Ice Age
Frozens offer groundbreaking organic and ethnic innovations Page 47
Meat Market
Execs weigh in on what’s trending in this all-important department Page 69
Animal Kingdom
What retailers need to know to keep their pet care sales frisky Page 118
Turn to page 71 Page 18
February 2015 • Volume 94 Number 2 $10 • www.progressivegrocer.com
* †Minimally processed, no artifcial ingredients. ‥ Federal regulations prohibit the use of hormones or steroids in poultry. * Creative not fnal.
Ice Age
Frozens offer groundbreaking organic and ethnic innovations Page 47
Meat Market
Execs weigh in on what’s trending in this all-important department Page 69
Animal Kingdom
What retailers need to know to keep their pet care sales frisky Page 118
Page 18
February 2015 • Volume 94 Number 2 $10 • www.progressivegrocer.com
so happy together ÂŽ
More bundled beverage choices can help drive proft to your deli promotions. From snacks to complete meal solutions, The Coca-Cola Company has a perfect beverage for every meal combination you serve. Go to CokeSolutions.com/retail for more insights.
Š 2015 The Coca-Cola Company
Š2015 Goya Foods, Inc.
*Nielsen Strategic Planner, Total U.S. (unit and dollar sales), 52 weeks ending 12/20/14
Drive traffic and sales with innovative and exciting items from Pillsbury®.
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February 2015
grocery
Volume 94, Issue 2
cover story
36 Beverages
Still Growing As consumption of soda falls, interest in healthier noncarbonated beverages experiences a surge.
42 rTe Cereal
Super Bowl Current tough times aside, ready-to-eat cereals can maintain their primacy by upping their innovation and marketing prowess.
refrigerated & frozen foods
80
deli insigHTs
Getting Grocery Prepared on the Dinner Menu Understand consumer struggles and use social media tools to present meal solutions.
18
90
2015 WHolesaler oF THe Year
Driving Shared Success Returning to its roots as a supplier to independent grocers is paying dividends for a reinvented Supervalu Inc.
ProduCe CaTegorY sPoTligHT
69 Steaking a Claim Smaller packs, purely natural products rank among the top fresh meat trends revealed in PG’s annual “state of the retail meat department” study.
Frozen Food HandBook 2015
The Big Chill Driven by organic, natural and ethnic oferings, the frozen food category begins a warmup that hinges on sustained, collaborative eforts.
Organic Opportunity Consumers seek supermarkets with clean, fresh and favorful produce they can trust.
100
fresh food Progressive groCer ’s reTail MeaT revieW
47
ProduCe
Stone Fruit Forecast Quality crops, new varieties and value-added introductions create fresh excitement in the category.
front end 104
On Top of Up Front Enhancing the front end experience must include customer needs, security concerns and the bottom line.
February 2015 | progressivegrocer.com |
5
nonfoods 110
570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com
HealtH, Beauty & Wellness:
Shave Overhaul Following a frontal assault in the shaving category, retailers prepare for the next wave.
EDITORIAL Editorial Director Joan Driggs 224-632-8211 jdriggs@stagnitomail.com Chief Content Editor Meg Major 724-453-3545 mmajor@stagnitomail.com Editor-in-Chief James Dudlicek 224-632-8238 jdudlicek@stagnitomail.com Managing Editor Bridget Goldschmidt 201-855-7603 bgoldschmidt@stagnitomail.com Technology Editor John Karolefski 440-582-1889 jkarolefski@stagnitomail.com Senior Editor Katie Martin 224-632-8172 kmartin@stagnitomail.com Senior Editor Anna Wolfe 207-773-1154 awolfe@stagnitomail.com Digital Editor Kyle Shamorian 224-632-8252 kshamorian@stagnitomail.com Art Director Bill Antkowiak bantkowiak@stagnitomail.com Contributing Editors Kathleen Furore, Bob Ingram, Lynn Petrak, Barbara Sax, Jennifer Strailey and Christina Veiders
114 HealtH, Beauty & Wellness:
The Smell Test Grocers must select, merchandise and promote fragrances and scented bath products for optimal sales.
118 PG Pet
Caring for ‘Senior’ Pets Specially formulated foods help with age-related health issues.
technology 126
sHoPPer loyalty ProGrams
Data Make the Difference Rumors of loyalty cards’ death are greatly exaggerated, analysts say.
equipment & design
130 KiosKs
Tall Orders Kiosk innovations ofer shoppers convenience, and grocers added and reclaimed sales.
departments 9 EDITOR’S NOTE: BLAzING A NEW TRAIL 10 PG PULSE 12 IN-STORE EVENTS CALENDAR: APRIL 2015 14 NIELSEN’S SHELF STOPPERS/SPOTLIGHT: FROzEN BAKED GOODS/FROzEN PIES 16 MINTEL GLOBAL NEW PRODUCTS: TABLE SAUCES AND SEASONINGS 134 WHAT’S NExT: EDITORS’ PICKS FOR INNOVATIVE PRODUCTS 136 THE SUPPLIER SIDE 138 THE LAST WORD: A MENU OF CHANGE
on tHe CoVer: (L-R) Brian Audette, SVP, independent
sales, merchandising and marketing; Barry Crane, VP, corporate logistics; Sam Duncan, president/CEO; and Janel Haugarth, EVP/president, Independent Business and Supply Chain Services, Supervalu Inc. Supervalu photo by Dave Jenkins
6
| Progressive Grocer | February 2015
ADVERTISING SALES & BUSINESS VP, Group Publisher Jeff Friedman 201-855-7621 jfriedman@stagnitomail.com Midwest Marketing Manager John Huff 224-632-8174 jhuff@stagnitomail.com Western Regional Sales Manager Elizabeth Cherry 310-546-3815 echerry@stagnitomail.com Eastern Marketing Manager Maggie Kaeppel 630-364-2150 • Mobile: 708-565-5350 mkaeppel@stagnitomail.com Northeast Marketing Manager Mike Shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@stagnitomail.com Marketing Manager Janet Blaney (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) jblaney@stagnitomail.com 630-364-1601 Account Executive/ Classified Advertising Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@stagnitomail.com Advertising/Production Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@stagnitomail.com Classified Production Manager Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com MARKETING & PROMOTION Director of Market Research Debra Chanil 201-855-7605 dchanil@stagnitomail.com Audience Development Manager Shelly Patton 215-301-0593 spatton@stagnitomail.com List Rental The Information Refinery 800-529-9020 Brian Clotworthy Reprints and Licensing Wright’s Media 877-652-5295 sales@wrightsmedia.com Subscriber Services/Single-copy Purchases 978-671-0449 or email at Stagnito@e-circ.net President & CEO Harry Stagnito Chief Information Officer Kollin Stagnito SVP, Partner Ned Bardic Chief Brand Officer Korry Stagnito VP & CFO Kyle Stagnito VP/Custom Media Division Pierce Hollingsworth 224-632-8229 phollingsworth@stagnitomail.com Production Manager Anngail Norris Human Resources Manager Sandy Berndt Corporate Marketing Director Bruce Hendrickson 224-632-8214 bhendrickson@stagnitomail.com Promotion Director Robert Kuwada 201-855-7616 rkuwada@stagnitomail.com VP/Events John Failla 201-855-7634 jfailla@stagnitomail.com Director of Digital Media John Callanan 203-295-7058 jcallanan@stagnitomail.com Audience Development Director Cindy Cardinal STAGNITO BUSINESS INFORMATION PUBLICATIONS
Progressive Grocer (ISSN 0033-0787, USPS 920-600) is published monthly by Stagnito Business Information, 570 Lake Cook Rd. Deerfield IL 60015. Single copy price $10, except selected special issues. Subscription: $135 a year; Canada $164 (Canada Post Publications Mail Agreement No. 40031729. Foreign $270 (call for air mail rates). Periodicals postage paid at Deerfield, IL 60015 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to Progressive Grocer, P.O. Box 1842 Lowell, MA 01853. Copyright ©2015 Stagnito Business Information All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.
CATEGORYISGROWTH EVERY DAY.
Trusted iconic brands and
EXPERT CATEGORY MANAGEMENT deliver sustainable growth.* Another way we’re committed to creating shared success every day. SUCCESS IS AN EVERYDAY THING.
*Source: Nielsen 12/2012-12/2014
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editor’s note
by Jim Dudlicek
Blazing a New Trail
T
“
hanks for putting Supervalu back on the map.” Tat’s the kind of thing Janel Haugarth is hearing a lot of lately from employees at the Eden Prairie, Minn.-based wholesale distributor. As EVP and president of independent business and supply chain services, Haugarth oversees the company’s relationships with about 1,800 independent retail grocery stores across the United States. “A positive attitude is a lot of what makes you successful these days,” she says. And it’s the kind of thing that helps attract some positive attention for a change, from investors and financial analysts, as well as from Progressive Grocer, which honors Supervalu in this issue as its 2015 Wholesaler of the Year. Over the past three years, new management has pulled the company out of its onetime death spiral. In July 2012, the company’s board ousted then-CEO Craig Herkert following a string of negatively performing quarters dating back to 2006, when Supervalu acquired fve regional banners from Albertsons, turning what was primarily a wholesale operation with some retail operations into a big-time national supermarket operator. Herkert was replaced, frst by company director Wayne Sales, then on a permanent basis by retail veteran Sam Duncan, who assembled a new management team and oversaw the sellof of those Albertsons banners, allowing the “new” Supervalu to essentially return to its roots and concentrate more of its eforts on supplying independent retailers and growing its proftable Save-A-Lot banner. Sales are now trending upward across all of Supervalu’s business units, details of which are included in our feature starting on page 18. And despite a few hiccups, such as a pair of data breaches last summer, Supervalu’s future looks brighter now than it has in quite some time. A 40-year retail veteran with stints as CEO of
OfceMax and ShopKo, as well as management posts with Albertsons and Kroger, Duncan has earned high praise from Supervalu’s independent retailer customers, who laud his accessibility and concern for their interests. “Sam Duncan has been a breath of fresh air,” says Jim McCafrey, who runs four upscale grocery stores in Pennsylvania and New Jersey served by Supervalu. “Bring an issue or problem to him, and he’s on it immediately. It’s refreshing to have access to the CEO of a company. “He really listens and really reacts,” McCafrey adds, jokingly adding, in reference to Duncan’s openness to the truth, “He’s not afraid for you to tell him if his kids are ugly.” Retailers have also given high marks to Haugarth and her team. Appointed to her current role in October 2012, she has been with Supervalu for more than 35 years, taking on primary leadership roles beginning in 1985, when she became controller for the company’s Bismarck division. After holding a number of roles across the organization, Haugarth was named EVP of Supervalu’s Northern region in 2000, becoming the company’s frst female region president. She was later named EVP, president and COO for Supervalu’s supply chain services organization in 2006, and in 2011 assumed the role of EVP of merchandising and logistics. Last year, Haugarth received the 2014 Trailblazer Award from PG and the Network of Executive Women. Te trail she’s blazing now is one that her independent customers are honored to follow. “Te opportunity to lead the charge is really exciting,” Haugarth says. “I’m very bullish on how Supervalu can play.” PG
Welcome PG’s New Tech Editor We’d like to introduce you to the latest member of the PG team: John Karolefski, who takes over as our technology editor, effective with this issue. John is a veteran business journalist with 25 years of experience covering CPG, retail and technology. Over the years, he has edited several trade
Supervalu’s future looks brighter now than it has in quite some time.
Jim Dudlicek Editor-in-Chief jdudlicek@stagnitomail.com Twitter @jimdudlicek
publications, and is the co-author of three books: “Target 2000: the Rising Tide of TechnoMarketing,” “All about Sampling and Demonstrations,” and “Consumer-Centric Category Management.” He has appeared on CNN, CBS Radio and BBC Radio to discuss marketing issues. John welcomes all points of view and can be reached at jkarolefski@stagnitomail.com. Read his inaugural PG article, on loyalty marketing, starting on page 118. PG
February 2015 | progressivegrocer.com |
9
What’s trending on Progressivegrocer.com …
NGA Honors Mondelez’s Holdiman, IGA’s Wiest
The National Grocers Association (NGA) recently honored Steve Holdiman, senior director, industry development at Deerfield, Ill.-based Mondelez International, with its Industry Service Award. The association also named Barbara Wiest, VP of administration and communications for Chicagobased IGA, its Woman Grocers of America (WGA) Woman of the Year. Congrats to both Wiest and Holdiman!
Holdiman
Gains Forecasted for Frozen
The popularity of the terms “fresh” and “healthy” among consumers is driving renewed interest in frozen foods, a category not often associated with such nutritious descriptors. The convenience of items in the frozen food category, coupled with the introduction of more natural and organic
—Packaged Facts’ “Frozen Foods in the U.S.: Hot Meals, Sides and Snacks” trends report
Wiest
Boosting Private Label at the Pump With consumers reaping the benefits of falling gas prices, data from Stamford, Conn.-based Daymon Worldwide reveal that many shoppers will use those savings to purchase more private-brand products from retailers than they did before, contradicting common assumptions that more money in consumers’ pockets results in a return to national brands. In fact, more than one in three shoppers (35 percent) said they will not only continue to purchase private brands
25% U.S. growth in the cheese category through 2018
—IDDBA’s “What’s in Store 2015” trends report
10
frozen offerings, has led Rockville, Md.-based research firm Packaged Facts to forecast an increase in sales from $22 billion in 2014 to $23 billion in 2019, among frozen dinners/entrées, pizzas, side dishes and appetizers/snacks. Additionally, see PG’s Frozen Food Handbook, starting on page 47.
in the categories they already do, but will also expand their privatebrand purchases into new categories. And 22 percent of respondents will delve into new privatebrand categories for the first time. Additional findings, however, show that one-third (33 percent) of respondents will use their
savings to switch back to national brands in some categories where they feel quality outweighs value, somewhat more than the 26 percent who said they will stay with the private brands they tried and liked, but don’t plan on purchasing private brands in new categories.
Falling Gas Prices Fueling Grocery Sales
PG’s most recent poll question asked readers how the recent drop in U.S. gas prices has impacted their bottom line. Here’s how the votes stacked up as we went to press with this issue: Very Favorable Modestly More Favorable Negligibly More Favorable No Discernible Effect
33% 38% 10% 19%
| Progressive Grocer | Ahead of What’s Next | February 2015
—Daymon Worldwide
19% 10%
33%
38%
¡Número Uno!
April 2015 is... National Fresh Celery Month National Grilled Cheese Month National Pecan Month National Soft Pretzel Month National Soyfoods Month
S
M
T
W
1
April Fools’ Day
T
2
National Peanut Butter and Jelly Day
F
3
Good Friday Passover National Chocolate Mousse Day
National Sourdough Bread Day
S
4
The NCAA Men’s Final Four begins today in Indianapolis, with the final game on April 6.
Whole Grains Sampling Day
5
6
Easter National Caramel Day This is National Egg Salad Week.
National Fresh Tomato Day
7
National Coffee Cake Day National Beer Day
8
9
10
11
15
16
17
18
N National Glazed Spiral Ham S Day D
National Eggs Benedict Day
24
25
National Empanada Day. Demo Latin American specialties.
National Chinese Almond Cookie Day
Set up displays of organic and environmentally friendly products to promote Earth Day.
National Caramel Popcorn Day New Beer’s Eve
12
National Grilled Cheese Sandwich Day. Have lots of gooey melting cheeses like Cheddar and Gruyere in the case.
19
National Garlic Day. Highlight the “stinking rose” throughout the store.
26
National Pretzel Day
12
13
National Peach Cobbler Day
14
National Pecan Day
Tax Day
National Day of the Mushroom
National Cheeseball Day
National Baked Ham With Pineapple Day
20
National Pineapple Upsidedown Cake Day
27
National Prime Rib Day
21
National Chocolate-covered Cashews Day
28
National Blueberry Pie Day
22
Earth Day
29
Bring together staff to discuss summer hours and summer vacation schedules.
| Progressive Grocer | Ahead of What’s Next | February 2015
23
Celebrate National Picnic Day by offering special packable lunches in the deli.
National Pigs-in-ablanket Day. Offer specials on mini hot dogs or sausages, refrigerated rolls, and mustard.
National Cheese Fondue Day. Set up displays of fondue pots, Sterno, long forks and, of course, cheese.
It’s National Soyfoods Month, so build end caps and displays of soy snacks, entrées and beverages.
National Zucchini Bread Day Make sure everything is in order for Cinco de Mayo.
30
National Oatmeal Cookie Day Honor International Jazz Day by playing cool sounds or hot licks in the store.
E-mail your calendar submissions to
awolfe@stagnitomail.com.
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Front End
Market Intelligence By The Numbers GRoCERY’S ToP 10
Shelf Stoppers
Frozen Baked Goods Largest Sales Increases in Supermarkets by The Nielsen Co. (52 Weeks Ending Nov. 22, 2014)
Sales % Change Dollars (Millions) 2014 2013 Bakery-Pies $367.2 6.1% -3.3% Bakery-Remaining 207.3 2.9 -8.8 Bakery-Biscuits/Rolls/Muffins 247.6 0.8 -3.9 Bakery-Cheesecake 65.0 0.8 4.0 Bakery-Bread 373.7 -1.4 -2.6 Dough Products-Bread 26.1 -3.1 -5.0 Bakery-Breakfast Cakes and Sweet Rolls 18.8 -4.8 -11.7 Bakery-Dessert Cakes 82.2 -6.0 -0.9 Bakery-Cobbler/Dumplings/Strudel 14.9 -12.9 -4.9 Bakery-Bagels 21.1 -13.6 -11.0 Total Category
$1,433.7
1.0%
% Change 2014 4.1% 4.7 0.4 3.4 -2.3 -3.0 -3.4 -1.9 -9.2 -13.8
-3.9%
0.3%
Units 2013 -6.0% -9.7 -4.1 2.6 -4.3 -5.7 -13.0 0.1 4.3 -11.2 -5.4%
NielseN’s Spotlight
While they’re also a popular purchase for some older bustling families, who no doubt appreciate their convenience, frozen pies are particularly hot among empty nesters and senior couples. These consumers are perhaps motivated by warm memories of the classic desserts of their youth, but unwilling to put in the considerable work it takes to create a pie from scratch.
CRoSS-MERCh Candidates
Consumption Index: Frozen Pies LIFESTYLE Behavior Stage
Cosmopolitan Affluent Comfortable Struggling Centers Suburban Country Urban Spreads Cores
Modest Working Towns
Plain Rural Living
Total
wITh ChILDREN: startup Families
39
47
68
56
77
93
65
small-scale Families
81
70
87
88
104
104
90
Younger Bustling Families
89
68
86
105
102
114
96
Older Bustling Families
95
85
115
124
124
125
109
Young Transitionals
25
46
87
50
67
60
53
independent singles
46
60
72
70
75
93
71
senior singles
81
78
119
98
105
119
103
established Couples
80
81
113
99
120
120
104
empty-nest Couples
101
97
140
121
133
152
126
senior Couples
121
154
148
125
191
181
159
Total
71
85
110
89
110
122
100
HHs with young children only <6 small HHs with older children 6+ large HHs with Children (6+), HOH <40 large HHs with children (6+), HOH 40+
No ChILDREN: Any size HHs, no children, <35 1-person HHs, no children, 35-64 1-person HHs, no children, 65+ 2+-person HHs, no children, 35-54 2+-person HHs, no children, 55-64 2+-person HHs, no children, 65+
Very High Consumption (150+)
14
High Consumption (120-149)
Average Consumption=100
| Progressive Grocer | Ahead of What’s Next | February 2015
• Tobacco and
Accessories • Yeast • Automotive Supplies • Books and Magazines • Canning and Freezing Supplies • Butter and Margarine • Insecticides, Pesticides and Rodenticides • Beer More oNLINE Dig up actionable e research and additional al intelligence at Progressivegrocer.com
Each Xpress Kit contains: • 2 blu Tanks™ in Classic Tobacco Flavor • 1 PLUS+™ Battery • 1 USB Charger
Contact Your Lorillard Representative. NOT FOR SALE TO MINORS. ©2014 LOEC, Inc. WARNING: This product contains nicotine derived from tobacco. Nicotine is an addictive chemical. blu™, blu eCigs®, the blu logo, the blu Plus+™ logo, Plus+™ and blu Tanks™ are trademarks of Lorillard Technologies, Inc.
Mintel Global New Products Database Category Insights For more information, visit www.mintel.com or call 800-932-0400.
Table Sauces and Seasonings MarkeT Overview Sales of condiments in the United States reached $5.6 billion in 2013, a 10 percent sales increase between 2008 and 2013. Mintel predicts the condiment market will drop to a value of $5.5 billion in 2018, representing a decrease of 1.5 percent between 2013 and 2018. key iSSueS A major focus of innovation for North American brands has been flavor blurring, whereby separate flavor
components are combined together, either from individual condiment lines or from different category lines. Mintel research indicates that U.S. Millennials (age 18-36) are more
North american consumers have identified low/no/ reduced sodium as one of the most important characteristics of condiment launches.
adventurous when it comes to trying new flavors and mixing condiments together. Approximately 79 percent of U.S. Millennials say that they enjoy trying new and different condiment flavors. Increased interest in healthier foods has pushed brands to launch better-for-you-positioned condiments. Such launches are particularly essential to target the 39 percent of U.S. consumers who say that condiments contain too many additives and preservatives. Table sauce manufacturers are also innovating around sugar content, with many choosing to replace sugar with other sweeteners.
What Does it Mean? Flavor blurring allows brands not only to form completely new products, but also to costeffectively unlock sales growth. Manufacturers should be looking
16
at new ways to improve the health appeal of table sauces. For instance, although the use of sweeteners other than sugar in condiments remains relatively niche in North America, such
| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | February 2015
products could be well received by health-conscious consumers. This demographic can also be targeted by using more natural, simpler ingredients such as Greek yogurt.
Returning to its roots ts as a supplier to independent grocers rs is paying dividends for a reinvented Supervalu Inc.
By Jim Dudlicek
18
| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | February 2015
TURNAROUND TEAM (L-R) Brian Audette, SVP independent sales; Barry Crane, VP logistics; Sam Duncan, president/CEO; and Janel Haugarth, EVP/president, Independent Business and Supply Chain Services
February 2015 | progressivegrocer.com |
19
· Encourage shoppers to explore new craft beer styles with a brand they trust · Blue Moon® White IPA is crafted with four varieties of hops, wheat, coriander, and a hint of orange peel · IPAs are the #2 driver of craft growth* · Blue Moon® White IPA available March 1st in 6pk bottles
*
Nielsen XAOC L52wks 7/12/14
It could be argued that the Supervalu of today in some ways more closely resembles the company of old than it does the one of more recent history. Historically a wholesale distributor serving independent grocers and smaller regional chains, Eden Prairie, Minn.-based Supervalu Inc. changed radically in 2006 when it acquired fve regional banners from Albertsons for $12 billion. Seven fnancially rocky years later, the company sold back its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores for $3.3 billion. New President and CEO Sam Duncan and his team set about rebuilding the company, a key component of which has been a renewed focus on its independent business, serving some 2,000 independent retailers in 43 states. With EVP Janel Haugarth leading the charge as president of Supervalu Independent Business and Supply Chain Services, the transformation has been dramatic. In its recent third-quarter earnings report, the company posted its best fnancial performance in years, with increases across all three of its business units. Supervalu’s Independent Business net sales in Q3 were $1.96 billion, compared with $1.91 billion in the year-ago period, an increase of 2.4 percent, primarily due to increased sales to existing customers and new accounts; unit earnings were $60 million, or 3.1 percent of net sales. Not long before the Q3 earnings call on Jan. 7, Supervalu announced a signifcant windfall: Its Independent Business would begin supplying an additional 64 stores in the Pacifc Northwest operated by Haggen, stores that the Bellingham, Wash.-based regional grocer acquired in the wake of the Albertsons-Safeway
June 8 – 11, 2015 McCormick Place (South Hall) Chicago, IL USA I FMIConnect.net
Or maybe it is.
CONNECT with MORE people and...
This is not your father’s Supervalu.
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Janel Haugarth EVP, Independent Business & Supply Chain Services
Bill Chew President West Region
Kevin Kemp President East Region
Brian Audette SVP IB Merchandising, Marketing & Sales
SUPERVALU INC. INDEPENDENT BUSINESS & SUPPLY CHAIN SERVICES
merger. As part of that afliation, Supervalu will be providing transition services to all 164 Haggen stores out of its Tacoma, Wash., distribution center, making Haggen one of Supervalu’s top fve independent customers. Additionally, Supervalu picked up some of the Rainbow stores divested by Roundy’s when the Milwaukee-based operator exited the Twin Cities market. Duncan declared the upward sales gains in all three of the company’s business units “an important milestone.” Not surprisingly, Wall Street analysts
Supervalu Basics Supervalu Inc. operates a complete range of grocery formats and merchandising programs addressing local and regional preferences. With a history dating back to the 1870s, Eden Prairie, Minn.-based Supervalu employs 35,000 people at more than 3,400 stores, encompassing 1,900 stores serviced primarily by the company’s food distribution business, 191 traditional retail stores, and 1,334 hard-discount stores, of which 957 are operated by licensee owners. Annual sales total around $17 billion. Supervalu consists of three business units: Independent Business, a food wholesaler that serves nearly 2,000 stores across the country; Save-A-Lot, the largest harddiscount grocery chain in the United States, with more than 1,300 stores; and five regional retail banners: Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s. Learn more at www.supervalu.com/about/historyinnovation.html.
22
| Progressive Grocer | Ahead of What’s Next | February 2015
STRATEGIC ALLIANCES Grand opening of a Midwestern Supervalu store in the 1950s. At the time, the company aligned retail customers operating under the Supervalu name as a “virtual chain,” streamlining processes, giving fixture and layout advice, and other services.
concurred, as evidenced by Supervalu’s elevated stock price and related favorable credit ratings. Major shareholder Jana Partners, a New York-based activist investment frm known for taking large positions in companies to leverage management changes, sold of more than 4.6 million shares in Supervalu. “Our employees believe in the direction we’re going. Sam and the board are clearly behind us,” Haugarth tells Progressive Grocer. “We believe we’re the best wholesaler in the industry, and we will continue to prove that. It’s just a great time to be part of Supervalu. We’re very excited about the direction we’re heading.” PG’s editors agree, which is why Supervalu Inc. has been selected as our 2015 Wholesaler of the Year. Operating under the simple philosophy that it’s only as successful as its customers are, Supervalu aspires to live up to its name by providing its diverse base of retail customers with exceptional value, expertise, and help with logistics, merchandising, store operations and professional services. With a renewed focus on private brands, perishable foods and betterfor-you products, Supervalu is ramping up investments in supply chain
Bernie Grutsch VP Procurement
Karen Borman VP Finance
Barb Parks Director & Associate General Counsel, Legal
enhancements to streamline the path from farm to shelf. And, with a strong focus on how data analytics can more efectively manage all aspects of the business, from inventory to consumer marketing, Supervalu is also investing heavily in professional consulting and customized services that will help its customers and suppliers gain an edge in the marketplace.
Charlie Welf VP IT Independent Business & Supply Chain
TBD Senior Manager, HR
Jeff Swanson Director, Corporate Communications
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Emerging Stronger “Tey say what doesn’t kill you makes you stronger, and that’s certainly true for Supervalu,” Haugarth says, explaining that the company’s tumultuous experience as a national banner retailer in some ways left it better equipped for its future. In fact, the period of upheaval and subsequent regrouping, she notes, has “brought us a lot of knowledge, expertise and insights” regarding procurement and supply chain efciencies To be sure, supply chain and logistics competency is among the fve key areas Haugarth identifes (whittled down from what she confdes is a personal list of dozens) as Supervalu’s competitive advantages as a wholesaler. “We take a lot of pride in on-time delivery and dock-outs,” says Haugarth, a PG Top Women in Grocery laureate and winner of the 2014 Trailblazer Award from PG and the Network of Executive Women. “If we couldn’t ship on time and at the right price, we wouldn’t be around.” Supervalu is constantly analyzing logistics and looking into new technologies to improve its upstream, downstream and sidestream operations. “We will continue to invest in our distribution centers and drive these costs down,” she afrms. Haugarth also stresses the importance of transparency in vendor funding: “Trade funds are so critical to our customers, and it’s important for them to know how their trade funds are being spent … so customers know trade funds aren’t being skimmed of for operational funding.” A strong technology platform has been, and continues to be, crucial to Supervalu’s success. “We were one of the frst wholesalers to put all our information online through an online portal,”
Rick Collison VP IT Merchandising & Marketing
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Commitment to Customers Yet another edge Supervalu has, according to Haugarth, is its independent retailer customers. “We are only as successful as our customers are, and we have some of the best retailers in the country,” she says. “Tey continue to challenge us, and we listen. We enjoy growing with them.” (See the sidebar on page 26 for retailer testimonials.) Audette, who’s celebrating his 24th anniversary with Supervalu this year, recalls seeing, on his frst day on the job, a sign declaring the company’s mission statement: “Committed to serving our customers better than anyone else can.”
“Our challenge is to help customers understand what’s coming and provide solutions. We’re really focused on keeping customers relevant through all this change.”
June 8 – 11, 2015 McCormick Place (South Hall) Chicago, IL USA I FMIConnect.net
Haugarth notes. “We continue to make that better and better. It helps us keep our costs low, to keep information fowing.” Te company’s latest tech move: Supervalu has partnered with Burtonsville, Md.-based iControl Collaboration Solutions to introduce SVInsights, a data exchange portal that houses its retail banner point-of-sale data and provides data access to manufacturers and brokers, as well as enhancing the strategic decision-making process between Supervalu and its suppliers. Te data sharing was enacted to improve the working relationship between Supervalu and the manufacturer/broker community. Te company also is working to include data from the independent retailers that it supplies. Supervalu has been working with iControl since 2013 to develop the data platform and create functionality that best serves manufacturers and brokers. “Supervalu is moving into a new era of providing our banner data to our suppliers, allowing them to work with us on a new level of collaboration and business planning,” says Mark Van Buskirk, EVP of merchandising, marketing and retail. Brian Audette, SVP of corporate independent business, merchandising and sales, further notes that “harnessing the power of data … will set us apart in the wholesaling world.” Additionally, Audette points to company initiatives like the eConnect content management system and SVLinks, which allows digital coupons to be linked with shoppers’ credit and debit cards. Haugarth stresses the importance of actionable point-of-sale data analytics to Supervalu’s helping its independent customers succeed. “My procurement team can do more with front end data than shipment data,” she says. “We’re trying to get product from feld to store as fast as we can — this data will let us do that much faster.”
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“If we help them grow, their success is our success — that’s the mission the independent team is focused on,” Audette afrms. “Tis year, we’re being active in growing our core business, helping customers with marketing planning. … We’ve been able to do that better than we have in a long time.” Tat success, Audette continues, rests on three pillars: growing that core business, driving costs down, and ofering “market-leading services, diferentiated oferings … to help our customers with success.”
Tose core independent retailers are many and varied. “We serve such a broad range of markets and store sizes. We embrace that one size doesn’t ft all,” Haugarth says. “Whether IGA banner stores, or Shop ’n Save in Pittsburgh, or Lunds and Byerly’s in the Twin Cities, our ability to understand what these diferent customers need sets us apart — who they’re serving and what their go-to-market strategy is.” It’s what Haugarth refers to as “a big share group.” She elaborates: “We serve a diverse group of
‘They’re Hungry for Business’
Independent operators laud Supervalu’s service and success. serves on its advisory board. He’s president and CEO of McCaffrey’s Food Markets, which operates four upscale grocery stores in Bucks County, Pa., and Princeton and West Windsor, N.J. Supervalu is McCaffrey’s primary wholesaler for most products and additionally handles the grocer’s IT services. “From a supply standpoint, they’re right on point — on time, in stock, all the things you count on,” McCaffrey says. “Probably most impressive is their people are hungry. You bring a suggestion or problem to them, and they react very quickly.” The changes since Supervalu’s rebirth have instilled new confidence in retailers, according to McCaffrey. “We have a very bright future with them. They want their retailers to grow,” he says. “It’s a very positive and very healthy relationship.” McCaffrey says of the Supervalu team, “Their best quality is listening and reacting. … From top to bottom, they’re hungry for business and for you to improve your business.” Supervalu customers for 47 years, the “They understand where the world is going. folks at Quincy, Ill.-based Niemann Foods Inc. also praise the partnership with They’re very relationship-driven.” their wholesaler. —Benjy Green, B. Green & Co. “It’s a collaborative effort. In the last couple of years, we’ve ramped up our efforts in category management, and they’ve certainly helped. It’s location in the more affluent suburbs. “We customize a critical issue,” says Rich Niemann, president and CEO of to the neighborhoods we serve, from lower-end private the company, which operates 105 retail stores in Illinois, label up to Wild Harvest,” he says. “We’ve never been Iowa and Missouri, including 50 traditional supermarkets baffled by where we’re going to get products from.” of various sizes under the County Market banner, along Over and above the basics, Green continues, “they with Save-A-Lot franchises, convenience stores, Ace hardhave an enhanced skill set. They understand where the ware stores, pet stores and pharmacies. world is going. They’re very relationship-driven.” “I think there’s an opportunity for both of us to Green lauds Supervalu’s “very accessible” management and commends the company for breaking down the continue to learn and collaborate and grow our relationship as we go forward. They realize the partnership has wall he says used to exist between its wholesale operato continue to evolve,” Niemann adds. “I think they’ve tion and its retail stores. “They’re to an extent using done a nice job getting back to the basics of good, sound their own retail stores as a laboratory,” he says. “We get wholesaling and really concentrating on that side of the a lot of insights through that.” business. That’s what’s really turned things around.” PG A Supervalu customer since 2000, Jim McCaffrey also Supervalu customers were quick to heap praise upon their wholesaler when they learned of PG’s honor. “I’ve always valued Supervalu as an industry peer,” says Benjy Green, CEO and third-generation owner of centuryold, Baltimore-based B. Green & Co. Supervalu supplies Green’s three Food Depot retail grocery stores and its two cash-and-carry operations in and around Baltimore. “We’re probably the most unique customers of Supervalu. We are a retailer and a wholesaler,” Green says, explaining that his company also operates as a redistributor that serves “businesses that are too small for Supervalu, but too big for cash and carry.” A member of Supervalu’s retailer advisory board, Green calls Supervalu the “pre-eminent logistical company. They do it very well and are extremely reliable. They are able to supply us no matter what business model we have.” Further, Supervalu offers the right product mix, whether it’s for Green’s price-impact city stores or its
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| Progressive Grocer | Ahead of What’s Next | February 2015
COMFORTS OF HOME The Pequot Lakes Supervalu is a family-owned, full-service grocery store in Minnesota’s Northwoods with a deli that features daily specials, indoor seating, a stone-hearth fireplace, a flatscreen TV and an outdoor patio.
customers, and take from each one ways to better serve customers in other parts of the country. We connect people to help each other.” Te business unit’s retailer advisory board also furthers the sharing of information, concerns and other issues with its customers. Haugarth and Audette both call out the Pittsburgh area’s Shop ’n Save group as a shining example of Supervalu’s independent retailer excellence. Te 100 formerly corporate stores are now independently owned by 30 owners and are run like a chain. Te Pittsburgh independent owners “are highly successful competing in that market,” Audette says. In fact, Supervalu has a dedicated team working with these owners to help develop marketing plans, loyalty and fuel programs, and otherwise keep their locations “focused on promotional excitement.” Tipping her hat to Pittsburgh’s formidable market leader, Giant Eagle, Haugarth extols the Shop ’n Save owners’ tenacity and competitive spirit “for pushing the edges to stay relevant.” In another example of its diverse clientele, Supervalu also serves Admax, a retailer-owned cooperative in the Southeast with its own merchandising group that undertakes its own negotiations with suppliers. “Most of what we provide them is logistics services and forecasting,” Haugarth explains.
Meanwhile, another of Supervalu’s larger independent customers is Jerry’s Foods, operator of Cub Foods franchise stores, Save-A-Lots in Florida and County Markets in rural communities around the Twin Cities. “We ofer them multiple solutions for the independent and franchise sides,” says Audette, who was president of Cub Foods for two years before transitioning to his current post. “We have the ability, and designed our model, to serve many diferent customers.” Here again, Supervalu’s experience running the Albertsons banners provided learnings that can be passed on to independent customers, Haugarth notes. “We need to help them compete,” she says, “doing what single stores can’t do on their own.” Mark Batenic, president and CEO of Chicagobased independent grocer alliance IGA, says Supervalu has been “a great supporter of IGA for more than 60 years, going all the way back to when they acquired the J.M. Jones Co., in Champaign, Ill. Tey are always looking out for the independent retailer, and are as committed as ever to the success of those retailers and the success of IGA.” More than 200 of IGA’s 1,150 banner stores are supplied by Supervalu, making it one of the top three IGA wholesalers in the United States. “During all the turmoil that Supervalu has been through in the last fve years,” Batenic continues, “we were never once given reason to be concerned about the company’s commitment to
“We believe we’re the best wholesaler in the industry, and we will continue to prove that. We’re very excited about the direction we’re heading.” —Janel Haugarth, EVP and President, Supervalu Independent Business and Supply Chain Services
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| Progressive Grocer | Ahead of What’s Next | February 2015
© 2015 flipflop Wines, Ripon, CA
www.flipflopwines.com
Award-winning
wines now in a
CAN
because
NEED A LIFT? Proud of its logistics prowess, Supervalu sees maintaining a warehouse workforce as a challenge in the years ahead.
IGA, or to family-owned independent business as a whole. We were assured many times that they would continue to support their IGA retailers and the independent channel, and they always did, both fnancially and through programs designed to help make family business more relevant in today’s marketplace.” Haugarth gives a lot of the credit for the company’s recent Q3 success to its independent customers, and she anticipates further victories. “Te momentum was coming from our core business,” she says. “New stores helped, but what took us over the top was the great business we did with our core independents.” Audette says it’s important to be fexible to design plans for customers’ specifc needs. “We are really blessed — honored — to serve the independent network we serve. Tey’re among the best operators in retail in general,” he says. “We do a great job bringing them together to learn from each other.”
Service-oriented Team Behind it all, the driving force is Supervalu’s people, comprising the team upon whose shoul-
ders Haugarth places a large measure of the company’s success. “Our people make it all happen for us every day. We’ve got a tremendous group of talented people,” Haugarth says, noting that Supervalu’s independent business is a “very fat” organization: “We push
Building Momentum The upward trajectory continues for the reborn Supervalu, and its most recent successes were a highlight of its latest financial report. “Momentum is building in our Independent Business segment, where sales turned positive on a yearover-year basis in Q3,” President/CEO Sam Duncan said during Supervalu’s Jan. 7 earnings call, trumpeting such victories as the new Haggen business in the Northwest. That 2.4 percent sales increase marked Independent Business’ “strongest quarter since early fiscal 2009, especially strong in light of the headwinds we faced,” Duncan declared. “The lost deal volume and lower military spending continue to pressure the top line, but we have now cycled the two significant customer losses that I have spoken to in the past.” Underlying business grew solidly, more than offsetting the negatives driven by a number of factors, Duncan noted. “First, our customers’ retail sales were strong this quarter, particularly around Sam Duncan, the Thanksgiving President/CEO, Supervalu Inc. holiday. Among de-
30
partmental results, we were most encouraged by center store, which showed very strong unit gains. Our center store programs, such as the new front end merchandisers, seasonal displays and private brands, are all building momentum and positive results. “Second, we reaped the benefits from this summer’s national selling expo,” he continued. “This event contributed to exceptional seasonal planning and execution. It was great to see effective, timely displays; innovative in-store merchandising; well-executed promotions; and high-service levels across our independent base.” Additionally, purchase concentration improved as retailers concentrated more volume through its distribution network, while “our affiliations, after hitting a low point in last year’s third quarter, continued to build,” Duncan said. “We were very fortunate to add several new customers to our base this past quarter, including a number from a distributor who experienced a recent ownership change.” According to Bruce Besanko, Supervalu’s EVP and CFO, the company will continue to make “prudent investments” to satisfy its customers. “We will make necessary investments in Save-A-Lot, necessary investments in Independent Business and necessary investments in our Retail Business to drive our customers and to achieve returns on the investments we make,” Besanko said at the January earnings call. “So we’re going to do what’s necessary in order to continue to improve the operations of these businesses to grow the top line and to grow the bottom line.” PG
| Progressive Grocer | Ahead of What’s Next | February 2015
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“Since the first day I started here, the focus on customer service has been deeply embedded in our company. It’s not about just saying yes; it’s about taking care of them to make them successful.” —Janel Haugarth, EVP and President, Supervalu Independent Business and Supply Chain Services
decision-making down as far as we can.” Supervalu has a long-tenured, service-oriented team that “makes us able to give customers what they need to compete, even if it’s some hard news once in a while that they need to step it up,” Haugarth says. “We need to be as lean and mean as we can be to deliver to our customers at the lowest cost so they can compete.” Te Independent Business team kicks of each fscal year by rallying the troops at a “top gun” sales conference to work on up to two dozen key initiatives in merchandising and services, Audette explains: “Tat gets our team focused with all the details we need to bring to our customers and help them succeed.” Last summer, Supervalu launched its frst national sales expo, Sales 4 All Seasons, bringing retailers and suppliers together with the Independent Business team — in all, some 4,500 attendees. “We took a bit of a risk putting together a national selling show,” Audette acknowledges, but it “led to some really good results with seasonal planning … and got our team focused on that third-quarter holiday selling period.” Haugarth confrms that the expo “brought it all to life,” resulting in an experience the company intends to continue for years to come, with the next one slated for August. “It was a tremendous educational environment — great networking for our customers and suppliers,” she says. It’s service that forms the bedrock of Supervalu’s corporate culture. “Since the frst day I started here, the focus on customer service has been deeply embedded in our company,” says Haugarth, who’s been with the organization for more than 35 years. “It’s not about just saying yes; it’s about taking care of them to make them successful.” Tat ethos is similarly championed by David Young, VP of private brands, an industry veteran but Supervalu newcomer, having joined the fold last spring. “In the short time I’ve been here, I’ve asked people how they feel compared to a year ago,” Young recounts. “Tey feel so much more engaged and confdent in the direction we’re going. Independents really are part of the family, and this way of going to market is really going to get Supervalu into the premium sector of our industry.”
The Road Ahead In addition to the planned investments in private brands, analytics and supply chain, Supervalu is testing the use of compressed natural gas to fuel its truck feet on the East Coast. Despite currently plummeting gasoline prices, Haugarth says, “We still think there’s a place for natural gas in our feet.” Beyond that, one of the most signifcant roadblocks to doing business is the speed of change, Haugarth maintains. “It’s always been a challenge in
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| Progressive Grocer | Ahead of What’s Next | February 2015
retail — making sure we have meal solutions, the right kind of fresh and organics, and staying on top of that,” she says. And in the past six months or so, labor availability has become a bigger issue, Haugarth notes. Te supply of truck drivers has tightened due to retirements outpacing new hires, and warehouse labor has reached “critical” levels. “When unemployment rates were low, we had a hard time stafng … [and] we’re seeing it tighten again,” Haugarth says, explaining that younger people aren’t
focking to the physically demanding, time-consuming shift work involved with order selection and truck loading. “It’s hard to get 20- and 30-year-olds to do that kind of work, even with good pay and benefts. People’s free time is important to them — they don’t want to work nights and weekends.” On the fipside, opportunities cited by Haugarth include providing customers with design services “to help … improve their store experience,” and maintaining the recent momentum of success: “Te opportunity to lead the charge is really exciting. I’m very bullish on how Supervalu can play.” Audette ofers: “Our challenge is to help customers understand what’s coming and provide solutions. … We’ve done a good job in leading change and developing products and services to help customers compete in their marketplace. We’re really focused on keeping customers relevant through all this change.” And as the number of players in the wholesaling feld continues to shrink through consolidation, staying on top of their game will be paramount for survivors like Supervalu. “Tere’s fewer wholesalers than there were last year, and certainly there will be fewer in the future,” Haugarth says. “Te ability to invest in food safety and technology is driving scale. … It’s still a low-margin business.” What are the leaders of PG’s Wholesaler of the
Year most proud of as they refect on the hard work and innovation that have turned the company around? “Te relentless focus on our diverse and successful customers,” Audette says. Tat includes a “topnotch network of vendors and brokers,” and the “total support to aggressively pursue new business” coming straight from the top. “Our employees treat our customers like family. We have a role in how our customers provide food [to consumers], and our team is proud to help them do that, and grow and thrive despite all the competitive channels,” he says. “Tis is a diferent time for Supervalu. I couldn’t be more excited and proud to be a part of the team.” Young says: “Te management team has us back on track as to what our core business is all about — making that shopper experience so people feel good about what they bought and want to come back — a customer service experience that makes them feel like part of the family. “You can feel the direction and leadership going on that’s really taking hold,” he adds. “It’s nice when suppliers are starting to come back to Supervalu after having left. Tat says they believe in Supervalu.” Haugarth, meanwhile, is most proud of the folks who make it all happen: “We’ve got people who will walk through fre for our customers. Tey will do whatever it takes — work overtime because of a weather issue — from truck drivers and order selectors to our private-brand team, to my presidents and their stafs, there is not an obstacle we cannot overcome as a team. … We’re not going to sit on our laurels. You always have to be on the edge of your chair. People make it work. “Our customers’ success is our success — it’s why we are who we are,” Haugarth declares. “As they succeed, we will succeed.” PG
ENERGY EFFORTS Supervalu is testing compressed natural gas to fuel its East Coast truck fleet.
Brand Portfolio
Brands in Demand Among the weapons in Supervalu’s competitive arsenal is a portfolio of private brands designed to satisfy key market demands and offer independent retailers yet another point of differentiation. “Our private-brands team continues to do good work around updating packaging and introducing new and meaningful items that our customers want,” President/CEO Sam Duncan said at Supervalu’s Jan. 7 earnings call. “We continue to see increases in our sales penetration, which was up about 30 basis points in the quarter compared to last year’s third quarter. We have increased the number of new items we expect to introduce this fiscal year to over 500 across our portfolio, including about 160 from our recently relaunched Wild Harvest line.” Heading up the initiative is David Young, VP of private brands, who joined Supervalu in May 2014, his latest mission in an extensive career that has included stints at Wild Oats and Daymon Worldwide, and as a private-brand consultant. “The opportunity for our brands is tremendous,” Young says. “They all have a niche in the categories and demographics we’re targeting.” Sales trends support Young’s assessment. U.S. consumers spent $120 billion on private label products in 2014, a 2.1 percent increase over the previous year, according to the IRI Times & Trends report, “Private Label and National Brands: Dialing in on Core Shoppers.” “You create destination products that people want and look for,” Young asserts, “destination products you can only get at our independent stores, and you’ve got a success.” Essential Everyday is Supervalu’s “workhorse” brand, Young notes, encompassing some 2,500 products across the store, promising quality “as good as or better” than national brands. “We push our manufacturers to create private brands that can be better,” he adds. Product development is aggressive for Wild Harvest, Supervalu’s natural and organic brand. “Consumers are looking for cleaner ingredients,” Young says, explaining that the brand has actually dropped the descriptor “natural” in favor of “free-from,” which he says resonates better with consumers. The brand has launched more than 200 items over the past several months, with David Young, more on the way. VP Private Brands, Supervalu Inc. Culinary Circle,
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Essential Everyday: The company’s flagship brand includes about 2,500 products across the store, including staples, prepared foods, ingredients and other products, priced at least 10 percent below national brands. The brand encompasses beverages, breakfast products, canned goods, condiments and spreads, ds, dairy, frozen, baking, g, pantry staples, snacks, s, household items, and cleaning ng supplies. es.
Wild Harvest: A line of more than 300 products free from “more than 100 undesirable ingredients” such as high-fructose corn syrup, trans fats, and artificial colors and flavors. The line includes baby items, baking ingredients, beverages, canned fruits and vegetables, cereal, dairy, eggs,
Supervalu’s upscale gourmet brand, has caught on among independent retailers. “Our customers are telling us they want more of it,” Young says. Meanwhile, the Equaline brand of over-the-counter medications, vitamins and supplements enjoys “good acceptance and distribution.” Supervalu is making R&D surrounding its private brands a priority. With a team of 20 product developers, the company is expanding R&D operations at its Minneapolis-area headquarters to include test kitchens — staffed by culinary experts and quality assurance personnel — for the development of private-brand products. “Our independents look upon Supervalu to guide and protect them when it comes to our products,” Young says. “We go through a great deal of effort with our manufacturers to make sure our product specifications are exactly what end up on the shelf.” Since coming on board, Young has led a reorganization of his department, placing it under a single business manager to eliminate duplication of some roles and responsibilities. “Suppliers were getting frustrated because decisions were taking so long,” he explains. “Execution is now much more efficient, and people are accountable. The window of opportunity closes quickly, and we want to make sure to take on every opportunity.” Part of that is staying aware of “niche operators popping up around the country,” retailers like Lucky’s and Fresh Thyme. “They’re key competitors to our independents. That’s why we’re pushing our Wild Harvest brand —
| Progressive Grocer | Ahead of What’s Next | February 2015
frozen foods, meat, pasta, rice, beans, sauces, and snacks. Arctic Shores: Frozen seafood, including shrimp, tilapia and salmon.
Culinary Circle: Premium restaurantinspired foods, including on-the-go meals, frozen prepared foods, specialty meats, cheeses, desserts, breads and pizzas.
Equaline: OTC medications, vitamins and supplements for adults and children.
Baby Basics: Products for babies and toddlers, including diapers, formula, shampoos, lotions and wipes.
Carlita: Mexicanstyle foods, including chiles, seasoning mixes, tortillas, salsas and dips.
it keeps our customers in our stores,” Young says. “This is where our customers look to us to defend market share and keep customers in their stores on a regular basis.” Young’s team keeps an eye out for new product trends both here and abroad, “not only from a product standpoint, but from a packaging standpoint — the look, style and feel of what attracts customers to our product line,” he notes. Among the challenges facing the private-brands team: keeping up with demand for certain products like organ-
Farm Stand: Fresh fruits and vegetables.
Stockman & Dakota: Hand-trimmed, USDA Choice Angus beef.
Java Delight: Artisan-blended 100 percent Arabica coffee in 27 varieties.
Stone Ridge Creamery: Ice cream, frozen yogurt and novelties.
Shoppers Value: Everyday items and family staples at value prices.
Superchill: Beverages such as carbonated soft drinks and waters.
ics, Young says, a category growing by double digits, in which demand is outpacing supply. Meanwhile, Young and his team will keep pushing ahead with product development, especially niche items to give customers a competitive edge. “I think there is a gap versus the way we’ve done things in the past. But with the talent we have now, I’m very excited about what we’re going to be bringing our customers,” he says. “The thing we emphasize with independents: These are not our brands, these are their brands. We want them to know they own these brands as much as we do — and they’re asking for more.” PG
February 2015 | progressivegrocer.com |
35
Grocery
Beverages
Still
Growing As consumption of soda falls, interest in healthier noncarbonated beverages experiences a surge. By Bridget Goldschmidt
F
or many consumers these days, carbonated beverages seem to have lost their fzz. According to Schaumburg, Ill.-based Nielsen, sales dollars for the category fell 1.9 percent for the 52 weeks ended Nov. 22, 2014, on top of declines of 1.9 percent and 4.3 percent for the comparable time periods in 2012 and 2013, respectively. “As part of taking responsibility and control of their health, consumers are reducing their intake of sugar in beverages,” explains Kristen Bodenstein, director, beverages at Stamford, Conn.based Daymon Worldwide. “Tis is driving the steady growth of categories like still, unfavored bottled water.” She points out, however, that soda-averse shoppers are indulging their lingering love for bubbles by “turning to sparkling water, which is usually unsweetened or made with natural/artifcial sweeteners.” Continues Bodenstein, “In order to leverage ongoing consumer health-and-wellness trends, noncarbonated beverages are expected to remain focused on healthy/functional oferings.”
Game Changer One manufacturer capitalizing on this rising consumer interest is Lakeville-Middleboro, Mass.-based Ocean Spray, which is, of course, synonymous with cranberry products. Recent research has indicated that the tiny red fruit not only plays a rule in urinary tract health, but also may protect the heart and maintain blood sugar levels. “Retailers can expect more beverages to emerge into the marketplace that provide a variety of unique health benefts that go beyond just vitamins and minerals, while also meeting the need for great taste,” notes Kelly Reilly, director, global innovation at Ocean Spray, adding that this past fall, the company “introduced a ‘game-changer’ within the functional beverage landscape.” Tat game-changer was PACt cranberry extract water, Ocean Spray’s frst foray into the water aisle, which contains PACs, or proanthocyanidins — “powerful elements found deep inside cranberries, to help cleanse and purify your body better than water alone,” explains Reilly. “Our team of research experts has been working for over 10 years to fnd a way to extract and preserve cranberry’s unique A-Type PACs, creating a patented process resulting in a concentrated liquid. To make PACt cranberry extract
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| Progressive Grocer | Ahead of What’s Next | February 2015
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Beyond the center store beverage and bottled water aisles, Coca-Cola’s activities in the chilled noncarbonated beverage segment include the rollout of Fairlife, an ultra-filtered milk with 50 percent more natural protein, 30 percent more natural calcium and 50 percent less sugar than ordinary milk. Set to launch officially early this year, the beverage will be distributed by the Atlanta-based company’s Minute Maid division and sold at a price similar to other premium value-added milks. Coca-Cola has also introduced three Simply Juice Drinks flavors, Fruit Punch, Tropical and Mixed Berry, in 59-fluid-ounce bottles, and two flavors, Fruit Punch and Tropical, in 11.5-fluidounce single-serve packaging. Additionally, the company’s Zico Premium Coconut Water, already available in shelf-stable varieties, recently launched Chilled Premium Coconut Water & Juice Blends, an innovative line “which marries pure chilled coconut water with fruit juice,” notes a spokesman for the brand. Featuring five naturally occurring electrolytes and nearly half the calories of regular fruit drinks, the chilled juices come in three flavors: Orange Juice Blend, Pineapple Mango Orange Juice Blend and Zico Natural Chilled Coconut Water.
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| Progressive Grocer | Ahead of What’s Next | February 2015
water, the extract is then added to purifed water.” According to its tagline, PACt features the “Power of 50 Cranberries” in every bottle, without all of the sugar and calories of traditional cranberry juice and juice drinks — just 10 calories and 2 grams of natural sugar per 16-ounce bottle. Te four-SKU line also refects consumer demand for clean-ingredient products, with a mere seven ingredients. To promote the new beverage, Ocean Spray has “embarked on a fully integrated marketing campaign, including PR, radio advertising, digital, social and product sampling,” says Reilly. “Tis fall, we kicked of our initial West Coast launch with Maria Menounos, E! Entertainment TV host and two-time New York Times best-selling author, to help us inspire consumers to hydrate in a healthy way … via PR events and social media. Beginning in 2015, PACt water will be available nationwide, and we will employ additional marketing tactics such as TV advertising next spring for our national launch.” Already available at major retailers in California and Nevada, as well as online, PACt benefts from Ocean Spray’s “distribution partnership with PepsiCo to ensure consumers can fnd [the beverage] everywhere they shop,” observes Reilly, adding,
“We’ve created several point-of-sale materials, including free-standing, in-store displays and advertising materials such as cold door clings.” According to Reilly, the product “provides a peek under the tent in terms of our future direction towards providing consumers with multiple options to address their needs.”
Lots to Choose From For Te Coca-Cola Co., which produces a wide range of noncarbonated beverages in addition to its iconic carbonated oferings, the issue comes down to providing plenty of options. “Consumers are looking for choice and variety, both in carbonated and noncarbonated beverages,” says a spokesman for the Atlanta-based beverage giant. Still, the spokesman acknowledges that noncarbonated choices have made inroads on soda’s once unchallenged dominance. “In the third quarter of last year, we gained value share in still beverages in North America, marking the 29th consecutive quarter that the noncarbonated beverage portfolio has either gained or maintained value share,” he afrms. “Specifcally, we saw volume growth in tea, energy drinks and water.” Te company partly attributes this growth “to the fact that one of our main global priorities is to strategically expand our proftable noncarbonated beverage portfolio. And when looking at the various categories, it’s the well-marketed, leading brands that are achieving and driving growth.” Te Coca-Cola Co.’s plans in regard to noncarbonated beverages include continuing “to invest in our core growth priorities where we are a leader in juice, juice drinks and enhanced hydration,” the spokesman notes. Tis investment includes various marketing and merchandising strategies with regard to certain brands. For its Vitaminwater line, the company “developed gravity-fed roller racks to dispense … 20-fuid-ounce bottles,” says Ron Renner, VP, Glaceau brands commercialization. “Tis merchandising solution has signifcantly improved the organization and overall presentation of the various favor varieties, making the product much easier to shop. We are currently expanding this
innovative solution to create additional value in this important category.” Among Coca-Cola’s RTD tea brands, Gold Peak Tea, whose oferings include shelf-stable 18.5-fuid-ounce bottles, will reprise “Te Taste that Brings You Home” campaign in 2015, following strong sales growth when it ran last summer. “By broadening the target audience for
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February 2015 | progressivegrocer.com |
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Grocery
“One of our main global priorities is to strategically expand our profitable noncarbonated beverage portfolio.” —The Coca-Cola Co.
Beverages
the campaign to include adults in their mid-20s up to their late 40s, the brand is focusing on consumers in various stages of life,” explains a spokesman for the brand. “Te campaign will run from June to October in print/tablet, out-ofhome and digital.” Te organic Honest Tea line, meanwhile, “continues to merchandise and partner with other like-minded brands across all our product lines,” notes a spokesman for the brand. “For example, Honest Kids is part of Rock the Lunchbox, a program and microsite created with several other brands. Rock Te Lunchbox ofers tips and suggestions for and by parents who pack lunches. In its second year, we saw a 300-plus percent increase in fan actions and a 400 percent increase in total impressions year-over-year.” Te spokesman adds: “With one of our [retail] customers, we also ofered our ready-to-drink PET Honest Tea line and Honest Kids pouches alongside snacks in select locations during our National Honesty Index social experiments this past summer. We
conducted our lighthearted test to see whether people would pay for or steal a snack when they thought no one was watching, which reinforced the honesty messaging.” Te brand has updated its look with a proprietary embossed plastic bottle and revamped label graphics, in addition to improving the favor of its Peach Tea SKU and converting its Honest Ade juice-based drinks into three herbal tea varieties: Pomegranate Blue, Orange Mango and Cranberry Lemon. Te new items began arriving on store shelves last month. As noncarbonated beverages grow ever more popular, shoppers can expect even more innovation in the segment. “Te future is bright for noncarbonated brands,” Te Coca-Cola Co. spokesman says. “As consumers continue to look for more variety and choices, we will continue to meet their evolving needs with brand extensions, new favors, sweeteners and packaging. As in years past, the continued growth of still beverages will remain a central element of our overall portfolio strategy moving forward.” PG
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RTE Cereal
Super Bowl
Current tough times aside, ready-to-eat cereals can maintain their primacy by upping their innovation and marketing prowess. By Bridget Goldschmidt
“I
t’s no secret the cereal business is going through some challenges,” says Tony Shurman, general manager at Parsippany, N.J.-based Post Foods LLC, and recent sales fgures for the ready-to-eat (RTE) segment bear him out: According to Schaumburg, Ill.-based Nielsen, sales dollars of such products slid 6.1 percent for the 52 weeks ending Nov. 22, 2014. Still, despite a serious challenge from the growing hotcereal segment, “RTE cereal remains the No. 1 choice for breakfast for myriad reasons, including its convenience and value for price,” asserts Darren Mahafy, VP marketing at Richmond, British Columbia-based Nature’s Path Foods. “Tat said, conventional cereals are declining, while organic options continue to surge as consumers look for more nutritional value, and have become more aware of what’s in their food. An increasing number of shoppers are looking to avoid GMOs, pesticides or artifcial ingredients, and the data clearly refects this shift to better-for-you cereals.” Tat means that those who like their breakfast straight from the box — or, increasingly, the reseal-
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| Progressive Grocer | Ahead of What’s Next | February 2015
able bag — have been increasingly gravitating toward granola and other “natural-type” cereals, sales of which leapt up by an impressive 12.7 percent during the previously mentioned time period tracked by Nielsen. Nature’s Path’s most recent contributions to the segment are four gluten-free organic SKUs introduced in 2014, two apiece under the EnviroKidz and Crunchy Sunrise brands. “Gluten-free is still key, macro nutrient benefts such as high fber and protein for long-lasting satiety will remain a strong focus, and sprouted grains are really taking of right now,” observes Mahafy. “Chia seeds, ancient grains and coconut are still hot ingredients.” “Consumers are looking for convenient, healthy, nutrient-dense food options,” afrms Leslie Sabino, senior business manager, cereal category, and supplier management lead at Stamford, Conn.-based Daymon Worldwide. “Cereal is an afordable part of consumers’ breakfast routine, while it also caters to the health-conscious side of their busy lives.” Of course, along with all of that, it’s got to be delicious, too. “Kids are the largest consumer of cereal, and
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parents know that if a cereal doesn’t taste good their kids won’t eat it,” notes Amanda Madrid, senior buyer at Bentonville, Ark.-based Wal-Mart Stores Inc. Among the mega-retailer’s private label oferings, “we’ve seen our customers really enjoy our Great Value line, including the brand’s Sugar Frosted Flakes, Honey Nut Spins and Fruit Spins cereals,” she adds. Another key to keeping consumers engaged with the category is coming up with exciting items, as well as inventive ways to sell them. “Consumers are always looking for new and better products that will ft their needs,” says Alex Cabrera, category director at Anaheim, Calif.-based Northgate Gonzalez Markets, whose 42 stores cater primarily to Hispanic shoppers. “Innovation always drives customer interest,” echoes Madrid.
Cereal is something everyone knows and loves, and Post is honing in on our key consumers to reach the right audiences at the right times.” —Tony Shurman, Post Foods LLC
What’s New Post certainly excels at product innovation, which has helped it to “signifcantly [outperform] the category on the whole,” says Shurman. “Our success has been driven by a combination of better execution, stronger demand generation, and a concerted and consistent efort to enhance product quality to delight consumers.” Among the company’s “great lineup,” he notes: “We’ve expanded the Grape-Nuts line with new Grape-Nuts Fit granola, and added Post Shredded Wheat Crunch to our traditional ready-to-eat cereal lineup. ... Additionally, a number of our cold cereals now have third-party non-GMO verifcation through the Non-GMO Project.” “We’re putting our consumers at the center of our new product innovation by rapidly addressing evolving food trends and investing in areas that our consumers value, including added protein, glutenfree and products made with simple ingredients,” says Camille Gibson, VP of marketing for the Big G division of Minneapolisbased General Mills, whose U.S. cereal sales continue to outperform the category. Recent introductions from the company include Cheerios + Ancient Grains, Cascadian Farm Protein Granola and French Toast Crunch. Shaking Up the Category When it comes to selling product, “Post works to reach consumers and ofer value both in and out of store,” observes Shurman. “In store, Post’s strong eforts to align aggressive promotional pricing with strong display have led to [our] having one of the strongest lifts of any manu-
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| Progressive Grocer | Ahead of What’s Next | February 2015
facturer in the category.” Going forward, “we see signifcant opportunities for packaging innovation, enhanced nutritionals, freshness [and] leaner/higher-protein items, as well as unique grain and favor combinations,” he says. Meanwhile, the manufacturer’s marketing eforts aim “to shake up the cereal category,” he says, pointing to a recent Post Shredded Wheat campaign that played up the cereal’s heart-healthy attributes through an integration with the popular TV game show “Wheel of Fortune.” “For Grape-Nuts, a brand popular with outdoor enthusiasts and thrill seekers, we’ve headed to Antarctica and brought our consumers along for the ride through a dynamic social media campaign,” adds Shurman. “On the Pebbles brand, we’ve enlisted tween- and teen-friendly celebrities to help create a little fun competition between our Fruity and Cocoa varieties. Cereal is something everyone knows and loves, and Post is honing in on our key consumers to reach the right audiences at the right times.” “Our sales and marketing teams work together year-round to ensure successful execution of programs and promotions across all categories,” says Mahafy, of Nature’s Path. “We analyze regional data in each channel across our business and other brands to ensure we are competitive and to maximize return on investment. We recently executed a consumer display program under our EnviroKidz brand which allowed consumers the chance to win an EcoTrip to Costa Rica. Te program built consumer oftake and brought new shoppers to the RTE category.”
The Hispanic Factor At retail, Northgate’s Cabrera attributes his company’s positive cereal sales for the past three years to a combination of “aggressive pricing, increased ad activity, innovation and promotion,” along with an expanded better-for-you selection and product itemization. He advises, however, that as well as addressing such concerns as health, convenience and value, those that want to grow the “struggling” category “need to market more to the Hispanic customer. Tis is the fastest-growing segment of our market, but they do not consume cereals for breakfast as much as other segments of the market; they prefer other foods.” With Hispanics’ help, RTE cereal can break new ground in favors and presentation, lifting itself out of its present doldrums and maintaining a robust presence on supermarket shelves for years to come. PG For more on the category, visit Progressivegrocer.com/cereal.
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Find out more at MOMbrands.com/bull * Source: Nielsen Homescan, EOY Market Summary 52 week ending 10/26/13.
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The Big Chill Driven by organic, natural and ethnic offerings, the frozen food category begins a warmup that hinges on sustained, collaborative efforts. By Lynn Petrak
I
n a year when the movie “Frozen” became ubiquitous after breaking box ofce records, frozen foods are performing better than expected at the supermarket freezer box. Bucking a trend of declining to fat sales in recent years, the category has revealed a few bright spots, aided by collaborative marketing efforts to achieve greater consumer interest and sales. According to Rockville, Md.-based market research publisher Packaged Facts, sales of frozen foods, spanning entrées/pizzas, sides and appetizers/snacks, are expected to grow from $22 billion in 2014 to $23 billion in 2015. Chicago-based market research frm IRI reports increased sales over the past year across several categories, including frozen breakfast foods, side dishes, pizza, ice cream, cookies and “other” frozen foods. The uptick in some frozen food sectors may be tied to a still-recovering economy, but renewed interest has also been attributed to shopper interest in other aspects of frozen foods. In its recent report, “Frozen Foods in the U.S.: Hot Meals, Sides and Snacks,” Packaged Facts found that consumers are warming up to frozen foods again because of the convenience of such foods, a greater awareness of the freezing process, and the addition of more natural and organic options.
To that end, the company has pegged organic and better-for-you frozen foods as particular segments to watch. As noted in its report, shopper concerns about the freshness and/or ingredients in frozen foods are alleviated by the perception that natural or organic frozen oferings are healthier and prepared and packaged in a quality way. “Tis has been the segment defying the frozen food decline and the one pointing the way toward revitalizing frozen,” notes Howard Waxman, a Packaged Facts analyst who worked on the report. Still, Waxman cautions that more work is needed for a long-term overall category upswing. “Yes, there is a new dynamic in the frozen food sector, but it is still mostly in the form of potential, and very early on in any foreseeable turnaround,” he stresses. “Frozen foods face a tough climb.” Waxman points to tough competition across the retail sector, including fresh natural and organic areas. “Tey are not competing in a neutral environment where all the sector has to do is get better, and the steps being taken by retailers to provide more convenience to shoppers has not really helped the frozen foods sector,” he points out. “So frozens not only have to get better, they have to do so rapidly in order to catch up to these other modes and even fnd ways to exceed the improvements in the alternative food categories.”
“There is growth potential in general, but it’s at the mercy of manufacturers’ ability to meet changing consumer needs, whether that’s for better-for-you or natural products, or something else.” —Amanda Topper, Mintel
February 2015 | progressivegrocer.com |
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Information, Please Amanda Topper, food analyst for Chicago-based market research frm Mintel, agrees that success in frozen foods hinges on the pace and scope of new product oferings. “I really think there is growth potential in general, but it’s at the mercy of manufacturers’ ability to meet changing consumer needs, whether that’s for better-for-you or natural products, or something else,” she observes. Ensuring that consumers know more about the way frozen foods are made is also key to overcoming any hurdles in the freezer section. “I believe that educating the consumer is a critical factor,” says Waxman. “Marketers need to stress important information such as that the products
are fresh at the moment of freezing. Tey need to create for themselves the opportunity to say, ‘A frozen organic is better for you than a refrigerated ‘fresh’ product full of artifcial or genetically modifed ingredients.’” Eforts are continuing to expand educational eforts and new product development. Last May, the McLean, Va.-based American Frozen Foods Institute (AFFI), with the support and insight of its major manufacturer members, rolled out a national category education and promotion initiative, “Frozen. How Fresh Stays Fresh,” now a third of the way through a three-year, $30 million program to reach consumers across a variety of channels with messages about frozen foods. PG
PR O MO TI O N S
The Promo Code From industry campaigns to in-store sampling, inventive promotions help focus shoppers on the freezer. By Lynn Petrak s both niche and international manufacturers have been busy on the R&D front to develop frozen foods that meet the needs and palates of today’s consumers, the cold, hard truth is that drawing shoppers to the frozen case is imperative in getting them to buy — and keep buying — products. To spur supermarket browsers to open the freezer doors, grocers, manufacturers and industry as a whole are devising and executing a variety of promotions that encompass traditional elements like coupons, signage and media campaigns, along with some unique eforts. Te National Frozen & Refrigerated Foods Association (NRFA) is putting muscle behind its work, in anticipation of National Frozen Foods Month in March. Along with point-of-sale materials made available to retailers, Harrisburg, Pa.-based NRFA is dropping a national free-standing insert (FSI) to a 20 million circulation in Sunday newspapers across the country at the beginning of March, with the tagline “Take a Fresh Look at Frozens.” A $10,000 consumer sweepstakes and a Facebook Freezer Giveaway (sponsored by St. Louis-based refrigeration equipment company Hussmann) are part of the 2015 National Frozen Foods Month program, too.
A
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| Progressive Grocer | Ahead of What’s Next | February 2015
NFRA is also providing members with an idea book featuring more information on the promotion and how they can maximize it through their own initiatives. Meanwhile, the organization’s direct conduit to consumers includes “Easy Home Meals,” a year-long social media presence on its Facebook, Twitter and Pinterest pages. In another bid to reach out to consumers, NRFA has assembled the Cool Food Panel, an online community comprising various food and lifestyle industry bloggers who will regularly share recipes, trends and ways to fnd and enjoy frozen food. According to the association, its collective communications programs have generated nearly seven times more impressions for frozen foods over this past year than the previous year. Likewise, the American Frozen Food Institute (AFFI), in McLean, Va., is continuing its multiyear, multimillion-dollar category education and promotion initiative, Frozen. How Fresh Stays Fresh. Te program includes TV and print advertising, along with online engagement and both in- and out-of-store promotions that will take place this year and in 2016. At the store level, beyond campaigns from national industry organizations, retailers can deploy various tactics to engage consumers at the freezer. Mike Paglia, director of retail insights for Boston-based Kantar Retail, says that a mix of traditional and new promotions can help generate excitement in frozen foods, which have experienced fat or declining sales in recent years, with the exception of some new product segments. “All of the tried-and-true approaches
“Frozen meals’ incremental value may be the extra time spent with your family around the dinner table, or how a frozen meal might be better for you than going out for fast food.” —Mike Paglia, Kantar Retail
around promotions will never go away, but in an age when we are seeing a landscape with shoppers responding to increased demands for value, particularly diferentiated value beyond price, other approaches will be important. Just having a good promotion isn’t going to cut it anymore,” he asserts. More efective and creative cross-merchandising is one way to go above and beyond. “Tere are a couple of things you can do,” notes Paglia. “Certainly, cross-merchandising is a real value, particularly if you’re cross-merchandising with private label. If you’re a supplier, that is a win-win, because both the supplier and the retailer are getting a bit of the lift on the [cross-promoted] items.” Cross-promoting with fresh or prepared foods that may at frst seem competitive with frozen foods is another way to give a jolt to frozens. “Tere is something to be said for the ‘if you can’t beat ’em, join ’em’ maxim,” he points out. Retailers can also boost their sampling programs to get people to take a new look at frozen foods. “At frst, you might think a frozen meal is tough to sample, but there’s a lot to be said for setting up a demo table in the freezer aisle and saying, ‘Here, try this, and here’s where you can fnd it.’ Tat is an important
experiential element,” says Paglia, adding, “Retailers and suppliers will say that adds labor expense, and that’s true to an extent, but if you can calculate the life or return on investment, then it’s worth it.” More explicitly sharing the benefts of frozen foods to shoppers is another way to promote and move such products, notes Paglia. “It’s important for the supplier to demonstrate the relevant or incremental value of a product. In frozen meals, it may be the extra time spent with your family around the dinner table because of their convenience, or how a frozen meal might be better for you than going out for fast food,” he remarks. Howard Waxman, analyst for Rockville, Md.based Packaged Facts, agrees that new ways of thinking about promotions are just as important as coming up with new products. “Out-of-the-box is the right direction,” he declares. According to Waxman, even a little humor goes a long way. “Put a video screen next to the freezer case or a next to a demo table where someone is cooking frozen snacks or appetizers, showing things you can do while waiting for your frozen snack to be ready — like dancing to the ‘Minute Waltz’ — and things you can’t do — like reading all of the book ‘War and Peace,’” he quips. PG
AdvertOrIAL
Talking with...
Fred Liggero VP of Sales and Marketing, Delizza Pattisserie It’s somewhere between New Year’s resolutions and the beginning of swimsuit season, so many shoppers are looking for ways to satisfy their cravings while still trying to stay ft or lose weight. Delizza Patisserie in Battleboro, NC, offers a variety of products for all palates, cravings and eating plans.
People don’t have to feel guilty or ask permission to enjoy these desserts. Eating healthy doesn’t mean the end of desserts as you know it – it’s just as much about how much of certain foods you eat as it is what you eat. We tell our customers to go ahead and indulge a little, and enjoy the fact that you don’t have to clean up aferwards.
Progressive Grocer: What does Delizza Patisserie offer for consumers who savor the indulgence of sweets but are looking to control portions or minimize calories?
Fred Liggero: When we say all of our desserts are only 50 calories –we mean ALL of them. Each miniature dessert has 50 calories, with a selection that includes Belgian Mini Cream Pufs, Chocolate Covered Mini Cream Pufs, Belgian Mini Eclairs and Belgian Double Chocolate Mini Eclairs.
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PG: How do these 50-calorie desserts also serve shoppers’ desire for desserts that are both satisfying and convenient? FL: Tese desserts are easy to prepare – it’s as simple as thawing and serving. If you have the time and inclination, you can also add your own touch, like drizzling chocolate sauce over some cream pufs or pairing some fresh berries with an éclair on a plate. For more information, visit delizza.us.
| Progressive Grocer | Ahead of What’s Next | February 2015
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BR E AK FAS T
Top of the Morning The breakfast daypart is a bright spot in the grocer’s frozen case. By Lynn Petrak
T
he sun seems to be rising on the breakfast daypart when it comes to frozen foods. Recent research from Chicagobased IRI reveals slightly declining overall sales for frozen entrées and meals geared toward lunch and dinner occasions, but slight increases for frozen breakfast foods. According to data for the last 52 weeks ending in late December 2014, overall sales of frozen breakfast foods are now just less than the $3 billion mark ($2.945 billion). Within breakfast, sales of frozen hand-held breakfast items and frozen breakfast entrées edged upwards, even as sales of frozen bagels and mufns dipped. Te upswing in hand-held breakfast entrées is evident in a variety of new products falling under that description. Dinuba, Calif.-based Ruiz Foods, for its part, has found breakfast to be a welcome daypart. “Our El Monterey Signature PM Burrito favors and our El Monterey Breakfast Burrito … both refect exactly what today’s consumer is looking for,” President and CEO Rachel Cullen notes, adding that consumers seek convenient items that are high in protein. “Consumers know that protein helps “Consumers them feel full longer, so they are reaching for know that protein high-protein foods, especially in the morning or helps them feel for snacking occasions.” full longer, so they are reaching for high-protein foods, especially in the morning or for snacking occasions.” —Rachel Cullen, Ruiz Foods
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Hands-on Innovation Many other brands have developed hand-held breakfast oferings. Artisan Bistro’s frozen portfolio includes entrées for lunch and dinner as well as breakfast. “We ofer a range of products and favors that appeal to convenience-focused food lovers of all kinds, including entrées, hand-held burritos and breakfasts, for any time of day,” says CEO Leo Grifn. To that end, the Irvine, Calif.-based company recently launched Beyond Breakfast items made with sustainable ingredients that are at least 70 percent organic, including cage-free egg whites.
| Progressive Grocer | Ahead of What’s Next | February 2015
Meanwhile, the Lean Cuisine brand, from Solon, Ohio-based Nestlé USA, has added a new morning collection that includes a Turkey Sausage Scramble, a Veggie Scramble, a Turkey Sausage English Mufn and a Veggie Egg White English Muffn. Another Nestlé brand, Stoufer’s, recently rolled out a line of Morning Classics, including a Bacon & Egg Scramble and a Southwest Scramble. Te venerable frozen breakfast brand Eggo, from the Battle Creek, Mich.-based Kellogg Co., recently debuted breakfast sandwiches, too, with wafe-style bread encasing sausage, egg and cheese, among other varieties. In another twist on portability, stalwart breakfast player Jimmy Dean, part of Chicago-based Hillshire Brands, has come out with breakfast items on a stick, including Original Pancakes and Sausage, Blueberry Pancakes and Sausage, Very Berry Pancakes and Sausage, and Apple Cinnamon Pancakes and Sausage. And the Pillsbury brand, from Minneapolis-based General Mills, has introduced single-serve Heat and Go miniature wafes and pancakes for the freezer section.
Bigger May Be Better On the other side of the portion spectrum, larger packages of breakfast foods are in demand as well. According to Howard Waxman, food analyst at Rockville, Md.-based Packaged Facts, balancing individual and family consumption is one way for frozen food companies to meet myriad needs and boost their market share. “Frozens can take advantage of the multiple family-size needs of consumers,” he points out. “Packaging can contain multiple discreet individual servings that can be accessed by a single person for several dining occasions, or by a couple using two individual servings, or a family of fve consuming all the individual servings in a package.” PG
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Frozen Snacks’ Appetite for Success Organic and ethnic nibbles are among those beginning to heat up the segment. By Lynn Petrak
F
rom pizza rolls to egg rolls, or popcorn chicken to pretzel poppers, frozen snacks fulfll cravings in a convenient, easy and afordable way, after just a few minutes in the microwave or a quick pop in the oven. Indeed, although they’re on the smaller side of portion sizes, appetizers and snacks are big business: According to Chicago-based research frm IRI, sales of frozen appetizers and snacks hit $1.8 billion over the 52 weeks ending Dec. 28, 2014.
The appetizer and snack category is benefiting from a spillover of the restaurant trend of small bites, which fall somewhere between meals and traditional appetizers.
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In its special category report on frozen snacks, released last April, Chicago-based research frm Mintel predicted that sales of frozen snacks would reach $5.1 billion by 2018. According to that report, while growth in snacks has been fairly negligible in recent years, future growth is expected because of consumers’ more frequent snacking habits and interest in convenient and afordable foods, along with more product introductions and reformulations from manufacturers. According to Mintel Food Analyst Amanda Topper, such reformulations and product launches will help propel growth, particularly in items that are considered better-for-you and that include “real” ingredients. She cites the success of some brands that have touted the organic and natural aspects of their products. “In frozen snacks, we still see people buying pizza rolls and hand-held pockets, but there is a bit of a balance now, as we’re seeing organic gain traction,” she says. “I think we’re seeing a trend
| Progressive Grocer | Ahead of What’s Next | February February2015 2015
toward cleaner product labels and more information on the package, whether it’s the calorie and fat content, or if the product contains real cheese, for example.” Authentic ethnic snacks are also gaining a foothold among increasingly discerning consumers, she notes. Analysts’ fndings are playing out in a number of ways in the marketplace. In the organic segment, for example, Petaluma, Calif.-based Amy’s Kitchen is fnding an audience with items like organic handheld pockets, burritos and snacks, including organic bean-and-cheese burritos and spinach pizza. Likewise, the Evol line of frozen organic foods, based in Boulder, Colo., includes unique snacks like its Street Tacos, a hand-held item that aims to evoke the cachet of gourmet food trucks. Shoppers can fnd more authentic ethnic snacks and appetizers in the freezer case, too. Stamford, Conn.-based Safron Road, for instance, markets its snacks as hors d’oeuvres, with distinctive varieties like Turkish Figs and Goat Cheese, and Crispy Samosas with Saag Paneer. Te appetizer and snack category is also benefting from a spillover of the restaurant trend of small bites, which fall somewhere between meals and traditional appetizers. King & Prince Seafood, of Brunswick, Ga., for one, has introduced a line of Small Plates/Bar Bites, including Jambalaya Fritters, Crispy Southern Flounder, and Lobster & Seafood Pups. Meanwhile, the nation’s leading food companies are focusing R&D eforts on new and improved snacks and appetizers. Solon, Ohio-based Nestlé USA, for its part, has reformulated and rebranded the Hot Pockets and Lean Pockets lines, a move that spurred increased sales, and the venerable Tyson brand, based in Springdale, Ark., continues to expand its line of Any’tizers, which now ofers options like Grillin’ Wings Rotisserie Flavored Wings. Topper agrees that in snacks, as with other frozen foods, consumers want to know more about how the products are made and why they would be on par with fresh counterparts. “Tere is a need to promote the fact that these foods can be as good as, or better than, fresh,” she says. PG
Frozen seafood has never looked so good! And now, quality and convenience look even better with the introduction of our newest Signature entrée. Succulent lobster, creamy potato cakes, and a cheesy herb sauce, make our NEW Lobster Au Gratin a delicious addition to our value added line. Explore new innovations in the category with Sea Best® and realize the benefits of increased sales and profits, by driving sales to your frozen seafood aisle.
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En Tr é E s
Front and Center Free-from ingredients and ethnic flavor profiles enhance appeal of frozen entrées. By Lynn Petrak V dinners have come a long way. Besides the fact that people rarely heat up frozen dinners and eat them on metal trays in front of a television anymore, the nature of heat-and-eat entrées has also evolved with the times. Reheatable pot pies may still be around, but you’re just as likely to fnd a lobster casserole topped with puf pastry as turkey and mashed potatoes. Likewise, fried chicken is still sold in the freezer case, but you can choose from all kinds of chicken-based frozen entrées, from Malaysianstyle chicken curry to lemongrass chicken to
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organic blue cheese-studded chicken patties. According to Howard Waxman, analyst for Rockville, Md.-based Packaged Facts, frozen food makers are fnding that they must mix it up, in terms of favor, ingredients, format, size, packaging and other attributes, if they’re going to move ahead at a time of tough competition not only with other foods on the shelf, but also with the in-store deli and prepared food section.
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Adv ertISeMeN t
Te Flavors of Japan: Fusion-Forward Cuisine for the Consumer with Authentic Japanese Ingredients Te American consumer is constantly searching for new food ideas with a focus on health and convenience. Te cornerstone of modern Japanese cooking is based on bright, clear favors that allow the quality of the ingredients to come forward without masking the textures and favors of the center of the plate. Japanese favors can be added to a simple pasta, rice or casserole to enhance any dish. As the American palate evolves the quest for new favors makes complexity and depth of Japanese ingredients a perfect addition.
Learning, Teaching and Tasting Te Japan External Trade Organization (JETRO) has partnered with New School of Cooking in Los Angeles to promote the use of Japanese ingredients in everyday cooking. Te school’s chefs have created a series of signature dishes using these bright and unique favors which are being showcased in a series of demonstration-tasting events at New School’s Culver City Campus. New School’s chefs are actively scheduling visits with supermarkets and food venues to educate consumers on the opportunities to use authentic Japanese ingredients in everyday cooking.
The Mystery of Umami Te Japanese identifed this natural taste as something distinct from the typical sensations of salty, sweet and bitter. It translates as “pleasant savory taste” and brings a subtle and complex quality to any dish. Foods that are rich in umami are readily available in nature and include fresh tomatoes, cabbage spinach, celery, shellfsh and cured meats. Many Japanese products utilize umami to develop complexity while allowing the natural qualities of the ingredients to shine through. Fusion-Forward Cooking Most American chefs are busy creating what we have come to call fusion cuisine in a efort to marry the best elements of various ethnic traditions. Te home cook can achieve the same results by incorporating authentic Japanese ingredients, readily available in the local market, into every day cooking. According to noted culinary expert and chef Christopher Becker, “the addition of Japanese favors into a soup, basic rice dish, marinade or pasta can transform an ordinary dish into something incredible.”
Interested parties can contact New School of Cooking directly to schedule a demonstration and tasting at their location. All food professionals are welcome to attend future events at the Culver City campus. For more information: Pam Andreas, Director New School of Cooking 310.842.9702 contact@newschoolofcooking.com JETRO, Los Angeles branch 213.624.8855 lag-food@jetro.go.jp
“Retailers have taken the lead in meeting consumer demands for convenience. To a degree, this has excluded frozens, but there are openings to take advantage of the convenience of frozens.” —Howard Waxman, Packaged Facts
Waxman ofers some advice to marketers: “Figure out how to stay in the game, or drop out. Are frozens to go the way of the proverbial buggy whip industry? Will they become a low-end, last-ditch-only alternative to pricier ways to deliver convenience to customers, something you have in the freezer at home for some desperate situation, or something a large, low-income family might buy in lieu of alternatives that may be out of the reach of their budgets?” Amanda Topper, food analyst for Chicagobased Mintel, agrees that manufacturers and marketers are realizing that competition is stronger than ever, and that reaching consumers with new products and information is crucial. “I think the AFFI [American Frozen Food Institute] campaign is defnitely a start,” she says of the trade group’s multiyear, million-dollar promotional program.
Trending Healthy Consumers’ interest in organic and better-for-you frozen foods is evident in rising sales and interest in such products, according to market research from frms like Packaged Facts, Mintel and Chicago-based IRI. Te trend is also underscored by the acquisition
of smaller organic or niche companies by bigger names in the industry. “Tat’s what’s interesting — the larger manufacturers, like the General Mills and Kelloggs of the world, are buying smaller manufacturers to increase their presence in that area,” Topper notes. From startup and smaller companies to major manufacturers, there has been a variety of new product launches of organic, better-for-you and free-from entrées in the past year alone, in addition to meals made with “clean” ingredients. Tose products range from Perdue’s line of Simply Smart lighter breaded chicken to Mayan Harvest Bake and Lemongrass Coconut Chicken from Kellogg’s Kashi line, among numerous others. Another example is a line of organic meals from Irvine, Calif.-based Artisan Bistro. CEO Leo Grifn says that eating organic has become more commonplace among Americans, but it’s not always easy to do. “Cooking every meal from scratch isn’t practical for most shoppers, so consumers are learning it’s possible to combine convenience with
A DVE RTO RI A L
Kenny Hartman President, Respect Foods Respect Foods, Inc. is a marketer of frozen food in the RESPECT™ brand and supplier of other custom recipes in private label. Its products are available in grocery stores throughout North America. Their food specialties include better-for-you, clean label, and premium products.
Progressive Grocer: What are some trends you're seeing among consumers, in regards to demand for high-quality ingredients? Ken Hartman: Customers are looking for brands to raise the bar. They want fewer and more readable ingredients. If apple, maple, egg, and cheese are in the product’s name, shoppers want to find those same words in the ingredients. We respect their requests and deliver delicious sandwiches that have more than fifeen grams of protein for a hot, energy-packed breakfast in less than three minutes.
consumers desire breakfast products that are portable, microwavable, and easy to consume at the office. Millennial and Gen-X consumers are more health conscious than previous generatons. Consumer studies have shown they are looking for healthy, real food with no artficial colors, flavors, or preservatves. Finally with the launch of the RESPECT™ brand, those desires are met. We worked hard to create premium, hearty and nutritous breakfast sandwiches for everyone with fast-paced lives. Each of the three popular choices, RESPECT™ Apple Maple Chicken Sausage, Egg & Cheese, RESPECT™ Turkey Bacon, Egg & Cheese and RESPECT™ Double Egg & Cheese contain fewer than thirty easy-to-read ingredients and are available in single serve packages. For further informaton, please visit www.respectoods.com.
PG: Respect Foods recently unveiled a new line of frozen breakfast sandwiches for immediate distributon in North America. How do they respond to changing consumer preferences? KH: First, it’s important to recognize that the frozen breakfast category is growing rapidly. Category sales were over a billion dollars in 2014! The growth is atributed to the consumer preference for hot, on-the-go eatng. Working
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| Progressive Grocer | Ahead of What’s Next | February 2015
w men want RESPECT.
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“We want to help retailers to transform the frozen food aisle into a place where shoppers can find affordable, nutrient-dense meals made with organic, sustainable, glutenfree and non-GMO ingredients.” —Leo Griffin, Artisan Bistro
organic quality and to eat healthy frozen meals made with the same superior ingredients you can fnd in the produce section,” he says. Artisan Bistro’s organic entrées include such items as Wild Alaskan Salmon, Grass Fed Beef with Mushroom Sauce, the Tai Style Yellow Curry with Chicken Bowl and Wild Albacore Tuna Bake. Grifn says that more category innovations are in the ofng, as the organic options continue to grow. “We want to help retailers to transform the frozen food aisle into a place where shoppers can fnd afordable, nutrientdense meals made with organic, sustainable, glutenfree and non-GMO ingredients,” he notes. “We believe this will bring retail customers back to frozen and the category back to growth.” Meanwhile, Topper cites the Evol product line as another to watch. “Tat’s another brand I fnd myself talking about,” she asserts. “Te tone of their core values is transparent, and their product line goes to the trend of consumers wanting transparent packaging and easily recognized ingredients.” Te Evol line includes quesadillas and tacos that can be used for meals as well as snacks, in varieties like Fire Grilled Steak Quesadillas, made with beef raised without antibiotics, and Gluten Free Chicken Quesadillas. On the topic of gluten-free, many grocery freezer cases now include frozen entrées touting that attribute. Te Udi’s line of gluten-free foods, from Colorado-based Boulder Brands Inc., for example, has expanded to include more frozen gluten-free skillet meals such as Chicken Parmesan, Ziti & Meatballs, and Chicken Florentine. Frozen vegetarian dinners are also growing more prolifc. Qrunch quinoa burgers are one example, along with new oferings from established vegetarian/vegan/meatless brands like Kellogg’s Morningstar brand. Carson, Calif.-based CedarLane Natural Foods, for its part, recently added tamales to its line of vegetarian frozen entrées, which also includes Baked Stacked Eggplant and Low-Fat Garden Lasagna.
Ethnic Flavors Te fact that many organic, free-from, health-oriented and vegetarian entrées also feature decidedly global favors also speaks to the ongoing interest in cuisines and ingredients from around the world, spanning Asian, Latin, Indian and Mediterranean fare. Authentic Mexican favors, in particular, continue to gain traction among consumers, Hispanics and non-Hispanics alike. At Ruiz Foods, in Dinuba, Calif., President and CEO Rachel Cullen says the
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| Progressive Grocer | Ahead of What’s Next | February 2015
company’s pipeline has included many new items geared toward people looking for authentic tastes. “Te introduction of our Spicy Jalapeño, Bean and Cheese Chimichanga, as well as our Spicy Taco Picante Burritos, refects our innovation in response to the consumer’s desire for value and ethnic favors,” she notes. Such products also exemplify consumers’ collective embrace of bigger favors, a trend that has evolved over time. “When Ruiz Foods frst began manufacturing frozen Mexican food in 1964, we ofered burritos with a variety of heat levels — levels that we thought would be expected. What we quickly learned is that the non-Mexican palate was not used to heat, and, in most instances, while they were eager to try this new ethnic introduction to convenience and quality, they had not been introduced to a variety of Mexican spices,” she recounts. “Tis early consumer welcomed beef-and-bean, or bean-and-cheese combinations, but was hesitant to try jalapeños, picante or even chipotle. Today, however, consumers are asking for more and more.” Another thing that consumers seem to be asking for, or at least browsing, is frozen food from familiar names. Te trend toward entrées co-branded with fast-casual restaurant chains like P.F. Chang’s, TGI Fridays and Chili’s continues. Some stores have also found success carrying frozen items — usually pizza — from local independent restaurants. “We’ve seen co-branded products on a regular scale with national branded restaurants, and doing it with local restaurants totally caters to the trend of eating and buying local, with the convenience of preparing it whenever you want, and usually at a lower price point than buying on premises,” Topper notes. While these newer types of frozen foods are injecting vigor into a category that’s been sliding in recent years, Packaged Facts’ Waxman says grocers can think even more out of the box — literally, in the case of paperboard boxes in the freezer case. “Retailers have taken the lead in meeting consumer demands for convenience. To a degree, this has excluded frozens, but there are openings to take advantage of the convenience of frozens. It could take such forms as delivering frozen products that have been microwaved on route to the customer and are ready to eat upon delivery,” Waxman says. “And as retail stores add foodservice components, do the same in-store, like having several microwave stations or microwaves at each table for heating up frozen snacks. It is time to get creative, or be left behind.” PG
Si de d i S h e S
Side Kicks Variety and innovation drive interest in frozen side dishes. By Lynn Petrak he concurrent trends toward betterfor-you, organic/natural and favorful frozen foods, combined with greater education on the freezing process and resulting quality of product, are evident in the side dish segment of the overall frozen food category. Side dishes have long appealed to shoppers who are either making a main dish from scratch and are looking for a quick, easy accompaniment, or who are using the oven or microwave to heat an entire meal. Te segment remains popular today: According to Chicagobased market research frm IRI, sales of frozen side dishes were more than $334 million in the past year, a 7.78 percent increase from the previous year. Within the category, IRI’s data show that the Stoufer’s brand, from Solon, Ohio-based Nestlé
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USA, has had a pretty good run of late, with sales of its Simple Dishes (such as white cheddar mac and cheese, and creamed spinach) rising more than 8 percent. Omaha, Neb.-based ConAgra Foods’ P.F. Chang’s line of frozen side dishes, co-branded with the restaurant chain of the same name, also had a breakout year in terms of sales, according to IRI. As the success of the P.F. Chang’s line shows, greater variety attracts shoppers browsing the freezer case for side dishes. Just look at the humble potato: Basic frozen french fries, hash browns and mashed potatoes remain freezer case staples, but sweet potatoes in various frozen forms — from sweet potato fries to sweet potato pufs to mashed sweet potatoes — continue to edge into the space. Te same is true for other frozen side-dish stalwarts. Complementing its traditional pierogis, Mrs. T’s, from Shenandoah, Pa.-based Ateeco Inc., recently introduced a new Loaded Baked Potato pierogi. Aiming to reach ever-busy shoppers, some
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manufacturers are adding rice side dishes, from the Steamfresh line of rice blends from Birds Eye, a brand of Parsippany, N.J.-based Pinnacle Foods, to a sticky white from Tukwila, Wash.-based InnovAsian Cuisine, to give just two examples.
Steamin’ Sales Improved packaging and cooking technology also spurs greater interest in, and sales of, steamable side dishes sold in the frozen section. According to IRI, sales of Steam N Mash potatoes from Ore-Ida, a brand of the Pittsburgh-based H.J. Heinz Co., rose nearly 4 percent in the past 52 weeks ending in late December. Steam-in-bag vegetables have been another noteworthy development in recent years. Bells, Tenn.-based Pictsweet, for example, has a Steam’Ables line featuring such frozen items as asparagus spears, broccoli forets, Brussels sprouts, corn and green beans, along with vegetable blends like broccoli forets with edamame, carrots and celery, and harvest vegetables with roasted red potatoes and herb-garlic seasoning. Te venerable Green Giant, a brand of Minneapolis-based General Mills, has added new takes on
old favorites to its Steamers line, like an Antioxidant Blend and a medley of Classic Brown Rice with Vegetables and Butter Sauce. And Birds Eye has a growing array of Steamfresh frozen vegetables; IRI’s latest research shows that sales of Birds Eye Steamfresh side dishes have reached the $50 million mark in the past year, a nearly 6 percent climb from the prior time frame. In keeping with the rising clamor for organic and/or better-for-you frozen foods, many brands have introduced or found success with those types of frozen side dishes. Ore-Ida, for example, has done well with its Simply Delicious line of all-natural, skin-on fries and wedges made with olive oil and sea salt. Emerging organic brands, like Woodstock and General Mills’ Cascadian Farm, ofer both frozen fruits and vegetables, as do some store brands, like the organic oferings from Austin, Texas-based Whole Foods Market’s 365 line. PG
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Des s e rT s
The Final Flourish Frozen desserts are moving way beyond the ordinary. By Lynn Petrak
W In addition to expanding into bold new flavors and formats, manufacturers are finding other ways to bolster sales and interest of their frozen dessert products.
hat’s cold and sweet and doing quite well? Te answer isn’t a Disney movie about young princesses in an icebound kingdom — it’s about frozen desserts in today’s retail case, including ice cream, novelties, gelato, favored ices, pies, cookies, cookie dough, and all kinds of other frozen dairybased and nondairy desserts. According to data from Chicago-based IRI, there’s a bit of a seesaw going on in frozen desserts, but overall, retailers are ringing up healthy sales of cool or reheatable treats that satisfy their customers’ sweet tooth. Bright spots include frozen cookies (up dramatically in the past year, to nearly $2.6 million), frozen pudding/mousse (up substantially, to more than $470 million) and the comfort-food staple of ice cream and sherbet (up almost 1.4 percent to more than $5.7 billion). Segments holding steady include frozen pies, with sales up almost 1 percent since this time last year, and frozen novelties, edging slightly down, around 0.16 percent.
More Than Just Vanilla While vanilla is still a top favor in ice cream and other frozen desserts, it’s defnitely not a vanilla marketplace in the other sense of the word. From green tea ice cream from brands like Mr. Green Tea, to pretzel-laden Crave bar novelties, to Dole Dippers chocolate-covered frozen fruit pieces, variety is the spice of frozen dessert life. In addition to expanding into bold new favors and formats, manufacturers are fnding other ways to bolster sales and interest of their frozen dessert products. For example, Pierre’s Ice Cream Co., based in Cleveland,
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has teamed up with a local celebrity chef to create favors for its new line of Pierre’s Chef ’s Signature Ultimate Ice Cream Pints; as one might imagine, the varieties are culinary-inspired, with varieties like Holé Molé, featuring cinnamon ice cream mixed with chili chocolate chips, chocolate-covered tofee pieces and a molé fudge swirl. Specialty ice cream varieties from small-batch manufacturers, usually sold in pints, are also making their way into freezers of supermarkets that want to distinguish their oferings, including ice creams from local or regional niche companies. Te freezer is also a place to ofer convenience to consumers. Solon, Ohio-based Nestlé USA has introduced Nestlé Toll House standup, resealable pouches of frozen cookie dough, with a longer shelf life than its refrigerated prepared cookie-dough counterpart. Mirroring the overall trend in the frozen food sector, the frozen dessert category and its subcategories are also being shaped by consumer interest in better-for-you, free-from and organic and/or natural options. Mainstream and smaller-scale frozen dessert makers alike continue to ofer better-for-you or free-from products to consumers, ranging from co-branded Weight Watchers ice cream to Skinny Cow to lighter lines from traditional brands like Edy’s, Ben & Jerry’s, and Breyers. Another example is the addition of more Greek-style frozen yogurts and Greek-style frozen yogurt novelties, from well-known yogurt brands like Yoplait, a brand of Minneapolis-based General Mills, and Greek yogurt brands like Boston-based Yasso. Likewise, similar to snacks, meals and entrées, vegan frozen desserts are entering the market or expanding. Escondido, Calif.-based Arctic Zero is one example. Te whey protein frozen dessert recently received a makeover: a redesigned container that features more product information on the lid for easier scanning. Te brand has added new varieties, too, like Salted Caramel, Orange Dream and Toasted Coconut. PG
INSIGHTS FOR 2015
LOOK INSIDE TO DISCOVER: Why Beef Means Sales Quality Trumps Price How to Drive Sales Across the Store ADVERTORIAL
The DEMAND FOR BEEF is the highest it’s been in years – and that means the value it brings to retailers is skyrocketing too. Consumers’ love affair with beef is going strong, despite its increased price. Total spending for beef has nearly doubled since 1990, from $44BB to $82BB, according to the USDA. That passion is driving beef sales at retail. Just look at what happens with beef in the basket:
SHOPPERS BUY BEEF MORE OFTEN 12% of all grocery trips include beef, and it makes up
4.3%
BEEF BOOSTS BASKET VALUE
THE ENTIRE STORE BENEFITS
A cart with beef has
Shoppers who buy beef spend 44 percent more across the store than those who buy chicken. Steak purchasers buy $63.11 of other products, and ground beef purchasers buy $63.88 of other products.1
1.85 times
the value of an average shopper basket, and beef makes up nearly 20% of total basket value.1
of total grocery store spending.1
QUALITY TRUMPS PRICE
Beef prices, like those of other proteins, are on the rise. The good news? It is still a top-seller in the meat case thanks to the quality it delivers. Shoppers will spend more for beef, as shown by the fact that the top-selling cuts are priced above the average retail price per pound for beef.2
Ribeye Steak, Bone In
Strip Steak, Bone In
Top Sirloin Steak
Ribeye Steak, Boneless
Strip Steak, Boneless
12.6 MM
12.8 MM
18.3 MM
26.2 MM
28.9 MM
$9.04/lb
$6.71/lb
$6.61/lb
$11.19/lb
$9.35/lb
September-November 2014 sales of cuts above $5.23 average price per pound.
CUSTOMERS WON’T CUT BACK ON QUALITY
76% of consumers
CONSUMERS DEMAND BEEF Consumers continue to spend on beef, despite higher prices.2
say beef is worth the price.3
ADVERTORIAL
$1.8 $1.64 billion billion
Nov. 2013
Nov. 2014
WHAT THIS MEANS FOR YOUR BUSINESS Demand for beef remains high. But relying on what you’ve done in the past won’t build sales for the future. Savvy retailers must innovate, motivate and educate to become destinations for beef shoppers. Here are just a few ideas to grow your business with beef:
As you focus on building your business with beef, you can feel confident knowing America’s beef farmers and ranchers are raising more beef.
FEATURE BEEF 78% of shoppers rely on advertising for meat specials. Featuring beef in weekly ads, even if it isn’t on sale, will beckon shoppers on any budget to your meat case.
A calf born today will take about two years to enter the market but rest assured that through this time of tight supplies, consumers have shared that they’re willing to pay for the high quality flavor and experience that only beef delivers. For more information, visit BeefRetail.org, the industry’s go-to source for businessbuilding ideas and solutions!
CROSS PROMOTE Merchandise condiments and sides tha pair well with beef in your meat department to boost sales storew
$
+ Steak
1
Fresh Meat Market Basket Analysis, June 2014, Information Resources, Inc.
2 FreshLook Marketing compiled by the VMMeat System, 2014 3
Consumer Beef Index, funded by the Beef Checkoff, July 2014
OFFER VARIETY Customers want a selection of high quality meats at all price points. Beef has more cuts to offer than any other meat in the case, making it an ideal way to set your store apart from your competitors. ADVERTORIAL
Bulgogi Steak Sandwich
Versatile and Valuable The Ribeye is one of the top-selling items in a store’s meat case, and it can add instant prestige to your retail meal solutions. This tender, succulent cut is the most favorful of all the subprimals. It’s universally loved and can command premium prices. And don’t just think steaks and prime rib. The Ribeye can be cut into various “right-sized” steak and roast portions that you can package to sell or menu for prepared foods options, like on-trend sandwiches to proft-building small plates with big, global favors. Discover how to get more out of the Ribeye at BeefRetail.org/Ribeye. © 2015 Cattlemen’s Beef Board and National Cattlemen’s Beef Association
Funded by the Beef Checkoff.
2015 Retail Meat Report
Steaking a Claim Smaller packs, purely natural products rank among the top fresh meat trends revealed in PG ’s annual ‘state of the retail meat department’ study. Analysis by Meg Major | Research By Debra Chanil
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he broader industry trends fanning the fames of retail food growth — namely traceable, free-from, purely natural, organic and smaller portion products — are the same factors propelling growth in the average supermarket meat department, as revealed in Progressive Grocer’s 2015 Retail Meat Review. Te gains with higher-end fresh meat cuts — which are increasingly appealing to a larger base of more discriminating, information-seeking consumers — have been a clear bright spot for grocers during a prolonged period of sticky high prices for the department’s leading cash cow, beef, domestic production of which remains tight due to lingering supply-and-demand economics. But when considering that the average retail price of ground beef was nearly 20 percent higher in September from a year earlier, let alone the steeper prices of steaks and roasts, retailers’ plates are clearly full with confronting the volatile market conditions and working to maintain consumer demand and remain competitive. When asked to weigh in on meat department sales performance for the 12 months ending Nov. 30, 2014, more than half (52.8 percent) of retail executives participating in this year’s “state of the meat department” study reported increases, alongside slightly more than one-quarter (26.6 percent) who cited decreases (various explanations for which appear on the related sidebar on page 70). Te remaining 20.7 percent of the 2015 retail meat study panelists, meanwhile, recorded status quo meat sales, good for an overall net change of 4.1 percent ahead of last year. Insights for PG’s annual review were again tabulated from a proprietary survey felded to retail meat executives from around the country in late 2014. As the only study of its kind, the exclusive, retailer-driven meat department research study provides a consolidated snapshot of benchmark performance and operations insights recorded over the past year by senior category directors, who were also asked to project what they foresee for the balance of the year.
Editor’s
Progress Note: ive Gro companio cer’s n Retail Se afoo will appe d Report a March 2 r in the 015 issue .
February 2015 | progressivegrocer.com |
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meat dePartment SaleS PerFormance
2015 Retail Meat Report
12 Months Ending 11/30/2014
20.7% 26.6%
increaSed
52.7%
decreaSed Stayed tHe Same
net cHanGe: 4.1%
Projected For total 2015 To that end, when asked to predict how fresh meat sales will presumably play out during the current year, nearly two-thirds of panelists, or 67.4 percent, anticipate plumper trends in tandem with long-awaited equalized beef supplies. Tis more optimistic sentiment was further reafrmed by the scant 7.6 percent who foresee potential fresh meat sales declines in the year ahead, with a full quarter of participants expecting no changes in either direction.
Consumer Demand Among the key highlights of this year’s study is a fresh look at overall demand trends, which are underscored
conSumer demand
25.0% 7.6%
increaSe
67.4%
decreaSe Stay tHe Same
Source: Progressive Grocer Market Research, 2015
increaSed
decreaSed
-
In the past year, here is how consumer demand has changed: Smaller PortionS/Pack SizeS Value-Priced (Ground, Flat SteakS, etc.) Free-From ProductS (antibiotic-Free, Hormone-Free, mSG-Free, additiVe-Free, etc.) GraSS-Fed beeF u.S. Wild-cauGHt SeaFood Premium-brand beeF orGanic meatS Value-added ProductS (marinated, kebabS, Gourmet burGerS, loaVeS, meatballS, etc.) u.S. Farm-raiSed SeaFood imPorted Farm-raiSed SeaFood locally raiSed meat imPorted Wild-cauGHt SeaFood alternatiVe ProteinS (e.G., biSon, VeniSon, oStricH) Source: Progressive Grocer Market Research, 2015
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| Progressive Grocer | Ahead of What’s Next | February 2015
Stayed tHe Same
68.2% 59.1% 52.6% 50.0% 444447.6% 47.5% 43.2% 38.2% 37.5% 34.2% 24.3% 23.1%
0.0% 9.1% 14.6% 10.5% 10.0% 11.9% 17.5% 18.2% 8.8% 22.5% 19.5% 21.6% 23.1%
31.8% 31.8% 26.8% 36.9% 40.0% 40.5% 35.0% 38.6% 53.0% 40.0% 46.3% 54.1% 53.8%
*
1 IRI, Total US Multi-outlet, Frozen Prepared Chicken NAE, dollar sales growth versus prior year, 26 weeks ending December 28, 2014. â&#x20AC; Minimally processed, no artifcial ingredients. â&#x20AC;Ą Federal regulations prohibit the use of hormones or steroids in poultry. * Creative not fnal.
2015 Retail Meat Report by the delicate balancing act retail meat executives are executing to simultaneously hone value-oriented tactics and enhanced premium oferings. When asked how consumer demand has changed for several fresh meat categories, smaller portions/pack sizes increased in clout as the foremost department driver, as ranked by more than two-thirds (68.2 percent) of panelists. No panelists indicated decreases with smaller packs, while the remainder (31.8 percent) reported on-par results. Value-priced cuts (ground, fat steaks, etc.), meanwhile, also came on strong, with 59 percent of retail meat leaders seeing increases during the last year, alongside 31.8 percent whose sales of value-oriented selections remained steady. A signifcantly smaller proportion (9.1 percent) of panelists reported decreased sales of valuepositioned proteins. Other fresh meat department gainers include the grow-
ing free-from and purely natural categories, penetration of which increased ed for 58.5 percent of retail meat survey panelists, much more than h the 14.6 percent who reported decreases, and nearly twice the 26.8 percent posting status quo sales. Grass-fed beef and domestic wild-caught seafood are also gaining clout with 2015 Retail Meat Report participants, at 52.6 percent and 50 percent, respectively. Ditto for increased demand for premium-brand beef, which gained in penetration for 47.6 percent of panelists, paced next by organic fresh meat products, sales for which increased among 47.5 percent of the meat survey panelists. Value-added products, such as oven- and grillready, marinated, kebabs, gourmet burgers, loaves and meatballs, continue to gain traction among 43.2 percent of retail meat executives, as do U.S. farm-raised seafood (38.2 percent), imported farm-raised seafood (37.5 percent) and locally raised meats (34 percent).
ADVERTORIAL
Speaking with…
Anders Hemphill
Q &A
Vice President of Marketing & Brand Strategy, Superior Farms
Progressive Grocer: Superior Farms celebrated its 50th birthday in 2014. Why the focus on American lamb now? Anders Hemphill: Our focus on American lamb goes far beyond our 50th anniversary. It is a long-term commitment to American lamb and to American sheep ranchers. American lamb delivers a superior eating experience to imported lamb–a position many top chefs have voiced. Furthermore, we value our relationships with American ranchers. We depend on them to bring the best product to market, and are committed to supporting them for the long term. PG: What benefits can lamb offer grocery retailers? AH: Attracting valuable consumers is one of the best reasons to carry American lamb. Research we conducted in 2014 showed the value of “Millennial Foodie” consumers— people in their 20’s and 30’s who are critically important and will only become more so as they get older and their incomes increase. They are focused on their dining experiences and have a propensity to grill and entertain at home. They are adventurous diners who eat a broad array of proteins, especially lamb. They’re also interested in where their food comes from, and often look for local products.
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American lamb is a great way to support local farmers. American lamb drives a higher overall market basket value than other baskets due, in part, to the fact these shoppers buy high value items such as wine and specialty cheese. Carrying a wider variety of cuts also increases the visibility of the meat case’s lamb section and gives consumers great options. Loin chops and lamb burgers are great for grilling; lamb shanks are savory when braised; and a rack or leg of lamb is great for celebrations. PG: How can stores merchandise lamb to boost sales? AH: Visibility and education are key. Lamb represents a small portion of the overall meat case in the U.S., so it can be easily overlooked. Effective point of sale material can draw attention to this area. Superior Farms has case dividers, rail strips, recipe booklets, and product labels with recipes to support retail efforts. We also provide sampling and demo support instore for our retail partners. Education is important because, while lamb is very easy to prepare, not everyone is familiar with how to prepare it.
| Progressive Grocer | Ahead of What’s Next | February 2015
FROM OUR farms TO YOUR forK
LAMB IS TRENDING! #LOVELAMB % change in Dollar sales
$ change in pound sales
Beef
+1.8%
-0.3%
Chicken
+7.0%
+0.6%
Pork
+0.7%
2.0%
Turkey
-0.7%
-0.8%
Lamb
+6.5%
+9.0%
class
w w w. s u p e r i o r fa r m s .c o m D i xo n , C a l i fo r n i a | 53 0 - 6 8 2 -1 6 2 2
HALAL CERTIFIED
Percent of total Meat offering froM case-ready Products
2015 Retail Meat Report Case-ready While case-ready meats continue to make inroads, as noted on the adjacent chart, in-store butchers remain an extremely important element for nearly 90 percent of PG’s 2015 Retail Meat Review participants. Indeed, numerous industry studies point to shoppers’ abiding desire for knowledgeable, visible, approachable meat department associates, who will not only solve the mysteries of purchasing and preparing specifc cuts, but also suggest alternate cuts, portions and serving tips. To that end, a full 91 percent of meat study respondents afrmed that their butchers/meat cutters engage in suggestive selling and ofering purchase advice to consumers. Although in-store butchers remain an essential ingredient for most of this year’s Retail Meat Review panelists, grocers
ProbleMs facing Meat/seafood dePartMent
Percent of offering 0%
attracting More shoPPers to dePartMent retail Pricing attracting neW dePartMent staff training/Motivating dePartMent staff to engage With custoMers Profits getting shoPPers to trade uP custoMer confusion/PercePtion nutrition labeling food safety
current 4.11 4.08 3.95
4.14 3.86 4.02
3.89 3.73 3.69 3.59 3.35 3.32
3.94 3.72 n/a 3.52 3.67 3.35
6.5%
1-25
52.2
26-50
13.0
51-75
8.7
76-99
10.9
100
8.7
Source: Progressive Grocer Market Research, 2015
do your stores have butchers/Meat cutters on site?
Rated on a scale of 1-6, where 6=extremely serious
year ago
Percent of resPondents
10.9%
89.1%
do these butchers/Meat cutters engage in suggestive selling and/or offer Purchase advice to consuMers?
yes no
9.3%
90.7%
yes no
Source: Progressive Grocer Market Research, 2015
Source: Progressive Grocer Market Research, 2015
What is the Most serious ProbleM facing your Meat dePartMent? Higher wholesale costs, rising retail prices, competition, and a shortage of qualified, competent associates were the recurring issues cited as the most vexing issues plaguing retail meat executives, according to insights revealed in Progressive Grocer’s 2015 Annual Retail Meat Report. Found below is a sample of verbatim responses that were shared with PG when meat study panelists were asked to answer the following openended question: What is the single most serious problem facing your meat department? Beef prices. Beef, pork, chicken costs. Competing in a market dominated by large national and regional chains. Competitive inability to pass on increased costs. Cost of goods.
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Educating customers on our value proposition as an independent. Customer engagement. Escalating retails. Lack of meat cutters. Finding qualified, energetic meat cutters who are also comfortable with selling. We are a sales-driven store, which requires good help. Butchers are becoming extinct.
Finding qualified, energetic employees who are motivated to work hard for a great company, but for relatively poor industry wages. Hiring and training quality employees. Increased raw material prices. Retaining sales increases. Lack of adequate space for creative displays. Local meat out-of-stocks.
| Progressive Grocer | Ahead of What’s Next | February 2015
Meat price increases that go up almost every week, and consumers are obviously buying less. Reacting to volatile markets and managing retails to maintain consumer demand and remain competitive. Shortage of certifiedorganic pork and lamb. Managing reasonable retail prices of “clean,” organic and 100 percent grass-fed beef. Managing wholesale costs of product with wages and benefits for a union shop.
M . o r r o e b a f l l a s v s or. e L InTroduCIng C a s e - R e a dy C r e e k s To n e Fa r m s PremIum B l aC k a n g u s B e e F a n d a l l- n aT u r a l duroC Pork!
Cut costs without cutting quality. Our NEW case-ready packaging makes it easy for you to serve America’s best beef and pork while minimizing shrink. • Extended shelf life – 28 days from date of production • Convenient smaller pack sizes – 6 to 12 pieces per case • Longer shelf life means less markdowns and throw-aways • No bone or fat loss means less waste Best of all, Creekstone Farms Case-Ready means fewer out-of-stocks.
Contact Christine Tanner at 620-741-3357 or email angusinfo@cfpbeef.com for more information.
2015 Retail Meat Report continue to rely heavily on case-ready meats, which are processed and packaged at a central facility and delivered to the store ready to be put directly into the meat case. In addition to helping retail meat executives manage labor costs and instocks, case-ready also ofers advantages in safety, as a result of USDA-inspected standards and processes.
effectiveness Of PrOmOtiOnal activities
Rated on a scale of 1-6, where 6=most effective average rating
PrOduct demOs/samPling events sOcial media POint-Of-Purchase infOrmatiOn crOss-PrOmOtiOn Within the stOre flash sales direct mail temPOrarY Price reductiOns Online marketing BOgOs mix-and-match Bundles (i.e., fOur fOr $20)
5.13 5.10 4.03 3.83 3.58 3.53 3.28 3.13 2.78 2.60
Source: Progressive Grocer Market Research, 2015
Moreover, case-ready programs are particularly advantageous for meat marketers in light of the inherent prominent branding opportunities, nutrition labeling, recipes and related usage ideas. Among the 93.5 percent of respondents with case-ready products, 36.5 percent of their total meat offering consists of case-ready products for selfservice fresh meats.
Prices Prompt Rampant Fluctuations The meat department is in a state of change — in many instances, pricing f luctuations are driving consumers away from the meat case. All but five categories in the meat department maintained or increased prices compared with the previous year. In fresh meat, price increases impacted volume sales
What Other PrOmOtiOnal activities have Been effective fOr YOur cOmPanY in the Past Year? The promotions-driven meat department continues to rely heavily — for good reason — on tried-and-true promotional methods that have long ruled the roost. And though meat marketers have more methods than ever at their disposal to capture customers’ attention, a few new tactics are proving increasingly influential for lassoing shoppers, including theme events, sampling, flash sales, cross-promotions and mix-and-match bundles. Below is a list of top responses PG’s 2015 Retail Meat Review panelists revealed when asked to respond to the following open-ended question: What other promotional activities have been effective for your meat departments in the past year? One-day sales/mega-meat sales events/truckload events. 15 percent off meat sack sale. 4 for $20, which is proving to be highly effective.
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Bundled family recipe meals cross-promos (i.e., Buy X item, get Y item free). In-and-out deals on closeout processed meats are having a huge impact, as our customers are starving for deals in the meat department. Cases sales when the chicken prices decreases are working out very well. In-store radio advertising. We find that sampling events in the meat department are very effective.
Through great customer service, great quality and a clean store, the customer ends up being our greatest promotion, as they talk among themselves and their neighbors of what a great store we have. The end result is more frequent shopping trips and added customers! Three-day specials. Our store-made, readyto-cook items are doing extremely well. The most successful thing we can do is to simply do it right!
| Progressive Grocer | Ahead of What’s Next | February 2015
We promote our stores best with honesty and integrity, trim correctly, stock quality products, and let customer satisfaction and return business take care of the rest. It’s not rocket science … it’s having good people! Themed events (i.e., meat sales with steaks and ribs for football promotions). Truckload sales. Two-day meat sales and high-visibility seasonal signage. Weekend beef and pork sales events.
THINK
INSIDE
THE BOX “ibp Trusted Excellence® ” is more than a phrase, it’s the foundation of what we deliver. For over 50 years, customers have known “The Green Box” means a commitment to the highest quality product, delivered on time and backed with expert support every step of the way. www.ibpTrustedExcellence.com ®
/© 2015 Tyson Fresh Meats, Inc.
2015 Retail Meat Report in beef and pork — the frst and third top-selling categories — with volume sales declining 2.4 percent and 5.5 percent, respectively. While less dramatic, chicken, the second highest-selling fresh meat category, also posted average retail price increases, although volume wasn’t substantially afected by higher retails. Processed meat, the second-largest meat supercategory, also experienced performance shifts similar to
fresh meat. Bacon and dinner sausage, the second and third top-selling categories, respectively, posted average price increases of more than 5 percent. Within fully cooked meat, fully cooked turkey — though a comparatively smaller meat category — posted the department’s largest increase in average retail price, up 70 percent, which caused volume to drop 38 percent compared with the previous year. PG
Meat DepartMent Category perforManCe Total U.S., 52 Weeks Ending Oct. 25, 2014
Segment
Fully Cooked Meat Chicken Other Meat Pork Beef Vegetables/ Stuffing Turkey Stir-fry/ Fajita Strips Lamb Fresh Meat Beef Chicken Pork Turkey Lamb Fowl and Exotics Veal Other Meat Meat Substitutes Other Miscellaneous Meat Items Condiments/Spreads Marinades, Sauces and Seasonings Processed Meat Lunch Meat Bacon Dinner Sausages Franks Packaged Meals Hams Processed Turkey Other Ground Meat Breakfast Sausage Other Grinds Other Patties
Dollars per Store/Week
Dollars per Store/Week Percent Change vs. Year Ago
Volume Percent Change vs. Year Ago
Volume Percent on Promotion
Volume Percent on Promotion Change vs. Year Ago
Average Retail
Average Retail Percent Change vs. Year Ago
$1,796 806 387 337 311 114 77 2
-2.8% 3.9 -0.3 2.6 1.3 3.4 9.1 15.7
-1.7% 5.5 -0.2 -0.9 1.3 -38.3 8.5 19.1
21.6% 16.0 27.2 17.9 32.0 23.7 21.0 18.7
-0.1% -1.7 -1.3 -1.1 -0.7 -2.5 8.9 1.5
$3.81 3.16 5.26 5.55 2.90 2.88 6.35 4.16
0.4% -0.1 1.4 5.0 1.4 70.0 2.1 -1.4
$18,828 9,905 5,302 2,071 283 143 65
5.1% 4.2 3.0 4.5 4.7 5.5 1.1
-2.4% 2.3 -5.5 2.8 3.4 5.5 2.4
24.2% 25.2 32.3 39.5 23.3 18.8 16.9
-2.4% -1.5 -0.5 -2.2 -1.9 -1.3 -1.1
$4.69 2.24 3.03 2.02 7.10 3.27 7.05
9.2% 3.3 10.5 3.1 2.8 1.4 0.2
$302 286 189 23
4.6% 12.2 1.5 0.1
3.5% 7.9 1.7 1.5
26.1% 29.8 24.7 30.3
-3.5% 1.1 1.7 4.3
$4.03 5.25 3.13 2.27
2.5% 5.5 1.2 0.1
$4,279 3,475 2,589 2,322 1,644 1,386 $14
1.6% 9.0 5.5 -0.5 0.6 0.4 -8.0
0.1% 1.9 0.5 -1.6 9.0 -4.0 -6.6
17.8% 28.5 22.7 24.7 19.4 43.0 11.1
-0.9% 1.6 -3.4 -1.4 -0.7 -3.7 -1.3
$4.31 4.93 3.83 2.95 2.18 2.47 3.60
3.0% 8.4 6.5 2.6 -6.4 6.1 -0.1
$1,514 12 1
7.9% 11.0 19.8
-2.9% -3.0 38.8
24.4% 6.2 17.3
-2.9% -2.5 -0.3
$3.27 4.10 8.29
12.7% 16.1 -12.5
Source: Perishables Group FreshFacts® Powered by Nielsen
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| Progressive Grocer | Ahead of What’s Next | February 2015
NEW!
Duck Leg
CONFIT Maple Leaf Farms All Natural Duck Leg Conft is made from duck legs that have been seasoned and cooked slowly in duck fat. Tis yields tender, favorful meat that may be served as a main dish or shredded to create delicious sandwiches, salads, pizzas or pasta. Enjoy the classic taste of conft in just minutes with Maple Leaf Farms fully cooked Duck Leg Conft!
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ote: Editorâ&#x20AC;&#x2122;shN e first
This is t part eof a thre igating t s e v series in nges and e ll a the ch nities of opportu prepared e rk t superma rograms. food p
Getting Grocery Prepared on the Dinner Menu
Understand consumer struggles and use social media tools to present meal solutions. By Joan Driggs
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| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | February 2015
T
he gamut of emotions evoked in relation to planning the evening meal is as varied as the menu at Applebee’s, according to new research into consumers’ approach to prepared food purchases for dinner. Tis complexity might be what’s keeping retailers from trying to connect with consumers, but it also means that grocery retail doesn’t rank as high as restaurants and pizza delivery when consumers are looking for quick dinner solutions. Tyson Foods recently commissioned quantitative and qualitative research conducted by research frm Carbonview, a sister company of Progressive Grocer. Te “On-the-Go Dinner” studies provide insight into how consumers determine what’s for dinner, where they buy and what’s taken into consideration when making these decisions. Tis article also features fndings from Tyson’s 2014 “Prepared Foods Attitudes and Usage Study,” referred to henceforward as the A&U study.
Grocery Lags Behind Restaurants as Dinner Solution When considering the evening meal, most consumers’ frst option is to cook a meal. But what happens when the evening meal doesn’t come together as planned? More than 70 percent of respondents to Tyson’s “On-the-Go Dinner” research indicate that they face unplanned meals once a week or more often, with one-third of respondents saying this happens two or three times per week. Where grocery retail is the go-to for a planned meal, just 5.3 percent of more than 6,000 respondents to the “Onthe-Go Dinner” survey say that they plan on purchasing prepared foods from the grocery store for an evening meal over the course of the next few days. Besting supermarkets for planned meal purchases are quick-service restaurants (QSRs) and pizza delivery or carryout. Analysis of the past 10 purchases of prepared foods for dinner is similar, with grocery retail slightly ahead of fast-casual restaurants such as Panera and Chipotle. Tis is despite fndings from the A&U pre-shop survey, in which 79 percent of respondents agreed with the statement “Buying prepared foods from grocery stores saves me a lot of time.” In the A&U survey, consumers identifed quality (81 percent) and freshness of food (80 percent) as key drivers of a grocery store prepared food purchase, indicating that consumers are generally satisfed with the items they’ve previously purchased. Yet grocery prepared deli doesn’t surface as an unaided top-of-mind solution for consumers looking for a good meal.
Q:
Of the last 10 times you purchased these prepared food items for a dinner or evening meal, how many of those purchases would you estimate are from each of the following establishment types? Quick-service restaurant such as McDonald’s, Subway, Wendy’s, Taco Bell, etc.
27.2%
Pizza delivery or carryout from a pizza restaurant such as Domino’s, Pizza Hut, Papa John’s, etc.
20.1%
Deli or prepared food section of a grocery store such as Safeway, Kroger, Walmart Supercenter, SuperTarget, etc.
19.6%
Fast-casual restaurant such as Panera, Five Guys, Chipotle, Panda Express, Boston Market, etc.
15.5%
Convenience store such as 7-Eleven, Circle K, QuikTrip, RaceTrac, Wawa, etc. Other
4.7% 12.9%
Note: (Analysis multiplied by 10 in the main tables for “share” of 10 times) Source: “Tyson On-the-Go Foodservice Study 2014.” Total Respondents, N=6,009
Tis might be attributable in part to how grocery retail promotes prepared foods. ECRM, a Solon, Ohio-based provider of promotional data and business intelligence, reviewed ad counts of representative markets over the six months ending Jan. 14, 2015, and found that 20 percent of prepared food promotions were promoted within a meal deal, indicating that most (80 percent) prepared items were promoted as standalones. Tis suggests that retailers aren’t committed to total meal solutions.
February 2015 | progressivegrocer.com |
81
Q:
Generally speaking, what triggers your decision to purchase prepared food for the dinner/evening meal?
Print and digital prepared food promotions reviewed by PG show grocery retail is focused on pricing, mostly by the pound. For instance, Chef ’s Kitchen Chicken Caesar Salad for $5.99 a pound speaks more to value than appeal, and when was the last time someone said, “Let’s split a pound of Caesar salad for dinner tonight”? As another example, a grocery ad for “Signature Pot Pie, $4.99” lacks meaningful descriptors. Meanwhile, a restaurant’s version, “Chunks of chicken breast in a rich broth, with carrots and peas, topped with a savory oregano-pastry crust,” paints a mouthwatering picture. “From picking the right produce to how we bake our breads, these are the stories that defne our commitment to the craft.” Ah, a company that “gets it”! Te quote is from Panera, which reigns supreme in the fast-casual realm and successfully markets products as “flling, wholesome meal[s].” In grocery, the website for burgeoning Chicagoarea chain Mariano’s Fresh Market promotes “Perfect meals in minutes — all you have to do is choose.” Tere’s a “design your meal” banner touting afordable fare “made fresh daily by our culinary team. Take home to heat or microwave in our store & enjoy!” But the site fails to show what the options are from day to day. Te retailer uses Instagram, Pinterest, Twitter and Facebook, but not to promote meal solutions to consumers when they’re most in need of help.
Dinner Purchase Triggers “On-the-Go Dinner” participants had mixed perceptions regarding the evening meal: At its best, dinner is a time to relax, connect with others and enjoy eating a delicious meal together. At its worst, dinner is yet another chore for the day — one that’s time-consuming to plan for, prep and clean up after. On par with the physical need for dinner is the emotional pull, perhaps the strongest of any meal occasion: “Tis is how I generally feel about dinner: excited! To me, dinner is a time to unwind from a busy day and focus on my son and spending time with him. I also love a good home-cooked meal!” reports a participant in the qualitative study. Not everyone views dinner through the same gravy-colored glasses, though. “Dinner is a chore at the end of the day when I am really tired, so I usually feel like screaming. More demands on me (make dinner, serve, clean).”
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| Progressive Grocer | Ahead of What’s Next | February 2015
I don’t feel like cooking I’m running late and need a dinner that’s ready quickly I realize I’m hungry and find someplace to stop I planned to purchase prepared foods earlier in the day I am buying a few specific items and also decide to buy prepared foods Someone asks me to stop to buy something I buy prepared foods as part of a larger shopping trip Someone in the household has an afternoon or evening meeting, practice, event, etc., that I have to schedule dinner around I just got paid I planned to purchase prepared foods earlier in the week It’s part of my normal routine There’s a special event that I want to make feel special Other
64.0% 37.6% 23.5% 21.6% 17.2% 16.9% 15.9% 15.0% 14.9% 14.6% 13.9% 9.3% 3.5%
Source: “Tyson On-the-Go Foodservice Study 2014.” Total Respondents, N=6,009
More than 40 percent of respondents to the “On-the-Go Dinner” survey say that they start thinking about dinner options during the day and make a plan before it’s time to start preparations. Just 15 percent have a plan in place, and more than half of this group adjusts based on triggers, such as a change in schedule, weather, available time or energy, appetite, mood, or available ingredients. Most retailers aren’t exercising any pre-shop day-of marketing; even the channels they’re using aren’t efective at promoting prepared foods. If circulars are an indication, retailers are actually losing ground in the prepared food arena, according to Market Track, a promotion and pricing intelligence frm. From 2013 to 2014, retailers shifted prepared items of the front page of circulars to the back, and also increased prices of prepared foods by 7 percent. Te Chicago-based frm reports that Continued on page 86
Tyson Deli, Inc.
Meet Your Best Deli Dinner Customers Understanding how your shoppers navigate their day-to-day dinner decisions is key to boosting deli prepared food sales. Leveraging research assets that provide a frame of reference unrivaled in the industry, Tyson Deli has identifed two groups of shoppers with the greatest potential for driving additional dinner sales at the deli counter: The Up-and-Coming Consumer and The Balancer Parent. Te Up-and-Coming Consumer is by far the primary purchaser of prepared food at the grocery store deli.
Te Balancer Parent has similar purchase intent but purchases less frequently.
n
average age of 36
n
average age of 41
n
more likely to be male
n
equally divided between male and female
n
college grad
n
n
51% are married, 44% have young children
64% are married, more likely to have older children
n
average household income of $60,000
n
average household income of $67,000
n
shop at the grocery several times per week but less likely to do a “big” trip to the store
n
make several grocery shopping trips per week but usually one “big” trip
Both of these shoppers are signifcantly more likely to make a prepared food purchase when they visit the grocery store, compared with other shoppers.
®/© 2015 Tyson Foods, Inc.
High-frequency purchasers of grocery prepared foods within consumer segment
Up-and-Coming Consumer Balancer Parent
66% 60%
SOURCE: CARBONVIEW RESEARCH, DECEMBER 2014
But both shopper groups allocate only one-ffth of their prepared food purchases to the deli— the same as other shopper segments—ofering retailers a prime opportunity to capture more of these purchases. Advertorial
Tyson Deli, Inc.
The Up-and-Coming Consumer Although Up-and-Coming Consumers already account for one-quarter of all deli prepared food shoppers and nearly one-half of the total purchase occasions, 52% don’t buy prepared food on every trip to the supermarket. Te grocery deli is in an ideal position to take advantage of that gap by stealing share from other prepared food channels such as takeout or restaurant dining. Convenience and ease is the Up-and-Coming Consumer’s primary driver because he or she is fguring out dinner plans in the moment. Tese shoppers are primarily non-planners and day-of planners who frequently have not decided what to do about dinner. Buying prepared foods is a normal part of their routine, not just an alternative to cooking or a result of immediate conditions such as running late. Tey’re also trying to juggle the needs and wants of a larger family than the general population, and are willing to walk away if they don’t like what they fnd: 15% have reported going to the grocery store with the intent to purchase something for dinner but changed their minds, compared with 9% of all shoppers. Top-of-mind awareness and taste/appeal appear to be the greatest barriers to deli prepared food purchases for Up-and-Coming Consumers, so displaying fresh, appealing prepared foods is a key tactic for converting these shoppers frequently.
The Balancer Parent Making up 10% of deli prepared food shoppers and 13% of total purchase occasions, Balancer Parents represent a secondary target for retail delis: Tey are very willing to purchase prepared food when plans change or they don’t feel like cooking, but they have less need because they aren’t shopping the store with the same immediacy as Up-and-Coming Consumers. Tey’ve already started thinking about dinner before arriving at the supermarket and may even have a preliminary idea of what they want to buy. In addition, 33% of Balancer Parents say they have some negative feelings when they realize they don’t have plans for dinner, which happens two to three nights a week on average. While taste, afordability and quality are Balancer Parents’ minimum expectations for prepared food, their dinnertime decisions are driven by a desire to please their families as the primary motivation. Nearly 80% of these shoppers say they feel infuenced by another in their prepared food choices, primarily spouses and older children, so capturing the Balancer Parent means meeting their expectations for healthfulness, value, kid-pleasing options and self-preparation ease for older children.
Research data provided by Carbonview Research, December 2014
®/© 2015 Tyson Foods, Inc.
Turn to Tyson Tyson Deli can support you with products, insights and tools to help grow your deli business. Contact Eric LeBlanc at (800) 248-9766 for more information.
Advertorial
Continued from page 82
circular promotions for eat-in/takeout foods decreased 5.3 percent from 2013 to 2014, but more specifcally, the category saw a decrease of 29.7 percent in front-page circular promotions. Tese were reallocated to the back page, which saw an increase of 21 percent. “Despite the increase to promoted price, retailers did offer promotional overlays, such as dollars or a percentage off on a higher percentage of eat-in/takeout food promotions in 2014 (70.4 percent) than in 2013 (67.4 percent),” notes Ryne Misso, marketing analyst for Market Track. “This is a counterpoint to the [shift in circular placement], as it is Market Track’s point of view that promotional overlays help drive traffic, not hurt.” Te instances where retailers are promoting prepared foods across multiple channels are few and far between. Standard Market, an upscale two-store chain in the Chicago suburbs, is an exception, featuring “What’s For Dinner Tonight” in its website, Facebook and Twitter posts: “Every dish is made entirely by our chefs in house, using fresh ingredients. One bag contains a generous meal for two, or bring home a couple for a family dinner!” Price Chopper, a large Northeast chain based in Schenectady, N.Y., successfully maintains its value proposition with weekly Meal Deals, while also employing emotional sentiments: “No time to cook or watching your budget? Stop by Price Chopper and pick up a Meal Deal.” Te chain also uses menu-worthy descriptors, including a “crispy, juicy family feast that serves 3-4 people with two breasts, 2 thighs, 2 wings and 2 legs. Add 6 fresh-baked, old-fashioned Southern Style Biscuits for $2 more!” Posting the week’s oferings also plants a seed for consumers who are caught of-guard at dinnertime or simply want to build prepared foods into their weekly meal planning.
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Anxiety about meal planning is likely heightened when shoppers consider the “decision infuencers,” including children (70 percent of respondents) and spouses (nearly 50 percent). Nearly three in 10 indicate that picky eaters in their households infuence prepared food purchase decisions. Noted one survey participant: “I have three kids, so the reality of dinner in my house can be a lot of complaining about the food served, begging and negotiating for other foods for and with dinner, refusing or making up excuses not to eat the dinner served, or just quiet and happy (usually because I have asked them what they want to eat and they have helped plan the meal).” Tere’s a “fear of failure” among participants, who indicate that they like to have a variety of dinner options, but that it proves challenging to please everyone.
Get a Seat at the Dinner Table Mobile apps, billboards, text alerts and social media, including Facebook, Twitter and Instagram, are recognized by fewer than 10 percent of consumers as infuencing their decision to visit a specifc grocery store, mostly because the majority of retailers aren’t using these mediums to promote prepared foods. Standard Market and Price Chopper, however, reach consumers pre-shop via ad circulars, as well as digital and social media. Further, these pre-shop initiatives mirror in-store eforts. Retailers looking to attract the majority of consumers who make infrequent trips with the intention of purchasing prepared foods should be using social media as a way to connect with consumers when they’re thinking about dinner — increasing messaging during the afternoon. Messages should address the many feelings consumers have about the evening meal, as well as alleviate barriers to purchase: Ease: not having to cook, little prep, less mess to clean Saves time: a way of recapturing lost time; available at the same store where you purchase other items Ability to eat whatever you’re in the mood for; satisfy many appetites; a treat Emergency backup plan when schedules change Ofers a solution when participants don’t have a plan; a relief If applicable, promote dedicated checkstands that speed transactions Consumers recognize that retailers do a good job of addressing the physical needs of dinner, including tasty, healthy, afordable and easy-to-use products. But until retailers also address emotional triggers and communicate in real time with consumers in need of support and reassurance, their prepared oferings won’t make it to the dinner table. PG For more information on Tyson’s “On-the-Go Dinner” research, visit Progressivegrocer.com/deliinsights.
Advertor i Al
Q &A
Talking with…
Bob Sewall
Executive Vice President Sales and Marketing
Blount Fine Foods, based in Fall River, Mass., is a family-owned and operated manufacturer of artisan soups, sauces and side dishes, producing more than 700 gourmet products for restaurants, institutions and club stores in all 50 states. The company’s portfolio includes over 500 proprietary soup recipes, including a new full line of organic and gluten-free soups.
Why did Blount Fine Foods decide to add organic and gluten-free soups to your vast offering of soups?
PG: What is the packaging format for these soups, and how will they be merchandised?
Bob Sewall: In mid-2014, we launched a line of 16-ounce organic soups, including an Organic Vegetable Chili, Minestrone Soup, Tomato Bisque and Lentil & Chick Pea Soup. The rollout that was not only a product expansion of the Blount brand, but a channel expansion as well: while available at club stores, Blount-branded soups have traditionally only been sold at grocery stores in the Northeast.
BS: The Blount Organics line are offered at retail in the familiar “fresh soup” 16-ounce cup specially designed by Blount for easy heating and eating, but will carry its own unique and distinct branding and design. We’ve held several retail promotions through the fall and winter soup season to support the initial product launch, and plan more support for the new products.
We felt that organic products are no longer just a niche trend — “organics” have made it to the mainstream, and are a rapidly expanding consideration for consumers, especially those who demand quality.
For more information, visit www.BlountFineFoods.com.
PG: How have you built on the success of those new products as 2015 begins? BS: We’ve just added two new soups to our line of Blount Organics soups: Tuscan-style Vegetable & Bean soup, made with cannellini beans, spinach and red peppers in a tomato-based broth with select spices, and Carrot & Broccoli soup, which blends a creamy carrot puree with chopped broccoli and select spices for a favorful kick. PG: How do these particular products refect the growth of your organic line, and current consumer demands? BS: Both of the new favors, which are available in bulk for retail hot bars, have us pushing past “traditional” recipes with our organics product line that launched last year and has done well around the country. Ultimately, the success of the Blount Organics line required that we start by reinterpreting some of our most popular soups as organic recipes. As those soups gain popularity and distribution, our chefs are eager to introduce more unique and specialized recipes, which we have tried to do with these new products.
Fresh Food
Produce
Organic Opportunity Consumers seek supermarkets with clean, fresh and flavorful produce they can trust. By Jennifer Strailey
A
mainstay of the nation’s burgeoning health-andwellness trend, organic produce is experiencing strong market expansion and sales growth. Increased product availability, more competitive pricing and a strengthening economy have spurred consumers, from diehard devotees to occasional organic shoppers, to buy more organic items than ever before. In 2013, organics saw its fastest growth rate in fve years, according to the Organic Trade Association (OTA), in Brattleboro, Vt., which expects to report continued growth when it publishes its 2014 fgures. Fruits and vegetables lead that growth, with $11.6 billion in sales in 2013, up 15 percent from 2012. Fresh produce accounted for $10.5 billion of those sales. Te overwhelming majority of U.S. consumers — 73 percent — are now organic users, notes Te Hartman Group in its recent report, “Organic and Natural 2014.” Te Bellevue, Wash.-based market research frm conducted focus groups and an online survey of 1,728 adults between the ages of 18 and 69 to gain insights into today’s organic consumers. According to Hartman Group research, more than a quarter of consumers — especially Millennials and parents of young children — are purchasing more organic, local and natural products than a year ago. Te frm further notes that core organic consumers have increased their usage since 2012. Weekly consumption among core consumers rose from 39 percent in 2012 to 42 percent in 2014, while their daily consumption also increased from 29 percent in 2012 to 34 percent in 2014.
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When the Price is Right 4Earth Farms, a Los Angeles-based conventional, organic and specialty grower-packer-shipper, has been tracking these trends — and leading them. Two years ago, the company decided to expand its organics division, resulting in double-digit growth in both sales and SKUs under the 4Earth Organics label. “We’ve seen extremely rapid growth, and that growth continues to be steep,” says Mark Munger, 4Earth Farms VP of sales and marketing.
7 Ways to Increase Organic Produce Sales The Natural Marketing Institute (NMI), in Harleysville, Pa., is an international research and consulting firm focused on health and wellness, sustainability, and healthy aging. Below, Diane Ray, VP of strategic innovation, shares her seven tips for supermarkets seeking organic success in 2015:
1. Show Them the Organics.
Consumers frequently report frustration regarding the disconnect between circulars and in-store experience, notes Ray. They see an organic item in a weekly ad, but when they go to the store, the item is nowhere to be found. Supermarkets would do well to support advertised organic specials with easy-to-locate, eyecatching displays in produce.
which upon re-evaluating its private label organics pricing, realized that they were priced 20 percent higher than comparable items at Whole Foods Market. The chain subsequently changed its pricing strategy, and now offers organic alternatives at no more than 10 percent higher prices than their conventional counterparts. “When they did that, they couldn’t keep the organic products on the shelves,” notes Ray. “Consumers will pay more for organic, but they won’t pay unreasonable prices.”
3. Price it Right. Ray points to one traditional supermarket chain,
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5. Make Shoppers Feel Good.
While customers really don’t want to hear about parts-per-million pesticides, they do appreciate a simple statement that makes them feel good about what they’re buying. This could be a straightforward message about carbon footprint or landfill reduction. Buying local also feels good, and its importance has almost surpassed that of organic for many consumers, notes Ray. “Organic doesn’t have to be local, but tell customers the story of where it came from and how it got there,” she adds.
6. Link Organic and NonGMO. “Consumers are unbelievably
2. Clean up the ‘Dirty Dozen.’ Scores of consumers
tell NMI that they carry a list of the “Dirty Dozen,” the list of the 12 worst offenders when it comes to pesticides and produce. “The bad news is that they don’t really understand organic by reading this list,” says Ray. Just because a fruit or vegetable has a peel doesn’t mean that organic doesn’t matter. Educating consumers through signage that what’s on the inside matters is key.
produce department.
4. Sample. “Ten years ago, you
put an organic apple next to a conventional, and it was hard to get people to buy the spotty-looking organic one,” recounts Ray. “We’re past that now. Now the comparison is about taste. It’s got to taste great and have flavor. Sampling organics will entice the consumer.” She also encourages sampling and cross-promoting organic items from other areas of the store in the
| Progressive Grocer | Ahead of What’s Next | February 2015
confused about the two. Many consumers believe that non-GMO supersedes organic. They don’t understand that organic is always non-GMO,” explains Ray. Help educate customers on this, as well as the meaning of USDA-certified organic, perhaps by creating a bulleted checklist, she suggests.
7. Gain Their Trust. “Consumers are really mistrustful of the food chain,” says Ray. “They want to feel they can trust you to only bring them the good stuff. When we talk to consumers, it’s the No. 1 reason they give for shopping at a particular store. If you are a big retailer, you want the consumer to trust you, and produce is the No. 1 place to start.”
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We still see growth in organic stores, but there’s tremendous opportunity with conventional retailers who have made a strong commitment to expand their organic programs.” —Mark Munger, 4Earth Farms
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“Our goal is to become more of a one-stop shop for organics,” continues Munger, who notes that the company now ofers more than 100 organic items. Among them are what he refers to as the “calling cards” of 4Earth: organic Brussels sprouts, sugar snap peas, spinach, kale and green beans. Additionally, he sees organic citrus, melon and avocados gaining momentum. While Munger says 4Earth will continue to expand its organic offerings, ensuring the yearround consistency, quality and availability of its existing lines is of the utmost importance, not just for his company, but also for the organics industry as a whole. “We as organic growers continue to get better, producing more per acre and more efciently,” he asserts. “As we do that, the industry gets closer to closing the price gap between organic and
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conventional. “Tere is a very loyal group of organic consumers for whom price isn’t on the top of their decision matrix,” continues Munger. “Tey are going to buy organic no matter what, but that market is fairly saturated.” According to the Hartman survey, 63 percent of consumers believe organics are too expensive. “Te real opportunity,” says Munger, “is with
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consumers who care about what they buy and what they feed their family, but they’re also price-sensitive. If we can get the price down, we open the door to a whole new group of consumers.”
Where They Buy Ten percent of the fruits and vegetables sold in the United States are now organic, notes the OTA. While this statistic is a victory for growers and purveyors of organic produce, there remains room for considerable growth. Price is one factor, increased availability another. Interestingly, the Hartman survey revealed that consumers are buying far less organic produce from natural food stores than they did in the past. When asked where they purchased organics in the last 30 days, respondents of the 2014 study replied that they purchased 24 percent from farmers’ markets, up from 15 percent in 2006; 59 percent from grocery stores, down slightly from 63 percent in 2006; 15 percent from club stores, up from 7 percent in 2006; and only 22 percent from natural food stores, down dramatically from 49 percent in 2006. “We still see growth in organic stores,” Munger says, “but there’s tremendous opportunity with conventional retailers who have made a strong commitment to expand their organic programs. In the past, for many of these retailers, organic was an afterthought. But now we see conventional supermarkets really fguring it out, and putting thought into merchandising and SKU selection.” Ricardo Crisantes, VP of sales and marketing for Wholesum Family Farms, one of North America’s fastest-growing organic producers, with farming and greenhouse operations in the United States and Mexico, also sees major growth opportunities in less developed outlets for organic produce. “Our sales, as we closed 2014, were up 20 percent to 25 percent from 2013,” says Crisantes. “We’re expanding that in 2015 with new distribution channels — looking at warehouses and club stores like BJ’s, Costco and Sam’s. Te club and warehouse stores are a totally new distribution channel for organic that’s really starting to come along.” Te Nogales, Ariz.-based company is also seeing greater interest from traditional grocery stores. “Te latest jobs report was the best it’s
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The Delicious Side of Organic been since 1999,” notes Crisantes. “Te story is that the economy is stronger, oil prices are down, people have more spending power, and we need to get organics in our stores.” To meet the growing demand, Wholesum Family Farms completed construction on a fve-acre greenhouse last year, and plans to plant another fve acres this year. Te company is looking at expanding its organic tomatoes and specialty eggplant, both of which Crisantes says are increasingly sought-after items.
Consumer Education Shoppers are not only hungry for fresh organic fare, they’re also ravenous for the truth about food. “If there’s one word that captures the swelling chorus of consumer demands in 2014’s organic marketplace, it’s transparency,” Hartman argues
Amid all of the buzz about health benefits, genetically modified organisms and the environment, the real story about organics — its true flavor, as it were — can get lost. Pioneering organic producer-supplier Earthbound Farm, in San Juan Bautista, Calif., has taken a bold step to ensure its focus stays on food. Last month, it launched a completely redesigned, foodforward website with original photography and a rigorous publishing schedule that will continuously refresh content focused on living a healthy, organic lifestyle. The recipe collection features an extensive database searchable by type of dish, dietary restriction, cuisine and occasion. Earthbound’s new site also offers Organic Bound — a web-based magazine for which visitors can sign up to get regular updates, cooking tips and coupons via email. In addition to content developed by Earthbound’s internal contributors, Organic Bound features content from dietitians and popular food bloggers.
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Fresh Food
The club and warehouse stores are a totally new distribution channel for organic that’s really starting to come along.” —Ricardo Crisantes, Wholesum Family Farms
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in its “Organic and Natural” report. “While the increased availability and proliferation of organic and natural products across categories fuel consumers’ aspirations, in a climate awash in confusing and conficting information, consumers are questioning products, companies and certifcations more than ever before.” “Educating the consumer doesn’t sound sexy, but that’s where it’s at,” afrms Crisantes. “Organic versus natural, organic versus GMO-free — there’s all this out there, and consumers have questions that need answers. And all of us in the industry need to educate, not just retailers.” It’s also about more than clarifying the meanings of non-GMO, pesticide-free and environmental impact. Consumers feel better about buying produce from companies that are socially responsible, promote farm worker health and support their local communities. Wanting to do more for the communities in which its produce is grown, Wholesum became Fair Trade Certifed. “We’ve started educating retailers about Fair Trade,” says Crisantes. “It requires a premium on top of the FOB price that goes to an independent worker committee, and they decide what to do with the money, whether it’s buying a school bus so kids can get safely to school in rural farming areas or purchasing medical vouchers for farm workers in Mexico. “We went to retailers and our partners with the story,” adds Crisantes. “Te frst year was the toughest, but now I think that the story has really resonated.” What’s the best way for supermarkets to get these positive messages out? Hartman research found that product labels are the main source of information on organic products for all demographics. However, there may be a greater opportunity to reach Millennials with in-store information. Hartman reports that this age group uses all information sources at a higher rate: labels, the internet, friends/relatives, store displays, magazines, etc. Hartman further found that diferent messaging speaks to core organic consumers versus the occasional organic user. Positive attributes associated with organic, such as social and
| Progressive Grocer | Ahead of What’s Next | February 2015
C.H. Robinson Expands Certified-organic Facilities “Organic produce is a very important part of the produce industry’s continued growth,” assertss Ray Griffin, director of global sourcing at Robinson Fresh, in Eden Prairie, Minn. With that in mind, this past July, C.H. Robinson began Robinson Fresh operations out of a new, certified-organic facility in the Los Angeles area. “Important features include innovative Airocide Ethylene Scrubbers that incorporate NASA technology, 28 refrigerated shipping and receiving dock doors, a Retailex online appointmentscheduling system, multitemperature storage rooms, floral-handling capabilities, and a 35,000-square-foot refrigerated packing room with 10 lines that have the flexibility to clamshell, overwrap, flow wrap, bag and sort produce,” notes Griffin. Additionally, C.H. Robinson conducts Robinson Fresh operations out of service center locations in Chicago; Bethlehem, Pa.; and McAllen, Texas. The facilities are all certified organic by Quality Assurance International (QAI), a USDA-accredited organic certifying agency. In other news, Robinson Fresh recently updated its Tomorrow’s Organics logo and packaging. Tomorrow’s Organics’ inaugural packaging was introduced in October 2014. “The new packaging displays brighter, more engaging colors and features consumer-friendly nutrition information,” explains Chris Lemmon, West region organic sales manager at Robinson Fresh. The company has also created a display shipper with detailed product information, According to Lemmon, “The POS materials were developed to help create a consumer-friendly organic destination in their produce aisles.”
environmental impact and authenticity, are more likely to resonate with core consumers, while less engaged consumers “are more likely to connect with messaging about safety and the experiential benefts of organic products.” Ultimately, Munger says: “Each retailer has the best pulse on what’s going to incentivize their customer base. Market by market, neighborhood by neighborhood, there are diferences to consider.” PG
Fresh Food
Produce Category Spotlight
Stone Fruit Forecast
Quality crops, new varieties and value-added introductions create fresh excitement in the category. By Jennifer Strailey
H
istorically, stone fruits have played a more subdued role in the ever-evolving and increasingly dynamic produce department. Sure customers look forward to cherry season, fresh peaches, nectarines and plums, but the selection has been somewhat predictable —until now. New value-added products, kid-friendly packaging, an emphasis on local, and specialty varieties are creating a juicy story for stone fruits in 2015. Take Woot Froot by Fresh Fruit Cuts, for example. It’s a story more than six years in the making, but the Fresno, Calif.-based company has succeeded in being the frst to bring fresh-cut peaches and nectarines to market. “Te biggest challenge is creating a consistent favor and texture throughout the season and maintaining shelf life,” says Kim Gaarde, president of Woot Froot. “Te thing that makes cut peaches and nectarines diferent from other sliced fruit is the varietal differences. Peach and nectarine varieties change every single week of the growing season. Each variety has diferent nuances that make its taste, texture or shelf life diferent.” While in fresh produce, this simply translates to diferent harvest times, in the world of fresh-cut, these nuances present a challenge. “We spent six-plus years testing over 400 varieties of peaches and nectarines under diferent conditions to see what would work,” notes Gaarde, who rolled out Woot Froot nationally in the spring of 2014. Te value-added fruit has experienced steady sales growth since its launch. It seems that every fruit can beneft from the burgeoning fresh-cut, value-added trend. According to the Q3 2014 edition of the “FreshFacts on Retail” report from the United Fresh Produce Association, in Washington, D.C., the valueadded fruit category posted average weekly dollar and volume sales growth of 10.5 percent and 3.1 percent, respectively. Te recent FreshFacts report, produced in partnership with the Nielsen Perishables Group and sponsored by Del Monte Fresh Produce, also noted the demand for value-added convenience produce items. Multiple categories, from mixed melons to fresh-cut fruits, experienced double-digit growth. With Woot Froot blazing the trail, now is the time for stone fruit suppliers and retailers to capture a slice of the value-added phenomenon. “Stone fruit has actually seen declining consumption over the years, because there has not been a lot of innovation in the category,” admits Gaarde, who adds that with a new product like Woot Froot, POS is helpful in drawing attention. “Because the product is new and consumers aren’t familiar with it, they also don’t know to look for it,” she says. “If the retailer has the ability to do a free-standing refrigerated or iced unit near checkout or on the foor of the h produce d department, this may also help spur trial and impulse purchases.”
Local Flavor Peaches are a big deal in South Carolina, the second-largest producer of peaches in the nation (California is No. 1). Te peach industry in South Carolina grosses approximately $50 million annually. So, in a state that knows its fuzzy-skinned stone
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fruit, it’s not surprising that local is a top trend. “Obviously, the local trend is huge,” afrms Matt Cornwell, of the South Carolina Department of Agriculture, in Columbia. “We see a high demand for South Carolina peaches not only in South Carolina, but in neighboring states as well.” Te state also provides signage free of charge to retailers eager to promote the Certifed S.C. Grown program. “Tis allows consumers to quickly identify local products,” says Cornwell. “Since many of our growers ship early and late varieties to northern and Midwest markets, it’s also important for those retailers to focus on quality displays and signage. Many consumers in those markets look forward to peaches coming from South Carolina as early as late May.” To the north, local is equally cherished. “Te ‘buy local’ food movement is a perfect match for North Carolina peaches,” says Dexter Hill, marketing specialist for the North Carolina Department of Agriculture and Consumer Services, in Kinston. “Consumers want to know where their food comes from, and are also very health-conscious. Peaches are a good source of vitamin A, and one medium peach contains about 40 calories and has 0 grams of fat.” North Carolina peaches are tree-ripened and sold immediately on the fresh market, local and regional farmers’ markets, roadside stands, and in some local grocery store chains, explains Hill, adding that “tree-ripened” means that the peaches are left on the tree longer and the sugar content is at its maximum before the fruit is harvested.
The retail sector has already shown great interest in carrying newcrop stone fruit, and is planning ads throughout the season.” A Plum of a Different Color —Dionysios Christou, Del Monte Fresh Produce
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Color is one of the easiest ways to create visual excitement. New varieties of stone fruits are adding interest and opportunities at retail, according to Evan Myers, executive director, South American imports for Te Oppenheimer Group, familiarly known as “Oppy,” in Coquitlam, British Columbia. “We are particularly excited about the lemon plum from Chile,” Myers says. “We anticipate record volumes this season. With their bright-yellow color and distinctive teardrop shape, lemon plums display beautifully.” Tese sweet plums with a slight citrus favor have a tender skin that blushes as they ripen, and a lush amber fesh — a unique plum, with the added allure of limited availability. In late April, Oppy plans to bring to market more of the new Callisto plum, a deep-red variety with golden fesh that reddens as it ripens. “One of the best things about Callisto is that it is a late-season plum, even later than the Angelino,” explains Myers. “Tis makes it a really good choice for retailers who want to extend the import stone fruit season later into spring to dovetail into the domestic plum harvest.”
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N.C. to Ramp up Peach Promotion North Carolina’s peach industry is poised for growth, says Dexter Hill, marketing specialist for the North Carolina Department of Agriculture and Consumer Services, in Kinston. “The growers themselves have just recently taken a giant step forward to ensure such growth,” notes Hill, referring to a referendum passed in April 2014 to establish a Peach Assessment — money that growers will pay into a fund to help promote the industry through the North Carolina Peach Society. “This is a way for the peach growers in our state to take control of their own destiny, so to speak,” says Hill. The assessment went into effect last month and remains in effect through December 2020. The North Carolina Peach Society will determine how to allocate the money to improve peach research and marketing efforts in the Tar Heel State.
Cherries Make for Cheery Winter Te timing is also right for cherries, which are increasingly available in winter. Oppy’s import cherry season has been underway since early November. “Cherry exports from Chile and Argentina are up, and we are seeing more cherry promotions as consumers discover and get excited about the increased availability of this typically summer item during the winter months,” Myers says. Cherries are a perennial favorite with scores of shoppers, and the Q3 2014 edition of FreshFacts fnds that love only growing stronger: Te fruit posted the highest growth in the fruit category, with dollar sales increasing 16.9 percent and volume up 36.7 percent. Oppy is participating in the highly successful “Sesame Street” Eat Brighter! movement, selling limited volumes of cherries in Cookie Monster packaging. “It has been a fun and efective way to marry up a kid-friendly pack with an easy-snacking item,” observes Myers. New Nectarines Del Monte Fresh Produce N.A. Inc. is reporting “extremely good growing conditions this year.” Te result, according to VP of Marketing Dionysios Christou, “will bring our stone fruit supplies back to normal, unlike last season with the two freezes that devastated the crop.” Te Coral Gables, Fla.-based company will introduce two new nectarine varieties in 2015: Te Andes 3 and Extreme Red. Both are large in size, with a full red color. “Te retail sector has already shown great interest in carrying newcrop stone fruit,” Christou says, “and is planning ads throughout the season.” PG
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Up Front Enhancing the front end experience must include customer needs, security concerns and the bottom line. By Bob Gibson
T
oday’s grocery stores are nearly unrecognizable to the supermarkets that frst emerged in the 1940s, and 2015 will bring even more changes as grocers seek solutions to increasing competition, thin margins and security threats. Let’s take a look at three of the major trends that will impact front end operations for grocers this year: Customer service differentiation: For grocery stores to stay front and center in the minds of shoppers in a highly competitive market, it’s imperative that they diferentiate their customer experience. Savvy grocers are bolstering customer experiences by leveraging front-of-store services and opportunities — this is how grocers grab additional market share. Te need for diferentiation aligns perfectly with coin-counting services, specifcally kiosks that feature excellent uptime and accurate performance, along with consumerfriendly, easy-to-use interfaces. In addition, as the grocery industry faces increasing pressure from growing online shopping and delivery options, it’s important for grocers to proactively implement strategies that provide both value to customers and the additional advantages of increased trafc and in-store purchases. Self-service coin redemption is a cost-efective way to achieve this goal and add proftability without taking up valuable store space. Continued on page 108
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| Progressive Grocer | Ahead of What’s Next | February 2015
ADVERTORIAL
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David Wagstaff Chief Operating Officer the happy egg company
The happy egg co., founded in 2009, is committed to producing great tasting eggs laid by the happiest hens, accepting only the highest standards of animal welfare for its laying birds. The company is part of the UK-based Noble Foods, the leading supplier of fresh eggs to major retailers in that region. product, you have to go all the way – there are no half-measures. We do constant quality tests ourselves; when you break eggs side by side, the hen with a better life, has a bigger egg with a bright orange yolk. That’s even in comparison with organic eggs, which tend to be small and pale, because most organic hens don’t go outdoors.
RL: How have happy eggs been received by retailers and consumers? Retail Leader: How is the U.S. marketplaceready for and interested in eggs from free range hens? David Wagstaff: We launched our brand of happy eggs here in 2012 after at least 12 months of research. In the UK, about 50 percent of all eggs are now free range, and we decided to see what other markets around the world would follow that trend. California’s Proposition 2 (prohibiting the confinement of certain farm animals) resonated with us, and we met with a lot of major retailers there and talked to U.S. farmers who would build farms to our specifications. Our research told us that the American consumer wants to buy products that are better for them and they care more and more about where their food comes from and how the animals are treated– and when a hen has a better life, it will produce a better quality product. We give our hens 14 square feet, which is about five acres per farm, and we are planning to move to 21 square feet per hen. We believe that to be a true free range humanely raised
DW: We introduced the product initially with 500 stores in California and today, we are in just over 4,000 stores nationwide. We are continually expanding production as well: we started with 150,000 hens on five farms in the Midwest, and are now moving to well over 400,000 hens on 22 farms. Happy egg has become a $15 million brand. I believe that the American egg market is going through what I call a perfect storm: there is a lot of talk about Proposition 2, consumers are trading into brands from private label and are trading up to organic and humanely raised products. We believe that however Proposition 2 turns out, it can only be good for the hens: as we like to say, ‘It’s all about the girls.” The welfare of our hens is our first priority – we want to continually raise the bar.
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Front End
Savvy grocers are bolstering customer experiences by leveraging front-of-store services and opportunities — this is how grocers grab additional market share.
Continued from page 104
Security and counterfeit detection: Unfortunately, data breaches are the new normal for retailers and consumers. As much as technology has advanced in recent years to move toward more convenient payment methods, credit and debit card security issues continue to be a substantial limiting factor in the widespread use of these tools. Consumers may continue to favor more secure forms of payment — such as cash and checks — to avoid these risks. Grocers can easily bring high-tech processing to these low-tech payment forms by employing dual-purpose currency and checkprocessing equipment. Similarly, grocers must protect themselves against security risks associated with counterfeit bills. In 2013, $88.1 million worth of counterfeit currency was seized, and we don’t anticipate a decline in 2015, according to a recent Chicago Tribune report. Currency-processing equipment with advanced counterfeit detection technology — such as magnetic sensing and fuorescence testing — can help grocers spot fake bills before they’re passed on to a fnancial institution or recirculated, thus protecting the store’s reputation and customers while also identifying needs for additional cashier training, reducing and managing future losses in this area.
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| Progressive Grocer | Ahead of What’s Next | February 2015
Decreasing margins: Te razor-thin margins grocers operate on will continue to be a challenge, making it critical to improve efciency and increase productivity in all parts of the store. Grocers need to be able to process a variety of payments, including checks and cash, which, when done manually, is a tedious and time-consuming task that takes away from employees’ time spent with customers. Streamlining the deposit process with cash and check scanners will eliminate back-ofce inefciencies, minimize errors with bank deposit reconciliations and free up a signifcant amount of time in the daily schedule, and the same machine can also be used to count cash. Maximizing efciency with a single-platform device will also lead to real overhead spending reductions that can be used toward eforts to improve customer-end projects. In addition, some regional and national grocers need technology solutions that will work with multiple banks, and this technology can allow grocers to get credit on their deposits sooner. PG Bob Gibson is VP of branch operations for Mount Prospect, Ill.-based Cummins Allison.
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Shave Overhaul
Following a frontal assault in the shaving category, retailers prepare for the next wave. By Christina Veiders
S
teely glints of a rebound in the shaving/ grooming aisles of retailers have begun to appear recently. After months of fallout in consumer demand for razors and blades — more men letting their facial hair grow — and resistance to costly replacement cartridges, suppliers have countered with innovations in the form of products targeted to meet specific shaving needs and, counterintuitively, price hikes. Although sales of most shaving segments are far from rosy, the bleeding appears to have stopped for razors and slowed in other shave segments. Razors are the bright spot in the shave/ groom category. Dollar sales of razors across food, drug and mass merchandiser channels were up 7.3 percent to $474.6 million for the 52-week period ending Nov. 30, 2014, according to Chicago-based Information Resources Inc. (IRI). Tis compares with a sales drop of 5.5 percent to $433.3 million during roughly the same period the year prior. Te spike can be attributed in part to Gillette’s much publicized launch last year of the Fusion ProGlide FlexBall at a premium price point of $11.49, and a battery-operated version for $12.59. “FlexBall ups the ante with two pivots to help our best blades stay in the right position and adjust to the contours of a man’s face,” says Kurt Iverson, a spokesman for the Procter & Gamble brand. In fact, disposables have
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fourished during the past two years. “In the four months since launch, we’ve seen an improvement in U.S. blades and razors market growth, including more than a 25 percent spike in razor sales,” noted Jon Moeller, CFO of Cincinnati-based P&G, during a frst-quarter earnings call last October. Additionally, Moeller told analysts that FlexBall technology will be extended to women this year through the Venus brand, “helping them to easily manage tricky spots such as knees and ankles.”
Gliding to Success? According to Shannon Romanowski, a senior beauty and personal care analyst with Chicagobased research frm Mintel, P&G’s sales of Fusion ProGlide products have been solid. Citing IRI multioutlet data, she notes that Fusion ProGlide sales grew from $64 million in 2010 to more than $160 million in 2014, year to date through June 15. However, sales of other Gillette sublines are on the decline. “Consumers are willing to embrace new innovations and premium price points, but ultimately at the sacrifce of ‘older’ technology,” she says. Te slow-to-rebound economy and men’s hair shave-styling trends have contributed to the depressed state of the shave/ groom category over the past few years, but a more robust economy with low oil prices bodes well for consumer spending on new technology and products for daily grooming routines. Men’s propensity for facial hair, however, appears to be a fashion trend not about to give way any time soon to more clean-shaven faces. Tose in the shave/groom business have countered by expanding their ofering beyond the face to the full body and its parts. For instance,
| Progressive Grocer | Ahead of What’s Next | February 2015
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last year, P&G last introduced Gillette Body, which it says is the frst razor designed for male body shaving, at an SRP of $7.97. “Te demand is strong enough to support a razor that’s designed with additional safety and comfort features for tackling the male terrain,” says Gillette’s Iverson, “while still delivering a close shave on a variety of body contours — an even more demanding assignment than the face alone.” Schick, a brand of St. Louis-based Energizer Holdings, is said to have gained traction with its Hydro 5 Groomer, a four-in-one facial hairstyling
Retailers’ Shaving Challenge
Focus on value and performance, analysts advise Retailers will need to closely evaluate their inventories in preparation for the uptick in shave/groom sales and product innovations expected in 2015, says Shannon Romanowski, an analyst at Chicago-based Mintel. As such, retailers will be forced “to prune their retail inventories to focus on the value and performance ends of the spectrum,” she notes. Brick-and-mortar retailers are also being undercut by newly emergent online subscription services for razor blades, such as Dollar Shave Club. Gillette, a brand of Cincinnatibased Procter & Gamble, launched its own online blade subscription business last year. Given the new online competitive channel, it’s important for retailers to get the merchandise right in their shaving aisles and know their shoppers’ needs, counsels Beth Weinstein, trade marketing manager — shavers at Bic Consumer Products USA, in Shelton, Conn. “Today’s consumer wants quality performance and value,” she says. “It is important to have a product mix that reflects this.” She offers these strategies for achieving sell-through: “Cross-promotions with adjacent categories make the in-store experience engaging and more convenient, and create less of a need for consumers to go elsewhere. “Offer a total grooming solution for consumers — place shavers and complementary products together. Retailers can increase their sales and improve the consumer’s shopping experience. “It’s also beneficial to have shavers and complementary products off-shelf where the consumer can easily see them, such as in an end cap display.” Bic has created retail end caps combining its Soleil razors and other popular beauty products for women. According to Gillette spokesman Kurt Iverson, an aisle devoted just to men works well, too. “You see a real ‘man’s aisle’ developing in many stores, and when all the grooming possibilities are marketed together, shoppers begin to think of it as an important stop,” he observes. “It widens the variety and quality of products that enter the consideration set. You’ve seen it for years in women’s cosmetics.”
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| Progressive Grocer | Ahead of What’s Next | February 2015
tool touted for its “manscaping” abilities.
Other Shave Categories Sales in all other shaving and hair removal segments were down, however: Blades fell 4.7 percent; shaving cream was of by 0.19 percent; and depilatories and electric shaver groomers both were down 1.5 percent, for the IRI reporting period that ended Nov. 30, 2014. In Mintel’s latest shaving and hair removal products report in the United States, the bulk of sales, 71 percent, were in replaceable cartridges and disposable razors. Over the past two years, replacement blade sales sank 5.2 percent, to the advantage of lower-cost disposables, which are up 1.8 percent, according to Mintel. Te researcher valued the overall market for shaving and hair removal products at $4 billion in 2014. Bic, for one, has benefted in the trading down from costly replacement cartridges to disposables. “We see sales of disposable razors continuing to grow because they provide a high-quality shave at a great value,” says Beth Weinstein, trade marketing manager — shavers, at Bic Consumer Products USA, in Shelton, Conn. “We believe that 2015 will be a growth year for the category, driven by new products with more premium features.” To that end, the company is introducing the Bic Flex 5 shaver, featuring a Balancing Sphere for better shave control, as well as a precision edging blade and a head that pivots 40 degrees to help shave in tricky areas such as under the nose or around sideburns. Mintel anticipates modest growth across most category segments. “We expect changes in category pricing structures to shift demand back to other segments as retailers grow increasingly less willing to accept low-velocity, premium-priced SKUs,” Romanowski says. “As the disposable segment levels of, average consumer spending in the category is likely to increase slightly over the next fve years.” Gillette’s Iverson, meanwhile, expects a pickup in the shave prep category. “We have some exciting innovation coming on that front,” he says. “Men are always on the lookout for ways to get a better shave — one that is safe for sensitive skin.” Mintel forecasts total market growth of 6.5 percent from 2014 to 2019, to reach sales of $4.3 billion. Despite weak performance in its shave/groom categories, Energizer Holdings CEO Ward Klein noted during last year’s fourth-quarter and fscal 2014 earnings call that price increases in shave preps and razor blades were put through and will carry through to this year. PG
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The
Smell Test
Grocers must select, merchandise and promote fragrances and scented bath products for optimal sales. By Barbara Sax
R
etailers were hoping the holiday season would fnally be merry for the fragrance category. “Fragrance is always a top category during the holidays, and after years of lackluster results, the market is showing some increases,” says Karen Grant, global beauty industry analyst at Te NPD Group. A recent report from Port Washington, N.Y.-based NPD found fragrance to be the ffth most popular purchase of the holiday season. Give Back Brands’ Nicki Minaj Pink Pill and Girlfriend by Justin Bieber and Coty’s Lady Gaga Fame all saw tripledigit increases going into the holiday season, according to multioutlet data from Chicagobased IRI for the 52-week period ending Oct. 5, 2014. Parlux Fragrances Ltd. followed its October launch of Rogue Man by Rihanna with the November introduction of Rogue Love by Rihanna, with both scents generating immediate interest. Gift sets, which Grant says traditionally account for up to a third of category sales, especially around the holidays, have become less popular with consumers, who are gravitating toward smaller-sized bottles and fragrance products
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for the home, such as candles. Retailers got behind the category with circular ad support. Fragrances garnered 13.4 percent of circular ad support share for the year ending Dec. 13, 2014, according to Solon, Ohio-based ECRM, up from 10 percent last year, not including fragrance gift sets, which represented an additional 4 percent of circular ad support for 2014. According to ECRM data, price promotion represented nearly 68 percent of circular promotions, while buy-one-get-one promotions represented about 8 percent of promotional activity, down slightly from Unless a the previous year.
supermarket
Supermarket Scents has a compelling Despite promotion, the experience, as mass fragrance category well as the right has been in a slump for the brands, women past year. A report from are just not London-based Euromonigoing to buy tor reveals that mass frathere.” grances have continued to underperform, especially —Wendy Leibmann, WSL Strategic Retail since prestige scents are increasingly available in mass-market channels. Reduced interest in celebrity fragrances and an absence of any blockbuster launches also contributed to fat sales. “For women, the fragrance category still feels like it’s celebrity-driven and hugely hit or miss, which means it’s hard for supermarket retailers to ride the wave,” notes Wendy Leibmann, CEO of New York-based WSL Strategic Retail. Leibmann adds that shoppers still don’t think about supermarkets when it comes to fragrances. WSL’s “How America Shops 2014” research report found that 7 percent of women said they purchased fragrance from a supermarket, down from 11 percent in 2012. “Unless a supermarket has a compelling experience, as well as the right brands, women are just not going to buy there,” asserts Leibmann. “For the most part, there are only a few supermarket retailers who are getting it
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close to right — Wegmans; ShopRite, which has improved its overall beauty department in some stores; For men, H-E-B; and Whole Foods/Whole Body.”
fragrance is part of a shaving/ grooming routine, so men are more comfortable shopping at a supermarket for fragrance, shaving and grooming products.”
—Wendy Leibmann, WSL Strategic Retail
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Essence of Man For men’s fragrance, however, the news was better, according to Leibmann: 10 percent of respondents in WSL’s 2014 report said they purchased fragrance at supermarkets, up from 8 percent in 2012. “For men, fragrance is part of a shaving/ grooming routine, so men are more comfortable shopping at a supermarket for fragrance, shaving and grooming products,” says Leibmann. “But again, retailers need to have the right brands and an appropriate experience.” Te men’s segment has outperformed the category overall. “While men’s fragrances have also struggled to grow sales, the segment has seen a slight gain in market share. Men’s growing involvement in grooming and personal care and new product development has helped the men’s fragrance segment slightly outperform women’s fragrances,” a recent report from Chicago-based Mintel notes. Supermarket dollar sales of Coty’s Nautica Blue were ahead nearly 59 percent going into the holidays, good news for the New York-based manufacturer, since it noted a 2 percent decline in fragrance sales as well as a 2 percent slide in skin care and body sales in its November earnings report. Coty cited “pressure in the mass fragrances market” in its comments to analysts. One new brand to watch is Coty’s Stetson Caliber. Launched in September, the scent targets men age 30 through 40 and is backed by at least $1.5 million in print and digital spending. Te Stetson fragrance brand, which debuted in 1982, has been among the top three sellers in men’s mass-market fragrance for the past decade, according to NPD. Men are an infuential and critical part of the fragrance industry, according to NPD’s Grant. “Younger men are a prime example of the well-rounded fragrance user, since they are the group most willing to experiment with diferent fragrances,” she observes. “Te category is more top-of-mind for consumers, and retailers seem to be giving more space to men’s fragrance, grooming and shaving. It’s a category with huge untapped potential.” Dollar sales of Procter & Gamble’s Old Spice Wild Collection surged 74 percent at supermarkets for IRI’s previ-
| Progressive Grocer | Ahead of What’s Next | February 2015
ously noted 52-week period. Last year, Cincinnatibased P&G launched Old Spice Re-fresh Body Sprays. Te brand’s “One Spray Lasts All Day” tagline stresses the brand’s innovative frst-in-category technology that eliminates the need for users to overspray or reapply throughout the day. Te launch was supported with a “Smellcome to Manhood” integrated marketing campaign, including television spots that humorously depict how tough it is for moms to come to grips with the fact that Old Spice is “spraying a man onto their sons.”
Other Segments Old Spice was also strong in the body wash segment. Gender-specifc body wash products have helped lift the liquid body wash segment 7 percent between 2011 and 2013, according to Mintel research. Mintel’s recent report on the category notes that growth in the segment was “driven largely by male-specifc products such as Axe and Old Spice.” Unilever’s Dove Men + Care line has also been successful. While there weren’t any signifcant introductions in the women’s body wash category in the past year, bath salts saw an intriguing launch in 2013. Chicago-based Morton Salt, most commonly known for its broad range of culinary salts, debuted a line of Natural Epsom Salt products, marking the brand’s frst foray into the health and beauty category. Te line of bath additives, which provides soothing relief as a soaking solution for minor aches and sprains, and is made with natural magnesium sulfate, blurs the line between an HBC and OTC product. Morton’s Natural Epsom Salt line, consisting of four core products, helped bring double-digit growth to the otherwise sleepy bath salts and powder segment, according to Euromonitor data. Organic and naturally based bath products are popular with consumers, as are products with a spalike positioning. Austin, Texas-based Whole Foods Market isn’t the only chain carrying organic/natural products; Rochester, N.Y.-based Wegmans Food Markets, for example, carries Avalon Organics as well as Kiss My Face. Mass brands, such as Aveeno and Organix, tout the soothing, calming or hydrating benefts of some of their products. Unilever and P&G spent the most on circular ads last year in the category and kept their promotions in line with last year’s spending. Englewood Clifs, N.J.-based Unilever remains the market leader in the category, and its Dove brand was the most frequently promoted brand in circular ads, according to ECRM. While supermarkets promote the category with price breaks and multipack deals, other retail channels are more aggressively promoting the category, ECRM has found. For instance, San Antonio-based H-E-B has featured both Dove Body Wash and Dove Men + Care as its online Beauty Pick of the Month, which includes digital coupon ofers. PG
Your Category Is Our Focus Using product categories to drive our meeting schedules, we ensure you have quality, face-to-face meetings. Efcient Program Planning Sessions (EPPS), are strategically scheduled based on retailer review cycles.
April 26, 2015 - April 28, 2015
June 14, 2015 - June 17, 2015
June 23, 2015 - June 25, 2015
July 12, 2015 - July 15, 2015
July 19, 2015 - July 22, 2015
July 27, 2015 - July 29, 2015
YOUR PLANNING BEGINS HERE
For more information regarding ECRM Events, please contact: Lisa Carrillo, Health and Beauty Care | (440) 528-0427 | lisac@ECRM.MarketGate.com Melinda Young, General Merchandise | (440) 248-2190 | MCYoung@ECRM.MarketGate.com Sarah Sweitzer, Grocery | (440) 542-3033 | ssweitzer@ECRM.MarketGate.com
PGPet Caring for ‘Senior’ Pets
Retailers can boost sales by offering products designed for age-related health issues. By Kathleen Furore
T
he Cookes of Oak Park, Ill., run a dogloving household. Tey’re never without at least one boxer — their favorite breed — so they’re quite familiar with problems they’ll face as their pets begin to age. Take Rogue and Gypsy, the Cookes’ boxers, who lived to the ripe old ages of 9 and 11, respectively. “Rogue started really aging around the age of 8,” recalls pet “mom” Sarah Cooke. “He started with loss of hearing, and hip or back dysplasia degeneration. Gypsy lost her hearing, then started basically having dog dementia.
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She would get caught in corners, and would sometimes turn a corner and hit her head on the wall.” What the Cookes and other pet owners have discovered is that the same age-related problems that plague the human population put the pet population at risk, too. Intestinal problems, arthritis and degenerative joint disease, diabetes, cognitive problems, and kidney and liver disease are just some of the health issues common to aging dogs, the New York-based American Society for the Prevention of Cruelty to Animals (ASPCA) reports. And with the population of older pets on the rise (more
| Progressive Grocer | Ahead of What’s Next | February 2015
A Dog’s Age than 37 percent of dog owners have a dog older than 7 years of age, according to an April 2014 survey conducted by New York market research frm Penn Schoen Berland and issued by Purina), more and more pet owners are looking for ways to make their pets’ senior years more golden. “Just as the average life expectancy for humans has increased, our pets are now living longer as well,” says Paul Cooke (no relation to the Oak Park family), VP/director of industry development at St. Louis-based Nestlé Purina PetCare. “Tis longer life span may be attributed to both advancements in pet nutrition, as well as pet owners making more informed decisions when selecting a food for their pets. Owners have learned how important it is to provide pets with complete and balanced nutrition from the time their pet is a puppy or kitten. And with a large share of pets now considered to be ‘seniors’ — any age above 7 — owners are actively seeking nutritional solutions to keep their pets happy and healthy as they age.” Consequently, retailers have a chance to boost pet product sales by stocking shelves with the kinds of “senior” products those owners are seeking.
Foods Counter Effects of Aging According to the ASPCA, many of the metabolic and body composition changes that aging animals undergo are unavoidable. Keeping pets active for as long as possible can help mitigate some efects of aging, since overweight dogs tend to age faster than their lean counterparts, while other conditions can be managed with diet. Low-fat, low-calorie, low-sodium and high-fber foods, as well as those with high-quality protein sources, are among specially formulated pet foods designed to beneft animals with agerelated health issues. In addition, some vets believe aging dogs beneft from the addition of dietary supplements, also known as nutraceuticals, according to the ASPCA.
Common wisdom holds that one yearr in a dog’s life equals seven years in “people” age. The truth is actually a bit different, pet experts say. According g to Web MD, the first year of a dog’s life e is equal to about 15 human years, because ause dogs mature more quickly than children dren during the first couple of years. The chart below shows how dogs age, by breed d type. Consider posting an age chart in your stores’ pet departments to assist shoppers in selecting the appropriate food for their dogs.
Translating Dog Years into Human Years
Age of dog
SmAll breed - Age in humAn yeArS
medium breed - Age in humAn yeArS
lArge breed - Age in humAn yeArS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
15 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80
15 24 28 32 36 42 47 51 56 60 65 69 74 78 83 87
15 24 28 32 36 45 50 55 61 66 72 77 82 88 93 120
Source: Web MD
February 2015 | progressivegrocer.com |
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PGPet Te Cookes believe in those benefts, too. Dietary supplements, including glucosamine, help their 8-year-old boxer, Tanner, who has hip problems, Sarah Cooke says. “Glucosamine, omega-3 fatty acids, antioxidants such as vitamin E and beta carotene, and extra vitamin C and vitamin E are some of the common nutraceuticals senior food formulas include,” information from the ASPCA notes.
Manufacturers Respond Many pet food companies are addressing pet owners’ desire for foods that will prolong their aging companions’ health. “After 30 years of closely studying the efects of aging, we made breakthrough discoveries on weight management, digestive health, eye care, memory and other notable developments designed to help pets live longer, healthier lives,” asserts Nestlé Purina’s Cooke. Based on that research, the company developed foods formulated for older dogs and cats. Purina One Smartblend Vibrant Maturity 7+ Senior and Purina Dog Chow Active Senior 7+ are made with highquality protein, plus essential nutrients that support mobility, immunity, and healthy skin and coats in aging dogs. Purina Cat Chow Healthy Weight is an energy-dense kibble to help ensure that cats receive nutrition required to maintain healthy body weight, while Purina One Smartblend Vibrant Maturity 7+ for cats includes high-quality protein from real chicken to help maintain lean muscle mass, vitamins and minerals to help maintain healthy joints, and natural sources of glucosamine, Cooke explains. Te Iams Co., a Procter & Gamble brand based in Mason, Ohio, has also invested in research related to pet health. Te fndings revealed that dogs and cats fed a diet rich in antioxidants such as vitamin E, lutein or beta carotene
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had improved immune responses and vaccine recognition. “Tis may be especially important in senior dog and cat care, because Iams research has found that as dogs and cats age, immune responses can decrease,” company information says. Te company responded to those fndings by creating Iams ProActive Health Mature Adult and Senior Plus foods with antioxidants, available in a variety of formulations for all sizes of dogs and cats. Loving Pets is also answering the call for specially formulated pet food targeting age-related health issues. “With pets living longer, we are proud to ofer a variety of treats that support an aging pet’s changing needs,” says Eric Abbey, president and founder of the Cranbury, N.J.-based company. “We want to keep pets healthy from the inside out, and ofer low-fat, lower calorie solutions that are easy on the digestive tract and promote heart and joint health.” Products from Loving Pets that can help manage age-related problems include low-fat, low-calorie Barksters, containing only 12 calories per treat; soft, afordable Natural Value treats, which are wheat-, soyand gluten-free; Gourmet Duck Sticks and Gourmet Meat Sticks, featuring glucosamine and chondroitin to help keep dogs’ joints healthy; and the Nature’s Choice 100% Natural Rawhide line, featuring Vita-Hide with Chicken Joint-Healthy Formula, with glucosamine and chondroitin, and Vita-Hide with Chicken Heart Healthy Formula (made with L-carnatine, a natural antioxidant that promotes heart health; taurine, an amino acid found to be helpful in treating heart ailments and high cholesterol; and vitamins C and E, which have health benefts related to heart function). Additionally, the company’s new TreatFinder (http://lovingpetsproducts.com/treat-fnder/) helps in the selection of treats based on such criteria as age of pet, size of pet, and sourcing. PG
PGPet
Help Pets Spring into Spring
Retailers can create a destination for shoppers with grooming products. By Kathleen Furore
S
pring is nearly here, and as pet owners welcome the warmer weather and longer days, they must contend with the health-related issues the season brings. Whatever the combination of products that end up on retailers’ shelves, merchandising an assortment of pet grooming supplies can help retailers boost sales as the weather grows balmy. “Looking at the seasonality of grooming, historically we know that consumers ramp up spending beginning in April, and sales hit a peak in June,” says Shay Moeller, consumer pets product manager at Sterling, Ill.-based Wahl Clipper Corp. “Retailers can capitalize on grooming sales by promoting and running end caps on items such as clippers, shampoos, grooming tools and other grooming items. Retailers that focus on being
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a pet destination for grooming products will increase sales and draw new customers into their stores.” It might also be useful for retailers to be mindful of pet owners’ specifc grooming needs to more efectively merchandise products and ofer solutions. For example, excess shedding and the arrival of feas, ticks and mosquitoes are some potential problems that can make spring less than pleasant for pets and their owners, industry experts say. “Pets develop heavier coats in the cooler months to protect them from the cold,” Moeller says. “When warmer weather comes into the picture, the dogs’ natural reaction is to shed their coats to prepare them for the warmer weather.” Double-coat breeds, including Huskies, Samoyeds and golden retrievers, are especially prone to spring shedding, notes Lisa Leady, a national certifed master groomer affliated with the Clark, Pa.-based National Dog Grooming Association and owner of Primp My Pooch, a mobile dog- and cat-grooming business in Genoa, Ill. “With spring being just around the corner, pet owners can also prepare by making sure that their pet has started their fea, tick and heartworm preventative [treatments],” Leady adds.
Warm-weather Grooming Tips and Products Understanding the kinds of grooming tasks pet owners most frequently perform at home can help retailers decide on the kind and scope of
| Progressive Grocer | Ahead of What’s Next | February 2015
products to add to their pet aisles this spring. Brushes are good options, since brushing a pet to remove loose fur is the frst step toward good grooming, Wahl’s Moeller says. “Weekly brushing will prevent excess shedding while promoting a healthy coat,” he explains. “All pet owners should practice brushing and combing their pet, even if it is trimmed short,” Leady concurs. Wahl’s new pin bristle combo brush with ergonomic grip and Hartz Groomers Best brushes are examples of pet-grooming tools that remove the loose fur so common during shedding season. Clippers, shampoos, and fea and tick products are other items to consider to round out retailers’ pet-grooming product inventories for spring. Pet clippers, according to Moeller, can remove fur be-
tween the pads of the paws, which helps prevent pets from tracking springtime dirt and debris into the house. Nail clippers are also important, Leady notes. “Te nails should be trimmed monthly to keep a nice, healthy foot,” she says. And shampoos do more than clean. Wahl’s all-natural Oatmeal Shampoo, Shed Control Shampoo, NoRinse Waterless Shampoo and Refresh Cleaning Wipes remove dirt and debris and also help prevent additional shedding, while the company’s Flea and Tick Shampoo, featuring rosemary, mint and cedar oil, naturally repels feas and ticks for up to one week, without the use of toxic chemicals. Secaucus, N.J.-based Hartz also ofers shampoos and products that keep pets clean and pests at bay. Groomers Best shampoos and conditioners and UltraGuard Plus Flea & Tick Dog Shampoos, plus fea and tick collars for dogs and cats, are part of the company’s grooming product lineup. PG February 2015 | progressivegrocer.com |
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PGPet Pet Product Showcase “I and love and you” Homemade In the Raw Dog Food Boasting a new formula and improved flavor, this line of 100 percent raw homemade dog food is now 100 percent grain-free, and features meat as the No. 1 ingredient. The new allergy-friendly raw Lamb Boom Ba variety is made with free-range lamb. All recipes are made with freeze-dried meats and dehydrated fruits and vegetables — just add water to prepare. Additionally, the made-in-the-USA product line contains GMO-free fruits and veggies, and no antibiotics or added hormones. www.iandloveandyou.com
Kong Cat Treat Cone
Your customers will be able to keep their cats busy, healthy and happy with this treat-dispensing puzzle toy that promotes exercise and fulfills Kitty’s instinctual desires to chase, hunt and capture. Pet owners can place a few treats inside and watch their cats chase and swat the cone. www.kongcompany.com
Iams Purrfect Delicacies
This wet cat food is made with wholesome ingredients like chicken, salmon, tuna, whitefish, mackerel, ocean fish, shrimp, beef and eggs. The meat and fish provide cats with plenty of protein, while vegetables such as carrots and spinach give them the nutrients they need, with no gluten, corn, soy or wheat. The item is available in flaked fish, chunks in gravy, and shredded forms. www.IAMS.com
Hyper Pet Hyper Squawkers
Durable, multitexture, interactive pet toys from Hyper Pet (a division of Rose America Corp.) make fun noises and can occupy dogs for hours. The toys are available in three designs: Jack (shown), Bone and Ball. www.hyper-pet.com
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Martha Stewart Founder, Martha Stewart Living Omnimedia
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Phil Lempert the Supermarket Guru
Harold Lloyd Founder, Harold Lloyd Presents
Youngme Moon Author and Professor, Harvard Business School
Arianna Huffington Co-founder & Editor-in-Chief The Huffington Post
Shaquille O’Neal NBA All-Star and Sports Analyst for TNT and NBATV
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Technology
Shopper Loyalty Programs
Data Make the
Difference Rumors of loyalty cards’ death are greatly exaggerated, analysts say.
I
By John Karolefski
n the past 18 months, Albertsons, Shaw’s, Star Market, Acme, Jewel-Osco, Pathmark and Waldbaum’s have discontinued their frequent shopper card programs. To maintain customer loyalty, these grocers will focus on everyday low prices on staple items, and specials listed in weekly sales circulars. Is a trend emerging? Is what seemed like the birth of a breakthrough promotion three decades ago finally fading away?
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Consultant Mark Heckman, former VP of marketing at Indianapolis-based Marsh Supermarkets, recognizes that a number of “good retailers” have abandoned their programs, while other successful retailers feel vindicated because they chose not to invest in electronic card marketing. Michael Schif, managing partner of Partners in Loyalty Marketing, a Chicago-based consultancy, predicts: “More stores will abandon their cards. It will be at a slower rate, and concentrated to those who see it as yet another way to deliver coupons.” But not everyone agrees with this promotional obituary. Several analysts, consultants and grocers are quick to rally behind loyalty card programs because they continue to be successful. Others hedge their bets by admitting that the “cards” themselves may disappear, but the programs need to remain in place if stores want to thrive and fourish. Te key is accumulating and using shopper data appropriately. “A well-designed loyalty program that strategically uses customer data to make price, promotion and assortment decisions will position retailers to understand and best satisfy the needs of customers. Tis, in turn, will give retailers the best chance to compete in a sustainable manner over the long term,” says Graeme McVie, VP and general manager of business development for Toronto-based Precima, the data analytics division of LoyaltyOne. “Te retailers who best satisfy the needs of customers will win in today’s competitive marketplace by earning the loyalty of shoppers,” he adds. “However, retailers that don’t have loyalty program data will have limited visibility to shopper behavior, and risk putting themselves at a competitive disadvantage.”
| Progressive Grocer | Ahead of What’s Next | February 2015
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• By erasing the need for paper or Smart Phone coupon scans, cashier training is a breeze, line bog-downs are a thing of the past, and customer frustration is greatly reduced • eCoupons automatically expire after use or set date • Potential fraud that occurs with printed coupons is eliminated • Cashiers can quickly see past rewards used by the customer and all current rewards available to the customer • Customers can be rewarded for sharing store events, newsletters, and more via their social media networks with BuzzBot™ included at no extra charge
Technology
Some retailers have chosen to refocus marketing efforts elsewhere, but those who have continued to invest in their loyalty programs — and are now leveraging new personalization and targeting capabilities — are seeing real return on that investment.” —Trey Moser, Inmar
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Shopper Loyalty Programs
Cards Carrying On Loyalty card programs in the grocery industry were introduced in 1985 by Richmond, Va.-based Ukrop’s Super Markets as a way to get to know customers by name and understand the behavior of the most valuable shoppers. Tis unique promotion — revolutionary at the time — spread throughout the grocery industry until it seemed as though every grocery operator had a card program. A 2014 Food Marketing Institute (FMI) report revealed that 81.3 percent of U.S. supermarkets emphasize a frequent shopper/loyalty program as a competitive strategy. Critics of loyalty cards claim that the proliferation of programs has diluted the benefts. Shoppers are known to have three or more such cards dangling from their key chains. No one is loyal to any single retailer. Don’t tell that to shoppers at Pittsburgh-based Giant Eagle, which operates nearly 400 retail locations in Pennsylvania, Ohio, West Virginia and Maryland. Its Advantage Card, launched in 1994, is the primary vehicle used to reward customers for shopping. Te ways in which customers receive value through the card include weekly sales, e-ofers, digital coupons and Fuelperks. Trough the last program, which began in 2004, customers can use their Advantage Cards to earn 10 cents of a gallon of gas for every $50 spent at Giant Eagle stores. Customers can earn discounts up to and including free tanks of fuel. According to company spokesman Dan Donovan, “In addition to offers available to a wide array of customers, we also on occasion use customer purchase history to deliver unique and specialized ofers to smaller groups of customers.” Schif, of Partners in Loyalty Marketing, admits that chains really mining the data will continue to keep their cards because they deliver tailored content and ofers to customers. Te industry’s best example is Cincinnatibased Kroger. Te linchpin for its enormous success is a long-term partnership with Dunnhumby, the
| Progressive Grocer | Ahead of What’s Next | February 2015
analytics frm that helped drive Tesco to major success in the United Kingdom by mining shopper data gathered through a card-based loyalty program. Consultant Gary Hawkins writes in the book “Te Essentials of Shopper Technology” (Outskirts Press 2012) that Kroger — through its partnership with Dunnhumby — has efectively “weaponized” shopper data in at least three ways, to the detriment of its competitors: Personalized marketing: Te partners leverage data to provide highly targeted promotions to shoppers, driving basket size, visits and retention over time. Merchandising: Kroger takes the shopper segmentations and insights created by Dunnhumby, and drives this knowledge down to a store level, using it to tune each store’s assortment and inventory to the shopper base. Direct monetization: Kroger charges brand manufacturers millions of dollars annually to access shopper insight and analytics provided by Dunnhumby. Te manufacturers are expected to use the information to help the chain improve its business. Kroger has more than doubled the number of premium loyalty shoppers, according to Hawkins. “It is converting secondary, lower-value shoppers into loyal high-value shoppers. Tis growth in revenue is coming at the expense of other competing retailers, often independents and midmarket stores.”
Leveraging Technology Hawkins knows all about competing as an independent against major chains. For years, he was president of Green Hills Farms, a one-store operation in Syracuse, N.Y. Te store earned a national reputation for efective shopper engagement enhanced by a cardbased loyalty program. Today, as executive director of the Center for Advancing Retail and Technology (CART), he aims to help small food operators take advantage of the newest technologies available. CART, which is an alliance partner of the National Grocers Association (NGA), powers a marketplace connecting stores, brands and solutions. One independent betting on technology is Lubbock, Texas-based United Supermarkets. Tis wholly owned subsidiary of Boise, Idaho-based Albertsons recently expanded its loyalty program from an April 2014 launch in seven Market Street locations in Dallas/Fort Worth to all east Texas United Supermarkets, Amigos, Albertsons Market, Market Street and United Express locations. Members may use their phone numbers during checkout instead of carrying a membership card.
Card-carrying Shoppers Inmar’s most recent “Shopper Behavior Study” found that nearly two out of three grocery shoppers (62 percent) consider the availability of a store loyalty card program an important or very important factor in determining where they shop. “Despite their channel fluidity, shoppers are looking to be rewarded for their purchases,” says Trey Moser, senior director of retail analytics at Winston-Salem, N.C.-based Inmar. Highlights of the study include the following: 81 percent of shoppers participate in at least one grocery store loyalty program, and 65 percent participate in a nongrocery store loyalty program. 40 percent of shoppers who reported using more coupons said they did so because they were able to load offers onto their store loyalty cards. Shoppers who regularly use coupons loaded to their store loyalty cards shop more and spend more in the grocery channel than shoppers who don’t regularly engage with load-to-card coupons. 72 percent of shoppers with children in their households want coupons loaded to their store loyalty cards for products that they normally buy; 64 percent of shoppers without children at home say the same.
—John Karolefski
Heckman, the consultant, enthuses that “shopping technology” is exploding. Shoppers want automation, simplicity and consolidation of the many ofers and rewards from each retailer. Consequently, he says, loyalty cards are gradually giving way to shopping apps, wireless chips and other technologies that identify the shopper both online and in the store. “Technology has fnally arrived to deliver on the promised returns of loyalty marketing,” he explains. “It is now up to the retailer to either embrace a new model of holistic, technology-based loyalty or run the risk of being rendered irrelevant, even to their most loyal shoppers.” Trey Moser, senior director of retail analytics at Winston-Salem, N.C.-based Inmar, agrees, saying that maintaining shopper loyalty requires more than just a shopper card program. “An engaging, data-guided program that encourages and rewards purchases should be at the center of every grocery retailer’s CRM strategy,” advises Moser. “Some retailers have chosen to refocus marketing eforts elsewhere, but those who have continued to invest in their loyalty programs — and are now leveraging new personalization and targeting capabilities — are seeing real return on that investment.” PG For more about shopper loyalty programs, visit Progressivegrocer.com/shopperloyalty.
Technology has finally arrived to deliver on the promised returns of loyalty marketing. It is now up to the retailer to either embrace a new model of holistic, technologybased loyalty or run the risk of being rendered irrelevant, even to their most loyal shoppers.” Mark Heckman, former VP of marketing, Marsh Supermarkets
Equipment & Design
Kiosks
Tall
Orders Kiosk innovations offer shoppers convenience, and grocers added and reclaimed sales. By Bob Ingram
“A
kiosk enclosure is the equivalent of a stem cell: Just wash the right hormones over it, and it can become anything.” Tat far-out comparison is from Mike James, founder and president of Kiosk Group Inc., in Frederick, Md., which wholesales to frms that develop kiosk software for diferent niches. “Practically speaking,” he says, “besides the touchscreen and computer, we often add card readers, coupon printers, receipt printers, full-page printers, bar code scanners, RFID [radio-frequency identifcation] scanners, cash acceptors and lots of branding. If you can imagine it, we can make it happen.” Tat roster of functions refects the increased sophistication of today’s kiosks. Similarly, Andrew Annacone, VP of innovations and new ventures at Outerwall Inc., in Bellevue, Wash., says his company’s scalable and completely turnkey solutions ofer retailers an opportunity to engage with customers cost-efectively within a small footprint in the post-register zone and throughout the store. “Outerwall Inc.’s kiosks — Coinstar, Coinstar Exchange, Redbox, ecoATM and SAMPLEit — turn empty space into retail solutions fulflling consumer needs and driving incremental proft for retailers,” he notes. Outerwall’s two latest models are Coinstar Exchange, which ofers instant cash for unused gift cards, and SAMPLEit, currently in pilot stage, which ofers samples and coupons, according to Annacone. “As automated retail technologies improve and evolve,” he observes, “Outerwall sees kiosks, mobile and other interactive self-service technologies playing a much larger role in supermarkets in the future.” Ofering self-checkout as a good example of this trend, he says that many supermarkets have adopted the technology as a way to empower shoppers and drive efciencies for both consumers and the retailer.
Delivering to Millennials Meanwhile, Tommy Woycik, president of Nextep Systems, in Troy, Mich., takes an all-or-nothing approach to kiosks: “As technologyimmersed Millennials continue to become the most dominant purchasing power on the planet, supermarkets will continue to deliver ways to purchase goods that Millennials prefer, or they will fail.” Woycik says statistics show that Millennials prefer a self-guided, personalized experience, most often accomplished through a user interface, and that kiosks are the next logical step to capture the attention and sales of this demographic.
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Light with staying power. That turns into buying power.
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Equipment & Design
As automated retail technologies improve and evolve, kiosks, mobile and other interactive self-service technologies will play a much larger role in supermarkets in the future.” —Andrew Annacone, Outerwall
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Kiosks
“Our Deli 1-2-3 solution is one of our most mature products, and has continued to evolve since frst inception in 2007,” notes Woycik. “A successful Deli 1-2-3 solution generally consists of a pair of foor-standing kiosks at the front of the store, with proper signage and visibility; Order Status Monitors throughout the store; and an Order Management System for the deli to receive and process orders.” Once the value of the core system has been established, Woycik says, many retailers opt for online and mobile ordering, which Nextep accomplishes through responsive design, eliminating the need for expensive applications for each diferent operating system. “Tis allows greater reach to guests while increasing sales at the deli and reducing the costs of entering the online marketplace,” he explains. “Past Order Recall has been developed in the past two years to allow previous guests to order in mere seconds, and we’ve continued to develop our online and mobile ordering to culminate in a ‘one site for all’ ordering portal that operates on any browser-enabled device, including computers, smartphones and tablets.” Also in the past two years, according to Woycik, Nextep has developed the free-standing ML and the countertop TD-18. Te ML fts into any marketplace, with durability and store branding as improved benefts, while the TD-18, featuring an integrated printer base and a very small footprint, can also be wall-mounted. Another beneft of deli kiosks, Woycik points out, is reclaimed sales. Shoppers who might not have bought items in the deli are now given another chance to purchase on their own terms, and they can make their purchases as personal as they like, “without a mob of villagers behind them, glaring at them for being particular. Not only does the store capture a lost sale, but they’ve [also] given the customer the most personalized experience possible while saving them time. Tis helps customer service at the deli as well, by helping to lighten the load during busy hours.”
| Progressive Grocer | Ahead of What’s Next | February 2015
More Options In Grafton, Wis., Ronald Bowers, SVP business development at Frank Mayer & Associates Inc., says, “Kiosks allow the retailer to ofer customized additional services to the consumer, without store associate participation, while they allow the consumer to shop the store and acquire additional services the store ofers, at a pace the consumer wishes.” Kiosks also give the shopper another option to purchase product that may be out of stock, Bowers says, such as special order and home delivery, thereby allowing the consumer fexibility and convenience. “All of these services build customer loyalty and positive brand exposures,” he adds. Lincoln, Neb.-based Nanonation provides software that powers kiosks and digital signs. “Utilizing Nanonation’s Pinpoint application, a product-fnder kiosk will provide a fast and efcient shopping experience, helping a shopper identify a recipe and associated ingredients,” says Sales Associate Jenna Deck. “Te kiosk will allow users to specify their needs; access products, pricing and ingredients; [and] then locate the product. Te Nanonation kiosk can be branded per supermarket with their design, font, logos and colors, and imagery can be implemented in nearly any way.” Te company’s latest ofering is a digital menu board that Deck says “helps the retailer communicate products based on time of day and current promotions, and gives them the fexibility to change promotions as necessary.” Nanonation is in the process of deploying a kiosk that delivers coupons and allows shoppers to check their loyalty program points in a network of stores throughout the country, she adds. RedyRef, in Riverdale, N.J., builds enclosures with component arrays that meet the requirements of all types of kiosk application solutions, including its newest kiosk line, EnGAGE. “We have our own wayfnding and directory software, and partner with software companies for any other solution,” says Ben Wheeler, director of marketing and sales. “Since we are not a turnkey software solution in food ordering or services, we need a partner to make solutions work with our sheet metal enclosures.” Wheeler sees various advantages to implementing supermarket kiosks, such as coupon dispensing, customer loyalty programs, self-checkout, mobile sales assistance and locators, fast-casual food, and specialty ordering in deli and bakery, as well as in human resources and employment services. Tus it seems that kiosks will be standing tall in supermarkets’ future, improving convenience for the shopper and the bottom line for food retailers. PG
Spread the news. Unilever is dedicated to the success of the spreads category, and is proud to introduce a reinvention of our spreads using only real, simple ingredients, starting with I Can’t Believe It’s Not Butter!®.
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©2015 Unilever
Food, Beverage & Nonfood Products
Best of the Best
Cluster Together
The Sea Best brand has expanded its line of frozen Signature seafood entrées with the launch of new individually sized Signature Singles. Available in five varieties – Citrus Scallops & Linguini, Stuffed Clams, Black Bean & Shrimp Tacos, Tilapia Florentine, and Spinach & Artichoke Flounder – the Signature Singles line builds on the brand’s original culinary concept by delivering the same quality in an on-the-go portion. Signature Singles retail for $5.99 each. www.seabest.com
Combining air-popped popcorn with baked granola, Popcorn, Indiana’s new Granola Popcorn Clusters are packed with whole grains and fiber from oats and flax seeds. Available at Costco locations nationwide, the Non-GMO clusters are made with no artificial preservatives, flavors or colors. The Vanilla Almond variety has an SRP of $8.99 for a 24-ounce bag, while the Dark Chocolate Coconut flavor comes in a 20-ounce bag and retails for a suggested $7.99. popcornindiana.com
Protein Power
Boasting 20 grams of protein per serving and made with allnatural ingredients, the Powerful Yogurt Drink is marketed as the first product in the protein drink space with a Greek yogurt base. Available in Blueberry Açai, Chocolate and Vanilla Maple flavors, the new offering is gluten-free, kosher and shelf-stable, requiring no refrigeration. The Powerful Yogurt Drink comes in 12-ounce bottles as well as 4-pack containers, retailing for $2.99 and $3.29, respectively. www.powerful.yt
seasonal spotlight Egging On
Moonstruck Chocolate Co. is gearing up for Easter with its latest slate of products designed to capture the “color, flavor and spirit” of the season. The manufacturer’s Easter Egg and Ladybug Truffles, Lemon Sea Salt Caramels and chocolate bunnies aim to liven up any Easter basket, while Moonstruck’s series of boxed collections make for a decadent gift as consumers look toward warmer weather. The company’s seasonal handcrafted confections are available at select national retailers and online for an SRP range of $7.50-$35. www.moonstruckchocolate.com
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Spud Solutions
Organic Additions
Blount Fine Foods’ Tuscan-style Vegetable & Bean and Carrot Broccoli varieties are the latest additions to the company’s growing portfolio of organic soups. Aiming to move past “traditional” soup recipes, Blount’s Tuscan Style variety is made with cannellini beans, spinach and red peppers in a tomato-based broth, while its Carrot Broccoli offering blends a creamy carrot purée with chopped broccoli, complemented by select spices for a flavorful kick. The Blount Organics retail line is available in refrigerated cases of six 16-ounce cups. www.blountfinefoods.com
Fast & Fresh! Microwave-Ready Gold and Red Potatoes by Alsum Farms & Produce deliver a quick and convenient solution for the time-starved consumer. This new offering features a 24-ounce package of triple-washed fresh baby gold or red potatoes that are ready to cook and can be prepared within seven minutes. Designed as a healthy, delicious side dish for any meal, Alsum’s Fast & Fresh! Potatoes are available year-round at select retail grocers. www.alsum.com
Finishing Touch
DennyMike’s has updated its line of all-natural, glutenfree finishing sauces and seasoning blends with a modern, eye-catching design in an effort to boost shelf appeal and brand recognition. With sauce bottles boasting more volume, and seasonings now featuring a convenient, easy-to-open shaker-top tin, home cooks and professional chefs alike can enjoy the company’s bevy of fun flavors, including Sublime Swine, Cow Bell Hell, Chick Magnet, Fintastic, Pixie Dust, Hot ’n Nasty, Mesquite Madness, and Sweet and Spicy. www.dennymikes.com
Shelf Score™ — december 2014 Purchase INteNt score
New Product
Small Packages
“We take great pride in listening to our fans, who let us know their need for more size options,” Wade Groetsch, president and COO of Noosa Finest Yoghurt, says of the brand’s launch of 4-ounce 4-packs of fan favorites Blueberry and Tart Cherry. These graband-go multipacks of Noosa’s lightly sweetened, all-natural yogurt join the brand’s 8- and 16-ounce sizes. Noosa Finest Yoghurt multipacks retail for $4.99 each. www.noosayoghurt.com
1 2 3 4 5 6 7 8 9 10
Sea Salt Caramel Nut Balance Bare Bar Auntie Anne’s Pretzel Nuggets Honey Bunches of Oats Bake at Home Granola Snackers French Toast Crunch Cereal Lay’s Wavy Original Dark Chocolate Covered Potato Chips Twizzlers Strawberry Lemonade Filled Twists Kellogg’s Pop-Tarts Gone Nutty Frosted PB&J Strawberry Queen Anne Black Cherry Cola Cordial Cherries McDonald’s McCafé French Roast K-Cup Packs Hapi Snacks Spicy Sriracha Peas
58% 58 57 57 50 50 50 47 40 38
source: Instantly Shelf Score
As expected, seasonal flavors have begun to make a showing in the latest edition of Shelf Score, with cinnamon, cranberry, peppermint and the like resonating with consumers. But the longer-term trend toward healthy and high-protein foods and snacks is still coming on strong, even through the holiday season.
February 2015 | progressivegrocer.com |
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IFCO Honored for Support of Food Banks Tampa, Fla.-based IFCO Systems, a global provider of reusable packaging solutions, has been awarded the Tafel Teller 2014 by the Bundesverband Deutsche Tafel e.V. in Germany, in recognition of its ongoing support of food banks worldwide. Since initiating its food bank support program, IFCO has donated nearly 150,000 RPCs (reusable plastic containers) to more than 70 food banks in Europe, North America and South America. It has also helped co-fnance 43 refrigerated vehicles to keep fruit and vegetables fresh. Tis year, IFCO Germany has helped co-sponsor eight refrigerated vans for German food banks and donated 13,000 RPCs. Wolfgang Orgeldinger, CEO of IFCO Systems, says: “Te food bank business corresponds very well with our own business model, and they do a great job in helping people in need. Tis is the reason why we concentrate our social activities on supporting food banks worldwide.”
Tyson Picks New Animal Well-being Leader
Springdale, Ark.-based Tyson Foods Inc. has selected a new leader to oversee its animal well-being eforts. Dr. Christine Daugherty has been named VP of animal wellbeing programs and technology, succeeding Dr. Dean Danilson, who is retiring after 26 years with the company. Daugherty will be responsible for leading the company’s commitment to proper farm animal treatment. Tis includes overseeing the Tyson FarmCheck program of third-party, on-farm animal well-being audits; working with an external advisory panel; and managing animal-handling training and audits at the company’s processing plants. “Her knowledge of cutting-edge technologies will help us further explore new and unique animal well-being innovations,” says Mike Roetzel, Tyson Foods’ group VP for operation services. Daugherty joined Tyson Foods in 2003, serving as an attorney and providing counsel in such areas as animal welfare, research and development, intellectual property, and food safety. She was promoted to director of intellectual property and technology development for Tyson Foods in 2011, and two years later was appointed chief technology ofcer for Cobb-Vantress, a poultry breeding company owned by Tyson Foods. www.tysonfoods.com
www.ifco.com
Produce Mom Partners with North Bay Produce
Indianapolis-based Te Produce Mom, the ofcial blog and consumer brand of produce supplier Indianapolis Fruit Co., has added North Bay Produce Inc. to its family of partners. Traverse City, Mich.-based North Bay ofers a year-round supply of a variety of fresh produce through its network of domestic and Latin American growers. Te company currently ofers customers a year-round supply of apples, asparagus, blackberries, snow peas, sugar snap peas and blueberries — the last a signature item that includes ready-to-eat snack packs. “Partnering with Te Produce Mom will allow us to better educate consumers on the year-round freshness, availability and safety of produce,” says Sharon Robb, North Bay national marketing manager. www.northbayproduce.com; www.theproducemom.com
Rehrig Pacific Launches DSD Solution Los Angeles-based logistics provider Rehrig Pacifc Co. has introduced the DSD GeoSystem (DSD-GS), which is “specifcally designed to optimize beverage and other retail delivery applications,” according to Brian Lindell, VP of beverage markets for Rehrig Pacifc. “Each component of our DSD-GS has been tested and proven to provide measurable supply
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chain productivity benefts and overall fnancial savings.” The DSD-GS solution improves the method for picking, loading and delivering DSD retail products. Up to 800 pounds lighter than competitive models, but with a 4,000-pound capacity, it enables more stops with fewer routes. www.rehrigpacific.com
| Progressive Grocer | Ahead of What’s Next | February 2015
advertiser index Ace Hardware 24 Airius 39 Amerlux Lighting 131 Beaver Street Fisheries 55 Blount Fine Foods 88-89 Chelan Fresh 91 Coca Cola 2 Colloquy 129 Cott 41 Creekstone Farms 75 Del Monte Fresh Produce 93 Delizza Inc. 50-51 ECR Software Corporation 127 ECRM 117 Food Marketing Institute 21, 23, 25 Fresno Food Expo 38 Generac Power Systems 31 Goya Foods, Inc. 3 Havas Media 11 Heineken USA 17 (Regional), 139 Home Market Foods 61 House-Autry Mills, Inc. 33 Idaho Potato Commission 101 International Dairy Deli Bakery Commission 125 JETRO LA 57 Kayem Foods 8 Kelloggs Company 43 LOEC, Inc. 15 Louisiana Seafood Promotion & Marketing 87 Loving Pets Products 121 Maple Leaf Farms 79 Mars Chocolate 27 Massimo Zanetti Beverage USA 37 Merz Pharmaceuticals 115 Milk PEP 46 MillerCoors 20 MOM Brands Insert, 45 Multicultural Retail 360 2015 113 National Beef Packing Co. 83 National Cattlemen’s Beef Association 65-68 National Restaurant Association 111 NEPA Carton & Carrier Co. 40 Nestles USA 53 Network Of Executive Women 17 (Regional) New Hope Natural Media 62 Perdue Farms Inc. 71 Pompeian Olive Oil 109 Prosperity Organic Foods, Inc. 94 Respect Foods 58, 59 Ruiz Food Products 49 Stemlit Growers, Inc. 96 Sticky Fingers Bakeries 63 Sun Pacific 95 Superior Farms 72, 73 Tabletops Unlimited Back Cover The Happy Egg Company 105 The Hershey Company 7 The J.M. Smucker Company 4 The Wine Group Inc. 29 Trion Industries 106, 107 Tyson Foods 77, 84-85 Unilever North America 133 USA Pears 99 Wholesum Family Farms 103 Wisdom Natural Brands 13
www.acehardware.com www.theairpear.com www.amerlux.com www.beaverstreetfisheries.com www.blountfinefoods.com/buildsales www.chelanfresh.com www.coca-cola.com www.colloquy.com www.cott.com www.creekstonefarms.com www.freshdelmonte.com www.delizza.us www.ecrs.com www.ecrm.marketgate.com www.fmi.org www.fresnofoodexpo.com www.generac.com www.goya.com www.havasmedia.com www.heinekenusa.com www.homemarketfoods.com www.house-autry.com/southern-side www.idahopotato.com www.iddba.org www.jetro.go.jp www.alfrescoallnatural.com www.kelloggs.com www.blucigs.com www.buy.louisianaseafood.com www.lovingpetsproducts.com www.mapleleaffarms.com www.mars.com www.chockfullonuts.com www.mederma.com www.gotmilksales.org/drive www.millercoors.com www.mombrands.com/bull www.multiculturalretail360.com www.nationalbeef.com www.beefretail.org www.restaurant.org www.nepacartons.com www.senecafoods.com www.newonline.org www.expowest.com/register www.perduefarms.com www.pompeian.com www.meltorganic.com www.respectfoods.com www.ruizfoodservice.com www.stemilt.com www.stickyfingersbakeries.com www.sunpacific.com www.superiorfarms.com www.roveliving.com www.thehappyeggco.com www.thehersheycompany.com www.smuckers.com www.thewinegroup.com/flipflop-wines www.triononline.com www.tysonfoods.com www.itstimetobelieve.com http://www.usapears.com/ www.wholesumharvest.com www.wisdomnaturalbrands.com
570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 Phone: 224 632-8200 Fax: 224 632-8266 www.stagnitobusinessinformation.com STAGNITO BUSINESS INFORMATION ALSO PRODUCES:
Harry Stagnito President and CEO 224-632-8217 hstagnito@stagnitomail.com Kollin Stagnito Chief Operating Officer 224-632-8226 kollinstagnito@stagnitomail.com Ned Bardic Senior Vice President/Partner 224-632-8224 nbardic@stagnitomail.com Korry Stagnito Chief Brand Officer 224-632-8171 korrystagnito@stagnitomail.com Jeff Friedman Vice President/Group Publisher 201-855-7621 jfriedman@stagnitomail.com John Huff Midwest Regional Sales Manager 224-632-8174 jhuff@stagnitomail.com Elizabeth Cherry Western Regional Sales Manager 310-546-3815 • Cell 310-990-9597 echerry@stagnitomail.com Maggie Kaeppel Eastern Marketing Manager 630-364-2150 • Cell 708-565-5350 mkaeppel@stagnitomail.com Mike Shaw Northeast, Marketing Manager 201-855-7631 • Cell 201-281-9100 mshaw@stagnitomail.com Janet Blaney Marketing Manager (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) 630-364-1601 jblaney@stagnitomail.com Jackie Batson Advertising Manager 224-632-8183 jbatson@stagnitomail.com
February 2015 | progressivegrocer.com |
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the last word
A Menu of Change
D
ropping gas prices and a strengthening labor market powered consumer confdence levels to an 11-year high last month, which, by all indications, is panning out splendidly for the retail food industry at the outset of what appears to be an intriguing year in the works. But make no mistake: As the economy continues to build up steam amid a rosier consumer spending vibe, competition in the supermarket business continues to intensify, as does the sense of urgency among progressive grocers to press forward with new initiatives and fortify growth plans to gain an edge. To that end, new developments are under way at some of the retail leaderboard’s most infuential players, which are entering a new era of transformative diversifcation to test, learn, explore — and ultimately seize — new opportunities to meet consumers’ needs and expectations. Among those that catch my eye: After a decade of perfecting its highly tailored midsize and larger-store formula, H-E-B is poised to open its frst combo small-format market/gas station in its downtown San Antonio stomping grounds in fall 2015. Te 12,000-square-foot concept store will be a proving ground for H-E-B to experiment with new oferings, delivery methods and inventory management for a smaller box. Following two years in the works, Grand Rapids, Mich.based Meijer is in the home stretch of construction of four new supercenters — two of which will feature a c-store and gas station — that will open this summer in the greater Milwaukee area, to be followed by two to three additional Wisconsin stores to open annually for the next four years. Austin, Texas-based Whole Foods Market’s expansion of in-store dining and bar options, beginning with four new stores set to open in Chicago (here’s looking at you, Mariano’s). Te Streeterville location, which cut the ribbon as we went to press with this issue, is the frst of seven former Dominick’s converting to Whole Foods and the frst to feature an in-store venue ofering raw and vegan foods via a partnership with Chicago restaurant Raw.
Giant Eagle is gearing up for its debut in the Hoosier State with a Market District and GetGo c-store in the fast-growing suburb of Carmel, Ind., which will be home to some frst-ever features like a blowout bar and nail salon, a juice bar, and a banquet facility. Another frst for the multichannel Giant Eagle is a tableservice restaurant inside its newest Market District, located in close proximity to its Pittsburgh corporate headquarters and boasting an array of all-day options, including weekend brunch. “Food stores continue to evolve beyond the traditional grocery store [boundaries], with oferings that cater to both the meal planner as well as the seasoned diner,” Market District SVP/GM Tom Devries relayed during my visit to the new store on grand-opening day in late January. Complemented by an expansive beer department and a full-service wine and draft beer bar, the 100-seat restaurant at the grocer’s ffth Pittsburgh-area Market District “reinforces our goal of being a purveyor of both the world’s latest culinary trends as well as classic recipes with a modern twist,” according to Devries. Giant Eagle has the same setup in three Ohio stores, and plans to replicate the restaurant and bars in future locations, for which Devries and his team will remain focused on “creating an inviting environment that encourages both exploration and relaxation in a welcoming atmosphere. Te dishes created in the restaurant are intended to spark the same culinary creativity in customers when they shop the full store.” Te decision to expand Giant Eagle’s grocerant prowess, adds Devries, has not been taken lightly, particularly when it comes to stafng expertise: “Our Strongsville (Ohio) and O’Hare Township Market Districts feature chefs with a dedicated restaurant focus, and team members with serving experience, to ensure quality dining and service.” Indeed, with fresh meals representing the biggest opportunity for traditional food retailers to expand their brands and meet or exceed consumers’ expectations, a menu of change — and companion rewards — awaits those committed to creating new vehicles for experimentation and growth beyond their conventional comfort zones. PG
Meg Major mmajor@stagnitomail.com Twitter @Meg_Major/@pgrocer
Some of the retail leaderboard’s most influential players are entering a new era of transformative diversification to test, learn, explore — and ultimately seize — new opportunities.
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| Progressive Grocer | Ahead of What’s Next | February 2015
SERVING UP MORE SALES IN THE CEREAL AISLE Five steps to grow profits and customer loyalty in a fast-changing category
C
ereal remains a favorite on Americaâ&#x20AC;&#x2122;s breakfast tables. But for retailers, although cereal is the No. 2 dry grocery category, itâ&#x20AC;&#x2122;s been hard to fnd ways to increase category profitability and build customer loyalty in the
cereal aisle amid economic pressures, population shifts and changing consumer preferences.
ADVERTORIAL
1
To succeed in the current retail
infation-adjusted 2012 income
environment, it’s important to
level but still nearly $4,500 below
understand the key factors that
what they earned before the start of
are impacting consumers’ buying
the recession in 2007. Middle-class
behavior. With this knowledge,
incomes have been either stagnant
retailers can then take steps to
or declining since peaking in 1999.
meet their customers’ evolving
As a result, median household
needs and wants—while boosting
income in the United States is now
their bottom line.
actually less than it was in 1989— nearly a quarter of a century ago.1
Economic pressures: recession afershocks
Particularly hard hit by recession
The recession may be over, but
aftershocks are lower-income con-
consumers are still feeling the
sumers, who now make up almost a
aftershocks.
third of the U.S. population. Nearly 104 million Americans fall into the
According to an analysis of U.S.
low-income category, defned as
Census Bureau data by Amer-
those earning between 100 and 199
icanProgress.org, the typical
percent of the federal poverty line.
middle-class household earned
Yet this large group of consumers
$51,939 in 2013, a statistically
presents an enormous opportunity
insignifcant $181 above their
for retailers, with nearly $833 billion in spending power, most of which is
Lower-income consumers: an opportunity for retailers
spent on necessities.2
The Census Bureau esTimaTes ThaT 106,376,000 ameriCans live on inComes aT 200% of The poverTy line and Below.
State of the plate: what America eats for breakfast Cereal remains Americans’ No. 1 choice for breakfast. According to a 2014 survey among 1,000 U.S. con-
34%
LOW-incOmE cOnSumErS
sumers by Carbonview Research, on any given weekday, 60 percent of adults and 79 percent of kids start a typical morning with their favorite cereal before heading off to work or school, making it the most commonly consumed breakfast food in the country. When asked which foods they feel defne breakfast, cereal came in second out of 20 options—surpassed only by eggs.3
Source: Census.gov
2
ADVERTORIAL
Top 5 items that defne breakfast for consumers
Eggs
54%
Cereal
48%
Breads/ toast
34%
Bacon
27%
Fruits/ berries
20%
Source: Carbonview Research, September 2014
Beyond traditional sit-down
Children under 13 consume 126
breakfast foods like cereal, eggs
servings of cereal per capita annu-
and toast, consumers today have
ally, more than any other age
an ever-growing array of new
group, and the under-13 population
breakfast options to consider,
is expected to grow 8 percent by
whether it’s for ease of prepa-
2020.4 Also a vital part of the mix
ration at home or eating on the
is the up-and-coming generation of
run. Over the years, new quickand-easy breakfast items such as toasted goods, hot cereals, frozen items, yogurt and granola
Top breakfast foods consumed on weekdays
bars have begun competing for the breakfast dollar. In addition, foodservice operators such as quick-service restaurants and
60%
Cold cereals
54%
Prepared breakfast items (eggs, pancakes, etc.)
54%
Toasted goods (toast, bagels, frozen waffes)
49%
Fruits
43%
Breakfast meats (bacon, sausage, etc.)
43%
Hot cereals
38%
Yogurt
26%
Frozen breakfast items that are heated up
26%
Breakfast bars
convenience stores have added an array of breakfast options to their menus. Despite these alternatives, cereal still remains a $9 billion category.
Population shifs: who’s at the breakfast table? There are a number of shifts in America’s demographic landscape that bode well for the cereal category. Not surprisingly, children continue to be big cereal eaters.
ADVERTORIAL
Source: Carbonview Research, September 2014
3
millennials aged 13 to 34—forecast
categories. They grew up with
to increase 6 percent by 2020—who
cereal, and they haven’t stopped
consume 96 servings of cereal per
eating it. Boomers aged 55 and
5
capita annually.
older currently consume 103 servings of cereal per capita each
Boomers, meanwhile, continue to
year, and there’s no sign they’ll
drive growth in categories they
be slowing down with a projected
favor—and cereal is among those
population jump of 22 percent by 2020.6
Who’s at the breakfast table? Children under 13 Millennials BooMers hispaniC households
Cereal consumption per year
The growth of the Hispanic population remains a dominant demographic trend. These
126 servings 96 servings 103 servings
households purchase cereal at a rate of 23.1 pounds per year vs. 22.7 pounds among the general
23.1 pounds
Source: NPD, U.S. Census Bureau
4
ADVERTORIAL
population, likely due to their typ-
In addition to great taste and good
ically larger household size. Today,
value, other attributes impacting
one of four children is of Hispanic
food purchases include a product’s
7
origin. Furthermore, Census pro-
ability to satisfy hunger and how
jections suggest that between now
well it provides parents with “foods
and 2050, the Hispanic population
my kids will eat.”10
will grow by 49 million to nearly 106 million, or 26.5 percent of the
The number of American consum-
U.S. population.
ers who consider healthfulness when purchasing their food and
For retailers, catering to specifc
beverages has shown a signifcant
consumer segments presents new
uptick in the past two years, accord-
opportunities to fulfll these shop-
ing to IFIC. As a factor in food and
pers’ unique needs and preferences
beverage purchases, healthfulness
while building store proftability.
rose from 61 percent of consumers
Having a better understanding of
in 2012 to 71 percent in 2014, a 10
what drives consumers to purchase
percentage point increase.11
cereal is part of the equation. To address consumers’ interest in
Top purchase drivers: taste, value, health, convenience
healthfulness, many cereal manu-
When it comes to factors infu-
range of better-for-you options
The growTh of The hispanic populaTion remains a dominanT demographic Trend. These households purchase cereal aT a raTe of 23.1 pounds per year vs. 22.7 pounds among The general populaTion.
facturers are now offering a wider
encing consumer food purchases, taste continues to reign supreme. According to the International Food Information Council (IFIC) Foundation’s 2014 Food and Health
Top purchase drivers in the cereal category: cereal buyers driven by taste and quality
Survey, taste and price consistently have been the top two factors that impact consumers’ food and beverage purchases, at 90 percent and 73 percent respectively.8 In fact, taste is so powerful with consumers that it can trump even brand name. Eighty percent of cereal buyers value product quality and taste over brand name, when
82%
80%
42%
Product quality
Taste
Brand name
asked to rank each factor in terms of how important it was in the cereal aisle.9
adverTorial
Source: Custom Panel, GROCERY, 52 weeks ending April 6, 2013; Path To Purchase study October 2013
5
focusing on healthful ingredients, such as whole grains, protein and fber, and more hot cereal options. Manufacturers also are moving toward cleaner labels, making it easier for consumers to see the product benefts.
Five steps to boost profitability in the cereal aisle
1
Offer more value through everyday low pricing.
Consumers need and want value, so offer it to them through everyday low pricing. Instead of relying
Given these considerations, here
on increasingly less effective
are fve steps retailers can take to
promotions to sell more volume,
serve up more sales, boost prof-
offer value brands that todayâ&#x20AC;&#x2122;s
itability and increase customer
cash-stretched consumers are
loyalty in the cereal aisle.
looking for.
80%
Of cEREAL buyERs VALuE pRODucT quALITy AnD TAsTE OVER bRAnD nAmE
2
Evaluate the mix. Assess product velocity and cate-
gory incrementality in the cereal aisle to see how fast products are selling, then make sure the product mix correlates to the turn. It may be necessary to stock the shelves with a better mix of options to meet the needs of people near your location. Bulk packaging for big, multifamily homes nearby. Nutritious options to help Boomers maintain their health. Quick, convenient cereal choices that make it easy for on-the-go millennials to eat breakfast on the fy.
3
Stay on top of food trends. The cereal
category is constantly evolving as consumer needs and wants change. For example, the health
6
ADVERTORIAL
trend has created the opportunity for many new cereal options that help people lead healthier lifestyles, so make it simpler for them to fnd solutions: offer cereals that bear the Whole Grains Council Stamp or that indicate added protein or fewer calories on the label. Also include more hot cereals, as consumers perceive them as a better-for-you option. While cereal is already a convenient product, consider adding single-serve cereal options to your assortment to appeal to consumers seeking more convenience or an on-the-go snack.
4
Stock the shelves with true innovations. Grocery stores
are flled with brand extensions that manufacturers create to look like something “new.” Offer cereal products that meet a need or solve
By offering customers high-quality,
a problem in a specifc and mean-
great-tasting and affordable cereals to
ingful way. For example, another
feed their families, retailers can help
new favor in a brand lineup is one
customers save money—while increas-
thing, but a product that enables
ing their margins in the cereal aisle.
consumers to address health concerns or save money will help to keep them in the category.
5
Don’t underestimate the power and sophistication of low-in-
come consumers. Low income doesn’t correlate with low interest when it comes to customers wanting high-quality cereal that offers great taste, value, health and convenience. While one product may not offer all of these benefts simultaneously, include in your lineup a mix of cereal brands that can deliver on these value propositions.
ADVERTORIAL
Sources 1 Americanprogress.org, Sept. 16, 2014, https://www.americanprogress.org/issues/economy/news/2014/09/16/97203/ what-the-new-census-data-show-about-the-continuingstruggles-of-the-middle-class/ 2 Census.gov 3 Carbonview Research survey, September 2014 4 NPD, U.S. Census Bureau 5 NPD, U.S. Census Bureau 6 NPD, U.S. Census Bureau 7 Pew Research, http://www.pewresearch.org/ fact-tank/2014/02/26/the-u-s-hispanic-population-has-increased-sixfold-since-1970/ 8 IFIC, 2014 Food and Health Survey, http://www.foodinsight. org/press-releases/more-americans-choosing-foodsbeverages-based-healthfulness 9 Custom Panel, GROCERY, 52 weeks ending April 6, 2013; Path To Purchase study October 2013 10 NMI’s 2013 Health & Wellness Trends Database® 11 IFIC, 2014 Food and Health Survey, http://www.foodinsight. org/press-releases/more-americans-choosing-foodsbeverages-based-healthfulness
ThE hEALTh TREnD hAs cREATED ThE OppORTunITy fOR mAny nEw cEREAL OpTIOns ThAT hELp pEOpLE LEAD hEALThIER LIfEsTyLEs.
7
DRIVING PROFITABILITY IN THE CEREAL AISLE Founded in 1919, MOM Brands® today is among the largest cereal companies in the United States. Today, one in 11 servings of breakfast cereal eaten every day is a MOM Brands cereal. Here’s How MoM Brands Helps retailers drive profitaBility in tHe cereal aisle: • Ofers an extensive house of brands featuring 103 varieties of familyfavorite ready-to-eat, natural,
organic and hot cereals that deliver on consumer needs for taste, value, health and convenience. • Everyday low-price strategy keeps consumers in the cereal aisle and creates higher margins for retailers. • Dedicated to finding better ways to make a better breakfast at a better price. MOM Brands has saved families nearly $1.5 billion on cereal purchases since 2007.
Put MOM Brands to work for you. For more information, visit www.MOMBrands.com.
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