter’s taps into 150,000 names developed from its mail order business. And creative marketing, such as sponsoring local university alumni meetings in exchange for email addresses, helps the company leverage its reach. Spontaneous with something mentions on television, such as those by actress Susan Lucci on the Nate Berkus show and by Oprah Winfrey herself, led to spikes in the mail order business. Mentions of the ice cream turn up in unlikely places. Author James Patterson has a character who speaks of Graeter’s in his book “Honeymoon.” The company samples ice cream at special events, such as the Taste of Cincinnati, where staff distributes individual serving-size cups of ice cream. Besides building goodwill in the community, these events give the company information about flavors and preferences. Based on 5,000 samples of green mint and white mint ice cream, Graeter’s went with the “white mint” version of its traditional Mint Chocolate Chip because the tasters could not tell the difference in flavor and preferred an all-natural product to one with artificial coloring. Graeter’s joined trade groups, including the International Dairy Foods Association, the National Frozen and Refrigerated Foods Association and the National Association of Specialty Food Retailers. It is also a member of the All Star Dairy Association, the Lexington, Ky.-based buying group. Although they now play on a national stage, the Graeters stay connected to the Cincinnati community. Graeter’s is a major sponsor of The Cure Starts Now Foundation, which is working to find a cure for pediatric brain cancer, and The Rusty Ball, which is an annual event that in 2010 raised more than $400,000 for local charities. “Community involvement is just part of being a good corporate citizen” says Graeter. “These are our neighbors; it’s not a marketing ploy.” www.PerishablesBuyer.com

The Next Steps Since Graeter’s had always thought of itself as a small company, it kept to itself. These days, Graeter’s is considered to be one of the few passion brands t! Attached is a new proof. hat has experienced growth without the investment in paid media. So what makes Graeter's Ice Cream a passion brand? “It's the personal connection and love that our customers have for our ice cream,”

according to Graeter. “They love it, they want it and they'll tell everyone they know about it. When it comes to ice cream, they will not settle for anything but Graeter's.” In return, Graeter's promises uncompromising quality to its fans and delivers on that promise. ■ Adapted from an article published in the August 2011 issue of Dairy Foods.

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CATEGORYSPOTLIGHT

DEL I KEY POINTS O Determining optimal deli product offerings is becoming more complex. O The economy and changing shopper lifestyles are impacting merchandising decisions. O It is vital for retailers to study sales data and speak with shoppers about their preferences.

THE RIGHT STUFF Deli operators can prosper by leveraging the products that sell. Pinpointing those items requires resolve. BY RICH MITCHELL, EDITOR-IN-CHIEF

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A Supermarket delis, such as in this Giant Foods outlet in Silver Springs, Md., are facing the increasingly complicated task of attracting and retaining customers from a variety of demographic groups, and with changing lifestyles. Photo by Rich Mitchell

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everaging optimal product assortments is a key—and often elusive—goal for deli operators. Merchandising items that are targeted at the specific shopper bases in each location, while juggling new offerings and store brands, is adding marketing complexity to an already challenging endeavor. Retailers, however, can simplify the process by studying sales data and shopper attitudes, analysts say. The first step is to determine the demographics and shopping behavior of customers in each store, and offering selections that meet their specific needs, says Voni

Woods, senior director of deli for Giant Eagle Inc., a Pittsburgh-based chain with 222 stores in Pennsylvania, Ohio, West Virginia and Maryland. “It is vital to keep a focus on category management disciplines,” she states. “The most important discipline is to listen to shoppers.” Additionally, she states that merchandisers “need to utilize tools to keep the team from carrying too much and duplicating items, while also insuring you are not underrepresented in a certain category.” That can be done by researching sales figures and identifying the most popular items in the deli and in other store departments, says Marcia Schurer, president of Culinary Connections, a Chicago-based food industry market research and consulting firm. Such research enables operators to determine the foods, flavor profi les and package sizes that shoppers prefer, she states. “Retailers also should stay current with food trends and demo the new products that are being developed to see if the items would appeal to the customer bases,” Schurer says. “They also can ask shoppers if there are any products they would like to see the department carry. “ In addition, operators should review what their competitors are carrying and the success those merchants are having with the items, she notes. Determining the optimal product mix, however, is becoming even more difficult because of evolving consumer lifestyles and economic conditions. Many consumers, for instance, are eating at home more frequently to cut expenses. “There are both challenges and opportunities when considering the breadth of offerings,” Woods says. “Options range from entry point products to higher-end selections.” Adds Schurer: “Retailers whose customers are on

December 2011 • Perishables Buyer

CATEGORYSPOTLIGHT

very limited budgets may have a harder time selling higher-priced, higher-quality prepared foods and specialty deli items. Retailers whose customers have a limited amount of time but have higher incomes may be more likely to purchase higher-quality prepared foods and specialty deli items for their convenience because they can afford them.” It is vital for retailers to determine the most appropriate prepared foods to market as the category can generate substantial revenues.

Giant Eagle, for instance, recently launched private label Market District-branded deli meats. The items were developed by Philadelphia-based supplier Dietz & Watson. Giant Eagle also markets wide varieties of Dietz & Watson-branded meats in its delis. “The shelf space in the fresh areas is notoriously limited,” Woods notes. “With many new items coming to the market that are delicious, innovative and fun, it’s important to balance the need to follow trends and find

“Differentiating the product mix between stores can be difficult, but it is certainly not impossible.” —Voni Woods, senior director of deli, Giant Eagle Inc.

The Perishables Group, a Chicago-based fresh food consulting firm, reports that deli prepared foods revenues are projected to have topped $10.5 billion for the 52 weeks ending 8/27/2011, up 6.7 percent from the yearearlier period. Prepared foods sales were up more than 23 percent from 2006 to 2010, adding $2.2 billion in revenues, the Perishables Group notes. In addition, the Perishables Group states that 13.1 percent of all grocery transactions include a deli prepared foods item, and nearly 83 percent of shoppers bought at least one deli prepared foods product in the 52 weeks ending 6/25/2011, with the average buyer purchasing from the section nine times during that period. Retailers merchandising prepared foods and other perishables, meanwhile, face the challenges of minimizing shrink and out of stocks. That can be accomplished by forecasting the right product mix and quantities to insure the operators can move items before the “sell by” date and that the products always look and taste fresh, Schurer says. Effective tactics include keeping accurate records on what sells and doesn’t sell, and getting feedback from shoppers on their product likes and dislikes. Indeed, one of the biggest deli merchandising mistakes is to ignore the customer, Woods states. “The most successful operators have the customer in mind during every step of the decision-making process, not merely at the point of purchase,” she notes. Adding to the marketing maze is the growing popularity of private label offerings, which is giving retailers more choices to consider when determining shelf-space allocations.

www.PerishablesBuyer.com

space for these items, while also considering sales information and unit movement that demonstrates what is popular with the customer today.” Giant Eagle, she adds, “attempts to employ disciplined category management tools and guidelines to steer us through some of these more difficult decisions.” An effective way to predict the success of new items is by gauging shopper response during samplings, Schurer states. “A retailer may cut back on multiple facings of the same product or having different package sizes in order to give shelf space to a new product,” she says. Such decisions should be made individually for each outlet because of varying shopper characteristics. “Differentiating the product mix between stores can be difficult, but it is certainly not impossible,” Woods states. “The challenge is to offer a core item list, while incorporating neighborhood favorites and multi-tier offerings in many categories. Segmenting groups of stores with like profi les in size and type of store, as well as customer profi les, are the best courses of action.” Economic issues, meanwhile, also are likely to play a major role in deli assortment strategies over the next few years. “The economy on both the buy and sell sides is probably the biggest issue that will impact merchandising decisions,” Woods states. “However, factors such as health and wellness and overall innovation will also play key roles.” Regardless of the extent of the economic impact, it still will be important for retailers to market quality items in every price range to meet the needs of different customers, Schurer states. O

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CATEGORYSPOTLIGHT

new products:

DEL I

For more information on the products featured below, visit www.PerishablesBuyer.com/Products.

DELI 27% Prepared chicken’s share of deli prepared food sales. (Perishables Group)

Sara Lee Corp. Herbed & Seasoned Deli Meats

Cedar’s Mediterranean Foods Hommus Party Platter

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Average number of deli prepared entrées carried in stores, up about 5 percent over the last year. (Perishables Group)

Hillshire Farm Grilled Essentials Lemon Pepper Chicken Breast

Plumrose General Plumose Deli Sliced Smoked Ham

3.8% Growth in deli ham sales for the 52 weeks ending 6/26/11. (FreshLook Marketing Group)

Walmart Stores Inc. Walmart Deli Ham Salad

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Sandridge Food Corp. Fresh and Delicious Salads

December 2011 • Perishables Buyer

CATEGORYSPOTLIGHT: SEAFOOD

SEA FOO D

A PRODUCT PUZZLE Changing global seafood demand is making sourcing more complex for merchandisers. RICH MITCHELL editor-in-chief

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here is perhaps no perishables department as dependent on a shaky supply chain as seafood. With such factors as government quotas on the amount of wild seafood that can be caught, and increasing demand for seafood from such countries as China and India, U.S. merchandisers are operating under an uncertain sourcing scenario. “About half of all seafood is wild, which makes sourcing totally different from other perishables sectors in which food is typically farm raised, grown or manufactured,” says Chuck Anderson, director of new business and retail for Sousa Seafood, a Bostonbased fresh seafood supplier and distributor. “More than 80 percent of U.S. seafood is imported, and with the Chinese middle class growing dramatically, there is a lot of pressure on the seafood supply and it is getting more expensive.” Indeed, Anderson, the former vice president of seafood sales and merchandising for Quincy, Mass.based Ahold USA, and former seafood business development manager for San Antonio, Texas-based H-E-B, notes that China over the last year has tripled the amount of its lobster imports. The United Nations Food and Agriculture Organization (FAO) reports that more than 110 million tons of seafood is consumed globally, and that Europe, Japan and the United States account for about

70 percent of all fish imports. To cope with increasing demand, farm-raised seafood, or aquaculture, is becoming an increasingly important inventory source. While about half the world’s seafood comes from aquaculture, volume is projected to steadily increase and account for approximately 70 percent of supplies by 2030, Anderson notes. Peter Redmond, president of Springdale, Ark.based Epiphany Group LLC, a seafood industry consulting firm and the former vice president and divisional seafood and deli manager for Walmart Stores Inc., agrees that changing global dynamics will affect the U.S. seafood market. “The biggest impact to buyers over the next three to five years will be China’s new position next year as a net seafood importer,” he states. “They are going from being the biggest exporter to being a big importer. As a result, there won’t be the same amount of products available. Some seafood that suppliers previously received from Indonesia may now go to China. Everyone is fighting for the same resources.” Redmond notes that the growing global population also is putting a strain on seafood resources. “There are now seven billion people in the world, and China in ten years will add one billion middleclass consumers who will have the disposable income to more easily buy shrimp and other seafood,” he says. “That will create pressure on suppliers. Aqua-

KEY POINTS O Increased worldwide seafood consumption is impacting supplies. O Aquaculture is becoming a more important seafood source. O Retailers must be versed on a wide range of species for enhanced customer service.

Average Store Seafood Sales Are Rising Product

2010 Weekly Store Sales

2009 Weekly Store Sales

Percent Change

Department Contribution

Seafood

$6,230

$6,188

0.7%

100.0%

Fresh Seafood

$5,009

$5,021

-0.2%

80.4%

Other Seafood

$244

$246

-1.0%

3.9%

Prepared Seafood

$977

$921

6.2%

15.7%

www.PerishablesBuyer.com

Chart Source: Perishables Group. Figures are for 52 weeks ending 12/25/10. Percent change is versus the yearearlier period.

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SEA FOO D

CATEGORYSPOTLIGHT: SEAFOOD

culture will have to double over the next decade to meet the emerging population. This uncertainty of markets and world events makes it an uneasy time for seafood buyers.” Aquaculture, meanwhile, already is a major source for such items as salmon, shrimp, tilapia, catfish, rainbow trout (steelhead), and swai (striped pangasius). Other farm-raised products include mussels, oysters, cobia, scallops, and bronzini. Anderson notes there also will be growth in supplies of some wild seafood, including Asian carp, bluecrab/crabmeat, haddock, and Pacific Dover sole. “All of those species are underutilized or should have increasing quotas and good sales potential,” he says. In addition to dealing with uncertain inventories, retailers also face the merchandising challenge of being versed on the plethora of seafood species. Indeed operators, to most effectively market products, must be able to accurately describe items to customers and answer shopper questions. Anderson says the range of offerings is immense, noting, for instance, that there are about 30 species of shrimp and 48 species of snapper. “It takes years to understand the market and all the species, which makes seafood more complicated than most other supermarket departments,” he states. “There also is the issue about whether adequate supplies of specific fish will always be available for merchandising.” An effective retail buyer will need to understand—and know how a changing market will affect—about 300 different species, Anderson says. That includes realizing when the price of a specific item is a value.

“Three years ago king crab was abundant and sold for about $9.99 a pound at retail,” he states. “But the price has doubled and today a lot of stores sell it $19.99. But there are 20 species of crab that retailers can sell for less to make up for lower sales of king crab. Merchandisers just need to keep track of the market and know what to go after.” Anderson recommends that retailers interview the largest suppliers and learn how and where the variety of seafood are produced, the items that sell best, and the logistics of getting the products to market. Such intelligence is vital as newer and more popular selections are consistently taking shape. “Fifteen years ago salmon and catfish were in, and then tilapia came along,” Redmond says. “In the last six months the growth of domestic pangasius has been phenomenal as it is very affordable compared to other selections.” He agrees that retail buyers should seek product and market information from key suppliers, and also lock in inventory. “Retailers are becoming aware that the China phenomena will impact them in a major way,” Redmond notes. “More are aligning themselves with different supply chains so they don’t have all their eggs in one basket.” Also impacting seafood sourcing is the growing interest by merchandisers—and consumers—in sustainability. The FAO notes that more retailers only are selling seafood from sustainable fisheries—which could impact available supplies. Monrovia, Calif.-based retailer Trader Joe’s, for instance, announced that all of its seafood purchases will shift to sustainable sources by Dec. 31, 2012. O

How Private Label Seafood Stacks Up Product

Chart Source: Perishables Group FreshFacts Powered by Nielsen. Figures are for 52 weeks ending 8/27/11. Weekly revenues are average per store. Percent change is versus the year-earlier period.

20

Weekly Revenues

Percent Change

Contribution To Department

Shrimp

$816

-3.0%

13.1%

Fin Fish

$299

24.4%

4.8%

Other Prepared Seafood

$192

5.8%

3.1%

Mollusks

$48

16.1%

0.8%

Crustaceans

$38

-10.8%

0.6%

Surimi Seafood

$27

-4.6%

0.4%

Seafood Dip and Spreads

$6

-9.3%

0.1%

Sauces and Seasonings

$5

8.4%

0.1%

Seafood Side Items

$5

-17.0%

0.1%

Other Seafood

$1

-9.2%

0.0% December 2011 • Perishables Buyer

Catch more customers. And keep them.

Sea Best ™ offers a variety that is sure to please everyone. When your customers try our high-quality, frozen-at-their-freshest seafood products, they’ll be hooked. Contact your Sea Best sales representative at 800.874.6426. © 2011 Beaver Street Fisheries

A Beaver Street Fisheries Brand

SEA FOO D

CATEGORYSPOTLIGHT: SEAFOOD

new products:

For more information on the products featured below, visit www.PerishablesBuyer.com/Products.

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Trans-Ocean Products Cracked Pepper Smoked Salmon

EcoFish Wild Alaskan Salmon

$2.3 billion Dollar sales of frozen seafood for the 52 weeks ending 10/2/11, up 3.6 percent from the year-earlier period. (SymphonyIRI Group)

Bluewave Seafood Co. Premium Butter Garlic Shrimp Scampi

Blue Horizon Organic Seafood Pacific Tuna With Teriyaki Surf Burger

$1.1 billion Dollar sales of frozen shrimp for the 52 weeks ending 10/2/11, flat from the year-earlier period. (SymphonyIRI Group)

Beaver Street Fisheries Stuffed Sole Fillets

22

StarKist Seafood Shrimp Arrabiata

December 2011 • Perishables Buyer

RETAILERPROFILE

A

RETAILER PROFILE

A Fresh Approach

BY RICH MITCHELL editor-in-chief

Fresh & Easy Neighborhood Market is working to attract the growing base of shoppers who are seeking quick, healthy and affordable meals. Five years after its launch, the chain still is trying to establish an economic foothold.

F

reshness and convenience are two of the most powerful perishables revenue drivers. Time-stressed shoppers—many of whom also are wellness-oriented—are seeking quick meal solutions that are healthy and tasty. And such consumers are the key target of Fresh & Easy Neighborhood Market, an El Segundo, Calif.-based chain of more than 170 stores in California, Arizona and Nevada that was launched in 2006 by Hertfordshire, England-based Tesco PLC, the United Kingdom’s largest retailer. The outlets, which are about 10,000 square feet, emphasize private-label offerings with heat-andserve and ready-to-cook meals prevalent in the re-

www.PerishablesBuyer.com

frigerated and frozen cases. Most of the selections are aimed at singles and smaller households. There are no in-store butchers, bakeries or delis. Prepared foods are developed at Fresh & Easy’s central kitchen and distribution center in Riverside, Calif. The concept began taking shape after Tesco research found that U.S. consumers were shopping more frequently, visiting a greater number of outlets and seeking fresher foods that are minimally processed, noted Simon Uwins, Fresh & Easy’s former chief marketing officer. He said the need for a chain like Fresh & Easy became apparent when many shoppers indicated that they usually buy fresh and healthy items at specialty outlets, which led the company to determine there was a need for convenience, healthier foods and lower prices.

A The use of frozen and refrigerated cases that consume less energy is a Fresh & Easy selling point. Photos by Rich Mitchell

23

RETAILERPROFILE

B KEY POINTS O Fresh & Easy is targeting wellnessoriented, time-stressed and price-conscious shoppers. O A large percentage of products carry a store brand. O Most perishables offerings are aimed at smaller households.

B With an average size of 10,000 square feet, stores have a small footprint. The Scottsdale, Ariz. location also gives parking priority to energy-efficient hybrid vehicles. C Fresh & Easy is appealing to timeconscious shoppers and moms by offering varieties of ready-tocook frozen meals and kid-oriented selections.

24

While the chain has reportedly lost hundreds of millions of dollars since its launch, Bill Bishop, chairman of Willard Bishop LLC, a Barrington, Ill.-based retail consulting fi rm, says that had more to do with poor site selections and marketing than product offerings. “Fresh & Easy has two important things shoppers look for— good quality products and low prices,” he states. “It is a spot-on concept. In today’s world, value trumps brand, as we are seeing with the growth of private label.” He adds that there also are many more small households and, as a consequence, fewer shoppers have the motivation to cook from scratch and do a lot of meal preparation. “Fresh & Easy is a natural market for ready-to-eat and heat-and-eat meals,” Bishop states. “But not enough shoppers understand what they do. That particular market segment is underserved and there is a greater demand for what Fresh & Easy is selling than what they are actually capturing. They are not particularly effec-

tive in getting people to understand their concept.” Nevertheless, Tesco reports that it plans to accelerate the rate of new store openings and, with improvements to the distribution center and manufacturing campus productivity, it expects Fresh & Easy to breakeven with around 300 stores rather than the 400 that was originally anticipated. “We have a strong plan for the business to breakeven towards the end of the 2012/13 fi nancial year,” Tesco notes. In addition to offering convenient meals, Fresh & Easy also is pushing health and quality by noting, for instance, that its chicken is fresh and never frozen and hand-trimmed with no added salt; that its milk and butter come from cows that have not been treated with the rBST hormone; and stores' prepared foods have no artificial colors, flavors or added trans fat. Perishables departments, meanwhile, also carry a wide range of organic selections. The products, which vary by season and are not always available in all stores, include such private label produce as apples, broccoli florets, oranges, bagged spinach, carrots, Roma tomatoes, eggplant, avocados, grape tomatoes, green beans, peaches and nectarines. Other organic offerings include varieties of milk, eggs, yogurt, frozen vegetables, boneless/skinless chicken breast and ground beef. Store brands also emphasize health and wellness. Fresh & Easy private label items that carry the chain’s Eatwell brand are marketed in boxes in the frozen case that state, “No added artificial flavors or colors; no preservatives.” In addition, the front panel of Eatwell packages list the calorie, fat, saturated fat and sodium counts. A Fresh & Easy outlet in Scottsdale, Ariz., mer-

C

December 2011 • Perishables Buyer

RETAILERPROFILE

D

chandises a variety of frozen Eatwell selections that are available in 8- to 10-ounce packages and priced at $1.99. Offerings include Turkey Lasagna, Spaghetti with Meatballs, Th ree-Cheese Ziti, Chicken Alfredo, Channa Masala, Beef & Broccoli, Chicken & Vegetable Pot Stickers, Kung Pao Chicken, Sesame Chicken, Chicken Enchiladas, Santa Fe-Style Rice & Beans, Tortilla Crusted Fish, Apple Cranberry Chicken, Beef Stroganoff, and Butternut Squash Ravioli. A smaller refrigerated Eatwell section has selections in 10- to 12-ounce packages that are priced between $4 and $5. Varieties include Vegetable Primavera, Creamy Tomato Basil Pasta, Maple Pork Tenderloin, Bruchetta Chicken, Roasted Apple Chicken, Herbed Chicken with Garlic Kale, and Chicken Chile Verde. Another store brand, Goodness for Kids, features child-oriented foods with cartoons on boxes. Items in 4- to 7-ounce packages and priced at $1.99 include Quesadillas, Broccoli in Cheese Sauce,

E

D As demonstrated by signage in the produce aisle, price and healthy eating are two Fresh & Easy selling points. E The frozen case features a plethora of desserts, including store-branded ice cream in standard and light varieties. F Refrigerated cases contain wide varieties of grab-and-go prepared foods, including entrées and side dishes. This case also has a section for store-branded Eatwell offerings.

26

F

Creamy Cheese Shell Pasta, Safari Pasta Bolognese, and Whirly Curly Pasta and Beef Meatballs. Cheese Pizza sells for $3.79. Larger-sized Goodness for Kids meals in the refrigerated case include Mini Meatballs & Pasta, Chicken Bites & Mashed Potatoes, and Macaroni & Cheese. Almost all items in the refrigerated meat case, however, carry the Fresh & Easy brand and many are value-added. They include Carne Asada, Lemon Pepper Turkey Tenderloins, Beef Pinwheels, Bourbon Apple Pork Chops, Tequila and Organic Chicken Breasts, Chipotle and Mango Chicken Breasts, Garlic and Herb Chicken Breasts, Adobo Beef Steaks, Beef for Fajitas, Herb Crusted Chicken Eucalopes, and Chicken and Bacon Parcels. Value-added seafood includes Herbed Parmesan Breaded Tilapia, Lemon Pepper Breaded Tilapia, Salmon Burgers, Salmon with Brown Sugar Glaze, Salmon with Misoyaki Sauce, and Eatwell-branded Lemon Paprika Salmon. Signage above the meat and seafood cases stress health, wellness, convenience and taste. Messages state: “Our beef is corn fed and aged for maximum tenderness and f lavor”; “USDA Choice beef. Always fresh. Never frozen. Hand-trimmed. Selected for tenderness and f lavor”; “Our pork is carefully selected with no added water or horDecember 2011 • Perishables Buyer

RETAILERPROFILE

mones”; “Fresh & Easy products contain no artificial f lavors, colors or added trans fats”; “Fresh & Easy chicken is trimmed by hand”; and “Our fish comes from environmentally friendly and responsibly managed fisheries ensuring the finest quality product.” Quality also is accentuated in the produce aisle. A large sign over Fresh & Easy-branded packaged salads notes, “Any faster and this product would get a speeding ticket.” The sign also contains a logo that states, “24 hours,” and reports that, “Produce packs with this sticker have been packaged and shipped within 24 hours to ensure freshness.” Indeed, the most prominent brand is “Fresh & Easy,” which dominates most sections throughout the store. Categories include desserts, which features more than a dozen types of store-branded ice cream that are marketed in 56-ounce containers for $3.99. Selections include Mint Chocolate Chip, Rocky Road, Butter Pecan, Pumpkin Spice, Coconut Pine-

apple, and Cherry Chocolate Chunk, Other desserts include Chocolate Chip Fillookie (chocolate chip cookies with a chocolate cream center); Apple Caramel Blossoms (pastry filled with apples and topped with caramel); Pineapple Upside Down Cakes, four types of cheesecake (Lemon Swirl, Banana Toffee, Strawberry Swirl, and New York); Strawberry Layer Cake, Coconut Mousse Cake, and Carrot Cake. Another frozen case contains many ethnic-oriented and seafood selections. Varieties include Shrimp Shomari, Pork Pot Stickers, Shrimp and Seafood Mini Dim Sun Platter, Southwest Chicken Empanadas, Breaded Calamari Rings, Coconut Breaded Shrimp, Crab Filled Puff Pastries, Maryland Style Crab Cakes, and Tempura Shrimp. Yet another frozen section holds packages that sit in cardboard boxes that proclaim, “Quick & Easy Meals. No added artificial flavors or colors. No preservatives.” The items, which are sold in 10-ounce packages and priced at $1.99, include Lasagna with Meat Sauce, Cheese Ravioli, Macaroni & Cheese, Chicken Tikka Masala, Chicken Alfredo, Chicken Fettuccine, Chicken Parmesan, Sweet & Sour Chicken, Teriyaki Chicken, Stir Fry Chicken with Brown Rice, Beef Tamale with Tomatillo Chili Sauce, Ancho Chili Chicken with Cilantro Rice, and Turkey Medallion with Stuffi ng. A large refrigerated section, meanwhile, contains close to 50 grab-and-go meals that are merchandised in plastic clamshell containers. Items include Baked Ziti, Mango Chicken, Thai Style Beef Noodles, Chicken Broccoli Alfredo, Buffalo Wings, Beef Sliders, Chicken Parmesan, Shrimp Alfredo, Chicken Cacciatore, Burrito Bowls, Meatloaf & Mashed Potatoes, Breaded Chicken Tenders, Potato Gratin, Southern Fried Chicken, Popcorn Chicken, Beef Stew, Cheese Tortellini, Thai Red Curry Chicken, Kung Pao Chicken, BBQ Boneless Wings, and Thai Style Beef Noodles. “Many shoppers, such as singles, are looking for the most convenient products to bring home and get on the table as soon as possible,” Bishop notes. “Fresh & Easy is more of a kitchen than a traditional retail store. People are looking for prepared meals.” O

Fresh & Easy At A Glance Company > Fresh & Easy Neighborhood Market Founded > 2006 by Tesco PLC Headquarters > El Segundo, Calif. Stores > More than 170 Market Area > California, Arizona, Nevada Distribution Center > Riverside, Calif.

G

H www.PerishablesBuyer.com

G A sign above a frozen case emphasizes the company’s focus on providing healthier meal options. H Stores carry different tiers of products, including those aimed at kids, wellness-oriented shoppers, and consumers seeking gourmet-quality offerings.

27

COVERSTORY

A KEY POINTS O Maintaining shopper trust is crucial for perishables merchandising success. O Transparency and

addressing consumer concerns are vital elements. O Regaining lost trust can

be a difficult and lengthy process.

The Comfort Consumers want to be

confident that their stores’ perishables will always be fresh, safe and high quality. Experts detail how retailers can gain—and regain—such trust. BY RICH MITCHELL editor-in-chief

A • A Bashas’ outlet in Sedona, Ariz., emphasizes both the quality of its eggs and the store’s local supplier. Photos by Rich Mitchell

28

A

loyal customer base is a key to food merchandising success. Having shoppers who consistently return to a store because they are confident that their concerns always will be addressed is a

major retailer goal. Yet, perhaps nowhere is it more difficult to solidify that trust than in supermarket perishables departments, where—among other issues—merchandisers must insure products are always fresh and safe. And with recent food scares—including this fall’s

Zone outbreak of listeria that was linked to cantaloupes— shoppers are more likely to be leery of buying produce and other perishables from unfamiliar and/or untrusted merchandisers. “Considering some of the food scares we had this year, consumers also are saying, ‘Do I trust you for safety?” notes John Rand, vice president at Kantar Retail, a Cambridge, Mass.-based retail analysis and consulting fi rm. But many retailers are not taking the proper steps to earn such trust, Rand states. Retailers across the U.S., for instance, are reacting differently to the cantaloupe incidents. While some merchandisers put up signs in produce sections listing the origins of their cantaloupes—making it clear they were aware of the tainted fruit—others conducted business as usual. And that, says Rand, was a mistake.

December 2011 • Perishables Buyer

COVERSTORY

“It was incumbent on the retailers to mention the situation,” he states. “The tendency for merchants to pretend the listeria outbreak never happened draws attention and raises more questions than it answers. Th at is an antiquated point of view.” Rand and other analysts say it is crucial for retailers to operate openly. “Customers are more interested in transparency than ever before,” notes Ron Paul, president of Technomic Inc., a Chicago-based foodservice consulting fi rm. “If you lose trust, it is hard to get it back. And being very customer-conscious builds trust.” Th at consciousness, he notes, includes having associates who are very knowledgeable about products, as well as a liberal return policy. “Whole Foods is a good role model for trust,” Paul says. “Outlets provide nutritional information, tell how fi sh is caught—in a net or on a line—and the freshness of the products. Many retailers are not purposely hiding such information. It just doesn’t occur to them to publicize it.”

packaged produce and they felt that Kroger occasionally slipped bad produce into the pre-packaged products. “Th is lack of complete trust in Kroger produce resulted in lower share than was desired and needed for the produce departments,” Hoff man says. “After an internal struggle of wills, Kroger fi nally transferred over to all bulk produce. We also moved the produce departments from the back to the front of stores to highlight the areas and eventually the customers responded positively. Trust in a company’s produce is a must.” In addition to produce, Hoff man says dairy and deli departments also are areas in which trust is essential for generating shopper allegiance. And if such trust is lost, retailers can only hope to get it back over time, he states. “They will need a major perceivable transformation in their operations and presentation,” Hoff man adds. Such operations should include having employ-

“The risks of mistakes are much higher than they used to be. It is much harder to fix a reputation once you have lost it.” Consistent product quality also helps strengthen trust, though that is becoming more difficult to achieve because of the expansion of private label programs, Paul notes. Store-branded perishables often are sourced from multiple suppliers—resulting in products that have gone through different development processes and have varying degrees of freshness and flavor, he states. “Lack of consistency will cause shoppers to lose trust in a chain’s perishables,” Paul states. Gene Hoff man, president of Corporate Strategies International, a Wayzata, Minn.-based retail consulting fi rm and the former president of The Kroger Co., agrees. “If a customer gets bad produce once, the trust between the company and customer is damaged and the success of the operation is jeopardized,” he states. Hoff man says that when he became head of merchandising for Kroger, all of the company’s produce was pre-packaged because it saved labor costs, “at the expense of what the customers expected in the produce departments.” He notes that company surveys for ten consecutive years suggested that customers didn’t like pre-

www.PerishablesBuyer.com

ees who make the extra effort to assist shoppers, says Richard George, professor of food marketing at St. Joseph’s University in Philadelphia. “There are times when I have gone to the seafood counter and asked the employee how the halibut was and he responded, ‘I don’t know, I don’t eat fi sh,’” George says. “Stores need to get such associates out of the department and have someone working there who can help me.” Some retailers already are trying to strengthen shopper trust by spotlighting their stores’ focus on customer concerns. Safeway Inc., Pleasanton, Calif., for instance, which operates more than 1,700 outlets in the U.S. and Canada under eight banners, distributes brochures in its seafood departments that list the company’s sustainable seafood policy and outlines the steps the company has taken to promote sustainability. Those steps include no longer marketing endangered species and encouraging aquaculture. Department signage also highlights stores’ commitment to food safety. A Chicago-area outlet, for instance, has hanging signs, aisle signs and decals on the full-service sea-

29

COVERSTORY

food counter glass that note that the store carries Safe Harbor Certified Seafood. The placards, which have headlines that state “Seafood with Confidence,” note that in order to receive a Safe Harbor certification, seafood must meet safety standards that are more stringent than those set by the U.S. Food & Drug Administration. “People are paying attention to food safety when it involves seafood and meat,” George states. “They want to know where it comes from.” More consumers also are seeking sourcing information for such categories as dairy and produce and are interested in locally developed items, which often have a halo of being fresher and healthier. Bashas’ Inc., a Chandler, Ariz.-based operator of more than 130 stores that operate under several banners, including Bashas’, AJ’s Fine Foods and Food City, is among the growing number of retailers emphasizing products that are sourced nearby. A large sign over the egg case in a Sedona, Ariz., Bashas’, for instance, states, “Arizona Grown. Local and Guaranteed Fresh.” The egg supplier, Hickman’s Family Farms, also is spotlighted on the sign in words and a photo. “Farming is one of the most respected professions so let’s show a picture of the farmer,” George says.

“Trust is a simple term that is easy to describe but not always easy to execute.” Yet, even with strong customer relationships, all it takes is one bad experience to shatter trust. Th at can happen when a shopper buys poor quality food or items that have gone past the sell-by date, Rand states. “You can do all kinds of customer service to try to overcome such incidents, but too often the well already has been poisoned,” he notes. Making it even more difficult for retailers to rebound quickly from negative situations is the prevalence of social media. While at one time unhappy customers might have told 10 friends about a circumstance, thousands of people now can immediately learn of it via Facebook or Twitter. “The risks of mistakes are much higher than they used to be,” Rand says. “It is much harder to fi x a reputation once you have lost it.” George suggests that companies, after incidents, create shopper focus groups and ask what the stores can do to regain the customers’ confidence. “We need to be loyal to our shoppers,” George says. “If we keep our promises about quality, they will come back.” O

B

B • Bashas’ guarantee of freshness in the produce department helps to strengthen shopper confidence.

30

December 2011 • Perishables Buyer

Lose the Fat. Not the Flavor. *†

Serving Suggestion

73% less fat* than the leading beef corn dog

™ ™

65% less fat † than the leading beef corn dog

DO LLA R SH A RE

MorningStar Farms® is the SALES LEADER in the Frozen Veggie Category *The leading beef corn dogs contain 10g total fat per 76g serving; MorningStar Farms® Meat Free Corn Dogs contain 2.5g total fat per 71g serving. See nutrition information for sodium content. † The leading beef corn dogs contain 10g total fat per 76g serving; MorningStar Farms® Mini Corn Dogs contain 3.5g total fat per 76g serving. See nutrition information for sodium content.

®, TM, © 2011 Kellogg NA Co.

MSF

40.4%

Amy’s Boca All Other

37.9% 9.1% 12.6%

Source: Nielsen, Total US FDMX 52 week ending 8/13/11

ROUNDTABLE: PACKAGING

MAKE IT WORK Perishables packaging has to deliver on features promised, such as resealability, all the while being environmentally friendly and informative. Here’s a look at what’s ahead for packaging. BY JOHN N. FRANK editorial director

A

P A Perishables Buyer recently assembled industry experts to discuss packaging trends. The consensus – packaging has to deliver on its promises and the promises of the product inside to be successful. Photos by Zach Stedt

32

erishables Buyer Editor Rich Mitchell and Editorial Director John N. Frank sat down at a recent food industry trade show with a cross-section of packaging experts to discuss the current state of perishables packaging and what to expect for packaging in 2012 and beyond. What follows is an edited transcript of our discussion. To read the full transcript, go to PerishablesBuyer. com. The roundtable was sponsored by Sealed Air's Cryovac Food Packaging Systems.

PB: What do you see as the major perishables packaging trends to watch for in 2012? Michael Quint: Sustainability is a big one. What packag-

ing do you have that is 100 percent recycled? To what degree can it be recycled? I think [packaging’s environmental] footprint is becoming an issue. Certainly you are seeing some smaller package size offerings. I [also] think resealability is still key. Jerry Kelly: The functionality of the package. It’s got to be easy open. The reclose feature has to be more than just saying that, it’s got to work time after time. Lindsey Hurr: From the design perspective, communications, but at this point in time, we’re starting to overcommunicate on packages. You see a lot of just too much information. December 2011 • Perishables Buyer

ROUNDTABLE: PACKAGING

Chris Durham: And we are not solving for her [the shopper’s] needs honestly. What solution am I bringing her and how am I helping her take care of her family? So how does [packaging and the perishables inside] help her life, how does it help her take care of her family? What are the benefits that actually mean something to her?

drop, we are going to see more of that coming [to cut retailer costs]. Durham: It’s a lot bigger than just the labor issue if [retailers] are going to do it right. [It’s about] we can actually use [retail-ready packaging] to better our merchandise and also sell more stuff.

Packaging Roundtable Participants Chris Durham > Founder

Mypbrand.com PB: What makes for a successful package? Kelly: Well the package has to perform, especially when you have extended shelf life. Is that product fresh in the first week? Is it fresh on the last week? Well, that’s their intention and the package has got to live up to that. So performance is certainly a key packaging element. Paul Weitzel: We see issues in frozen [packaging]; a lot of packaging breaking down and [that’s happening while] the frozen departments are only growing in every store that we see being built. So quality must continue to be improved. Quint: Whatever information you can put on the package, the product has to deliver what is conveyed on the package, whether it’s a usage shot or it’s some statement of quality. If the product doesn’t match up to the packaging, then you’ve got your first and only sale. PB: When you talk about packaging breaking down, is it the structure of the package? Weitzel: I think it’s the material, you can see some packages breaking down. Kelly: One way to address that specifically is to add more packaging, put a shrink wrap around it. [But] then are you getting away from a reduced packaging [footprint] strategy. Weitzel: I think that a package, to be successful, also has to stand up to some of the new shelf conditions that we have. We are seeing a lot more shelving innovation, in the refrigerated case right now [for example], [there’s] spring-loaded, gravity-fed, more packaging trying to get upright. There is a lot more of that coming because retailers are trying to cut labor cost and reduce inventory and when everything is front-faced it looks great. We are going to see a lot more shelving innovation coming and the packaging is going to have to work in that environment. PB: Regarding retail-ready packaging, is demand growing? Weitzel: Some of the big retailers are very interested in reducing cost, and labor cost is the one cost that they can control. Th ings like packaging that can go right to the shelf, whether it’s a tray or a case pack or pallet www.PerishablesBuyer.com

Kelly: We see things like the focus on the natural and organic category, going to a different type of packaging, a vacuum skin type package, where you get longer shelf life. It conveys freshness. And then they get the extended shelf life but it’s focused in on product that has that halo of freshness, that’s organic, it’s natural or it’s a specialty category. PB: Can there be a design aspect to those? Kelly: Design is crucial. [we’re] working with a retailer right now and [putting] its color scheme on its natural line. It’s a destination category in the case [so] it’s going to look different, physically different than the other products. Weitzel: I think extended shelf life may be important [here] too. We’re seeing a lot more open code dated products than ever before and even the big national brand guys are moving more and more, putting open code date on the package and, obviously, that has a ramification for days of supply.

Lindsey Hurr > Vice President

Immotion Studios Jerry Kelly > National Retail

Account Manager Cryovac Food Packaging Systems Michael Quint > Vice President,

Chief Customer Officer West Liberty Foods Paul Weitzel > Managing

Partner Willard Bishop

PB: So, with all of these considerations in mind, what makes for a successful package? Quint: It has to function and do what it promises, whether it’s reclose or easy open. It’s got to reclose correctly. If I take it and I turn it upside down and shake it or anything else, [it needs to remain closed] because it’s going to be treated that way in the refrigerator at home. And then it needs to be able, from a graphic’s designer standpoint, to communicate what it does; if there is something that is unusual about it, if it’s a new opening or closing type of product or anything, it needs to convey with clear instructions how you do it. Hurr: For us, it depends on its tier. It’s not just about what makes a good package but for a premium, obviously, that equals high quality. Our design team has [guidelines] as to if it’s a value tier, the descriptions are large. If it’s a premium, descriptions are smaller. It just depends on what you are trying to communicate. Kelly: Keeping it simple [in terms of packaging instructions], showing pictures, communicating. Simple communication is really the key to success. PB: To have the perfect package – stronger, functional,

33

ROUNDTABLE: PACKAGING

sustainable – will mean a more expensive package, will consumers or retailers be willing to pay for that? Hurr: I think consumers are worried about sustainability but they are more worried in this economy about the money in their pocket. So if it’s going to cost them, if they’re going to have to pay more for a more sustainable package, I think they’ll choose not to. So you have to be very careful.

It depends on what study you read. If you have high cholesterol or if you’re gluten intolerant, you’re going to be looking for different requirements in a product, so a lot of it is based on the individual in terms of their definition of what’s healthy. So how do you standardize health?

Quint: I would agree. I mean I think if everything is equal [and the] sustainability piece of it is clearly communicated, they’ll move in that direction. But if it’s 50 cents more to have a sustainable package, I don’t think [consumers] are there yet, in most cases.

Weitzel: There’s just too much to be able to communicate that on the shelf and that’s the problem with trying to communicate everything in shelving. We’re overwhelming them [shoppers] on the package; we’re trying to do too much.

Kelly: We have options for sustainable packaging [but] one of the issues is you don’t have the economies of scale. If we were making a million a day it would be different and the price would come down. So we are in this position — people want it, it performs, we have trays for different parts of the store, they perform differently but they cost more because we’re not selling a lot of them. So it’s tough right now.

PB: Is Gen Y shopping, and reacting to packaging, differently than its parents? Quint: I think so, I think they’re much more educated and they understand the tools to go answer a question very quickly if they want to. They expect better quality.

PB: How complicated are the various front-of-package labeling schemes making the packaging challenge? Hurr: It goes back to the clutter situation. It’s a nice idea but we’re all over the board right now; everyone’s trying their own different tactics to convey health issues. Kelly: You start out with a good idea but the execution is all over the board and so it does make it challenging. PB: Are any of these front-of-package systems connecting with consumers? Durham: I was with Delhaize when it launched Guiding Stars. It’s an impressive program, there’s a lot of science behind it. What worked well for it was that it gave [the shopper] an easy way to say, okay, this is two stars, this is three stars. Is it any better or worse than the rest of them? Probably not. I think at the end of the day all those programs have to come down to [is], are you actually helping her shop or make a better decision? Weitzel: The issue we have is [that] even though more consumers take a shopping list [to the store], a lot of decisions are being made in the store. [So], to connect with shoppers you’ve got to do it at the shelf and so everyone is trying to throw as much information at the shelf as they can. So it’s on labeling, it’s on the end of the shelf, signage above the shelf, markers, navigational signs, everything. There’s almost so much information right now that we have clutter; it’s a challenge. Quint: The problem is, what’s the definition of healthy?

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Quint: That’s where all naturals come into play. Of course, you don’t know what all natural is necessarily.

Durham: First of all [for Gen Y], the local food movement’s been huge. And then you’d layer in food safety on top of it [as a Gen Y concern] and all of a sudden the mass production [that was] a cool, sexy thing that came out after World War II doesn’t look the same to that generation. So they are starting to ask questions and wanting to know where the food was sourced and how it was made and what it’s packaged in. PB: If more consumers are into fresh, does that affect the packaging and what they expect from packaging? Kelly: Absolutely, packaging can convey fresh. It’s all about packaging design, dialing in the package to the product that you’re selling and making sure it matches up. PB: European packaging always seems to stand out, why? Have they gotten the message that packaging is more important than just a package? Quint: It goes back to how they shop differently than we do too. They don’t go in and buy for the week, or the next week and a half, in a lot of cases. It’s ‘I’m buying for today and tomorrow,’ so it’s smaller portion sizes which then allows for different packaging, allows for a lot of different packaging. Durham: And they’re not afraid of just saying what it is and being miniml about it and then spending a lot of money on photography. Go look at Tesco, look at that [package], it says what it is and there’s a beautiful picture and a sensible font and they’re done. Kelly: Well they do take a minimalist approach. When it comes to packaging, I think they are willing to try difDecember 2011 • Perishables Buyer

ROUNDTABLE: PACKAGING

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ferent things and maybe we are a little too conservative in some regards PB: There’s been a lot written this year about cost pressures on commodities and other ingredients, are we seeing that in packaging as well and what’s the outlook for next year? Kelly: Volatile. You have unrest in the Middle East, you have other issues going on, you have countries on the verge of default. We’re more global than we’ve ever been and, certainly for our company, we’re a global company and we’re impacted big time by a little bump somewhere else in the world. Most of the [raw material used in fresh food packaging] is a oil-based derivative and that is a very fluid and dynamic market. So that’s going to be a big issue going forward, there is still a lot of instability. Quint: Ultimately, you’re going to want to do one or two things, you’re going to pass [cost increases] through or are you going to try to find a solution to lower costs in order to compensate for that. PB: Is packaging’s reliance on petroleum changing? Kelly: There are alternatives, there are corn-based trays that you can make, you can also take corn out of the equation because that’s a real sensitive issue. When you say ‘we’d like to sell you a corn-based tray’ there’s www.PerishablesBuyer.com

a link made that, well, you’re helping fuel the price of corn when in reality its such a small percentage it really doesn’t impact it. But we can switch to switchgrass as another item; we have a tray that’s made out of tapioca and bamboo. Now it doesn’t work for meat but it works for produce, works for bakery, has some great applications. But again, we don’t have a lot of people using those types of trays. They want to but they don’t want to pay, they want to be cost neutral and the economics just don’t work right now on being cost neutral. We [also] look at packaging source reduction as a big thing, one of the categories we’re looking at is shredded cheese and the packages that are out there now. We have an offering that would take up less space, you know top to bottom, and be a shorter package, same amount of ounces. PB: What’s going to be the biggest news in packaging next year? Quint : I think the quest for differentiation. Durham: You can expect to see Kroger continue to roll out some significant re-designs; CVS and Walgreens will both grow out some [new products]. Kelly: I think package performance, meeting expectations or going beyond, coming out with new features, extending shelf life without increasing the cost. O

B Sealed Air Cryovac's Jerry Kelly, center, says a successful package is one that performs as promised. Chris Durham, left, and John Frank, right, look on as Kelly speaks.

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Bakery

Dairy

Deli

Foodservice

Frozen

Introducing

13

The Beverage Battle Heats Up

produce

mariano's puts the spotlight on perishables

dairy

retail

EDITOR’SNOTE

9

18

Solving The Merchandising Riddle

OCT11 vol.1 iss.1

STATE OF THE INDUSTRY REPORT

Perishables Buyer serves food retail and wholesale executives, directors, managers, buyers, merchandisers, and other key decision makers in all vital perishable categories. Each issue will include category data, new products, analysis of trends, retailer profiles, strategic & tactical insights and operational best practices.

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SPECIAL REPORTS ON: + Bakery + Meat + Dairy

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Meat

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Category Updates 38

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DECEMBER 2011 38 Produce A Plethora of Products 39 Dairy Sourcing for Success 40 Meat What A Deal!

41 Frozen Consumers Eating Out While Eating In

43 Refrigerated ‘Bold’ Promotions Drive Beverage Sales

42 Bakery The Shoppers Speak

44 Foodservice Slow Going

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CATEGORYUPDATE: PRODUCE

A PLETHORA OF PRODUCTS New offerings were attention-getters at the 2011 Fresh Summit. BY RICH MITCHELL editor-in-chief

KEY POINTS O Many suppliers were showcasing new products at the Fresh Summit. O Selections were from a wide range of produce sectors. O Freshness and uniqueness were key product elements.

A • Among the products on display at the Fresh Summit was a 64-ounce vegetable tray by Apio Inc. featuring thick and creamy ranch dip.

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ew products are the lifeblood of perishables. The consistent rollouts of novel offerings—or extensions to existing product lines—help propel sales while keeping sectors vibrant. This reliance on new products as a key merchandising strategy was evident at the Produce Marketing Association’s (PMA’s) 2011 Fresh Summit International Convention & Exposition, held in October in Atlanta. Indeed, a large portion of the more than 800 exhibitors were demoing and/or providing data on their most recent rollouts. To further accentuate newer offerings, the PMA—at glass showcases outside the exhibit hall that displayed dozens of new products—was distributing information sheets listing companies, booth numbers, the specific items being offered by each vendor, and columns labeled “visit now” and “contact later” that users could check to better track their activities. Products, meanwhile, came from a wide cross-section of companies throughout the produce sector. Items included fruits, vegetables, seasonings, snack packs, trays, dressings, juices, fi lm and packaging. And taste and appearance were key product themes. Apio Inc., Guadalupe, Calif., for instance, was spotlighting its Clearly Fresh recloseable and recyclable zip bags that the company states are designed to keep fruits and vegetables fresher up to 50-percent longer. Dole Food Co. Inc., Westlake Village, Calif., was introducing packaging that is intended to keep bananas from spoiling too quickly. The company’s FreshPack is a bag with two separate chambers that hold bananas. When buyers open and consume bananas from one chamber, the other side remains sealed and fresh. The technology—which employs no chemical treat-

ment to the bag or bananas—extends the ripening process and enables bananas to maintain a bright yellow color up to six days longer, Dole reports. Suppliers also were spotlighting unconventional foods. Sage Fruit Co., Moxee, Wash., was sampling Crazy Apples—apples that are regular in appearance, shelf life, nutrition and calories, but have unique flavors on the inside. Varieties include Bubble Gum, Pomegranate Grape and Tropical Blast. Available in single packs and four packs, the products are intended to appeal to both kids and parents, and to give non-produce buyers a reason to try fruit. Naturripe Farms, Naples, Fla., also was targeting kids with its display of BerryQuick Snacks. Positioned as quick and healthy offerings, the snacks consist of fresh blueberries that are pre-portioned in single-serve trays designed to be easy to hold and pour. Packages contain three, 1.5-once packs and have a suggested retail price of $2.99. O December 2011 • Perishables Buyer

CATEGORYUPDATE: DAIRY

SOURCING FOR SUCCESS Maintaining an efficient supply chain is vital for reducing dairy item shrink and out of stocks. BY VANESSA L. FACENDA

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eing out of stock or having inventory that is past the “sell-by” date will cost retailers profits, regardless of the category. But such situations are particularly painful for merchandisers of dairy products—which can generate large revenues and also significant shrink. To minimize occurrences, retailers must emphasize education, execution and communication, analysts say. Store personnel, for instance, must be trained to inspect delivery loads for damaged goods and adequate sell-by dates. “They must be able to reject the product at the point of entry to the store if there is not enough time to sell it,” says David Leonhardi, director of cheese education and events for the Madison-based Wisconsin Milk Marketing Board (WMBB). Retailers also need to be cognizant of the sales trends in each outlet and plan deliveries accordingly. “Being heavy on inventory because of a great deal is only great when retailers can move it through their system and their customers’ systems,” Leonhardi states. A manager at Gristedes, a New York-based chain of 31 stores in the city, says his outlets receive dairy shipments an average of three times per week, while stores with less traffic receive two shipments weekly. Paula Rosenblum, managing partner at Miamibased RSR Research LLC, meanwhile, says the best way for retailers to consistently market such loads while reducing shrink is to keep the cold chain intact. Operators, she notes, need to insure there are enough product turns to keep fresh items constantly displayed at

www.PerishablesBuyer.com

A KEY POINTS O Merchandisers must focus on reducing shrink and out of stocks. O Technology can help insure there is adequate inventory. O Maintaining proper temperatures is vital for food safety.

the front end of cases, while having back-end items in a protected, chilled environment. “The supply chain network needs to be efficient and be able to deliver on an as-needed/just-in-time basis,” Rosenblum notes. That can be supported with business intelligence technology that enables merchandisers to calculate the rate of sale and send alerts to vendors when supplies are low. Retailers also should determine how shrink occurs in order to reduce the waste, she says. “What is the shrink and what is causing it—is it due to spoilage or is it due to loss?” Rosenblum states. In addition, it is vital that in-store refrigeration temperatures are maintained for dairy products. “In some jurisdictions, a store can be liable for causing food-borne illness even if a product was incorrectly stored by the consumer who got sick,” warns Alan Hiebert, education information specialist for the Madison, Wis.-based International Dairy-Deli-Bakery Association (IDDBA). “Retailers would also do well to provide food safety education to their customers.” O

A • Active dairy merchandisers, such as Wal-Mart Stores Inc., have the task of insuring that cases have the optimal amount of products so there is minimal spoilage.

39

CATEGORYUPDATE: MEAT

WHAT A DEAL! Meat shoppers are leveraging a variety of tactics to cut costs. BY RICH MITCHELL editor-in-chief

Look More at Package Price

Use Coupons

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Buy/Cook Meat Less Often (Meatless Meals)

10

Buy Meat at Less Expensive Stores

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Purchase More PL Meat

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Purchase in Bulk Packages

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Eat More Casseroles/Pastas

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Look More at Price per Pound

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Buy Less Expensive Cuts of Meat

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Stock up on Sale Meats

80 Read Grocery Store Advertising More

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75%

70%

68%

64%

57%

57%

50%

49%

46%

46%

40%

How Consumers Are Saving On Meat Purchases KEY POINTS O The vast majority of meat buyers are researching deals. O Fewer shoppers are purchasing meat in bulk. O Price per pound is a key purchasing factor.

A The Power of Meat 2011. Figures are the percent of shoppers who indicated they follow the methods every time or frequently when they shop.

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argain hunting—always a key consumer shopping strategy—is becoming increasingly pronounced in today's fragile economy. And supermarket meat areas, which typically merchandise products with higher price points than most other store departments, remain key venues price-conscious customers. Indeed, the Power of Meat 2011 report notes that 75 percent of shoppers research meat deals either before going to the store or by means of circulars or specials that are posted online or in the store. In addition, 70 percent of shoppers are stocking up on meat and poultry when the items are on sale, and 68 percent are buying less expensive cuts of meat. The data were collected through an online survey of 1,201 consumers that mirror the U.S. population. The report was prepared by 210 Analytics LLC, a San Antonio, Texas-based market research firm. In a shift from previous behavior, however, fewer shoppers are purchasing meat in bulk. Fifty-two percent of consumers indicated that they are buying proteins in large quantities to freeze and use over time, down from 60 percent in 2010 and 58 percent in 2009. “A number of shoppers are focusing on spending less through buying less rather than implementing other

money-saving tactics, such as buying in bulk,” the report notes. “Bulk purchases were of less interest to people who experienced a loss of income in the past year and lowerincome households in general. While these two groups are very interested in saving money in general, purchasing in bulk requires an outlay of money to generate future savings they may not be able to afford.” Still, while 13 percent of shoppers noted that they would never buy in bulk, the remainder could be motivated to do so with the right incentive, the research found. Fift y-two percent of respondents, for instance, indicated that a substantial discount could cause them to purchase large quantities; 20 percent noted that they are interested in the prospect of having bulk purchases pre-portioned into smaller packages for easy use over time; and 16 percent said they favored variety packs with either different types of proteins, or various cuts of the same protein. The most important meat purchasing element, however, is price per pound. Consumers gave the factor a 4.5 rating in which 6 is the top influencer. It is followed by product appearance (4.0), total package price (3.9), nutritional content (3.1), knowledge of how to prepare (3.0) and preparation time required (2.7). O

December 2011 • Perishables Buyer

CATEGORYUPDATE: FROZEN

CONSUMERS EATING OUT WHILE EATING IN Restaurant brands are proliferating in the freezer case; use them to capture more consumer food dollars. BY ED FINKEL

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here can you find Marie Callender’s Chicken Pot Pies, T.G.I. Friday’s Loaded! Potato Skins Stuffed with Cheddar & Bacon, P.F. Chang’s Shanghai Style Beef and California Pizza Kitchen Rising Crust BBQ Recipe Chicken Pizza? It’s not in a fast-casual chain version of a food court, nor is it a weird fever-dream: It’s in the frozen section of your local supermarket or club store, where restaurants, hit hard during the recession, are trying to reach consumers with frozen restaurant-branded products when they choose to eat in.

www.PerishablesBuyer.com

A June report from Mintel International Group titled Restaurant to Retail says that such products can deepen brand-consumer connections, or establish them in areas where the restaurant does not yet exist. They don’t detract from restaurant traffic, and brand quality can be maintained thanks to improved freezer technology. Retailers seeking to capitalize on this trend should offer family-sized packaging and emphasize better-foryou elements, says Mintel, which sees continued potential for growth, given the sluggish economy. This trend is not completely new. Products such as Bob Evans’ frozen sausages have been around for decades, for example. But it is mushrooming, says trendwatcher Phil Lempert, self-named The Supermarket Guru, Santa Monica, Calif. “It’s especially in the past three years, where people have not been eating out as much and certainly a lot of the chain restaurants have been struggling,” Lempert says. “People still, at home, want to celebrate their food. … Consumers have embraced it. The big question is whether those products can deliver.” Ron Paul, president and CEO of Technomic, Chicago, says most restaurant-branded frozen food comes from contract manufacturers, with the notable exception of White Castle. Some have rolled out lines exclusive to certain retailers, like Walmart or Costco, while others have focused regionally rather than nationally. “It’s a quick way for the consumer to see a familiar brand; it doesn’t cost money to launch a new brand,” Paul says. “It’s not a slam-dunk. There are fixed costs; you need to find a manufacturer willing to do that. Then there’s [the question of], ‘What’s it going to do to my brand?’ ” Lempert believes supermarkets and other retailers need to be more aggressive about in-store marketing of restaurant-branded products. “The retailer hasn’t done these brands justice,” he says. “It could be having a special section in the supermarket that would promote these restaurant brands, where it’s a separate freezer case—maybe even decorated like a restaurant.” O

KEY POINTS O Restaurant branded frozen products can attract consumers who once ate away from home more. O Retailers should be more aggressive in marketing these known brands. O Think about special displays and even special freezers featuring restaurant offering.

A A Mariano’s in downtown Chicago features PF Changbranded frozen items in an end-cap freezer, giving prominence to the brand. Retailers can boost sales with such displays featuring restaurant offerings.

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CATEGORYUPDATE: BAKERY

THE SHOPPERS SPEAK Supermarket bakeries are popular, but operators must improve key elements if they want to further strengthen their relationships with consumers. BY RICH MITCHELL editor-in-chief

KEY POINTS O Self-serve supermarket bakeries are a major draw for shoppers with a yen for baked goods. O Shoppers rank freshness and cleanliness as top department attributes. O Operators still need to improve upon elements that are most important to consumers.

Chart Source: International Dairy-Deli-Bakery Association. 2010 survey of 2,000 bakery consumers.

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however, it is important that supermarket bakery operators focus on the factors most important to shoppers. Offering fresh products, having a clean bakery and safe-food handling are the top three factors, the survey found. Also deemed “very important” or “somewhat important” to consumers is the taste of breads (noted by 93 percent of consumers), availability of wanted products (93 percent), prices (93 percent) and taste of baked sweet goods (91 percent). Yet, the IDDBA notes in its Consumers in the Bakery: Attitudes, Buying Behavior, & Purchase Drivers report, that some of the largest “performance gaps”—the gulf between the importance that shoppers place on an attribute and their actual satisfaction with the delivery of the attribute—are occurring in the areas that shoppers are deeming most important. Only 28 percent of consumers, for instance, indicate they are “very satisfied” with in-store bakeries’ prices, and just 54 percent note that they are “very satisfied” with the freshness at the in-store bakery that they shop in most frequently. Performance gaps, meanwhile, are relatively small for such attributes as variety of breads, employee Factors That Would Encourage knowledge about products, variety More In-Store Bakery Purchases of items for special dietary needs, variety of sugar-free or reduced Somewhat More Much More sugar products, and variety of lowElement Likely To Buy Likely To Buy carbohydrate products. “The good news is the perforFresher Breads 41% 26% mance gaps for some of the most Fresher Sweet Goods 37% 29% important services, which can Samples Available 36% 32% be trended, have decreased sigNutrition Labels on Products 28% 25% nificantly since 2004,” the IDDBA notes. “Th is indicates that in-store Smaller Portion Sizes 27% 28% bakeries are making progress.” Easier To Get Assistance 26% 31% Indeed, performance gaps fell Children Want A Product 25% 37% between 2004 and 2010 for prices, Sales Associates More Helpful 22% 31% freshness and the availability of More Products That Fit With Diet 17% 16% products. O

he traditional supermarket in-store bakery is where it’s at. That at least appears to be the attitude of U.S. bakery shoppers. A 2010 survey of 2,000 bakery consumers by the Madison, Wis.-based International Dairy-Deli-Bakery Association on where shoppers purchase baked goods found that 95 percent of respondents frequent supermarket self-serve bakeries, the highest percentage of the 13 venues listed. It was up from 89 percent in 2004. Next in popularity were supermarket aisles (94 percent), traditional supermarket full-service bakeries where a clerk waits on shoppers (83 percent), discount supercenters (78 percent) and independent bakery shops (61 percent). Discount supercenters, which include such chains as Walmart, Target and Kmart, registered the largest increase in shoppers, up from 52 percent from 2004. Convenience is the most frequently mentioned reason for shopping at self-service bakeries (noted by 32 percent of consumers), while freshness is the top motivator for shopping at full-service bakeries (16 percent). To maintain and increase shopper satisfaction,

December 2011 • Perishables Buyer

CATEGORYUPDATE: REFRIGERATED

‘BOLD’ PROMOTIONS DRIVE BEVERAGE SALES Energy and sports drinks are seeing big gains while bottled water lags. BY ED FINKEL

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mium private label French sodas, has introduced a 14-ounce single-serve bottle and a four-pack of the single-serve, says Sophie Rufin, director of marketing. She believes private label beverages need to fi nd a central location in the refrigerated case and build eye-catching seasonal displays. “Visibility is the key,” Rufi n says. Steve Fay, executive vice president of Berner Food and Beverage, Roscoe, Ill., knows of retailers who have promoted their private labels through offers tied into the purchase of a branded product. “That is bold,” he says. “That is saying to the consumer, ‘Try, and compare it.’ ” Displaying refrigerated beverages with other items instore, such a ssandwiches or take-out dishes like salads, is another way to increase sales. Energy drinks scored the largest sales increases during the year ending Aug. 7, 2011, with sales up more than 14 percent; sports drink sales rose more than 10 percent, while bottled water inched up a more modest 2.8 percent, according to SymphonyIRI Group, Chicago. Between 2005 and 2010, sales in these subcategories remained largely stable, according to a May 2011 report from Mintel International, Chicago. The numbers on soda have remained steady despite people’s wellness aspirations, especially among children and young adults, and people with lower incomes, Mintel reported. Bottled water dipped slightly from 2008 to 2010, possibly due to more people simply turning to the tap, the report says. O

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on-alcoholic beverages such as exotic sodas, sports and energy drinks, and bottled water are seeing bolder packaging and promotions on the private-label side and diversification of offerings on the branded side as companies try to keep sales numbers healthy in today’s slow economy. Branded energy drinks like Red Bull and Monster have distinguished themselves through marketing that appeals to young men, co-branding with alternative rock and hiphop music as well as competition in extreme sports. On the private label side, store brands are becoming considerably more sophisticated with their label designs, while trying to ensure product quality keeps pace, says Andy Dratt, executive vice president of Imbibe, Wilmette, Ill. “People will try it based on how it looks, and they’ll buy it again based on how it tastes,” he says. Lorina Inc., Coral Gables, Fla., which makes pre-

www.PerishablesBuyer.com

KEY POINTS O Energy drinks continue to chase young consumers. O Private label beverages are sprucing up their labels and merchandising. O Display refrigerated beverages with readyto-go items to boost impulse purchases.

A Energy drinks, such as Pepsi’s Amp, are capturing more sales from younger, male consumers. B Displaying refrigerated beverages with takeout items is one way to spur impulse sales.

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CATEGORYUPDATE: FOODSERVICE

SLOW GOING More consumers are taking out meals from supermarkets, but the economy still is impacting activity. BY RICH MITCHELL editor-in-chief

KEY POINTS O Supermarkets are enhancing their foodservice offerings to lure more customers.

O Prepared breakfast foods are becoming more prevalent.

O Economic conditions still are forcing many consumers to prepare meals at home.

A Food retailers are expanding their prepared foods sections to attract busy consumers. Shown here, a Whole Foods foodservice selection.

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upermarket delis are increasingly taking steps to become stronger prepared foods powers. More operators are expanding and upgrading their selections of entrées, appetizers and side dishes, and some are working to attract more customers throughout the day by offering breakfast in addition to the traditional lunch and dinner selections. A key objective is to lure consumers who typically would purchase such meals from conventional foodservice outlets, such as fast-food and fast-casual restaurants. And indeed, market share for prepared food store meals is gradually increasing. Retail food stores account for 13 percent of all meals that are bought at commercial foodservice establishments, up from 11 percent in 1996, reports Harry Balzer, vice president of The NPD Group Inc., a Port Washington, N.Y.-based market research fi rm. He notes that the supermarket and convenience store share has increased annually for eight consecutive years. Much of the activity is due to more supermarkets offering take-out foods. “The retail store prepared meals program is a force in foodservice,” Balzer states. “The more stores there are that market prepared meals, the greater the opportunity consumers have to try the foods.” Breakfast activity, he adds, is ripe for expansion as many consumers fi nd it convenient to quickly obtain a prepared breakfast on their way to work. Indeed, in its Morning MealScape 2011 study, The NPD Group found that 10 percent of consumers skip breakfast. Among the top reasons for eschewing breakfast was not having the time or being too busy. For those who eat a morning meal, 14 percent do so

A

away from home, The NPD Group reports. More operators, meanwhile, are starting to market breakfast items. A Whole Foods outlet in downtown Boston, for instance, earlier this year began selling breakfast tacos at its prepared foods counter. Balzer notes, however, that many supermarkets will not be strong foodservice competitors until they install drive-through windows. “Supermarkets are offering more prepared options, but are they really responding to what consumers want?” Balzer asks. “Until they are making life easier for me, they are not participating in the take-out market.” The success of supermarkets in attracting more foodservice customers, however, still is largely dependent on the economy. While many persons prefer to eat out frequently, they often are discouraged by the high cost. “The biggest foodservice industry concern is household income,” Balzer adds. “A lack of an increase in foodservice meal activity is because the items are more expensive than meals prepared at home. There is not a great desire for consumers to cook more. But can they afford not to?” O December 2011 • Perishables Buyer

NUMEROLOGY

TAKE A NUMBER

78

Percent of U.S. families buying ORGANIC FOODS, up from 73% in 2009. (Organic Trade Association)

0.90

Average times a week consumers shop at traditional supermarket self-serve bakeries. (International Dairy-Deli-Bakery Association)

Increase in average seafood prices in October 2011 compared to the year-earlier period.(U.S. Department of Agriculture)

75 6% 36

7.1

%

Percent of shoppers who look for use-by or sell-by dates on produce packaging. (Produce Marketing Association)

Dairy department dollar sales increase for the 52 weeks ending 9/3/11. (The Nielsen Co.)

Percent of shoppers who have changed their

MEAT PURCHASING

behavior because of the economy. (The Power of Meat 2011)

www.PerishablesBuyer.com

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AD&COMPANYINDEX

AD INDEX COMPANY

WEB/EMAIL

PAGE

Alouette Cheese USA ..................................................................www.alouettecheese.com....................................................................3 Beaver Street Fisheries Inc. .......................................................www.beaverfish.com .......................................................................... 21 Diversified Business Communications....................................www.bostonseafood.com..................................................Back Cover ECRM ...............................................................................................www.ecrm.marketgate.com ................................ Inside Back Cover Graeter’s..........................................................................................www.graeters.com .................................................................. A10-A15 Kellogg Company/Eggo...............................................................www.kellogg.com...................................................................................7 Kellogg Company/Kashi ..............................................................www.kellogg.com...................................................................................5 Kellogg Company/Morningstar ................................................www.kellogg.com................................................................................ 31 Perishables Group.........................................................................www.perishablesgroup.com ............................................................. 25

COMPANY INDEX COMPANY

PAGE

COMPANY

PAGE

Trader Joe’s....................................................................................20

Berner Food and Beverage........................................................43

210 Analytics LLC ........................................................................40

Corporate Strategies International ........................................29

United Nations Food and Agriculture Organization..........19

Culinary Connections .................................................................16

U.S. Department of Agriculture...............................................45

Epiphany Group LLC ...................................................................19

Walmart Stores Inc. ....................................................................39

Fresh & Easy Neighborhood Market ......................................23

West Liberty Foods .....................................................................33

Giant Eagle Inc.............................................................................16

Whole Foods Market Inc. ..........................................................44

Gristedes ........................................................................................39

Willard Bishop...................................................................... 24, 33

Immotion Studios........................................................................33

Wisconsin Milk Marketing Board ...........................................39

International Dairy-Deli-Bakery Association .............. 42, 45 Lorina Inc.......................................................................................43 Mariano’s Fresh Market.............................................................41 Mintel International Group Ltd. .......................................41, 43 Mypbrand.com .............................................................................33 Organic Trade Association ........................................................45 Perishables Group......................................................... 17, 19, 20 Produce Marketing Association ...................................... 38, 45 RSR Research LLC........................................................................39

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BNP Media II, L.L.C 155 Pfi ngsten Road, Suite 205, Deerfield, Illinois 60015 847-405-4000 Fax: 847-405-4100

READER & MARKETING SERVICES PRINT & INTERNET ADVERTISING Peter Hansen 847-405-4033 [email protected] Brion Palmer 847-405-4072 [email protected]

Bashas’ Inc. ...................................................................................30

Kantar Retail.................................................................................28

Perishables Buyer (formerly R&FF Retailer) reaching an average qualified circulation of 10,000 copies. Source: June 2011 BPA circulation statement.

NEW PRODUCTS Apio Inc. .........................................................................................38 Beaver Street Fisheries ..............................................................22 Blue Horizon Organic Seafood ................................................22 Bluewave Seafood Co. ...............................................................22 Cedar’s Mediterranean Foods ..................................................18

LETTERS Rich Mitchell [email protected] Perishables Buyer 155 N. Pfingsten Road, Suite 205 Deerfield, IL 60015 REPRINTS Jill DeVries [email protected] 248-244-1726 CUSTOM MEDIA Chris Wilson [email protected] 248-244-8264 BACK ISSUES Ann Kalb [email protected] 248-244-6499

Dole Food Co. Inc. .......................................................................38 EcoFish ...........................................................................................22

Safeway Inc ..................................................................................29

Hillshire Farm ...............................................................................18

Saint Joseph’s University ..........................................................29

Naturripe Farms...........................................................................38

Sealed Air Corp. ...........................................................................32

Plumrose General ........................................................................18

Sousa Seafood..............................................................................19

Safe Fruit Co. ................................................................................38

SymphonyIRI Group ....................................................................43

Sandridge Food Corp. .................................................................18

Technomic Inc. ......................................................................29, 41

Sara Lee Corp. ..............................................................................18

Tesco PLC .......................................................................................23

StarKist Seafood ..........................................................................22

The Nielsen Co. ............................................................................45

Trans-Ocean Products ................................................................22

The NPD Group Inc. ....................................................................44

Walmart Stores Inc. ....................................................................18

Also publishers of Beverage Industry, BrandPackaging, Candy Industry, Dairy Foods, Flexible Packaging, Food & Beverage Packaging, Food Engineering, Independent Provisioner, Industria Alimenticia, The National Provisioner, Prepared Foods, Private Label Buyer, and Snack Food & Wholesale Bakery.

December 2011 • Perishables Buyer

STOCK YOUR SHELVES with

GROCERY epps events today!

CTION A F S I T A S TEED GUARAN First Half Grocery Events Convenience Hyatt Regency Phoenix | Phoenix, AZ

January 8 - 11, 2012

Checklane, Front End, and Impulse Hyatt Regency Phoenix | Phoenix, AZ

January 9 - 12, 2012

Meal Solutions for Convenience Channels Hyatt Regency Phoenix | Phoenix, AZ

January 10 - 12, 2012

Winter Confectionery February 19 - 22, 2012

Hyatt Regency Dallas | Dallas, TX

International Winter Confectionery Hyatt Regency Dallas | Dallas, TX

February 22 - 23, 2012

Snack, Beverage, & Grocery : Back Half Planning Hyatt Regency Dallas | Dallas, TX

February 20 - 23, 2012

Private Brand Foods Marriott Napa Valley Hotel & Spa | Napa, CA

April 16 - 19, 2012

Fresh & Frozen Foods Marriott Napa Valley Hotel & Spa | Napa, CA

April 17 - 19, 2012

Valentine’s Day Candy Boutique PGA National Resort & Spa | Palm Beach Gardens , FL

April 29 - May 1, 2012

Spring & Summer Confectionery Marriott Miami Biscayne Bay | Miami, FL

June 10 - 12, 2012

A • STRATEGY • THAT

DS E E N R U O Y FITS

ECRM events are conveniently timed throughout the year to coincide with retail planning periods. This strategic timing offers buyers and suppliers a narrow category focus, resulting in productive and tactical meetings. Combined with our leading edge technology, our events foster an open dialogue between buyers and suppliers to streamline the selling process and to fit your 2012 grocery objectives. Don’t let this opportunity slip away. Execute your strategy today and register for ECRM’s upcoming events.

ECRM provides BUSINESS SOLUTIONS by integrating PROCESS, VISION and TECHNOLOGY

www.ECRM.MarketGate.com Please Contact: Ed Reilly - VP of Grocery• (508) 533-3725 • [email protected]

brought to you by ecrm