Progressive Grocer - February 2017 by ensembleiq

Solid Sales

Frozen foods vie with fresh items for better-for-you bucks Page 61

Meat’s Muscle

Beef bouncing back amid category’s renewed sizzle Page 77

Pet Profits

Exclusive report offers promising retail growth strategies Page 94

Leading independent grocers pave the way for food retailing excellence Page 26

February 2017 • Volume 96 Number 2 $10 • www.progressivegrocer.com

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Contents

02.17 Volume 96, Issue 2

26 Cover Story Rise to the Top

What makes a good supermarket? This year’s independent standouts offer a variety of solutions. 47 / Profiles in Progress The Fantastic Four This quartet of food retailers is doubling down on ecommerce now, for future success. 54 / Cereal Better Bowls Cereal remakes its ‘boring’ image with new products, promos.

77 / Progressive Grocer’s Retail Meat Review Making Connections Healthy outlook for meat sales could be even better with the right sales strategies.

87 / Seasonal Produce Spring Cha-ching A new season of fresh produce sparks sales and culinary imagination.

61 / Progressive Grocer’s Frozen Food Handbook

Frozen, Solid Consumer demand for innovation and lifestylebased options is revitalizing frozen food categories.

February 2017 | progressivegrocer.com |

Contents

02.17

570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com SVP, Brand Director 201-855-7621 Associate Brand Director (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY)

94 / PG Pet The Profit Potential of Pet Care Investment in the premium pet channel can lift center store sales. 98 / Technology App Quest Success has been spotty, but progress is being made.

101 / Industry Events Dare to Disrupt NRF’s 2017 Retail’s Big Show stressed importance of rethinking branding, talent management and more to remain relevant. 106 / Supply Chain Retailing on Demand As new technology impacts the way consumers shop, retailers must accommodate with changes to their supply chains.

8 / Editor’s Note On Solid Ground 12 / PG Pulse 14 / In-store Events Calendar April 2017 18 / Nielsen’s Shelf Stoppers/Spotlight

Condiments, Sauces and Gravies/ Vinegar and Cooking Wine

20 / Mintel Global New Products Spirits and Liqueurs 22 / All’s Wellness Seeking Good Health in the Cereal Aisle 110 / What’s Next Editors’ Picks for Innovative Products 114 / The Last Word Wholly Transparent?

| Progressive Grocer | February 2017

Jeff Friedman jfriedman@ensembleiq.com Janet Blaney jblaney@ensembleiq.com

630-364-1601 EDITORIAL Editorial Director Joan Driggs 224-632-8211 jdriggs@ensembleiq.com Chief Content Editor Meg Major 724-453-3545 mmajor@ensembleiq.com Editor-in-Chief James Dudlicek 224-632-8238 jdudlicek@ensembleiq.com Managing Editor Bridget Goldschmidt 201-855-7603 bgoldschmidt@ensembleiq.com Senior Editor Randy Hofbauer 224-632-8240 rhofbauer@ensembleiq.com Senior Editor Katie Martin 224-632-8172 kmartin@ensembleiq.com Senior Editor Anna Wolfe 207-773-1154 awolfe@ensembleiq.com Technology Editor John Karolefski 440-582-1889 jkarolefski@ensembleiq.com Contributing Editors Kathleen Furore, Jenny McTaggart, Lynn Petrak, Diane Quagliani and Jennifer Strailey ADVERTISING SALES & BUSINESS Eastern Marketing Manager Maggie Kaeppel 630-364-2150 • Mobile: 708-565-5350 mkaeppel@ensembleiq.com Western Regional Marketing Manager Rick Neigher (CA, OR, WA) rneigher@ensembleiq.com 818-597-9029 Northeast Marketing Manager Mike Shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@ensembleiq.com Account Executive/ Classified Advertising Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com EVENTS SVP, Events & Conferences Maureen Macke 773-992-4413 mmacke@ensembleiq.com CUSTOM MEDIA VP/Custom Media Division Pierce Hollingsworth 224-632-8229 phollingsworth@ensembleiq.com General Manager, Custom Media Kathy Colwell 224-632-8244 kcolwell@ensembleiq.com MARKETING VP, Marketing & Communications Bruce Hendrickson 224-632-8214 bhendrickson@ensembleiq.com Director of Market Research Debra Chanil 201-855-7605 dchanil@ensembleiq.com AUDIENCE DEVELOPMENT Director of Audience Development Gail Reboletti greboletti@ensembleiq.com Audience Development Manager Shelly Patton 215-301-0593 spatton@ensembleiq.com List Rental The Information Refinery 800-529-9020 Brian Clotworthy Subscriber Services/Single-copy Purchases 978-671-0449 or email at EnsembleIQ@e-circ.net ART/PRODUCTION Director of Production Kathryn Homenick khomenick@ensembleiq.com Advertising/Production Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@ensembleiq.com Art Director Bill Antkowiak bantkowiak@ensembleiq.com CORPORATE OFFICERS

Executive Chairman President & CEO Chief Operating Officer Chief Brand Officer Chief Financial Officer Chief Business Development Officer & President, EnsembleIQ, Canada Chief Customer Officer/ President of Strategic Platforms Chief Digital Officer Chief Human Resources Officer

Alan Glass Peter Hoyt Richard Rivera Jeff Greisch Chris Stark Korry Stagnito Ned Bardic Joel Hughes Greg Flores

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Nielsen Perishable Group 52 weeks ending 7/30/16; Total US

Note By Jim Dudlicek

On Solid Ground

T While retailers can be relieved that Gen Z has an affinity for the tactile, they must continue to aggressively innovate, expand and engage.

he rumors of the death of the brick-and-mortar store apparently have been greatly exaggerated. Digital retailing continues to gain momentum, enough to visibly erode in-store sales, most recently demonstrated in the 2016 holiday shopping period, when stalwarts like Target reported softer-than-expected sales in their physical locations. But even the likes of Amazon recognize the value of actual stores, suggesting that a balance of digital and in-store offerings will most likely be a winning formula over the long haul. Traditional grocery retailers have been expanding their omnichannel presence, with operators like Kroger, H-E-B and Walmart leveraging their infrastructure and brand prowess to expand their reach. We look at some ecommerce success stories in this issue, in our Profiles in Progress feature starting on page 47. Meanwhile, some really good news for the physical store came out just ahead of last month’s National Retail Federation (NRF) show in New York (PG’s Randy Hofbauer was there — he recaps the event, starting on page 101). Despite expectations that the first “digitally native” generation would want to shop online, a new study from IBM and the NRF found that almost all members of Generation Z (teens through age 21) prefer to shop in brick-and-mortar stores. “They appreciate the hands-on experience of shopping in a store,” says NRF President and CEO Matthew Shay. “With technology constantly evolving but some shopping habits remaining the same, retailers need to be agile enough to serve both needs. Retailers are constantly focused on experimenting with new innovations both online and in-store to remain relevant to evolving consumer demand.” So that doesn’t mean that everything old is new again.

Jim Dudlicek

Editor-in-Chief jdudlicek@ensembleiq.com Twitter @jimdudlicek

| Progressive Grocer | Ahead of What’s Next | February 2017

“With the global Gen Z population set to reach 2.6 billion by 2020, retailers need to create more interactive engagement around their brands to serve the always-on, mobile-focused, highspending demographic,” the study notes. IBM General Manager of Global Consumer Industries Steve Laughlin elaborates: “Generation Z expects technology to be intuitive, relevant and engaging — their last great experience is their new expectation. This presents a significant challenge for retailers and brands to create a personalized, interactive experience with the latest digital advances, or risk falling behind. This kind of innovation is not linear or a one-time project — it is a new way of thinking, operating and behaving.” The “Uniquely Gen Z” study, conducted by the IBM Institute for Business Value, is based on findings from more than 15,000 consumers aged 13 to 21 from 16 countries. These consumers are important to retailers because they’re expected to bring as much as $44 billion in buying power. According to the study, they care the most about retailers “getting the basics right,” with 66 percent saying product quality and availability are the most important factors when choosing one brand over another; 65 percent, meanwhile, focus on value. It looks like brick-and-mortar stores are going to remain in style. But retailers need to keep pursuing ways to enhance the shopper experience before, during and after the visit. While retailers can be relieved that Gen Z has an affinity for the tactile, they must continue to aggressively innovate, expand and engage.

Independent Means Effective with this issue, Progressive Grocer will include more coverage of independent grocery operators, content that had been featured by Progressive Grocer Independent, which has ceased production as a separate publication. We believe we can more effectively report on issues covering the wide spectrum of the grocery industry in one convenient publication. We kick things off with our Outstanding Independent Awards, starting on page 26. The awards were spearheaded by Katie Martin, who, just as she was as editor-in-chief of PGI, remains committed to her coverage of independent retailers. PG

ÂŠ2017 CSC Brands LP

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PREPARED FOODS INSIGHTS

In part two of a threepart series covering Tyson Foods’ Prepared Foods Challenge, four Chicagoland families explore the prepared foods category with the guidance of a culinary expert.

Chef Charlie Baggs shows the Ramirez family the best technique for deboning a rotisserie chicken.

Lessons in Prepared Foods Four families learn to navigate the supermarket in a new way, unlocking the untapped potential of prepared foods. tore branding and marketplace differentiation are important retail strategies, but educating consumers is more critical than ever. Passing on the kind of knowledge that leads to understanding, confident decision-making and an elevated consumer experience can be a real game changer in today’s hyper-competitive grocery industry.

Educating consumers about the prepared foods category is especially relevant because, as it turns out, shoppers don’t actually know that much about prepared foods and how to make the most of them. Tyson Foods, Springdale, Ark., recently completed its Prepared Foods Challenge with the help of Redwood City, Calif.-based marketing firm Green Bear Group. The consumer-centric experiment enlisted four Chicagoland families to exclusively use prepared foods from their local supermarkets to assemble seven consecutive family dinners. On days one through three of the Challenge, no assistance or advice was offered to the Keeley, Ramirez, Schnurr and Gebien families, leaving them frustrated and disappointed by the overall lack of product variety, freshness and quality in the prepared foods departments.

To renew the families’ enthusiasm, Tyson Foods brought in a seasoned chef on days four, five and six to help educate and inspire them to use prepared foods in new ways and to enjoy the benefits of the supermarket in its entirety. “Some supermarket retailers are trying to compete with QSRs; some are trying to compete with fast casual. Rather than trying to imitate our competitors’ value proposition, we need to focus on our own,” explained Eric Le Blanc, director of marketing for Tyson Foods. “What do consumers really want? Freshness, variety, quality, and in addition, the convenience of being able to combine trips. What do supermarkets have? Forty thousand SKUs. We need to embrace who we are and what we offer.”

Educating and Inspiring Chef Charlie Baggs, executive chef and president of Charlie Baggs Culinary Innovations, visited the families on days four, five and six of the Challenge. Almost immediately, his presence had a positive impact on the families. He encouraged them to choose a dinner theme, such as Italian, Asian, Mexican or Mediterranean, as a precursor to their shopping excursions. “I learned that when you have a theme it’s must easier to

“I learned how to make prepared foods in different ways to make them more exciting for my family.” — Ebony Ramirez T YSON FOODS’ PR EPA R ED FOODS CH A L L ENGE PA RT T WO

the best way to cut up a rotisserie chicken to make the most of its components. On night five the Gebien family enjoyed the same rotisserie chicken as a main ingredient in Caprese wraps, Mexican pizza, stir-fry and chicken cacciatore, for example. “I was always doing the same thing with the rotisserie chicken— bread and potato salad. Now if I buy the rotisserie chicken it will last us three days,” added Ramirez. “I can prepare it three different ways, and the kids eat it because they think they’re eating something different.”

Elevating prepared foods at the Keeley house.

pull foods together that go with that theme without as much thought. It literally took less than five minutes to jot down a menu and that has been huge for me,” said June Keeley, a wife and mother of two. Baggs started to navigate the supermarkets in the produce department, explaining that choosing a meal’s fresh component is a good first step. He showed the families how to organize their carts by dish—protein, salad, appetizer and dessert—to further simplify meal planning. Most importantly, Baggs demonstrated how to use what’s available in other store departments to complement prepared foods and to create more complete, cohesive meals. On day four the Gebien family added rotisserie chicken to a premade orzo pasta salad to transform it into a more complex meal, for example. The Keeley family added fresh, refrigerated pasta, garlic bread and a salad to prepared meatballs and sauce. The Schnurr family used stock made from rotisserie chicken bones to add flavor to an Asian Stir-fry with shrimp and brown rice on night five.

To make dinnertime more fun and less stressful, Baggs encouraged the families to spend more time together in the kitchen. On night four at the Schnurr house, Baggs broke the family into teams, giving everyone tasks to perform in the kitchen. On day six the Gebien family enjoyed a mac and cheese cook-off. “It created a memory. We were having fun. In the end there was the satisfaction of, hey, we did that,” said Schnurr. Tyson’s Le Blanc stressed that the families’ new perspectives on the prepared foods department after just a few short visits with Baggs demonstrate the missing piece of retailers’ prepared foods puzzle.

“Now I’m thinking, wow, that store really is as great as I thought it was,” said dad Scott Schnurr. “The problem was my execution in using the prepared components. I just didn’t know how to make it great. I was literally trying to take it out of the window, throw it on a plate and hope for a good experience. And the experience was terrible.” Ebony Ramirez, a mother of five, added that Baggs’ instructions made her think about prepared foods and the whole store experience in an entirely new way.

The Schnurr family makes restaurant-quality mushroom sauce with a little help from Chef Baggs.

“When we first went shopping, I was lost. I went straight for the prepared foods and that’s it,” she said. “When I went shopping with Chef Charlie we walked through the vegetables and he showed us ways to use them to complement the taste of the prepared foods. I learned how to make prepared foods in different ways to make them more exciting for my family.”

Making the Most of Dinnertime Among his other culinary tips, Baggs demonstrated ways to reduce costs, such as making better use of leftovers and showing

“It wasn’t a different store or a different blueprint. It wasn’t a different price or a different assortment of product,” said Le Blanc. “What made the difference is that they learned how to use the store to support their use of prepared foods. They learned how to use the assets the store already had and that made the difference.” n Stay tuned for a report on day seven of the Tyson Foods’ Prepared Foods Challenge and what these results mean for retailers of prepared foods in the March issue of Progressive Grocer.

DAYS 1-3

DAYS 4-6

DAY 7

Families make dinner on their own using prepared foods from local supermarkets.

Chef Charlie Baggs educates the families on prepared foods and how to make the most of them.

Families again are on their own to make dinner, this time using what they learned about prepared foods and the supermarket as a whole.

T YSON FOODS’ PR EPA R ED FOODS CH A L L ENGE PA RT T WO

What’s trending on progressivegrocer.com …

Fresh Thyme Farmers Market’s plans to open up to 20 new stores, with a goal of 70 locations by the end of 2017, alongside the Downers Grove, Ill.-based specialty retailer’s continued investment in its private label program with new categories, factored as the most click-worthy story on progressivegrocer.com during the Dec. 15, 2016–Jan. 15, 2017 measuring period. Pacing in the second and third most newsworthy slots, respectively, were H-E-B and Wegmans being among the 50 winners of Glassdoor.com’s ninth annual Employees’ Choice Awards honoring the Best Places to Work in 2017 and Whole Foods Market’s recently opened first-ever store in El Paso, Texas, the design of which aspired to serve as a “third place” for bilingual and bicultural residents.

Fresh Thyme Projecting Further Growth in 2017

bit.ly/2jRY4b9

H-E-B and Wegmans Earn Employee Choice Awards bit.ly/2jpTZOK

Harris Teeter Adopts MyWebGrocer Platform bit.ly/2iFEXTZ

bit.ly/2jYLevI

El Paso Whole Foods Embraces Local Culture bit.ly/2ivvxfd

More Room at the Table for Recognizable Ingredients bit.ly/2iApGk5

Giant Eagle Closing 5 Stores, 4 GetGos bit.ly/2jihvLe

Walmart Plans More Layoffs by Month’s End: Reports

| Progressive Grocer | Ahead of What’s Next | February 2017

DRIVING CATEGORY GROWTH

Trusted iconic brands and expert category management delivering sustainable growth.

hersheys.com

April 2017 is... National BLT Sandwich Month National Soft Pretzel Month National Soyfoods Month National Grilled Cheese Month National Garlic Month

1 National Sourdough Bread Day Email your calendar submissions to

One Cent Day. Offer buy-one-get-onefor-one-more-cent specials throughout the store.

awolfe@ensembleIQ.com

National Peanut Butter and Jelly Day

National Chocolate Mousse Day. Pin your favorite recipes on Pinterest.

National Cordon Bleu Day

Caramel Day

New Beer’s Eve. Start a new tradition and promote local specialty beers. National Fresh Tomato Day

7 Prepare for highvolume Easter holiday baking and cooking sales with Domino® Sugar and C&H® Sugar displays.

8 National Empanada Day. Introduce customers to these savory Latin pastries.

Palm Sunday

National Cinnamon Crescent Day

National Cheese Fondue Day. Offer in-store demos on how to prepare this melty treat.

National Licorice Day

For National Egg Salad Week, ask customers to share their favorite recipes on Facebook.

Good Friday

15 Last minute bakers

National Pecan Day

for Easter means last minute shoppers.

National Chinese Almond Cookie Day

National Peach Cobbler Day

Passover begins.

Easter

National Cheeseball Day

National Animal Crackers Day

To celebrate National Grilled Cheese Month, run promotions on ooey, gooey melting cheeses.

Offer coupons for bacon to help celebrate National BLT Month.

National Eggs Benedict Day

21 It’s Tea Day, so set up tasting stations around the store, along with packets of America’s favorite sugars.

Tax Day

22 National Jelly Bean Day

Earth Day

National Cherry Cheesecake Day

National Pigs-in-aBlanket Day. Offer coupons on mini hot dogs, refrigerated crescent rolls and mustard.

National Zucchini Bread Day

National Pretzel Day

Make sure everything is ready for Cinco de Mayo.

National Blueberry Pie Day

National Shrimp Scampi Day

National Picnic Day

30 It’s National Oatmeal Cookie Day! Feature all necessary ingredients, including Domino® Sugar and C&H® Sugar.

| Progressive Grocer | Ahead of What’s Next | February 2017

Prime Rib Day

Arbor Day. Donate a tree in a local park or open space in your store’s name.

Spring means Spring in the sweetener aisle The spring holidays are occasions for special baking and cooking.

Stock up on classic baking sugars, along with the newest innovative sweetener products.

• Pourable Light Brown • Quick Dissolve Superfine • Honey Granules • Maple Flavored Granules

Whole Grain

MAXIMIZE CATEGORY SALES WITH THE BRANDS FAMILIES LOVE. Â© General Mills

Leading Brands Health and Wellness Seasonal Favorites

Front End

Market Intelligence By The Numbers

Shelf Stoppers

Condiments, Sauces and Gravies

ToTal condimenT, sauce and gravy sales reached $4.4 billion in The pasT year (52 weeks ending Dec. 31, 2016)

Demographics

Top 5 condiment, sauce and gravy categories $2,000,000,000

1,500,000,000

1,000,000,000

500,000,000

pasTa sauce

52 Wks - W/e 12/31/16

52 Wks - W/e 01/03/15

meaT and Fish sauce

mayonnaise

52 Wks - W/e 01/04/14 mexican sauce

52 Wks - W/e 01/05/13 keTchup

“vinegars, particularly cider vinegar, have benefited greatly from a recent focus on their functional benefits as part of an overall healthful diet. With apple cider vinegar being touted as a healthful ingredient in drinks and facial cleanses, it’s perhaps no surprise that sales of the product have grown 33 percent over the last year, and now encompass nearly one in every three dollars that consumers spend on vinegar. vinegars have also benefited from the broad trend toward fermented foods and the increase in popularity of everything from kimchi to kombucha.” — nielsen vp consumer insights Jordan rost Source: nielsen

Spotlight on Vinegar/Cooking Wine (52 weeks ending Dec. 31, 2016)

Segment cider vinegar specialty vinegar White vinegar cooking Wine Total Vinegar

Sales Dollars (Millions)

Dollar Percent Change

Unit Percent Change

$189.6 165.1 216.4 39.2 $610.3

32.8% 3.8 3.6 1.9 11.1%

16.4% 3.1 2.2 1.3 5.8%

vinegar and cooking wine cater to more affluent audiences, often couples or twomember households, and those within later stages of life, such as empty nesters or senior couples. Those within the highest income bracket ($100,000-plus) spend 16 percent more than their expected share on vinegar and cooking wine. Further, twomember households overindex in spend on this category by 16 percent. senior couples and emptynest couples spend 20 percent and 24 percent more, respectively, than their expected share on this category.

Source: nielsen Source: nielsen

| Progressive Grocer | Ahead of What’s Next | February 2017

Shrimp Paella

ÂŠ2017 Goya Foods, Inc.

Your shoppers ďŹ nd this and other great recipes at goya.com

*Nielsen Strategic Planner, Total US (dollar sales), 52 weeks ending 12/17/16

Mintel Global New Products Database Category Insights

Spirits and Liqueurs Market Overview The United States is the standout market in the North American spirits category, with a predicted average value growth of 4.8 percent over the past five years. key iSSueS Interest in clean and nutritional labeling in the alcoholic beverage category has been driving the growth of more natural-positioned innovations.

As attention to ingredients across foods and beverages grows, it’s not surprising that consumers are growing more interested in organic varieties of spirits. Although only 2 percent of the total product launches in the 12 months to September 2016 were explicitly positioned as organic, the niche segment offers significant potential, especially as “organic” is often perceived as a catch-all for small, ethical, safe, local, fresh and healthy.

According to Mintel research, 51 percent of U.S. white-spirits consumers indicate that they wish there were more all-natural white spirits, while 44 percent of consumers say that they would be willing to pay a premium for organic white spirits. This suggests an opportunity for the spirits category to evolve with current natural and organic ingredient trends, addressing consumer needs for alcoholic beverage labeling. In the United States, 22-to-34-yearold men and older Millennials (ages 29-38) are most likely to want more natural options.

Free-from launches, such as dairy- and gluten-free, are an indirect way for spirits brands to capitalize on the Millennial desire to lead more healthy/ natural lifestyles, something that’s increasingly dominating the food and beverage industry. Gin is capitalizing on the natural trend, thanks to its use of botanicals and clean and adventurous taste profile.

| Progressive Grocer | Ahead of What’s Next | February 2017

For more information, visit www.mintel.com or call 800-932-0400.

My American vodka beats the giant imports every day. Try American! Itâ&#x20AC;&#x2122;s better.

All’s By Diane Quagliani

Seeking Good Health in the Cereal Aisle Let the basics be your guide.

any health-minded shoppers today have strong preferences about what they look for in cereals and other foods. Interestingly, what’s not in a food seems more important than what is in it, according to the International Food Information Council Foundation’s (IFIC) 2016 Food and Health Survey. When respondents were asked how they define a healthy food, the top answer, at 35 percent, was “Does not contain (or has low levels of) certain components” such as fat, sugar, calories, carbohydrates and cholesterol, while only half as many respondents (17 percent) said that a healthy food contains certain components such as vitamins, minerals and protein. These preferences are showing up big time in the cereal aisle, leading to a flood of new products and reformulations of existing products. When faced with so many options, how can shoppers make the best choices for their health? Getting back to basics by focusing on a few key nutrients and ingredients can help.

When faced with so many options, how can shoppers make the best choices for their health? Focusing on a few key nutrients and ingredients can help.

Whole Grains and Fiber Most Americans fall woefully short on consuming recommended amounts of both whole grains and fiber, but shoppers can get the best of both worlds by choosing cereals with both. Eating a 100 percent whole grain or predominantly whole grain cereal is an easy way to jump-start intake. Shoppers should look for the Whole Grain Council’s Whole Grain Stamp, which gives the number of grams of whole grain in a serving (many people need 48 grams daily, or three 1-ounce servings). For packages without the stamp, consumers should look for the grams of whole grain listed elsewhere on the package, or pick a cereal with a whole grain appearing first on the ingredient list. For fiber, an easy shortcut for shoppers is to check the package for the FDA-approved claims “good source of

fiber” (3 grams per serving or more) or “excellent source of fiber” (5 grams per serving or more), or consult the Nutrition Facts panel for the grams per serving.

Added Sugars Many consumers are concerned about sugar intake, which has prompted cereal makers to cut the added sugars in their products. As of now, it’s tough to know how much added sugars a cereal contains, because the information isn’t required on the Nutrition Facts panel. That will change by July 2018, however, when an updated panel goes into effect on most products. Shoppers will then see the grams of added sugars per serving and a percent daily value showing how much that amount contributes to a 2,000-calorie diet. Until that time, shoppers can compare cereals by checking the Nutrition Facts panel for the grams of sugars per serving and choosing one with a lower number. They should keep in mind, however, that “sugars” includes both naturally occurring sugars from fruit ingredients and added sugars.

Protein Protein is a sought-after nutrient, thanks to its ties to an increased feeling of fullness and the popularity of low-carb diets. While grains naturally contain some protein, some cereal makers are bumping up amounts with protein-containing ingredients like quinoa, nuts, seeds or soy. If protein’s their goal, consumers should choose cereals with at least 5 grams per serving — adding milk or yogurt significantly increases protein, too. PG Diane Quagliani, MBA, RDN, LDN, specializes in nutrition communications for consumer and health professional audiences. She has assisted national retailers and CPGs with nutrition strategy, web content development, trade show exhibiting, and the creation and implementation of shelf tag programs.

| Progressive Grocer | Ahead of What’s Next | February 2017

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The four small words that you big sales This one is organic. Because Millennials are all about making smart food choices, you can earn their business by carrying the Blount Organic line of soups, sides, entrees and sauces. Millennials (and all health-conscious shoppers) can choose from exciting and varied recipes that are USDA certified organic, simple and authentic, and that fit busy lifestyles with heat-and-serve convenience. For your share of the 75 million-strong millennial market, call your Blount sales rep at 800-274-2526.

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SOUPS • SAUCES • SIDES • ENTRÉES

Cover Story

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | February 2017

To The What makes a good supermarket? This year’s independent standouts offer a variety of solutions. By Katie Martin

he fifth annual Progressive Grocer Outstanding Independent Awards honor independent grocery operators excelling in a variety of categories: overall single-store operator, overall multistore operator, overall new concept design, overall fresh excellence, bakery, center store, deli/prepared foods, meat/seafood, produce and technology. Each has succeeded in its own unique way, but the stores don’t operate in a bubble, and each is trying to attract today’s busy consumer. In that effort, some commonalities materialized. Fostering a connection to the community is one trend that emerged in speaking with this year’s winners. Whether it was creating an atmosphere that fosters easy

communication between customers and staff, or offering ways for the stores to give back to the community through charitable donations, or creating a strong business environment by focusing on buying local products, the winners offer a variety of ways that can inspire owners to become a pivotal cog in the local economy. The workforce staffing the stores was another theme that all of the winners noted. Without good employees, the stores couldn’t be successful. They are that vital link to customers and help to create a welcoming environment that encourages repeat visits. Nearly all of the winners noted that they have many long-term employees who are known by customers and have become the faces of their respective stores. This year’s winners have a lot of actionable ideas that can be applied to your own stores, because no matter how good you are, there’s always room to make your stores better. One small change can make the biggest difference and could encourage more visits by customers. Congratulations to a great group of independents! February 2017 | progressivegrocer.com |

Overall Outstanding Single-store Operator

Janssen’s Market, Greenville, Del.

n a world that’s busier and offering more food-purchasing options than ever, establishing a distinctive identity for a grocery business is crucial. And Janssen’s Market, in Greenville, Del., knows exactly what type of store it is. “For only a subset of our customers, we are their only grocery store,” says Paula Janssen, general manager. Her grandfather founded the business in 1952, and she, along with her parents, Eileen and Joseph Janssen Jr., now run the business. “But we are, for a lot of people, a place to top up. We make it convenient to make that second trip, so they’re not just coming for one thing, they’re coming and they get everyday items at the same time.” Customers can purchase gourmet items like Epoisses cheese, but can also pick up some laundry detergent. Shoppers also come in for prepared foods from J’s Café, which offers a variety of breakfast and lunch items for dine-in or takeout. “It works for all different segments of our customers,” Janssen notes. The store caters to several retirement communities in the area, as well as busy families, by offering prepared food options that can be sized as needed. Singles can choose one chicken breast and some asparagus for a nice dinner, or families can buy a whole meal, including proteins and sides. Janssen’s also was the first supermarket in Delaware to receive a liquor license, so customers can enjoy a glass of wine or beer with their meal in J’s Café. The meat department has full-time butchers on site that cut or grind meat to the customer’s exact specifications. If a customer wants a steak cut 1¼-inch thick, the butchers can easily do that, Janssen says, or grind a specific mix of pork, veal and sirloin for a special family recipe. Produce is a draw, Janssen adds. With its location so close to Philadelphia’s produce market, the store sends a broker daily to select the best items. Janssen’s also regularly sources from local farmers; some of the relationships

go back decades. “There’s one local farm that we’ve been working with since my grandfather had the store,” she says. “They are on their third generation as well, so it’s fun that we’ve grown together.” In addition to the quality products, Janssen also credits the store’s commitment to service in keeping customers coming back. “We focus on the customer experience within the store. We make it warm, inviting and convenient; that’s No. 1,” she says, suggesting that Janssen’s Market is almost more of a gourmet convenience store than a supermarket, due to the customer’s ability to get in and out of the store quickly. Employees also help create the environment. The store has a number of long-term staffers, with managers’ tenures averaging 10 years or more. About two-thirds of the 90-person staff are full-time, so customers and staff get to know one another well. “People can choose to buy their groceries anywhere,” Janssen says. “We need to make it a positive, friendly experience for people to come back.”

| Progressive Grocer | Ahead of What’s Next | February 2017

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Overall Outstanding Multistore Operator

Oliver’s Market, Santa Rosa, Calif.

liver’s Market, with four stores in Sonoma County, Calif., has found its niche. The hybrid store is completely focused on giving the community a choice in how it eats. The crossover concept allows the stores to offer 50 percent conventional products and 50 percent organic and natural products, and sales fall along those lines. “Our approach to product assortment is to provide the largest amount of choice we can. We don’t make choices for our customers; we just try to provide choices,” says Tom Scott, who retired last September as CEO of the company, after 26 years. Scott Gross, formerly store director of the Windsor store, was promoted to general manager, and Eric Meuse, formerly the Stony Point store director, was named operations manager. Perhaps the biggest commitment to offering choices to the community is Oliver’s reliance on local suppliers and producers; the stores currently source from about 400 area companies. “Local for us is just this county. It’s not anywhere but Sonoma County,” stresses Steve Maass, founder and president. “It’s not Napa, it’s not Marin, it’s just Sonoma. We’re a Sonoma County store; we’re not located anywhere else.” The bottoms of the stores’ receipts feature the dollar amount spent on local products, so customers can be aware of their support of local producers and suppliers. When customers buy a locally sourced product from

locally owned Oliver’s Market, the financial benefit to Sonoma County is 2½ times greater than when they purchase a national brand from a national chain, according to a report conducted by Sonoma State University and commissioned by Oliver’s Market (the original study was conducted in 2011 and updated in 2016). In addition, the report found that Oliver’s current operations generate more than $184 million, with $19.3 million in state and local taxes, while creating or sustaining more than 700 jobs in the county. “It dawned on us about 20 years ago that that’s our competitive advantage, that we’re local, too. We understand this place better than any chain stores,” Scott says. The company’s newest location, in Windsor, even gave the community a place to gather with its Tavern Off the Green taproom, which offers 24 local beers, wines and ciders on tap. The grocerant concept offers a pub-style menu, or customers can bring in items from the prepared food department located next to the taproom. The tavern hosts local musicians on Saturday nights (all stores often feature live local music talent outside the main doors as well), and wine and beer tastings on Thursday and Friday evenings. Oliver’s Market also allows its customers to help their neighbors with its community card, which provides a 3 percent rebate to a school or nonprofit of the shopper’s choice. More than 500 Sonoma County nonprofits are registered with the cards, and 2015 donations totaled more than $240,000, with more than $1.8 million raised since the inception of the program. The stores also provide a lot of in-kind donations and support local food banks. During the most recent holiday season, Oliver’s partnered with Redwood Empire Food Bank to sell $1 bell necklaces at the checkstands; each purchase supplied two meals to food-insecure Sonoma County residents. The One Bell Saves Supper campaign raised nearly $9,000 for the local food bank. “We’re known as a community store,” Maass notes, “and we participate in the community.” February 2017 | progressivegrocer.com |

Overall Outstanding Fresh Excellence

McCaffrey’s Food Markets, Langhorne, Pa.

“F

resh” is the word in modern grocery retailing, and McCaffrey’s Food Markets, with five stores in Pennsylvania and New Jersey, excels at the fresh departments. Two of its stores opened within the past year, a 50,000-square-foot store in Blue Bell, Pa., and a new, smaller, 13,000-square-foot Simply Fresh by McCaffrey’s in Doylestown, Pa. The new Simply Fresh concept “is all the best things that McCaffrey’s has to offer,” says Jim McCaffrey III, company president. At the forefront of the fresh departments is prepared foods. “I think the single biggest thing that we do different and better than our competition is prepared foods,” says EVP Jim McCaffrey IV. Most of the items are prepared in the grocer’s 33,000-square-foot central

commissary to help control the quality and consistency of products, which are finished in the stores to impart some theater to the fresh departments. Customers can select from Mediterranean, Italian and Chinese cuisines; fresh-made soups or salads; or handcrafted pizzas. The stores feature hot, salad and grain bars for grab-and-go ease, as well as a dine-in seating area. McCaffrey’s also introduced a bar and beer garden in the Blue Bell location that features a tapas menu with 20 high-end options. Simply Fresh also debuted a crepe station, which was a feature in the Blue Bell location when it opened a few months later. “Both the crepes and tapas are made fresh to order right in front of you,” says McCaffrey IV. Another fresh department that’s a big draw for customers is gourmet cheese. The stores feature a full cutand-wrap program, with everything

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brought in as wheels and cut on site by cheesemongers in each store. McCaffrey’s has spent a lot of time and effort on training — both of its staff and its customers. The department samples every day, and the cheesemongers also host educational classes. In the Blue Bell location, McCaffrey IV plans to have the cheese department partner with the bar to offer cheese-craft beer tastings. All stores’ meat departments, which have butchers on site from opening to closing, feature full-service cases with custom-cut selections, as well as gourmet items in what McCaffrey III calls the “jewelry case for the fellas.” Each night, a different butcher designs the gourmet case for the following morning. “They really compete with one another on what they’re putting in there, whether it’s several valueadded items or different cuts,” he adds. “They compete on how the case is going to shine the next day.”

Produce is a key driver of fresh, and Tim Mirack, McCaffrey’s produce director, “lives and breathes produce,” McCaffrey IV says. As with any supermarket, the two biggest buzzwords in the department are “local” and “organic.” Mirack has partnered with a number of area growers to supply the stores with fresh produce, and also is working with a hydroponic company to grow produce for the store in a greenhouse located within a mile of the Yardley, Pa., store. “We’re fortunate that we’re not that far spread out geographically yet, so what’s local for one store is legitimately local for the others,” McCaffrey IV adds. The stores’ focus on fresh is paying off. “Every time we’ve put a focus on a department, especially a fresh department, whether it’s gourmet cheese, coffee or sushi, we’ve seen dramatic increases in business,” McCaffrey IV notes. “That’s what the customers are demanding.”

Overall Outstanding New Concept Design

Harvest Market, Champaign, Ill.

ith a name like Harvest Market, a supermarket is firmly connecting itself to the land. And Quincy, Ill.-based Niemann Foods’ newest concept does just that. Instead of the standard ribbon-cutting, the grand opening last October featured two tractors pulling away haywagons to reveal the store after a recording of Paul Harvey’s “So God Made a Farmer.” “We said, ‘This is what inspired us every step of the way in this process,’ and it is,” says Rich Niemann Jr., president and CEO of Niemann Foods, of the opening. More than

two years ago, the company realized that its newly acquired location in Champaign, Ill., would be a whole new concept, one that was rooted in the farm-to-table idea. The new concept would be a break from the company’s signature banner — County Market, which is generally located in smaller, rural communities. Champaign, a university town, is one of the larger markets in which the company operates, and, with the new concept, it would be serving a slightly different demographic. “We began with the idea that we wanted our customers to have a connection that is unique in the industry and allow them to understand who the producers and makers are, because that allows them to understand where their food came from, what’s in it and what’s not in it,” Niemann explains. The team took to heart the knowledge that such a small percentage of the population is involved in agriculture, yet agriculture is what sustains us all, and that people are growing more interested in where their food hails from. “Everything flows in this store,” Niemann says, “flows from the producers and makers, with all the fresh product.” The fresh departments became increasingly important in the store design, and most are open to customers’ view, so they can see the food being prepared fresh, from scratch, in the deli, bakery and Farmhouse restaurant. Everything is designed around the concept of fresh, wholesome food. The store also features its own butter-churning room, which makes plain and compound butters for retail sale and for use in the store’s other departments, including the restaurant and deli, the bakery, and even the seafood department. Even bumping up the ceiling in the floral/ produce section of the store to let in more natural light plays into the idea of fresh, natural food. “The culinary conversation here is so much greater than other stores,” says Tim Fink, VP fresh product, business development. “There’s a certain expectation starting to happen with this Harvest Market experience.” While the produce department does have a tractor situated on the sales floor, the Niemann team was careful to not go down the hokey “Hee Haw” route when it came to design elements in the store. The Los Angeles-based design firm Shook Kelley was instrumental in helping keep the store homey, but with a modern feel that would be attractive to today’s customers. “We reach back to farm symbols of yesterday, but they’re tweaked to make you feel that this is not a joke,” Niemann notes. “This is not a plastic marketing campaign. It’s what we believe in. This is a mission that we’re on to help our customers and provide that information, that interest, that passion for food.” Learn more about Harvest Market in PG’s March 2017 issue, in which it will be profiled as the Store of the Month.

| Progressive Grocer | Ahead of What’s Next | February 2017

Bakery

Broulim’s Fresh Foods, Rigby, Idaho

“W

e have just a little bit of everything, and I think that’s what sets us apart,” says Charles Camp of Broulim’s Fresh Foods’ in-store scratch bakeries. Camp is bakery/deli director of the family-owned chain that operates 10 stores in Idaho. Only two stores don’t have scratch bakeries on premise; the other eight produce varying options of scratch-made doughnuts, artisan bread, cookies and decorated cakes, with product shipped among the stores so each offers a full line of bakery items. Two stores also feature tortilla machines to make fresh tortillas on site. About five years ago, when the stores transitioned to the scratch artisan-bread program, Broulim’s sent its bakers to the San Francisco Baking Institute to learn the basics of bread making, including how to use starters. Now, those bakers act as trainers for the rest of the bakery staff on how to prepare the 20 to 30 varieties of bread and bake them in the hearth ovens. The bakery production area is open to customers’ view,

so they can watch the bakers work the bread dough or the cake decorators icing and decorating cakes. But to help get that fresh-made point across, the stores regularly conduct “chat and chews,” during which staff sample the product and answer any questions that customers may have. “It builds our guest interaction, and we can talk about how it’s made,” says Scott Zahrn, sales manager. “That’s a good time to say it’s scratch-made in the store.” Or the employees may set up a demonstration table and highlight how well the baguettes partner with different dipping oils. Production is staggered throughout the day so customers can always see activity in the department as well as smell the various products baking. Doughnut production begins at 2 a.m., followed by artisan-bread production at 7 a.m. Cookies and cakes are still being baked as late as 4 in the afternoon. And hot French bread is coming out of the oven until 7 p.m. to tempt shoppers after work. Bakery, as part of Broulim’s fresh food strategy, is what sets it apart from the competition.

Highland Park Market, Manchester, Conn.

“W

e definitely have something that other grocery stores don’t have,” says Bob Thatcher, bakery director for Highland Park Market, an upscale supermarket company that operates five stores in central Connecticut. “We do a lot of things from scratch,” he adds. “We do a lot of our own cheesecakes and fruit tarts, and we make all our own buttercreams. We also make a few breads and coffee cakes from scratch. We don’t have a lot of product that we just take out of a box and put on the shelf.” All five in-store bakeries have pastry chefs and bakers on site who begin baking at 4 or 5 a.m. To help maintain consistency, Thatcher travels to each store frequently and invests a lot of time in training the staff, often looking to culinary schools to find talent. Scratch production also allows the bakeries a lot of latitude to fulfill custom product requests, which can turn into regular offerings. As an example, Thatcher notes that the department’s cream cheese icing actually was a result

of a customer coming in with a recipe and asking Thatcher’s staff to reproduce it. Most of the production, including cake decorating, is in view of customers, which helps add to the theater of the department and emphasizes the freshness of the product. “People find that fascinating, when they see us doing stuff like that. You don’t see that at other stores,” Thatcher notes. The mostly service bakeries have few grab-and-go items; customers have to interact with staff, which gives the Highland Park Market team an opportunity to establish rapport and relationships with shoppers. It also allows the product to be displayed to its best advantage. “The cases really stand out,” Thatcher says, and customers can’t help but notice the department when they enter the stores. “You get a lot of oohs and ahhs when [customers] walk in and see the case,” he adds. “With bakery, it’s a lot of impulse buying, so you have to make it look good.” February 2017 | progressivegrocer.com |

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Center Store

Blue Goose Market, St. Charles, Ill.

hen it comes to center store, it can be hard to set yourself apart, to make it exciting. At Blue Goose Market, in St. Charles, Ill., owner and President Paul Lencioni is trying to flip the script. He doesn’t want to talk about customers or consumers; instead, his focus is on people. He often presents new managers with the question of how many people came in to buy a gallon of milk in the past year. The answer: none. “They don’t come in for milk,” he asserts. “They come in for what that milk is going to do for them — be an ingredient in a recipe, feed their children in the morning.” You have to understand the reason that people are coming to your store before you can provide them with the products they need. Also, you have to care about them, their children and their lifestyle. “What I’ve always railed on in category management is, you have to manage preference,” Lencioni says. “What do people want? Then go ahead and fill it.” His philosophy on product selection is to find the best products — specialty items — and create an experience through the product. A mistake that retailers often make is expecting those specialty items to just fall into carts without creating the experience that will make customers want those items.

Macey’s, Sandy, Utah

acey’s, a banner of Associated Food Stores (AFS) operating a dozen stores in Utah, is trying to make shopping and food prep easier for customers. The stores’ Dinner 1-2-3 promotions target Gen X and Millennial shoppers who are looking for simple dinner solutions. “We realized a lot of our shoppers are time-starved,” says Josh Allen, director of center store operations for As-

To create that experience, demoing is a must, Lencioni says. Blue Goose has regularly scheduled demonstration shifts to give customers the chance to try a product. To help keep the product selection in line, Lencioni focuses on fresh, healthy items that offer higher culinary excellence (not necessarily upscale), and he conducts a lot of focus groups. “It’s a hunt,” he says. “Live life as big as possible. Go find cool things. Then bring them to people and show them. Take the responsibility to show people cool things on their terms, not yours. Just understand that’s your role.” sociated Retail Operations, a division of Salt Lake Citybased AFS. “This is a quick meal solution for them to take care of their needs.” The promotion highlights an innovative center store product, typically a sauce mix, along with instructions on how to combine it with other items throughout the store to make a fast, easy meal. Macey’s often offers customers a price break when they purchase all of the ingredients needed for a Dinner 1-2-3 meal. Macey’s also offers a treasure aisle. “It’s a destination that our guests come to where they can find all the items they need at a very low price. It truly is kind of a treasure hunt experience,” Allen says. The items are rotated regularly and are often larger, family sizes of products or things that may not be typically found in a supermarket. Recent treasure aisle products have included fireworks for the Fourth of July and New Year’s and electronics on Black Friday. Allen admits that many consumers may not find grocery shopping all that interesting, and that “this creates a fun element to the shopping experience.” For sports fans, Macey’s makes tailgating easy with the Tailgater Box, which includes all of the key components of a good tailgating experience — from chips to soda to candy and even some healthier alternatives like beef jerky. The box is priced at about 50 percent less than if customers purchased the items separately. Additionally, customers are even allowed to pick and choose the items, so they can create the ultimate box for their friends and family members. February 2017 | progressivegrocer.com |

Deli/Prepared Foods

Tony O’s Supermarket, Kingsville, Ohio

bout a decade ago, Tony Orlando, owner of Tony O’s Supermarket, in Kingsville, Ohio, knew he had to make some changes in his store if he was going to stay in business. “I wanted to keep building strong niches because I saw the future, which is, we’re going to be out of business if we don’t really give them some signature, branded items that they have to come here for,” he says. “I changed over to 100 percent scratch in my deli, and we never looked back.” Orlando is the main innovator in the department, and he tries to make 30 to 40 new items every year to add to its mainstays, like five-cheese macaroni ’n’ cheese, meatloaf, rigatoni with meatballs, goulash, and baked beans. The department also offers 100 kinds of salads, such as stuffed baked potato, cucumber or sweet dill pickle, that rotate in and out depending on the sea-

son. The deli case measures only 22 feet, so Orlando is judicious about what’s offered and the price point. “We’re very acutely aware of value, but we will stick to the homemade philosophy,” he says. The staff also is trained to engage customers without making them feel cornered. “We say, ‘What can I get for you today? Tony just made a fresh batch of potato salad.’ And then, boom — they have a sample in their hand because we’ve handed it to them,” he notes. Controlling the sampling is important, and Orlando doesn’t believe in leaving samples on top of the counter, because that makes it too easy for customers to grab them and leave without employees having a chance to engage. “If you control the sampling, your sales go up 80 percent,” Orlando says. “We control, we engage, we talk to people. We just try to stay relevant.”

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Deli/Prepared Foods

Lunds & Byerlys, Edina, Minn.

imple, quality ingredients form the foundation of the prepared food offering at Creations Café, located in 14 of Lunds & Byerlys’ 26 locations. The Edina, Minn.-based retailer focuses on choice when it comes to the café, which features hot and cold buffets, and salad and taco bars. “The differentiation there is behind the scenes — our kitchen teams,” says John Stueland, director of deli and foodservice. “They source great-quality ingredients. They do minimum processing and preparation to them, and they just put out great, simple, fresh, high-quality prepared foods.” The self-service element of Creations Café allows customers to create their own meals in the portions they want, without being hemmed in by a predefined portion or price point; however, the cafes also offer whole sandwiches, subs and sushi. The eateries also have a dedicated checkout so customers can quickly purchase their items to take out or eat in. In both the Creations Café and the deli department, Lunds & Byerlys has introduced several better-for-you options to meet customer demand. Stueland’s team has

added freshroasted and -steamed vegetables, as well as replaced the breaded and fried fish items with baked or broiled nonbreaded salmon, cod or tilapia. While pasta is still available, the selection is usually only one variety instead of the three or four previously offered, and now fresh, seasonal grains are on the menu, like brown rice and quinoa. The deli also offers an extensive cheese department with highly trained cheesemongers, many of whom have been certified by the Denver-based American Cheese Society. “It’s great to have the certification on the wall of the cheese counter, or on the name badge of the employee, but the whole group just benefits from having the training,” Stueland says.

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Meat/Seafood

B. Green Co., Baltimore

ith four stores in the Baltimore area — two Food Depots in the inner city and two Green Valley Marketplaces in the suburbs — seafood is a big deal, and not surprisingly, the locations have become well known for their crabs. “We’re one of the only grocery stores I know that bring in live blue crab,” says Rick Rodgers, COO. “They’re local during the season. You can buy them live, or we steam them right there in the store for you. There’s not any other grocery stores that do that.”

The stores also make jumbo lump crab cakes that are available in several varieties like traditional, or seasoned with Creole or Cajun flavor, or stuffed with pimento or jalapeño cheese. “We’re taking things that are very good in Maryland and putting our spin on them,” Rodgers adds. The stores also have the Ready, Fresh, Go program in the meat/seafood department. Customers pick their protein — fish, shrimp, chicken — and then select the pasta and/or fresh-cut vegetables they’d like to go with it, and all of the ingredients are placed in microwavable, ovenable, grillable bags that customers take home and cook. “It’s unbelievable how good it is,” Rodgers notes. “You can pick from a variety of different things. We have them already made, or we actually have in the showcase all the vegetables, the pasta and the proteins for people to pick.” Rodgers notes that the perishables departments, such as meat and seafood, are what set the stores apart. “If somebody is coming in and buying the center of the plate, which is a protein item, whether it’s meat or fish, they’re going to buy everything else,” he says. “I know there’s a lot of people that use our meat, our seafood and our deli because we do a much better job. If they have confidence in the perishable part of your business, then they have confidence in you as a company.”

Superlo Foods, Memphis, Tenn.

uperlo Foods, with seven stores in Memphis, Tenn., was recently voted one of the best meat markets in the city, and it also has the largest selfservice meat department in the area. “It’s all self-serve, and it’s that way intentionally,” says owner Randy Stepherson. “We’re operating as an everyday low-price operator, and we felt like it would help our image as an EDLP operator to not do that service counter.” On average, the stores have 28 percent meat distribution, due largely to the high-quality products at good prices. Superlo sells Certified Angus Beef and Seaboard 100% Prairie Fresh Pork. The stores also grind meat on site. Best-selling items range from ground beef and chuck roast to steaks and filets, depending on the location of the store. The products are cut in-store, with the stores’ meat cutters boasting a combined 800 years of experience; the larger stores have as many as six cutters on staff to handle the volume demanded. Some of the cutters have

been with the company for more than 30 years. “We’ve held on to our core group for a long time,” says Brad Whitaker, meat director. “We’ve got really good people that work for us, and I think that makes a difference. We can take care of our customers.”

| Progressive Grocer | Ahead of What’s Next | February 2017

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One entry per store. Winners will be decided based on the sole discretion of AFM and Augustine Agency only. Winners will be chosen based on usage of required AFM Fanwich promotional pieces and overall display look. Winners will be chosen on April 17, 2017 and contacted via email within (7) business days of decision. Potential winners have (7) days to reply to correspondence to accept prize. After (7) days, the prize will be forfeited and another winner will be chosen. Any entry not meeting the contest criteria requirements or missing information required on the submission form will result in a forfeiture of entry. AFM is not responsible or liable for any damages or losses of any kind, including direct, indirect, incidental, consequential; or punitive damages arising out of entrants access to and use of the contest, downloading from, uploading to and/or printing material downloaded from any website associated with the contest; or winners use of the prize. In no event shall the released parties’ total liability to you for all damages, losses, or causes of action. All prizes are provided “as is” without warranty of any kind, either expressed or implied. All partners and program elements are subject to change.

Produce

Piggly Wiggly Alabama Distributing, Bessemer, Ala.

“I

n produce, it’s freshness — that’s what it’s all about,” asserts Jay Bennett, director of produce for Piggly Wiggly Alabama Distributing (PWAD), in Bessemer, Ala. He has worked to streamline the stores’ ordering system so product comes in as needed to keep it fresher on the shelves. With three or four produce deliveries a week, stores can easily adjust the amounts needed by what’s selling. If strawberries are selling better than expected, store operators can simply adjust the amount needed for the next delivery. “From a service level, [the retailer] isn’t in trouble for more than a day before another truck is rolling in,” Bennett notes. Another aspect PWAD has focused on is educating retailers about how weather events can affect the end product that they’ll get in their stores. In good growing conditions, citrus has a long shelf life, but Bennett sees his job as educating retailers that a lot of rain two months earlier, during the prime growing season, can affect the shelf life after the product has been picked — things retailers may not pay attention to or understand. Local is a huge trend in produce departments across the country, but PWAD services stores in five states, so what’s local in one area may not be local in another. Part of the

appeal of locally grown products is that customers like to support family farms, and it’s that family-farm element that Bennett is focusing on in a new marketing program that will be rolled out in stores over the next several months. Stores will be able to pull a farm’s information from a web portal and use the farm’s photos and other pertinent information to market the product, similar to how many stores currently market local products. “These are literally family farms that are growing this product. They may be in California or Washington, but you’re still supporting that family. You’re still supporting another independent small farm,” Bennett says. “The concept is not to take away from a local philosophy.”

Willy Street Co-op, Madison, Wis.

he produce departments at Willy Street Co-op, which operates three locations in Madison and Middleton, Wis., are really the cornerstone of the business, notes Brendan Smith, director of communications. “Our produce department is kind of a destination spot in our city. I think people really appreciate our freshness and commitment to local. If you’re going to have a commitment to local, it has to be based in the produce department,” he adds. Meghan Minnick, purchasing director, agrees, “We have relationships going back to the inception of our co-op, to the late ’70s, with farms.” Minnick and her team work with about 20 area growers to supply the stores, as well as three distributors out of the Twin Cities, to help keep the departments

fully stocked with organic and conventional items. Because Minnick works so closely with area farmers, at times there’s more product than she can sell, or there are times outside the local growing season when there’s no local product to sell. To help mitigate this problem, she works with both the farmers and a processing facility to create a line of preserved local products sold under a Willy Street private label. Some products include canned tomatoes, diced tomatoes, frozen butternut squash cubes and frozen broccoli, as well as items used in the stores’ prepared food departments, like local fruit that’s preserved for use in Thanksgiving pies. “It’s beneficial for everybody,” Minnick says. “It’s beneficial for the farmers because it helps them get rid of that surplus product that they can’t necessarily sell fresh. It helps preserve the local season. It’s been really great.” February 2017 | progressivegrocer.com |

Technology

California Fresh Market, San Luis Obispo, Calif.

ne of customers’ biggest pain points in a supermarket is the checkout, and California Fresh Market, in San Luis Obispo, Calif., introduced an app to relieve the stress of picking the right line when the store opened last November. Customers download the app, add a credit card number and start shopping by simply scanning product barcodes and placing the items in their bags. For weighed items like produce, the store has scales where the customers input the product and a barcode flashes up on the screen. The customers then take a photo of the barcode, and it’s added to their checkout total. When they’re ready to check out, customers go to a special checkout that scans the QR code that the app generates on their phones. If all is good, a beacon flashes green and they can walk out of the store. If the system senses a problem, a blue light flashes and an employee comes over to do a bag check. Adoption of the app has been low, admits Alfred Holzheu, president of California Fresh Brands, which operates California Fresh Market and El Rancho Market. Among

the company’s three locations, only about four or five transactions out of every 1,000 are done via the app. However, as the younger generations, who are used to being on their phones, begin to shop more, Holzheu predicts that the adoption of the app-based checkout will increase. Holzheu and the app company also are working on a way for customers to order deli items on their phones and then go pick them up when they’re ready. “I’m a techie in general,” he says, so he’s always looking for ways to push the envelope in the grocery industry.

Festival Foods, De Pere, Wis.

uring an assessment of everything digital associated with Festival Foods, the De Pere, Wis.-based company realized that its biggest opportunity was its website: It was the hub of the supermarket’s digital presence and linked to all other digital properties. That led to a complete revamp, because the site “was not responsive, it was not SEO-optimized — some of the basic tenets of what you should have in a website,” says Nick Arlt, brand strategy director. Festival Foods doesn’t have a loyalty program, so Arlt’s team had to find out who the customers really were by sending out surveys. From the results, they divided customers into four core personas, and then built the website around the needs of those four personas. “We built that foundation

of really what do these shoppers want from us, and how can we be of assistance,” Arlt explains. Since the updated website launched in October 2015, the results have been beyond expectations: Overall traffic has increased by more than 24 percent, and mobile traffic specifically is up more than 56 percent. In developing the new site, which took about a year, Arlt broke it down into two halves: technology and people. “Looking at the technology side, it’s almost no longer an option to not have a website, and it’s becoming nonoptional to not have a mobilefriendly or mobile-responsive site,” he says. “On the people side of it, don’t make it about yourself, make it about your guests. A website that serves your purposes doesn’t necessarily mean your guests are going to want to go there.” PG

| Progressive Grocer | Ahead of What’s Next | February 2017

Ecommerce

Profiles in Progress

The Fantastic Four

This quartet of food retailers is doubling down on ecommerce now, for future success. By Randy Hofbauer

fast food By partnering with Uber, Walmart has access to a fleet of cars for grocery delivery 24/7, allowing online shoppers to get their orders whenever they want.

t’s understood that in ecommerce, the grocery channel has been somewhat of a laggard compared with others. According to New York-based eMarketer.com, computers and consumer electronics are anticipated to make up the No. 1 category in U.S. ecommerce dollar sales between 2012 and 2018, at $108.4 billion, trailed by apparel and accessories ($86 billion) and auto and auto parts ($51.6 billion) at Nos. 2 and 3, respectively. Food and beverages fall at No. 9, with $10.9 billion. Grocery ordering online for pickup or delivery is anticipated to mature, however. While only 12 percent and 9 percent of North Americans in 2015 reported purchasing groceries online for delivery or pickup, respectively, 55 percent and 57 percent said they’re willing to do the same, respectively, according to “The Future of Grocery,” an April 2015 report from Schaumburg, Ill.-based market researcher Nielsen. Clearly,

many are ready to give online grocery shopping a try. A number of traditional brick-and-mortar grocers seem to understand this reality and have been investing heavily in recent years to grab their share of the ecommerce pie sooner rather than later — and to continue to grow it even while competition heats up. The following is a look at four of the more noteworthy contenders.

Walmart Wal-Mart Stores Inc. recently has made significant strides to position itself as a major ecommerce player. In late 2015, the Bentonville, Ark.-based company announced plans to pour $2 billion into ecommerce over the following two years, outpacing the $700 million it spent on February 2017 | progressivegrocer.com |

Profiles in Progress

The combination of walmart’s retail expertise, purchasing scale, sourcing capabilities, distribution footprint and digital assets, together with the team, technology and business we have built here at Jet, will allow us to deliver more value to the customer.” —Marc lore, Jet.com

Ecommerce

ecommerce in the previous fiscal year, The Wall Street Journal reported in November 2015. Among the mega-retailer’s initiatives in the grocery ecommerce space were partnerships forged last June with rideshare services Uber, for the Phoenix market, and Lyft, for the Denver market. Particularly interesting is the Uber partnership, notes Jim Wisner, president of Libertyville, Ill.based retail consultancy Wisner Marketing Group. While most other services require scheduling time windows for delivery, Uber empowers the retailer’s shoppers to get their deliveries whenever they want. Turning from delivery to click-and-collect, Walmart has continued to expand its pickup program in various markets in the past year. In April 2016, for instance, the company brought free curbside pickup of groceries to eight new cities, including Kansas City, Mo.; Boise, Idaho; Charleston, S.C.; and Austin, Texas. As Walmart ramps up competition against Seattle-based Amazon.com, attention to perishables will play a critical role, especially since the ecommerce behemoth hasn’t yet developed the same reputation in the area of groceries, particularly perishables, that it has in nonconsumables, notes Carol Spieckerman, president of Spieckerman Retail, a consultancy based in Bentonville. In response, the company is putting in place what Wisner calls an “extensive training program” for team members who prepare shoppers’ orders, with special attention paid to perishables. But these initiatives don’t hold a candle to what’s arguably Walmart’s biggest ecommerce move yet: the acquisition of Amazon’s most capable ecommerce competitor, Jet.com. The $3 billion cash deal included not only the Hoboken, N.J.-based company’s proprietary technology, customer data and ecommerce expertise, but also the services of its co-founder and CEO, Marc Lore, who will head Walmart’s online division for several years. “The combination of Walmart’s retail expertise, purchasing scale, sourcing capabilities, distribution footprint and digital assets, together with the team, technology and business we have built here at Jet, will allow us to deliver more value to the customer,” Lore, a former Amazon executive, said at the time of the acquisition last August. Of particular benefit for grocery shoppers: Jet’s pricing platform calculates discounts as shoppers purchase more, which helps drive volume and average order value. This is critical in the low-margin ecommerce grocery business, Mike Elmgreen, CMO of New York-based

| Progressive Grocer | Ahead of What’s Next | February 2017

B2B ecommerce platform provider Handshake, told Progressive Grocer at the time of the acquisition announcement. Additionally, since Jet was a late ecommerce entrant, it used quick delivery as a differentiator, positioning warehouses and streamlining logistics to maximize rapid delivery — something especially critical with perishables. Jet’s technology is state-of-the-art enough to match Amazon’s, says Bill Bishop, chief architect with Barrington, Ill.-based retail technology firm Brick Meets Click. And combined with its market position, which allows it to outflank Amazon on price, the acquisition could well be a game changer for the industry.

Kroger Kroger is well known for being careful and disciplined across its business, from leveraging consumer insights for product development to integration of entire regional chains into its overall operations. It approaches ecommerce in a similar manner. The Cincinnati-based grocery giant is methodically growing its way to online success by expanding its click-and-collect service to a growing number of markets. Formally dubbed ClickList in fall 2015, the service came into existence following the company’s 2014 merger with regional grocer Harris Teeter, which

learn as you Grow Kroger gained a firm footing in the world of online vitamin and health product retailing through its 2014 acquisition of Vitacost.com.

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Profiles in Progress

Kroger is doing a good job bringing together the personalization they have become known for and making it part of their online experience.” —Gary Hawkins, Center for advancing retail & technology

Ecommerce

gave Kroger access to the Matthews, N.C.-based chain’s Express Lane technology as a starting point. Harris Teeter’s program helped Kroger end up with a successful online grocery shopping platform, Bishop says, noting that the regional chain had been around long enough to “work out a lot of the kinks,” and that building the platform on its own loyalty program helped with personalization. Additional power came from the July 2014 acquisition of Vitacost.com, which gave Kroger a “solid foothold” in the pure online retailing of vitamins and health-related products. In the past year alone, the grocer has expanded in a number of markets from coast to coast, from Southern California to Atlanta, and even celebrated the launch of its 500th ClickList location, in Delhi, Ohio, last fall. It rang in 2017 with the announcement that it plans to double the number of ClickList locations in central Ohio. All of the data powerhouse’s expansions are planned carefully, according to Gary Hawkins, CEO of the Los Angeles-based Center for Advancing Retail & Technology (CART). The grocer is well positioned to leverage its “vast knowledge” of its customers to understand what services these folks want, and which shoppers are most apt to use online ordering. Moreover, Kroger is a master at using qualitative and quantitative customer feedback to continuously evolve and improve its online offering, which, at press time, consisted of some 40,000 products, including fresh meat and produce, as well as private label, which Wisner says few chains have effectively begun to integrate across all digital platforms. “Kroger is doing a good job bringing together the personalization they have become known for and making it part of their online experience,” Hawkins says. “I can start building my online shopping list using items I frequently buy or have most recently purchased, or I can choose from sale items that have been filtered based on my past purchasing behavior, all of which make creating the list easy to do.” Furthering convenience in this area, digital coupons saved to loyalty cards are automatically applied to online orders. Additionally, Kroger waives fees for the first three orders, which Wisner says allows consumers to learn the value of the service without the risk of losing money trying it. As Kroger continues to build on its acquired properties and integrate them into its fold, it’s expected to carefully consider how any new addition can benefit its ecommerce capabilities — and vice versa — and better position it for the future, especially if the Harris Teeter deal has been any guide. “I think Kroger has a much more mature approach to acquisitions than most companies do,” Wisner asserts. “They leave what works there and try

| Progressive Grocer | Ahead of What’s Next | February 2017

to add resources where they have something new and different, and bring what they got from the acquired company back to the rest of the Kroger operation.”

H-E-B Regional grocer H-E-B has a reputation for not being quiet about its Texas pride. It’s also known for the deep admiration it engenders among generations of Lone Star State residents: Unlike many other grocers in Texas, San Antonio-based H-E-B has called the state home since its beginning, with locals relying on it for everyday needs since 1905. “They do a better job of engaging their customers in the shopping experience” than most grocers, Wisner stresses. That’s especially true of ecommerce today: In 2016, the homegrown Texas retailer expanded partnerships with such third-party delivery services as Birmingham, Ala.-based Shipt and San Francisco-based Instacart, making such services even more accessible to Texans across some of the biggest markets statewide, including Houston, Austin, Dallas, Corpus Christi and Waco. It also brought its Curbside click-and-collect service to areas such as San Antonio and Waco, as well as more stores in the Houston metropolitan area. Arguably, however, its most inventive ecommerce innovation goes well beyond its borders — and evokes its home-state pride, too. In November 2015, the grocer announced that more than 50,000 shelfstable foods, drugs and general merchandise products — an assortment larger than that of many online

lone star tastes H-e-B’s website enables consumers in texas and 46 other states to choose from 50,000 nonperishable products, including a large number of texas-made brands, for delivery to their front doors.

It’s one thing to know what he’s buying today. But what about tomorrow? There’s a science to knowing the answer, and when you work with Nielsen, that science is working for you. Learn more about The Science Behind What’s Next™ at nielsen.com.

Profiles in Progress

the technology incorporated into the samsung family Hub refrigerator allows families immediate access to our shoprite stores the moment they run out of food or need ingredients for a recipe or planned meal.” —Joe sheridan, Wakefern food Corp.

Ecommerce

retailers and even some H-E-B stores — had become available for purchase and shipping via HEB.com, including national and store brands. Unlike its brickand-mortar stores or Curbside and delivery options, though, the website allows consumers in Texas and 46 other states, as well as those stationed at military bases worldwide, to shop H-E-B. The news meant that while many grocers were working to set up their own ecommerce sites to offer everyday products that locals might be able to find elsewhere nearby, H-E-B was differentiating itself by offering only Texas’ best. At the time, its new “Totally Texas” page included products made in Texas or inspired by Texans, such as Whataburger Whatafries potato snacks and Spicy Ketchup, and Austin-made Franklin Barbecue Sauce, as well as Texas-made chips, carbonated soft drinks, salsas and more under H-E-B’s own brands. Even the grocer’s exclusive Mexican-inspired Cocinaware cookware could be purchased through the site for delivery. “We’ve been receiving calls for decades from Texans around the country that miss their favorite foods from home, like H-E-B Texas-Shaped Corn Tortilla Chips and H-E-B Café Ole Taste of Texas Coffees,” says Martin Otto, chief merchant and CFO at the grocer. “Now, even if you move outside of Texas, you’ll still have a ‘neighborhood H-E-B’ just a click away.” It’s this intense focus on growing a differentiated business that makes H-E-B primed for tomorrow, Bishop notes.

smart fridGe Via a partnership with mastercard and samsung, shoprite lets customers order groceries directly from the samsung family Hub refrigerator, which sports a tablet that runs an app customized for the grocer.

| Progressive Grocer | Ahead of What’s Next | February 2017

“Today, they’re the go-to site online for Texasmade consumer products,” he says. “This gives this regional grocery powerhouse a national online reach, which is quite exceptional.”

ShopRite ShopRite, the banner operated by members of Keasbey, N.J.-based retailer cooperative Wakefern Food Corp., is known as one of the earlier adopters of online grocery retail, foreseeing the shift to come years down the road. First introduced to customers in 2002, ShopRite from Home is now available in ShopRite stores across Connecticut, Delaware, Maryland, New Jersey, New York and Pennsylvania, allowing customers to place online orders from their home computers or mobile devices and have their groceries delivered to their homes or picked up in-store. ShopRite’s longtime leadership in online grocery puts it at an advantage for future success in ecommerce. Bishop notes that the retailer has been able to drive strong online sales using both customer pickup and delivery. It promotes its online grocery aggressively, resulting in sales in this space reaching up to 10 percent of total-store sales at some locations. What made for such early and long-term success? First, the commitment of Wakefern’s top management, and second, the co-op’s strong partnership with Winooski, Vt.-based MyWebGrocer. A unique development in ShopRite’s recent ecommerce initiatives, however, connects to the larger Internet of Things (IOT). In January 2016, ShopRite revealed plans to integrate ShopRite from Home with Groceries by Mastercard, an app that comes preloaded in the Samsung Family Hub refrigerator, allowing consumers to order directly from the fridge using a built-in screen. The fridge, which was released four months later, sports an integrated tablet that allows users to schedule in-store pickups or athome delivery with a few simple taps on the refrigerator. Via the app’s secure, easy-to-use interface, customers also have the ability to add products to their ShopRite shopping basket and pay online. “This new technology incorporated into the Samsung Family Hub refrigerator allows families immediate access to our ShopRite stores the moment they run out of food or need ingredients for a recipe or planned meal,” Wakefern President and COO Joe Sheridan said at the time of its launch. While the technology is still very much a new concept, it displays the grocer’s forward-thinking nature and desire to be truly ahead of the game in the ecommerce space. “Their partnership with Samsung is definitely thought-leading,” Bishop says, adding that it “will position them well in terms of the evolution of online shopping” into IOT. PG

Grocery

Cereal

Better Bowls Cereal remakes its ‘boring’ image with new products, promos. By Bridget Goldschmidt

When shoppers stock up on their weekly must-haves, cereal is a go-to item that leads to additional purchases.” —Linda Fisher, Post Consumer Brands

re consumers bored with cereal? Category performance would seem to indicate so, with overall sales dollars down 2 percent at total U.S. food stores with sales of more than $2 million for the 52 weeks ending Nov. 19, 2016, according to Schaumburg, Ill.-based Nielsen. Even the sales dollars of hot cereal, that recent media darling, were down 1.9 percent during the same time period. There’s one bright spot, however: Natural and granola-type cereals, which, Nielsen data show, experienced a sales dollar uptick of 4.8 percent. Observing that “consumers are focusing on health, more so now than ever before, [because] they value life and family and want to ensure longevity and life’s rewards,” Dan Cabassa, CEO of Lake Success, N.Y.based America’s Food Basket (AFB), advises fellow grocers: “Clearly market the benefits of healthy living. Tie in health-benefits promotions and educate the consumer. Increase variety and incentives to try new [items] so the consumer benefits from exploring. This ensures continuity in the segment, and, in some cases, the brand.” Cabassa’s company, which operates stores in Connecticut, Massachusetts, New York and Rhode Island under such banners as America’s Food Basket, Ideal Food Basket and Ideal Market Place, has seen success with a similar strategy. “The AFB organization has partnered up with [wholesaler]

| Progressive Grocer | Ahead of What’s Next | February 2017

Grocery

Cereal

United Natural Foods Inc. in order to increase the selection of products and increase the activity and exposure behind key brands,” he says. “As a result, our category same-store sales are up over 6 percent from the previous year.” The current shopper emphasis on personal health aligns with other, more global concerns, he believes: “Consumers in this segment also have become more aware of environmental impacts and will look for more earth-friendly packaging which is also more informative on nutritional benefits.”

Cereal can be a snack, as well as a different dessert option, and we have some marketing that focuses Natural and Healthy Offerings Manufacturers concur that natural and better-for-you on this.” cereals are a high priority for shoppers. “According to —Susanne Prucha, General Mills

a survey we conducted last year, we know that many consumers are looking to avoid artificial flavors and colors from artificial sources,” affirms Susanne Prucha, director of marketing for Cheerios, the iconic brand made by Minneapolis-based General Mills. “As a result, we are working to remove them from

our cereals, and we are making great progress. Today, 90 percent of General Mills cereals do not contain artificial flavors or colors from artificial sources.” The brand’s latest product, Very Berry Cheerios, featuring real strawberry, blueberry and raspberry fruit flakes, arrived last month on store shelves nationwide, following popular seasonal offerings Strawberry Cheerios and Pumpkin Spice Cheerios. Among Battle Creek, Mich.-based Kellogg Co.’s new items in this segment are Raisin Bran Crunch Apple Strawberry, which puts “a sweet spin on heart-healthy bran,” and Special K Nourish granola in two “light and crispy” varieties, while even its recently launched Disney Princess cereal is “made with flavors and colors from natural sources.” “We’re seeing that consumers are searching for cereals that are natural, organic, gluten-free, high in protein and lower in sugar, and several of our varieties fit these needs, including Puffins, Brown Rice Crisps, Multigrain Spoonfuls and Better Than Granola,” says Tim Kenny, director of marketing at Marlborough, Mass.-based Barbara’s. “Additionally,

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BREAD THAT HAS THE CRITICS RAVING! muesli for breakfast has become an emerging trend, helped by the popularity of overnight-oats recipes. Our Alpen line is perfect for consumers looking for that option.” Also, last fall, the company brought back its popular limited-edition Pumpkin Puffins variety, which has only 5 grams of sugar per serving. Regarding the 2016 rebranding of Barbara’s Better Granola line to Better Than Granola, Kenny explains that it “was inspired by overwhelming consumer feedback that Barbara’s granola blend offers more than a traditional granola, both in exceptional taste and nutritional benefits.” Offering a larger serving size than many other comparable products, Better Than Granola blends toasted oat clusters and puffs, almonds, and ancient grains and seeds such as quinoa and flax seeds, and contains 6 grams of fiber and 9 to 10 grams of soy-free protein per serving. In other news from the fashionable protein front, Kay’s Naturals’ cereals “provide per 34-gram serving — 1.2 ounces — 12 grams of protein,” according to Ann Jones Kazemzadeh, president of the Clara City, Minn.-based brand. “This is as much protein as three small eggs.” That’s not all, however. Adds Kazemzadeh: We also provide 4 grams of fiber, which is as much fiber as an apple, but we only have 3 grams of sugar. There is not another … cereal on the market with this high protein and fiber and low sugar. It is a win-win for the consumer.” The products are also gluten-free. That last attribute in particular is much on the mind of Bakery On Main, an East Hartford, Conn.-based manufacturer of hot and ready-to-eat cereals, along with granolas, granola bars and muesli that are all gluten-free, as well as offering other clean-label hallmarks. “Consumers want foods that are produced with higher-quality and better ingredients,” observes Bakery On Main founder and President Michael Smulders. “This need is generating increased interest in ancient grains, superfoods, superseeds, low-glycemic sweeteners, increased fiber and protein, as well as organic and non-GMO products.” Health and product purity aren’t the only considerations, though. “Taste has always been, and continues to be, the No. 1 driver in the cereal category,” asserts Linda Fisher, director of corporate communications at Lakeville, Minn.-based Post Consumer Brands, whose newest product, line extension Cinnamon Pebbles, a crispy rice

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Grocery

Innovation is the constant which keeps consumers engaged in the product.” —Dan Cabassa, America’s Food Basket

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Cereal

cereal, also launched in January. For her part, Fisher is highly optimistic about the category’s long-term outlook, perhaps because, as she points out, Post “is the only cereal company to show growth in the category over the past 52 weeks. This is a result of our commitment to taste and our focus on marketing and merchandising fundamentals. “We don’t believe cereal is boring, and retailers shouldn’t either,” she continues. “Breakfast food is a huge category, representing over $50 billion in sales, and is a significant business driver for retailers. Cereal is also the second-largest breakfast category behind fruit and one of the most economical breakfast options available to consumers. Additionally, research shows that when ready-to-eat cereals are in the grocery cart, the average cost of all groceries is $94.64, versus $46.54 when cereal is not in the cart — an increase of 103 percent, according to Nielsen Home Panel information. When shoppers stock up on their weekly must-haves, cereal is a go-to item that leads to additional purchases.”

More Ways to Go To counter the cereal category’s current overall lack of momentum, AFB’s Cabassa points out that, as well as focusing on health, savvy supermarket operators “are exploring and offering an expanded selection of products and increasing promotional activity to deliver not only the products [shoppers] are looking for, but also at a value.” He further recommends “segmentation of the category in print and media.” Additionally, for many cereal makers, selling strategies revolve around cereal’s versatility as an anytime snack or meal, or even as a recipe ingredient. “We are seeing the trend of cereal being consumed at various times outside of breakfast,” notes General Mills’ Prucha. “It can be a snack, as well as a different dessert option, and we have some marketing that focuses on this.” “We’ve received lots of interest from consumers about unique recipes that mix our cereals and other healthy foods to make great-tasting and nutritious snacks, so we’ve been incorporating more and more recipebased content into our marketing strategies,” says Barbara’s Kenny. Literally thinking outside the box is another smart move. “One of our best strategies with cereals is to offer them in

| Progressive Grocer | Ahead of What’s Next | February 2017

single-serve bags,” observes Kazemzadeh. “This gives the customer a chance to try the product at low cost. Once they become fans, they switch to the larger box.” Additionally, Kay’s has updated its packaging to make it “fresher and more appealing,” she explains. Despite her upbeat view of the category, Fisher believes grocers can still increase their odds of spectacular sales. “To be successful in cereal, smart retailers will seek to optimize their shelf sets to ‘fix the mix’ for their consumers and their neighborhoods, and provide the right products at competitive and everyday promotional prices,” she notes. “As the only major cereal company 100 percent vested in cereal, Post Consumer Brands is increasing investment in the category, including advertising and consumer promotions on our core best-selling brands. We’re also making changes to our merchandising and packaging to improve consumer appeal and shopability. With the broadest portfolio of cereals spanning all segments of the category, we’re uniquely positioned to help [grocers] create the mix that works for each of our customers.”

New and Exciting Speaking of cereal offerings, Cabassa suggests that retailers adopt “innovative product introduction,” since, as he asserts, “innovation is the constant which keeps consumers engaged in the product.” In an effort “to bring the category back to growth,” Prucha also stresses new product development: “It is important to bring news to the cereal aisle, and we have focused on product innovation and renovation to keep the category relevant.” Fisher, too, agrees on the importance of new products, observing: “We believe the key to successful innovation that will actually grow the category is to offer the right product at the right price for the right consumer. … Because taste is king in the cereal aisle, we’ll continue to invest in taste improvements across our portfolio where it makes sense and will increase consumer appeal.” Even with all of the emphasis on novelty, however, a large contingent of shoppers will always want their old standbys close at hand. Cabassa acknowledges that, for many consumers, “there is nothing better than just dropping back to your favorite [cereal]. That’s what makes us all unique.” PG To learn the latest about the cereal bar category, visit progressivegrocer.com/cerealbars.

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Breakfast Appetizers/snacks entrées side dishes desserts

Frozen, Solid Consumer demand for innovation and lifestyle-based options is revitalizing frozen food categories. By Lynn Petrak

he frozen food case is hardly frozen in time. Staples like chicken pot pie, green peas, garlic bread, cheese pizza and apple pie are still there, but today’s grocery freezers feature a diverse and increasing array of items geared toward consumers driven by a quest for quick, tasty meals that fit their lifestyles and interest in health, nutrition, sustainability and authenticity. As manufacturers expand product lines, and more food companies and even startups get into the frozen food business, many center store freezers are growing right along with the number of offerings. Another thing that’s growing: sales across some segments of frozen foods, after a long stretch of flat or declining sales. Julie Henderson, VP of communications for the

Harrisburg, Pa.-based National Frozen & Refrigerated Foods Association (NFRA) cites Nielsen data showing that total department sales for the past year ending in mid-November reached $52 billion. “Dollar sales are up 0.3 percent and unit sales are down 0.4 percent over the same period last year,” she notes. Data from IRI, a Chicago-based market research firm, show an upward trajectory for some subcategories of frozen foods. According to IRI’s findings for the last 52 weeks ending Dec. 25, 2016, sales of frozen side dishes, breakfast foods and frozen dinners/entrées have each increased over the previous year. Other categories posted slight declines, including frozen appetizers, desserts, pies and pizza. Some of the growth — and a lot of the buzz — is coming from frozen foods that fit shoppers’ penchant for natural, February 2017 | progressivegrocer.com |

While many consumers have historically viewed frozen as the opposite of ‘fresh,’ people are beginning to realize that freezing actually enables a longer shelf life with fewer preservatives.” —Alison Bodor, American Frozen Food Institute

organic, clean labels and foods otherwise deemed healthier. “It’s clear that the growth segments in frozen are being driven by organic, natural, ethnic offerings and premium ingredients, primarily in pizza, breakfast sandwiches, sauces and soups,” says Alison Bodor, president and CEO of the American Frozen Food Institute (AFFI), in McLean, Va. “These products appeal to a diverse population, and certainly to Millennials, who are looking for healthful yet adventurous options.” Likewise, Henderson observes that retailers can draw consumers to the frozen food aisle by carrying frozen foods that fall into such trending areas. “The frozen department should take advantage of trends that have staying power, like health and wellness and natural/organic,” she asserts. Many manufacturers, including both global companies and niche producers, have tapped into the demand for lifestyle-driven frozen products. “We see continuing growth in consumers looking for organic offerings,” says David Perkins, CEO at Austin, Texas-based Beetnik Foods, adding that the sector continues to widen. “Within that group of shoppers, we have also continued to see a growing number of consumers looking for Paleo and other diet-specific options that reflect an increasing number of people with very specific restrictions or preferences, all of which is reflected in a trend toward simpler ingredient decks.”

Cool Generations Frozen foods can complement another muchbuzzed-about topic in retail these days: Millennials and Generation Z. “Millennial and Generation Z consumers are more thoughtful about the quality of ingredients in the foods they consume, but they are also time-strapped, like the rest of society,” notes Amy Lotker, owner and head of sales and marketing for Better for You Foods LLC, in Delray Beach, Fla. “Quality frozen foods can easily satisfy the need for convenience, while offering healthy and all-natural products at the same time.” That sentiment is echoed by Suzanne Muller, senior director of consumer insights at Chicagobased Conagra Brands. “We are seeing Millennial consum-

| Progressive Grocer | Ahead of What’s Next | February 2017

ers gravitate to frozen meal options with modern health attributes and more sophisticated culinary cues,” she observes. They also appear to be willing to pay more for these options versus the classic varieties in the space.” Adds Kelly Swette, CEO of Sweet Earth Natural Foods, in Landing, Calif.: “When you look at Millennials, they are at a peak career point in their lives, but don’t have a lot of time. So you have to have the right types of products they are looking for.” According to AFFI’s Bodor, expanded frozen food offerings — and ongoing efforts to educate shoppers about the production and attributes of frozen foods — can resonate with younger audiences. “While many consumers have historically viewed frozen as the opposite of ‘fresh,’ people are beginning to realize that freezing actually enables a longer shelf life with fewer preservatives,” she notes. “This message is strong with Millennials and other shoppers seeking products with clean labels, and our members are working with retailers to convey this message to shoppers.” Beyond products tied to balance, health and wellness, and those that appeal to Millennials, the frozen food marketplace includes more items made with bolder or nontraditional ingredients. “In addition to authenticity in their foods, consumers are looking for bolder international flavors,” confirms Brian Van Otterloo, senior director of pizza marketing for Schwan Food Co., in Marshall, Minn., citing a Mintel International Food Trends report revealing that 80 percent of Millennialled families eat spicy international foods and that 89 percent of Hispanic families want more spicy food options. Schwan’s isn’t the only frozen food maker stepping up to the plate in that regard. “Both heat and spice have been trends in the frozen Mexican foods category for quite some time. Today’s con-

sumer enjoys experimenting with a variety of flavors and spices,” says Rachel Cullen, president and CEO of Dinuba, Calif.-based Ruiz Foods, who points to flavor profiles that have been added to the company’s El Monterey brand product line.

Out of Aisle Experience Meanwhile, manufacturers and retailers are working together to bolster frozen foods by crossmerchandising or promoting such products with offerings throughout the store. “The freezer aisle has a lot of opportunity for expanding category management by pairing frozen items with other foods and beverages in the store catering to consumer demands for quick and easy meal solutions,” Henderson says. Changes or additions to displays may also lift frozen food sales and benefit the store as a whole. “Consumers want to have a deeper connection with their foods, and we encourage retailers to think about dynamic new retail layouts featuring these exciting food options as a method to drive people down the frozen food aisle,” observes Bodor. Retailers can help break down any remaining misperceptions about frozen foods by communicating to customers the value and benefits of such items. “Suppliers need to educate retailers about their process and food to help them understand why they are different and why it matters to that retailer’s unique customers,” says Mark Conachan, senior brand advisor for the Parla line of frozen pasta, made by Drake’s Fresh Pasta Co., in High Point, N.C. “Retailers can then educate employees, which will not only help better represent products, but make for a more personal shopper experience.”

sharing messages about convenience, variety and quality, and is providing supermarket dietitians with additional educational resources. Grocery retailers should take advantage of these programs and their related marketing materials to drive frozen aisle traffic and keep the momentum going in a category that can easily be the foundation of broader meal solutions for busy consumers.

Keeping your perimeter fresh…

Marketing Opportunities During National Frozen Foods Month in March, industry groups and manufacturers will roll out various educational and promotional efforts to draw attention — and with it, dollar sales — to supermarket freezers. Focusing on the It’s Real Food … Just Frozen promotion, NFRA will team with sponsoring frozen food brands to introduce a new national program including digital coupons, a media campaign, and recipes for TV segments and blog posts. AFFI, meanwhile, is encouraging shoppers to “rethink frozen” by

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Breakfast

Breaking Away Entrées, natural products present opportunities for the frozen breakfast segment. By Lynn Petrak

meal that traditionally kicks off the day, breakfast still leads some dining trends. The notion of an all-day breakfast, popularized by quick-service restaurants like McDonald’s, has resonated with many Americans.

| Progressive Grocer | Ahead of What’s Next | February 2017

At the same time, frozen breakfast foods reflect changing consumer preferences and tastes, from interest in natural, organic and healthy morning meals to the ongoing desire for dine-and-dash meals and snacks. Within the larger frozen food category, breakfast foods represent some daylight. According to data from Schaumburg, Ill.-based Nielsen, sales of frozen breakfast foods are continuing a four-year positive trend. While gains aren’t as sizable as they were in 2014, the segment has seen growth in several product areas. Chicago-based market research firm IRI reports that sales of frozen breakfast foods have reached nearly $3.1 billion in the last 52 weeks ending Dec. 25, 2016, a 1.27 percent increase over the previous year.

Continued focus on nutrition and on-the-go features could propel the category to future growth, but brands may well consider promoting frozen breakfast as an alternative to restaurant breakfasts, particularly as a weekend option.” —William Roberts Jr., Mintel

Within the overall category, bright spots include breakfast entrées (up 2.8 percent) and hand-held frozen breakfasts (up a slight 0.74 percent). Categories with diminished sales from December 2015 through December 2016 include frozen waffles (down 1.8 percent) frozen muffins (down 11.2 percent) and frozen bagels (down 8.5 percent). As with other frozen foods, things are looking sunny side up in the better-for-you area of breakfast. Chicago-based SPINS, which provides retail consumer insights, analytics reporting and consulting services for the natural, organic and specialty products industry, reports that sales of frozen breakfast foods in natural, specialty and conventional multioutlet retailers topped $3.18 billion in 2016, a 1.3 percent rise from 2015. Within the better-for-you arena, several product launches underscore interest in breakfast foods that break the morning mold. Battle Creek, Mich.-based Kellogg Co., for example, last year unveiled a new line of Special K Crustless Quiches with 10 to 11 grams of protein per serving, in varieties including Uncured Ham, Cheese, Quinoa and Peppers and Portabella, Quinoa, Parmesan, Asiago and Kale. Kellogg has also added an Oats & Berries variety, made with real berries and steelcut oats, to its stalwart line of Eggo waffles. Other players in this segment include the El Monterey brand, from Dinuba, Calif.-based Ruiz Foods, which has added such breakfast items as Simply Breakfast Egg, Turkey Sausage & Cheese Burritos and Signature Breakfast Meat Lovers Chimichangas. “Breakfast remains an exciting frozen Mexican food subcategory,” says President and CEO Rachel Cullen, adding that Simply Breakfast Burritos have 11 grams of protein and

220 calories per serving. Brands that are making their names on more natural products have also made headway with breakfast meal innovations. Landing, Calif.-based Sweet Earth Natural Foods, for example, has complemented its original line of functional breakfast burritos with additional items such as a line of frozen breakfast sandwiches that includes Tuscan Sausage, Kale Pesto and Smoked Gouda varieties. “I think retailers are starting to realize that seven doors of pancakes and waffles is overkill,” says Sweet Earth CEO Kelly Swette. “Frozen breakfast needs a transformation. Also, the idea of vegetables in breakfast foods is something that I really think will continue to cross the country. It just makes sense.” Another notable development in frozen breakfast is the advent of bite-sized products that meet cravings for morning meals as well as snacks. Newer examples include Hot Pockets Breakfast Bites from Nestlé, and Bagel Bites Breakfast from Kraft Heinz. As they merchandise and feature frozen breakfast items, retailers can find other ways to position these products as morning meal and all-day snacking solutions. Mintel’s August 2016 breakfast category report projected that sales of frozen breakfast will continue to grow in the grocery channel, even amid competition from foodservice and other at-home options. “Continued focus on nutrition and on-the-go features could propel the category to future growth, but brands may well consider promoting frozen breakfast as an alternative to restaurant breakfasts, particularly as a weekend option,” observes William Roberts Jr., senior food and drink analyst at Chicago-based Mintel.

Appetizers/Snacks

Of Crave Concern

Snacks, appetizers reflect consumers’ changing habits. By Lynn Petrak

lmost everyone — 94 percent of us, anyway — snack at least once a day. That’s according to data from Chicago-based market researcher Mintel, which also showed that half of adults snack two to three times a day. Meanwhile, the average number of snacks consumed daily in the United States is 2.7, and 46 percent of consumers snack three times a day, according to an April 2016 report by Chicago-based IRI. Under the increasingly broad umbrella of snack-

| Progressive Grocer | Ahead of What’s Next | February 2017

ing, frozen snacks and appetizers are projected to grow through 2020, according to a 2016 report from Mintel on frozen snacks. “Emerging restaurant brands, as well as brands from other snack categories and, indeed, fresher foods, begin to leverage their attributes in frozen cases,” observes William Roberts Jr., senior food and drink analyst at Mintel. “At the same time, consumers believe frozen snacks, while suitable as a convenient indulgence, could be healthier and less artificial.” Frozen appetizers and snacks rang up nearly

$2 billion in sales in the year ending Dec. 25, 2016, according to Chicago-based IRI. That was a slight dip, by 0.74 percent, from the previous year, but within the category, sales of such brands as Pagoda, Chungs and Hot Pockets increased. As with the rest of the frozen food sector, sales of natural, organic and specialty frozen snacks and appetizers are also edging up. SPINS, a Chicagobased research firm that tracks the natural, organic and specialty product industry, reports that sales of frozen appetizers and snacks in that arena edged up 0.4 percent from 2015 to 2016, topping $4.56 billion. Underscoring the collective craving for snacks among American consumers, several new frozen appetizers and snacks are filling today’s grocery freezers. The iconic Velveeta brand, from Pittsburgh-based Kraft Heinz Co., recently introduced Stuffed Grilled Cheese and Cheesy Bites. Another iconic brand extension: a line of Doritos Loaded frozen nacho snacks, launched last December by Plano, Texas-based Frito-Lay.

Consumers looking for cleaner labels and natural ingredients can also find more options in frozen snacks and appetizers. Schwan Food Co., in Marshall, Minn., revamped its branded food portfolio to focus on simplifying ingredient labels and sourcing real ingredients. “As of September 2016, Pagoda Potstickers now contain 60 percent less sodium, a bold new Lime Ponzu sauce, and a reformulated dough optimized for an authentic steamed experience from the microwave,” notes Stacey Fowler Meittunen, SVP of product innovation and development, adding that flavor is also key among today’s

consumers. The brand team will introduce two additional Pagoda wonton flavors, Honey Sesame Chicken and Korean BBQ Style Beef, this month. On the sweet side of snacking, new products include Donut Holes in Cinnamon Sugar and Chocolate with Vanilla Glaze varieties, both from St. Simons Island, Ga.-based Farm Rich.

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Entrées

Entrée to Success Frozen meals grow in size and scope. By Lynn Petrak

ecent product rollouts underscore the opportunities and challenges of developing frozen entrées at a time when consumers have more choices than ever, both within and beyond the store. Case in point: Pittsburgh-based Kraft Heinz Co. introduced its Devour line of frozen meals last summer. Marketed as “craveable” meals designed to upend consumers’ perception of frozen foods, the line offers a dozen varieties, including White Cheddar Mac & Cheese with Applewood Smoked Bacon, and a Pulled Chicken Burrito Bowl. “For years, there has been an unmet need in the frozen meal category for food that’s not just dependable, but also something you look forward to eating,” says Brand Manager Molly White. Other major food companies have introduced or revamped products in recent months. Chicagobased Conagra Brands has added four meals made with USDA-certified organic ingredients to its Healthy Choice Simply Café Steamers line. “One thing we heard from core Healthy Choice eaters is a desire to consume more organic foods,” notes Alan Brooks, associate brand manager. Conagra has also reformulated the Bertolli line to feature a simpler ingredient list. “Growing consumer interest in simplified ingredient statements is just one manifestation of what consumers are ultimately looking for. Accordingly, we are going beyond just simplifying our ingredient statements to ensure presentation of our simple, premium ingredients is optimal at every consumer touchpoint,” notes Brand Manager David Koehler, citing packaging features such as transparent windows. Meanwhile, the influence of specialty brands is visible with a spate of

| Progressive Grocer | Ahead of What’s Next | February 2017

newer entrées, including those that fall under the natural or organic umbrella. Better for You Foods LLC, based in Delray Beach, Fla., has debuted a line of USDA-certified Organic Ancient Grains Pizzas. “This is a prime example of a product line developed to bridge the gap between the convenience of frozen pizza and the desire for healthy, natural foods,” explains company owner Amy Lotker. At Austin, Texas-based Beeknik Foods, CEO David Perkins says that recipes are carefully balanced for authenticity and ease of preparation. “Along the way, we’ve been able to integrate ingredients like cauliflower ‘rice’ into some prepared meals, which is not just for those who are looking to reduce carbs, but also for people wanting to try new things,” he observes. Other brands stress the authenticity of ingredients, such as High Point, N.C.-based Parla Pasta, rebranded last year from Drake’s Homemade Pasta. “We use larger chunks of meats, vegetables and herbs, and our products do not include artificial or unnecessary additives,” notes Mark Conahan, senior brand advisor. “Freezing is our ‘natural’ preservative, you might say.” Frozen proteins are also expanding. Michael Angelo’s Gourmet Foods Inc., in Austin, Texas, has recently added five frozen seafood entrées. “Studies show that seafood meals were largely underrepresented in the freezer aisle and are being demanded by Millennials and Gen Z,” explains President Cheryl Renna, emphasizing the importance of collaboration with retailers. “We launched the seafood meals with an image on both sides of the box that could be

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Convenience continues to be king for shoppers, with the caveat that the food must feel authentic and be on-trend.” —David Gacom, Grecian Delight Foods

merchandised vertically or horizontally to offer retailers more flexibility when resetting the category.” Jacksonville Fla.-based Beaver Street Fisheries is set to launch a Wild Caught American Shrimp line. “Frozen seafood trends are on the rise, and Millennials’ tastes and demands are driving much of the innovation in the category,” says Marketing Director Bluzette Carline. Additionally, brands are touting innovative formats. Conagra’s P.F. Chang’s brand, for example, introduced a line of family-size skillets in January. Grecian Delight Foods, in Elk Grove Village, Ill., will soon offer new Opaa! Gyro Kits made with no artificial preservatives, flavors or colors, available in single-serve and multipacks of pita, beef/lamb or chicken gyros, and Greek-yogurt-based tzatziki. “Convenience continues to be king for shoppers, with the caveat that the food must feel authentic and be on-trend,” observes David Gacom, EVP of supply chain, retail sales and marketing. The Juneau-based Alaska Seafood Marketing Institute is working to educate consumers about frozen seafood by developing a series of Cook It Frozen! tips. “The objective of the program is to provide retailers and seafood buyers with an easy-

to-execute program that will offer opportunities to grow seafood sales and educate consumers about cooking Alaska seafood,” explains Linda Driscoll, retail marketing manager, adding that frozen seafood is one of the fastest-growing retail seafood categories. Of the overall market, Chicago-based market research firm IRI reports that sales of frozen dinners/entrées have reached more than $8.67 billion, a 0.12 percent increase from December 2015 to December 2016.

Side Dishes

In Good Company Innovations in flavor and freezing technology fuel growth in frozen side dishes. By Lynn Petrak

B Frozen vegetable makers are providing consumers with more choice than ever before.” —Alison Bodor, American Frozen Food Institute

uoyed by rising purchases and product innovation, frozen side dishes comprise a growing segment within the overall frozen food category. According to Chicago-based market researcher IRI, sales of frozen side dishes experienced double-digit growth in the last 52 weeks ending Dec. 25, 2016 — up 10.99 percent from the previous year, for a total of more than $475.6 million. Within this subcategory, some segments are doing particularly well. “Specifically, frozen vegetable makers are providing consumers with more choice than ever before. We are seeing new options, such as buffalo cauliflower and sriracha green beans,” says Alison Bodor, president and CEO of the American Frozen Food Institute (AFFI), in McLean, Va. A variety of new frozen vegetable items on the market supports that observation. Birds Eye, the iconic frozen vegetable brand from Miami-based Pinnacle Foods Group, has recently introduced a spicy Buffalo Cauliflower, along with offerings that combine vegetables with in-demand proteins and global flavors, including Hawaiian Style, Tuscan Style and Thai Style blends. The venerable Green Giant brand, part of B&G Foods Inc., in Parsippany, N.J., likewise has been busy, launching a line of Riced Veggies, positioned as a lower-calorie alternative to rice, in Cauliflower, Cauliflower & Broccoli, Cauliflower & Sweet Potato, and Cauliflower Medley varieties. Other recently created sides from Green Giant include Veggie Tots, Roasted

| Progressive Grocer | Ahead of What’s Next | February 2017

Veggies and Mashed Cauliflower. There’s also innovation within frozen fruits. Oregon Fruit Products, in Salem, Ore., offers Pourable Fruit, a fruit topping/sauce that delivers fruit flavor in a frozen, easy-to-use stand-up bottle format. The item comes in blueberry, strawberry and raspberry varieties, “Oregon Fruit Products has a foodservice range that was doing very well. Our customers in that sector were using it as a yogurt topping, blending it into smoothies and milkshakes, or even using it as a base for sauces. We thought the retail consumer would enjoy the same type of applications at home,” explains CEO Chris Sarles. As technology enables fresh tastes and as industry groups and frozen food companies work to undo misperceptions about the nutrition and quality of frozen produce, further growth in frozen fruits and vegetables may well continue. In a report released last year, San Jose, Calif.based Global Industry Analysts projected that frozen fruit and vegetable production will reach 28.2 million tons by 2020. Meanwhile, other side dishes, including potatoes, are getting makeovers. Beaverton, Ore.-based Reser’s Fine Foods has recently introduced Main St. Bistro Maple Mashed Sweet Potatoes, and Mrs. T’s Pierogies, in Pottsville, Pa., is complementing its traditional products with newer varieties like Garlic Parmesan and Five Cheese Pizza, debuting this year. “Watching the innovation within the pizza category itself, from upgrading to premium ingredients to new concepts,” says Deanna Lyons, Mrs. T’s associate brand manager, “we saw the opportunity to bring the big, bold flavor of pizza in a pierogi to life.”

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Desserts

Something for Everyone Frozen desserts deliver what consumers want from sweet treats. By Lynn Petrak

G “Consumers look for variety. They also look for desserts to be more than just for special occasions or an after-meal indulgence.” —Kevin Busby, Conagra Brands

ood things come in small packages. You can have your cake and eat it, too. Pick a food-related adage — or its opposite — and you can find a correlating trend in the frozen dessert aisle. For one thing, there are more mini frozen desserts available to satisfy shoppers’ craving for a satisfying but not over-the-top indulgence. The TGI Fridays Frozen Desserts brand, distributed under license by Barrington, Ill.-based Captivated Foods LLC, has added flavors to its retail line of Frozen Flings Bon Bons, including Death by Chocolate, S’Mores, Strawberry Shortcake, Birthday Cake and Mexican Hot Chocolate. Other mini desserts from the TGI Fridays brand include varieties of Cake Pops, Cake Bites, Whoopie Pies and Parfait Shooters. Unilever, in Englewood Cliffs, N.J., added a slew of ice cream products in 2016, among them Breyers Chocolate Snack Cups and Good Humor Double Chocolate Chip Cookie Sandwiches. Chicago-based Conagra Brands’ Marie Callender’s brand includes new single-serve Banana Cream pies, in a move aimed at meeting consumers’ desire to fuse indulgence and moderation. “Outside of key holidays, consumers look for variety,” explains Kevin Busby, brand manager. “This includes seasonally relevant offerings and specials, nostalgic flavors, and minis. They also look for desserts to be more than just for special occasions or an after-meal indulgence.” As for having your cake and eating it, too, frozen desserts have followed the examples of other frozen foods by adding more better-foryou options and cleaner labels. One case in point is the Edwards dessert brand, from Marshall, Minn.-based Schwan Food Co. “In

| Progressive Grocer | Ahead of What’s Next | February 2017

2016, the Edwards desserts brand team began renovating its offerings to reflect the company’s broader ingredient-simplicity commitments,” notes Stacey Fowler Meittunen, SVP of product innovation and development. “As a result, partially hydrogenated oils and artificial certified food dyes were removed. The company followed that up with a removal of highfructose corn syrup and artificial flavors from all Edwards products in early 2017. With these changes, the brand has one of the cleanest labels in the frozen desserts category.” Other frozen desserts straddle the lines between indulgence and wellness, nutrition and wholesome ingredients. Bofanna Bars, in St. Paul, Minn., has rolled out frozen fruit-and-cream bars made with fresh fruit, cream and probiotics. In keeping with trending high-protein diets, Los Angeles-based Halo Top Creamery recently expanded its line of high-protein, low-calorie ice cream to include 10 more flavors. Sales data show something of a mixed bag when it comes to frozen desserts. According to Chicago-based market researcher IRI, sales of frozen sweet goods, excluding cheesecake, rose 4.38 percent from December 2015 to December 2016, to reach nearly $231 million. Frozen cheesecake sales lost ground by IRI’s findings, declining 9.02 percent to $127.2 million in that same time frame. On the other hand, ice cream and sherbet sales rang up more than $6.1 billion for the 52 weeks ending Dec. 25, 2016, a 4.9 percent leap from the year-ago period, while frozen novelties jumped 2.1 percent to top $4.1 billion, according to IRI. For its part, Chicago-based SPINS found that frozen dessert sales within the natural, organic and specialty market increased 2.8 percent from 2015 to 2016. PG

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2017 Retail Meat Review

Making Connections Healthy outlook for meat sales could be even better with the right sales strategies. By Jim Dudlicek

ndustry analysts indicate that meat consumption is rebounding: Stabilized prices, especially for beef, along with a renewed interest in protein and a desire for “real” food, have created a prime growth environment for meat. At the same time, a shift among many consumers, particularly younger folks, away from animal proteins and toward plant-based foods appears to be acting as a counterbalance. Editor’s According to the results of Progress Note: Progressive Grocer’s latest exclusive survey of ive Gro companio cer’s chain and independent retailers from across n Retail Se the country, just over a quarter of respondents afood Re view w il l appea said that their meat sales increased during March 2 r in the most of 2016 — well below the 46 percent 017 issue . who said a year ago that they anticipated an upswing in meat department sales. Yet despite these results, optimism remains strong; well more than half of respondents to this year’s survey said that they expect their meat sales to grow during 2017. USDA projections seem to support retailers’ expectations. As economist David Widmar wrote for AgEconomists.com last October, 2016 per capita total red meat and poultry consumption was forecast at 215 pounds and expected to reach 218 pounds in 2017. If this bears out, Widmar notes, U.S. per capita meat consumption in 2016 would be at its highest level in eight years. Meanwhile, USDA predicts continued declines in farm-level cattle and wholesale beef prices, and 1 percent to 2 percent increases in wholesale pork prices for 2017, notes Michael Uetz, principal with Chicago-based meat industry consultancy Midan Marketing. “They say we can expect beef and pork consumer prices to decline an additional 1 to 2 percent in 2017, given an increase in supply of both proteins,” he says. “That should help increase volume sales.” This comes after consumption fell as low as 202 pounds between 2008 and 2014, with Widmer calling the idea of a complete rebound “pretty impressive” — indeed, considering the reported trend toward proteins other than from animal sources. But America’s appetite for meat appears to be buoyed by the overall trend in protein consumption, as well as meat suppliers’ efforts to deliver on increasing demands for natural, humanely raised and clean-label products. February 2017 | progressivegrocer.com |

2017 Retail Meat Review mEat dEpartmEnt salEs pErformanCE

43.9%

26.5% 29.6%

29.6%

CurrEnt InCrEasEd

YEar ago

43.8% 46.3%

dECrEasEd

dECrEasEd 10.0%

staYEd thE samE

nEt ChangE: 1.3%

InCrEasEd

staYEd thE samE

nEt ChangE: 3.5%

projECtEd for total 2017 YEar ago

CurrEnt

40.8%

54.1%

5.1%

InCrEasE

53.6% 46.4%

InCrEasE

dECrEasE

staY thE samE

nEt ChangE: 2.7%

nEt ChangE: 4.0%

12 Months Ending Nov. 30, 2016 Source: Progressive Grocer Market Research, 2017

Methodology Progressive Grocer’s Retail Meat Review survey was fielded by electronic and telephone interviews in December 2016 to supermarket retailers involved in the meat/seafood category. A total of 100 responses are included in these results. Fifty-three percent of respondents represent chains, while 47 percent are independent operators. By region, 32 percent are from the South, 30 percent from the Midwest, 21 percent from the Northeast and 17 percent from the West. By title, 46 percent are meat/seafood executives, category managers and buyers; 42 percent are store-level department managers and store managers; and 12 percent are from the c-suite. Among these respondents, the meat/seafood department averages 19.6 percent of their total store sales.

According to data from Schaumburg, Ill.-based Nielsen, while meat dollars showed decline, volume was up 2.2 percent in the year ending Nov. 26, 2016, versus the year-ago period, driven by lower prices in fresh meat. The average retail price of meat was down 5.6 percent in that same time period, largely driven by beef, whose prices were down 10.5 percent. A key reason for this: record levels of supply in 2016. “Supply was so high due to little disruption from [factors like] weather, disease [and] regulation, which we’ve experienced sporadically across proteins over the past few years,” says Sarah Schmansky, director of Nielsen Fresh. In addition, Schmansky notes that “products like organic, value-added, grass-fed and premium/branded deliver necessary differentiation at the shelf and keep some fresh meat prices elevated above conventional products.” Nielsen Perishables Group data shows that most traditional categories dropped in sales last year, with products like lamb and exotic meats showing the only growth in fresh meat dollar sales for survey respondents. “We will continue to see growth in products with

| Progressive Grocer | Ahead of What’s Next | February 2017

2017 Retail Meat Review consumEr dEmand

incrEasEd

dEcrEasEd

In the past year, here’s how consumer demand has changed: valuE-addEd Products (marinated, kebabs, gourmet burgers, loaves, meatballs, etc.) valuE-PricEd (ground, flat steaks, etc.) frEE-from Products (antibiotic-free, hormone-free, msg-free, additive-free, etc.) grass-fEd BEEf organic mEats PrEmium-Brand BEEf smallEr Portions/Pack sizEs locallY raisEd mEat altErnativE ProtEins (e.g., bison, venison, ostrich)

staYEd thE samE

54.3% 53.1 51.6 42.2 39.3 38.7 37.5 28.2 11.9

12.0% 5.2 4.4 6.0 13.1 14.0 9.4 7.7 16.4

33.7% 41.7 44.0 51.8 47.6 47.3 53.1 64.1 71.6

Source: Progressive Grocer Market Research, 2017

production claims around organic/natural and how the animal was raised (antibiotic-free, hormone-free, etc),” Schmansky says, citing a recent Nielsen survey showing that consumer meat purchases are most influenced by the claims of being hormone- and antibiotic-free. More than half (51.6 percent) of PG’s survey respondents said that consumer demand increased in the past year for meats with free-from claims (followed by grass-fed and organic), down a bit from a year ago, but still achieving a solid third place among top customer requests. Leading the pack: value-added products like marinated, seasoned and other ready-to-cook items, with 54.3 percent of respondents reporting an increase in demand. That’s a significant leap since last year, when value-

EffEctivEnEss of Promotional activitiEs

Rated on a scale of 1-6, where 6=extremely effective

currEnt

added meats ranked seventh among reported in-demand products. “Convenience continues to be a key driver for a majority of shoppers, but in particular for Millennials who have families and careers,” Midan’s Uetz observes. Curiously, demand for smaller pack sizes dropped from first to seventh place since last year’s survey. But consumers’ taste for value-added meats is an indication of the growing desire for easier meal solutions, to which grocers should be responding with appropriate merchandising throughout the store. “The industry believes the deflation and high supply levels of late 2016 will absolutely carry into 2017, which means meat will continue to be relatively inexpensive, and therefore compete more closely with other affordable meal solutions in the battle for more share of consumers’ stomachs,” Schmansky says. “This will likely translate to continued softness in dollars, which manufacturers and retailers can combat by understanding consumer demand for benefits, deliv-

YEar ago

tEmPorarY PricE rEductions

4.40

4.90

Bogos

4.23

4.09

Product dEmos/samPling EvEnts

4.17

4.69

mix-and-match BundlEs (i.E., four for $20)

4.05

4.00

flash salEs

3.89

4.75

social mEdia

3.86

4.28

Point-of-PurchasE information

3.80

4.62

dirEct mail

3.70

3.93

cross-Promotion within thE storE

3.67

4.47

onlinE markEting

3.58

4.13

Source: Progressive Grocer Market Research, 2017

| Progressive Grocer | Ahead of What’s Next | February 2017

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2017 Retail Meat Review What PerCent of Your total fresh meat sales are from Case-readY versus full-serviCe ProduCts? Current

46.8%

53.2%

PerCent of sales from Case-readY ProduCts

Year ago

55.7%

44.3%

PerCent of sales from Case-readY ProduCts PerCent of sales from full-serviCe ProduCts

PerCent of sales from full-serviCe ProduCts Source: Progressive Grocer Market Research, 2017

ering products that offer those benefits and commanding the appropriate price premium to buoy sales.” In verbatim responses, survey participants were divided as to how prices impacted their sales, with a plurality indicating price decreases of the past year had little to no effect on meat department sales. Several noted that “beef prices have dropped, which helped sales,” and others experienced “more tonnage, less dollars,” while one retailer indicated a “dramatic decrease in YTD sales.” As with last year, most respondents said that temporary price reductions are their most effective promotional tool. Yet another survey respondent declared that “competitive situations affect sales, not price,” illustrating how crucial it is for retailers to create points of differentiation that drive repeat visits and banner loyalty. To that end, 98 percent of respondents reported having on-site butchers, compared with 82 percent a year ago, with 94 percent saying that they actively promote this service. Custom cuts, special orders and customer service dominated the features highlighted most, with one respondent asserting, “You name it, we can do it.” “If butchers are not available or are not cost-effective, then hire enthusiastic meat personnel who understand your programs and can also provide tips and recipes on what to buy and how to prepare the products,” Uetz suggests. “Train them to engage shoppers and assist when possible.” Despite the continued rise of the service meat counter, case-ready sales are up, having risen to more than 53 percent of all meat department sales, versus the 44 percent that survey respondents noted a year ago, indicating that speed and convenience remain important to shoppers who lack time to linger over even the most alluring butcher case. Asked to name one thing their suppliers could do to help improve their meat departments, most survey respondents recommended either better prices

or more promotions, with one suggesting that they “work with my employees to make the public understand the reasons for the problems in prices.” To be sure, thinking outside the box will be critical for future success in meat sales. “Supermarkets have the fantastic ability to carry so many products, but when building a meal, all the components are scattered all over the store,” Nielsen’s Schmansky notes. “Meat is isolated near the back of the store, away from other areas that complete the meal. Using opportunities to bring quick meal solutions together for the consumer, with meat as the center of the plate, will win.” This is critical, she stresses, since quick and convenient meal solutions like meal kits and deli prepared foods, as well as restaurants, compete for share of stomach and sales. Uetz concurs: “Provide recipes and meal solution suggestions that incorporate products from other departments within the store, use cross-promotions, suggest pairings from the butcher, and even consider using a chef for in-store demos and cooking classes, and as a store spokesperson for new and exciting meals.” Additionally, retailers can increase sales by building on existing trip connections,

| Progressive Grocer | Ahead of What’s Next | February 2017

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2017 Retail Meat Review Schmansky advises, citing 2016 research by Nielsen and Coca-Cola that revealed opportunities for retailers to leverage sales and basket connections with traditional staples that are occasion-focused. One example involved bottled water. “As this beverage category gains in popularity, meat marketers should keep this total store connection in mind,” Schmansky asserts. “Findings from this study revealed that still water has a 75 percent buyer overlap with fresh chicken breast and a 79 percent overlap with bacon. With this in mind,

retailers and manufacturers can leverage existing cross-store connections between products, or build new partnerships via solution-based promotions or merchandising programs, to ultimately help increase total store profitability and meet shifting consumer demands.” PG

Meat DepartMent Category perforManCe

Segment

Fresh Meat Beef Chicken Pork Turkey Lamb Fowl and Exotics Veal Fully Cooked Meat Chicken Other Meat Pork Vegetables/ Stuffing Beef Turkey Stir-fry/ Fajita Strips Lamb Other Ground Meat Breakfast Sausage Other Grinds Other Patties Other Meat Meat Substitutes Condiments/ Spreads Other Miscellaneous Meat Items Marinades, Sauces and Seasonings Processed Meat Processed Lunch Meat Bacon Dinner Sausages Franks Packaged Meals Hams Processed Turkey

Dollars per Store/Week

Dollars per Store/Week Percent Change vs. Year Ago

Volume per Store/Week Percent Change vs. Year Ago

Volume Percent on Promotion

Volume Percent on Promotion Change vs. Year Ago

Average Retail Price

Average Retail Price Percent Change vs. Year Ago

$19,234 10,026 4,986 2,112 301 147 53

-3.3% -1.4 -8.6 -2.9 1.0 1.9 -12.7

7.7% 0.4 -1.1 -3.3 4.6 -1.7 -11.6

25.5% 26.1 33.8 39.1 23.2 20.9 18.7

3.6% 2.1 1.2 2.1 0.9 2.4 2.9

$4.72 2.25 2.70 2.10 7.15 3.54 8.12

-10.2% -1.9 -7.6 0.4 -3.5 3.7 -1.2

$1,857 721 381 360 283 102 90 2

-1.3% 0.8 -0.5 7.4 -4.3 -11.0 8.6 -11.1

0.2% 2.5 0.1 6.4 -4.4 -7.3 12.6 -8.8

19.6% 19.9 24.1 28.9 14.9 21.9 14.9 21.2

0.5% 1.1 0.1 -2.0 -0.9 -0.4 -0.7 1.5

$3.83 4.26 5.47 3.07 6.15 3.46 6.97 4.12

-1.4% -1.7 -0.7 0.9 0.1 -3.9 -3.5 -2.6

$1,519 47 13

-1.9% -50.3 1502.1

3.9% -44.7 2997.1

27.2% 21.5 16.5

1.6% -5.5 -4.4

$3.14 5.47 2.64

-5.6% -10.1 -48.3

$319 195 151 30

3.5% 1.7 -10.8 8.9

1.8% 5.9 -12.9 9.0

22.8% 20.2 35.0 27.7

-2.5% -0.3 10.0 1.0

$4.18 3.11 5.72 2.39

1.7% -3.9 2.3 -0.1

$4,332 3,469 2,615 2,187 1,373 1,315 13

-2.7% 2.0 -3.5 -6.7 8.3 -10.1 -9.6

-3.5% -1.9 1.9 -5.5 9.4 0.6 -6.9

15.0% 28.8 24.8 24.6 19.8 42.6 10.6

-0.1% -0.8 2.1 1.2 0.0 0.1 1.4

$4.64 4.77 3.67 3.05 1.71 2.37 3.57

0.9% 4.0 -5.4 -1.2 -1.0 -10.7 -2.9

Total U.S., 52 Weeks Ending Oct. 29, 2016 Source: Nielsen Perishables Group®

| Progressive Grocer | Ahead of What’s Next | February 2017

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Fresh mix-in patty volume is up 16% YOY

Source: Nielsen Perishable Group

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Seasonal Produce

Fresh Food

Spring

Cha-ching A new season of fresh produce sparks sales and culinary imagination. By Jennifer Strailey

nce spring has sprung, consumers are eager to lighten their cooking and eating habits with a bounty of seasonal produce. More than ever before, retailers are fueling consumption with demos, displays and recipes that encourage shoppers to fill their baskets with a wide variety of the season’s freshest fruits and vegetables. At Reading, Pa.-based Redner’s Markets, which operates 44 warehouse stores and 20 Quick Shoppe convenience stores in Pennsylvania, Maryland and Delaware, spring produce ushers in a host of opportunities to connect with consumers around healthy eating. “Everyone is excited at the first hint of spring. When the warm weather hits, people are motivated to get moving, be outside and eat better,” says Redner’s Corporate Dietitian Meredith McGrath. “The

comfort foods are put on the back burner, and produce gets new life with seasonal and local offerings.” One of the retailer’s most successful produce campaigns has focused on The Blend, an ongoing program from the Mushroom Council, which promotes mixing finely diced mushrooms with such proteins as beef, turkey, lamb and pork to make healthier burgers, tacos and more. “The goal is always to coach customers on using more fruits and vegetables to enhance flavors, textures and, of course, nutrients,” explains McGrath, who conducts community cooking classes and demos on The Blend, and has made TV appearances to promote the campaign. In partnership with the San Jose, Calif.-based council, Redner’s implemented a multifaceted promotion including print advertising, in-store signage, social media and in-store demos. “Any time you can use several vehicles to drive a promotion, you are bound to see success and February 2017 | progressivegrocer.com |

Fresh Food

Seasonal Produce

increased sales,” McGrath asserts. “Our team of in-house demonstrators showed our customers how to execute The Blend to enhance a meal experience while saving money, calories and fat. “The overwhelming customer response was, ‘Wow, I can do that! It looks easy and tastes great,’” she continues. “That’s exactly what we want to hear from our customers.”

Magnificent Mushrooms Mushrooms are grown year-round indoors, in every region of the United States, and seasonally in certain areas around the country. With such a wealth of fungi, spring is the ideal time to promote local mushroom varieties. “Many people may not know that the mushrooms in their local supermarket are coming from close by,” asserts Katie Preis, of the San Jose, Calif.-based Mushroom Council. “Telling customers that your mushrooms are local and seasonal are strong selling points.” What’s more, when customers have the chance to try in-store samples of dishes made with mushrooms, they’re more likely to buy. “Retailers have a bigger and bigger influence today. They can use the new flavors of the season to inspire customers to eat more produce and try ingredients they haven’t been using,” says Preis, who suggests cross-merchandising mushrooms with other local produce and sampling a spring dish like mushroom-and-fresh-pea risotto. The council’s The Blend campaign is another way for retailers to boost spring vegetable sales and encourage healthier eating. While the Mushroom Council is working with the New York-based James Beard Foundation to promote the Blended Burger Project for the third consecutive year, 2017 marks the first time that the project will include a retailer component. Any retailer with an in-store restaurant or deli that sells cooked burgers featuring The Blend can participate this year. “We are encouraging retailers to get on board,” says

Preis. The campaign, which runs Memorial Day through July 30, invites consumers to vote for their favorite blended burger at a restaurant or retail establishment. The restaurant or retail chef with the most votes wins. To learn more, visit www.jamesbeard.org. Although The Blend is more widely established in the foodservice world, Preis finds that the campaign is slowly but surely gaining traction with supermarket retailers. In addition to the success of Redner’s Markets (see main story), Doc’s Country Mart and Weis Markets consistently offer The Blend in their delis. “We want The Blend to become a staple in stores,” she says. Last spring Doc’s, based in Bixby, Okla., celebrated Mushroom Mania with the launch of a pilot program of The Blend in its deli, meat and produce departments. As part of the program, Doc’s grabbed shopper attention with customized POS materials; samples of blended burgers, tacos and chili; recipe cards; and store ads featuring instructions on how to make The Blend dishes at home. According to a Mushroom Council case study, Doc’s experienced a 60 percent sales increase of fresh mushrooms in the produce department, and a nearly 12 percent increase in hamburger patty sales. Blended burgers represented more than 8 percent of all patties sold. Today, Doc’s continues promoting the program. “We realized how influential The Blend was for our customers when they started coming into the store asking for it by name,” notes a Doc’s representative in the case study. “We continually put blended products in our ad and still have great success with it.”

| Progressive Grocer | Ahead of What’s Next | February 2017

Fresh Food

The goal is always to coach customers on using more fruits and vegetables to enhance flavors, textures and, of course, nutrients.” —Meredith McGrath, Redner’s Markets

Seasonal Produce

Radishes and Regal Hues “When I think of spring produce, I think crunchy vegetables, Brussels sprouts, asparagus and radishes,” says Karen Caplan, president and CEO of Frieda’s Specialty Produce, in Los Alamitos, Calif. While Frieda’s offers a refreshing assortment of the last-named item, from Icicle to French Breakfast to Watermelon Radishes, Caplan is particularly excited about Frieda’s new eye-catching radish packaging. The company recently introduced a Watermelon Radish pouch bag, which features an image of the large radish sliced in half, showcasing both its beige-to-green exterior and bright-pink interior. This tender-crisp cousin of the daikon radish is also featured in the stunning crudité platter at True Food Kitchen, a restaurant chain with 16 locations in 11 states, and six more locations currently in the works this year, giving the item tremendous exposure. Caplan foresees that Watermelon Radish sales will come from customers who’ve dined at True

Food, as well as others who identify strongly with the new visually enticing Frieda’s packaging in grocery stores around the country. Also blooming this spring, according to Caplan, is a regally hued trend four years in the making. In 2013, Frieda’s predicted that purple produce — rich in anthocyanins, antioxidants touted for their health benefits and disease-fighting properties — would

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| Progressive Grocer | Ahead of What’s Next | February 2017

be a major food trend. That same year, the company launched its Power of Purple campaign. Flash-forward to late 2016, and NBC’s “Today,” Fortune and Forbes magazines, and Austin, Texasbased Whole Foods Market are all celebrating purple produce as a powerful force in food. Currently, more and more supermarkets are

increasing sales of purple produce. Frieda’s points to a Southern California retailer that recently created a dynamic display of purple fruits and vegetables, meeting with notable success. The supermarket chain is now rolling out a Power of Purple display featuring purple asparagus, sweet potatoes, cauliflower, passion fruit and more to multiple locations. “Purple is so near and dear to our hearts, so we’re really excited that it has credibility now,” says Caplan, who adds that purple has been Frieda’s signature color for 55 years. Indeed, the Power of Purple trend is so strong that Frieda’s expects to be sold out of purple produce by the end of April.

When I think of spring produce, I think crunchy vegetables, Brussels sprouts, asparagus and radishes.” —Karen Caplan, Frieda’s Specialty Produce

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February 2017 | progressivegrocer.com |

Fresh Food

As consumers become more familiar with mangos, they are willing to try different varieties and experiment with different flavors.” —Angela Serna, National Mango Board

Seasonal Produce

Top-of-mind Mangos While there are hundreds of mango varieties cultivated worldwide, and nearly a dozen varieties commercially available in the U.S. market, many consumers are unaware of the category’s seasonal offerings and the unique attributes of each type of mango. February marks the transition from Kent mangos from Peru to Mexican Ataulfo mangos, followed by Tommy Atkins mangos from Mexico and Guatemala in March and April, explains Angela Serna of the National Mango Board (NMB), in Orlando, Fla. “As consumers become more familiar with mangos, they are willing to try different varieties and experiment with different flavors,” says Serna. “Retailers are encouraged to offer multiple varieties, sizes and prices to present consumers with more options.” For spring mango promotions, Serna recommends proper handling, big displays and consumer education. “Mangos make up more than 40 percent of tropical fruit sales, so give them plenty of space,” urges Serna, who adds that front-of-store

displays can be effective, as mangos are often an impulse buy for shoppers. Merchandise mangos next to seasonal spring fruit rather than other tropicals, she further suggests. In a 2015 store display test, the NMB found that merchandising mangos adjacent to stone fruit had a 45 percent net impact on mango volume and dollars, compared with that of mangos displayed in the tropicals set. The NMB also encourages retailers to participate in its annual Mango Mania Display Contest in July, which offers $10,000 in prizes and incentives. Details and POS kits can be found this spring at mango.org/contest. “Mangos are here to stay as visibility continues to grow year after year,” observes Serna. “Over the last decade, mango volume has increased over 50 percent, from 62 million boxes in 2005 to 93 million boxes in 2015.” Meanwhile, weekly store volume is up from 132 units per store/ per week in 2005, to 213 units per store/per week in 2015.

Seasonal Specialties Spring is the season of change in the produce department, affirms Robert Schueller, director of public relations for Melissa’s Produce, in Los Angeles. New citrus items such as Ojai Pixie Tangerines and early tree fruits

| Progressive Grocer | Ahead of What’s Next | February 2017

like apricots offer fresh flavors in the fruit category, while Dutch Yellow Potatoes are still going strong from winter through spring. What’s on Melissa’s radar for spring produce sensations? “Cherimoya peaks in the spring,” Schueller enthuses. This heart-shaped subtropical fruit offers a unique flavor profile that’s at once reminiscent of pineapple, pear, lemon, mango and strawberries. Kumquats and Black Velvet Apricots are also at their peak of season in spring. The latter features a deep-purple/blackish skin and a bright-golden interior with a sweet, concentrated flavor.

Cultivating Convenience When it comes to strong performers in spring produce, Robinson Fresh, in Eden Prairie, Minn., points to asparagus, berries, pineapple and avocados, among others. “These categories perform especially well this time of year for a number of reasons, the first being that many of these items enter the peak season for availability and flavor,” explains Michael Castagnetto, director of global sourcing. “Other factors influencing the popularity of these varieties include spring holidays that boost sales. Easter, Mother’s Day, Cinco de Mayo and even Memorial Day can influence buying behavior for these and other fresh produce items.” To boost sales of spring produce, think meal solutions, valueadded, local and convenience, notes Castagnetto. “Usage ideas, cooking instructions and other ‘meal kit’ options trigger impulse buys,” he affirms, while cross-merchandising complementary items for easy meal solutions and creating valueadded sections speak to the timecrunched consumer. “Thanks to social media platforms and popular recipe blogs, today’s average consumer is more willing to expand their taste horizons and try new produce,” he observes. “This, combined with concerns around health and wellness, and a desire for snacking and convenience, are primary growth catalysts for produce — this spring and year-round.” PG February 2017 | progressivegrocer.com |

Exclusive Report

The Profit Potential of Pet Care Investment in premium pet channel can lift center store sales. By Kathleen Furore

f you knew there was an opportunity to tap incremental sales of nearly $5 billion, would you jump at the chance? That’s the opportunity open to grocery retailers and mass merchandisers willing to invest in the pet category, according to “Identifying & Capturing ‘Real Growth’ at Retail: The Super Premium Pet Opportunity,” a new white paper by The Cambridge Group, based in Chicago. Your chance to land a share of that $5 billion pot requires

capturing leaked/lost sales from pet specialty outlets — a task not quite as daunting as it might seem. “Remember that mass and grocery retailers have lost pet sales for a long time due to the lack of awareness among shoppers regarding availability of quality pet food, lack of knowledgeable staff to educate shoppers, and lack of quality merchandising programs,” the report says. “These are relatively straightforward opportunities to address, with very clear and real return on investment.” “Shoppers are less loyal and trips are fragmenting, so winning those trips is possible,” adds Tim Joyce, principal with The Cambridge Group and co-author of the report, noting that other categories don’t have as rich a specialty channel from which to draw. “Yes, pet specialty stores are strong competition — but it is not a zero-sum game from a competitive perspective.”

A Plus for Center Store and Beyond According to data from Schaumburg, Ill.-based Nielsen, dollar growth in the pet care category has been double that of overall center store growth over the past five years. Just as important, the category spurs more store visits than any other category in the total store. On average, 57 percent of pet care category purchases trigger a trip to the store. That’s true across all generations of shoppers. “This metric alone is a critical indicator of real growth opportunity, since categories that are considered trip drivers have greater potential to generate store traffic than other categories,” the Cambridge Group report explains. “Shoppers plan their pet care purchases more than any

| Progressive Grocer | Ahead of What’s Next | February 2017

ar dd e Ch te hi W

Sea Salt

Tips for Capturing Pet Care Sales In its new white paper, “Identifying & Capturing ‘Real Growth’ at Retail: The Super Premium Pet Opportunity,” The Cambridge Group suggests steps that retailers should take to capture this “real growth” opportunity: 1. Understand the pet shopper in your banner. How are they shopping the category? How have their baskets changed? 2. Engage with your key pet food manufacturers and insight provider to understand their perspectives on the evolution of the pet care category. 3. Collaborate with your key manufacturers on category, merchandising and pet shopper engagement innovation. Understand the roles of value, premium and super-premium as “real growth” drivers. 4. Develop programs with your key pet manufacturer partners to capture premium and super-premium pet food shoppers. 5. Act now — before your competition does. The goal is to achieve first-mover advantage in premium and super-premium pet nutrition.

| Progressive Grocer | Ahead of What’s Next | February 2017

other department, and choose the destination for the trip based on these planning efforts. Pet care buyers at grocery and mass have the biggest and fastest-growing baskets. Consider the dollars that grocery and mass retailers miss out on when they are not even included in consumers’ pet care product consideration set.” Consumers’ penchant for treating their pets as people is fueling these shopping trips, Joyce explains. “When a person has a pet care need, it’s more likely to spur a trip than any other category,” he says. “That doesn’t make it the biggest trip driver in absolute terms … but it does make it the biggest opportunity to add trips. The humanization trend means people are more responsive to the needs of the end user, and therefore more likely to make a trip on their behalf. If grocery and mass retailers get their assortments and merchandising right, pet [care] could be the biggest trip driver in absolute terms. It’s an ‘if-you-build-it, they-will-come’ scenario.”

Super-premium Drives Sales The growth of super-premium pet food in grocery and mass-merchandising channels alike is dramatic — approximately 10 percent each year for

Super-premium is Leading Growth

Super-premium

Premium

Value

Size $ MM 2016

Incr. Sales $ MM 2012-2016

CAGR

Cat Food-Dry

$534

$46

Cat Food-Wet

219

150

Dog Food-Wet

1,475

361

Dog Food-Dry

400

171

Total

$2,628

$728

Cat Food-Dry

$1,524

$102

Cat Food-Wet

1,746

103

Dog Food-Wet

2,475

-318

-3

Dog Food-Dry

1,042

Total

$6,769

-$31

Cat Food-Dry

$261

-$59

-5%

Cat Food-Wet

126

-23

-4

Dog Food-Wet

1,065

-145

-3

Dog Food-Dry

164

-36

-5

$1,616

-$263

Total

-4%

Source: Five-year Nielsen Scantrak POS data, xAOC, 52 weeks ending April 2, 2016

the past three years. More specifically, super-premium pet foods were the dominant driver of growth across both channels, generating $336 million and $358 million, respectively, in incremental sales over the past five years, the Cambridge Group report shows. In even better news for retailers, the category demonstrates no signs of waning.

“We see no indications that this growth trajectory will flatten or slow in the near future, as studies show consumers have increasing willingness to spend on healthier food options for both themselves and their pets,” the report says. Retailers who want to capitalize on this “willingness to spend” must make sure that inventory aligns with demand. “The right assortment and experience matter enormously in the pet aisle,” the report notes. To succeed in implementing a new approach to pet care, retailers must move away from standard, traditional merchandising strategies and embrace pet care as a department instead. Joyce suggests improving merchandising in ways that illustrate how your assortment has shifted to include more premium products, and creating a store-withina-store for the pet category. “That requires the highest investment, but has the highest potential return,” he says of the store-within-a-store concept. Whatever the approach, investing in pet care has the potential to substantially boost sales and profits. “Everything from presenting pet solutions and bundling products to creating cross-sell opportunities could offer growth potential of two to four times what is realized today,” the Cambridge Group report asserts. PG February 2017 | progressivegrocer.com |

Technology

Grocery Apps

App Quest

hoppers can load onto their “For many people around the world, Success has been smartphones a wide variety spotty, but progress loyalty to a specific grocery retailer has never of popular third-party grobeen lower,” he explains. “Many factors conis being made. cery apps to help them save tribute to this modern reality. They include time and money. Meanwhile, the development of the convenience sector, By John Karolefski grocers themselves also offer shoppers the wealth of price information available at store apps, which should be the cornerour fingertips, and the disaggregation of the stone of their mobile strategies. The overall food retail chain, meaning there are now idea is to create loyalty to the store as well as helping many alternatives available should you prefer never to set shoppers save time and money. foot in a supermarket if you choose not to. Therefore, what How successful have grocers’ apps been? would be the upside to engaging with a specific retailer’s “I say most shoppers have not downloaded their grocer’s app? You might need three or four of them to cover the app to their mobile device,” asserts Barry Stone, director of majority of your grocery spend satisfactorily.” marketing for New York-based Digital Social Retail. “There are very few grocers, if any, who have an app with Promoting Value more than 5 percent shopper adoption,” notes Mike Grimes, A recent survey by 3Cinteractive validates that point. chief revenue officer of Mobee, a Boston-based provider of Research by the Boca Raton, Fla.-based provider of real-time crowdsourced data and insights for retailers and mobile marketing services found that more than half of brands. “Why? Because grocery shoppers won’t use an app customers polled (56 percent) said they use only one, or unless they have a real compelling reason to do so.” maybe two, grocer apps on a regular basis, despite most David Shukri, of Mindtree, agrees, saying, “Ansaying they downloaded as many as four apps to their ecdotally, I believe penetration of such apps remains smartphones. This signals a need for grocers to move relatively low.” The “retail champion” at the Warren, beyond a pure app strategy and develop new mobile tacN.J.-based IT services and consulting firm believes that tics designed to maximize engagement. Grocers would one reason is shopper behavior. be wise to leverage an SMS strategy to keep reaching

| Progressive Grocer | Ahead of What’s Next | February 2017

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Technology

The grocer needs to focus on educating the consumer about their app so that the consumer is fully aware of its benefits and how it could save the consumer money.” —Barry Stone, Digital Social Retail

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Grocery Apps

smartphone users even after app notifications have been turned off, say officials for 3Cinteractive. “Unless you spend money to have more storage space on your mobile device, these shopping apps can consume most of your coveted storage space,” points out Mark Heckman, a consultant based in Bradenton, Fla. “But more importantly, each of these shopping apps requires a requisite amount of time and energy to use. For shoppers who are now shopping more retailers — both online and instore — for all of their needs, it is just not practical to use more than one or two of these apps, at the most.” Stone, of Digital Social Retail, places the blame for the lack of success of grocers’ apps on the grocers themselves, since they don’t give shoppers a good enough reason to download their apps. For example, he says that downloading an app could give shoppers 5 percent off every purchase or 20 percent off a first purchase. “The grocer needs to focus on educating the consumer about their app so that the consumer is fully aware of its benefits and how it could save the consumer money,” he advises. “In the end, that’s what consumers want to hear. When you can get the message across that you are saving the consumer money, more times than not, the consumer will not only download the app, but also interact with it regularly.” Mindtree’s Shukri suggests that grocers should promote the value of apps in terms of price, quality and convenience, or some combination of these three levers. He adds that for now, these apps seem to be more about “first-mover” advantage — and, of course, data collection — on the assumption that mobile wallet and payment adoption will take off at some point in the future. Heckman, the consultant, agrees that incorporating payment options and other perks will make apps truly worthwhile for the shopper. For example, he points to the SmartPay app offered by Framingham, Mass.-based Cumberland Farms’ convenience stores, which enables customers to receive a 10-cent discount off each gallon of gas they purchase when they use SmartPay. “This attractive discount is covered in part due to the much lower transaction-processing fees of a ‘private label’ payment system linked to the shopper’s automated clearinghouse, [rather than] using a bank-based credit card,” he explains. “The technology is easy to use and the value proposition is easy to understand and ergonomic. In this instance, the retailer has made technology the focal point of the customer proposition, and it is working because it benefits the shopper first and foremost, and is easy to engage.”

| Progressive Grocer | Ahead of What’s Next | February 2017

Fresh Lettuce and More The good news is the growing evidence that some grocery retailers are enhancing their own apps to engage shoppers and provide more value. For example, Marsh Supermarkets is offering its Fresh Lettuce for free download in the iTunes and Google Play stores. The Indianapolis-based retailer claims to be the country’s first retailer to launch an innovative mobile app that pays its customers for interacting with national brands. Customers can link their Marsh Fresh Idea card to the app. After engaging with their favorite national brands through short ads and videos, shoppers earn cash that’s loaded directly to their loyalty card. Earnings are then applied during checkout, regardless of what products are in their shopping cart. “Fresh Lettuce turns our customers’ downtime into dollars they can use to spend on anything they want in our stores,” says David Palmer, SVP of marketing, sales and advertising for Marsh. “The customers are in control of what ads they see, when they choose to see them and how they want to spend their earned dollars in our stores.” Meanwhile, Weis Markets recently redesigned its mobile app and website. The Sunbury, Pa.-based retailer says that both now offer a digitally optimized experience and easier navigation functions. “We’ve worked hard to enhance our website and app to make them more useful to our customers on a daily basis,” notes Brian Holt, Weis’ VP of advertising and marketing. “The improvements we’ve made are designed to give our customers a better mobile experience, with easier navigation and an easier-to-read circular.” According to Mobee’s Grimes, Meijer has created an app linked to its popular mPerks loyalty program. With active usage of the app, the retailer can add features around convenience that would otherwise go unnoticed, such as joining department-level savings clubs. Likewise, Minneapolis-based Target’s Cartwheel app supports its savings value proposition, which generates increased adoption and usage of social features like earning badges. “These are examples of desirable virtuous cycles that increase loyalty through app features that are built atop high consumer-value propositions,” Grimes sums up. “Tech is not a panacea, and while an app is easy to put together, it’s not going to get the job done on its own. It’s the hard work of forging unique value propositions that makes things click, and makes it possible for supplemental technology to further that success.” PG

NRF’s 2017 Retail’s Big Show

Industry Events

Dare to Disrupt

NRF’s 2017 Retail’s Big Show stressed importance of rethinking branding, talent management and more to remain relevant. By Randy Hofbauer

oday’s competitive environment is forcing grocers to rethink the way they approach everything in day-today business — from sourcing and merchandising products to hiring, training and retaining staff. So, perhaps unsurprisingly, “disruption” was a major theme running throughout the National Retail Federation’s (NRF) 2017 Retail’s Big Show, which took place Jan. 15-17 at New York’s Jacob K. Javits Convention Center. Opening the second day of the show, Jan. 16, with his State of the Industry address, Matthew Shay, president and CEO of Washington, D.C.-based NRF, stressed that retail needs disruption: that companies must shake up the status quo and usher in the new. Things like simplified tax reform and a focus not just on the “what of technology,” but also the “who of the workforce,” are critical for survival in this era.

The Retailer as Entrepreneur Arguably, these insights couldn’t have been communicated more succinctly than in a statement that opened the following keynote event: “I’m a person who looks forward more than looks back.” Those were the words of Virgin Group founder Sir Richard Branson, shared in a video about his life as an entrepreneur, which played before he took to the stage for a keynote interview with Kip Tindell, chairman of The Container Store, based in Coppell, Texas, and then-chairman of NRF. In the interview, the man behind the multinational conglomerate — who’s also an investor, philanthropist and adventurer — emphasized the importance of approaching retail like an entrepreneur. He noted that keeping a brand fresh requires every new venture to enhance the brand and not damage it. But being serious about entrepreneurship doesn’t mean taking oneself too seriously — he encouraged

RETaIl Roundup Close to 35,000 attendees representing 95 countries converged on new York’s Javits Center for the latest insights and solutions for retail disruption.

February 2017 | progressivegrocer.com |

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Industry Events

lIkE a vIRGIn In a keynote interview, virgin Group founder Sir Richard Branson encouraged retailers to think like entrepreneurs.

Retail’s Big Show

retailers to have “a bit of fun” and be “cheeky.” Conscious capitalism also took the spotlight, with Branson pointing to ways in which he has used business to better the world. Echoing a point Tindell made earlier — that “we can improve the world by improving the world of business” — Branson said that if every company in the world adopted a problem and used its entrepreneurial skills to overcome it, most of the world’s issues could be solved. Further, doing so can benefit the bottom line, too: Employees want to feel like they have a greater purpose in life, and working for a company that tries to make the world better can help create that purpose.

Hire, Train, Retain Right Human capital was the topic of conversation Jan. 15 as well, when Bill Brand, president of Home Shopping Network parent HSN Inc., based in St. Petersburg, Fla., pointed out the importance of hiring the right retail talent across all levels, from the c-suite to the store floor. He followed his point with a keynote panel discussion that included Greg Foran, president and CEO of Bentonville, Ark.based mass merchandiser Walmart U.S.; Terry Lundgren, chairman and CEO of Cincinnati-based department store chain Macy’s Inc.; and James Rhee, executive chairman and CEO of Secaucus, N.J.-based apparel retailer Ashley Stewart. “We must change how we approach talent development,” Brand said, noting that today, technology is fundamentally altering the way we consume, organize and work, not only in retail, but also in every economic sector. With retail anticipated to change more over the next five years than it has during the previous 50, it’s more important than ever to recruit people with nontraditional backgrounds who never even thought retail was “for them.” Training is a huge focus for many of the larger retailers in today’s market. For instance, of its five points of critical employee investment, Walmart focuses on training with two initiatives: Pathways, an entry-level program rolling out nationwide that gives new or existing associates basic business skills, and its Academies, managerial-level institutes that use 200 Walmart locations as training facilities, which 140,000 department managers will attend this year. It’s also seeking to retain employees by addressing turnover at not just the store manager level, but also the floor level. Investing $2.7 billion over

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| Progressive Grocer | Ahead of What’s Next | February 2017

two years in higher employee wages and providing tools and mobile devices necessary to complete jobs are critical for this advancement, as is distilling the complexity of the various duties of an omnichannel business into simplicity for the sake of training. For Macy’s, training is essential even for employees already considered experts in their roles. The company is already focusing strongly on attracting great talent dedicated to technology — particularly women, which has made it a top company for promoting female technologists. But it continues to encourage education: Over the past year, it has trained 600 of its technologists to focus on everything from website development to when and how it’s best to use cloud technology for measuring peak-period demand. The retailer also has a select number of universities where it spends time on campus to capture the interest of STEM students, who often don’t have the retail industry at the top of their lists of career choices. And in Ashley Stewart’s case, great talent can often best be attracted and retained through creating a sense of community. Rhee, who reinvigorated the women’s apparel chain, which focuses on urban neighborhoods and is known for its deep connections with, and commitment to hire from local communities, fell in love with the brand because it had nothing to do with clothes — at its best, Ashley Stewart was about respect, community and empowering women. Although it was tough to do, Rhee empowered team members by persuading them that they had loyalty and a strong sense of friendship with the community and among each other — things money can’t buy.

Fresh Focus with Tech The call for disruption came from the technology front as well. In a Jan. 15 keynote, Rod Sides, retail, wholesale and distribution leader at New York-based research firm Deloitte LLP, noted that retailers need to use data and digital in a new and different way

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Industry Events

WoRk In PRoGRESS During a keynote panel discussion, Walmart U.S. CEo Greg Foran (second from left) stressed that employee training is more important than ever for Walmart.

Retail’s Big Show

if they want to lead, considering that digital has an influence on stores, and the expectation of great customer service and satisfaction is set by digital, not in-store, operations. Looking at the top 200 retailers in the country from an economic perspective, Deloitte found that the ones that provide differentiated products and experience report 13 percent cumulative average annual sales growth, compared to the overall retail industry’s average of 2 percent growth. Sides emphasized that the retailers that are winning use data and digital to do three things: Have integrated experiences: There is no online

or offline to them, as consumers are online and connected all the time. Leverage customer data in meaningful ways: One

size doesn’t fit all for these retailers, as meaningful data are different by category. Compel shoppers to return to their stores: Retailers

winning today all create integrated unique experiences, which allow them to continue to grow. Turning from presentations to the show floor, myriad vendors showcased the latest and greatest technological wares geared toward disrupting various points of retail business. While there were too many to list, several noteworthy companies and solutions applicable for grocers included:

104

Theatro displayed its voice-controlled wearables for retail employees. Through the 1.5-ounce voice-driven product, floor associates can interact instantly with any and all store employees, systems and management, and even associates in other stores. The cloud-based technology also features a real-time indoor-location-tracking service, as well as access to real-time and historical team-performance metrics. Fujitsu unveiled Fujitsu Digital Workforce, a cloudbased platform that automates repetitive, low-value tasks, freeing up staff to engage in more complex and higher-priority assignments. It offers a number of benefits, including improved speed and consistency of tasks that are prone to human error; significant cost benefits, thanks to more productive use of employee time; and easy implementation without the need to extensively retool existing IT infrastructure. Intel debuted its Responsive Retail Platform (RRP), intended to deliver a deep understanding of how stores and people interact. RRP connects multiple data streams’ digital and physical environments. With the goals of lowering costs and increasing sales, the platform helps optimally place inventory, deploy employees and other resources, and track inventory from supply chain to the store door. It provides in-the-moment information about what customers are buying, what they want and how to manage inventory so it arrives on time.

Apex Supply Chain Technologies showcased its AnyWhere automated pickup lockers. Particularly useful for retailers with click-and-collect programs seeking to streamline last-inch delivery, the customer-facing, two-sided, flow-through systems can be loaded by employees from the rear without requiring them to leave their workstations. It allows for secure order pickup and decreases customer lines, as well as providing real-time reports and analytics.

FutureProof Retail (FPR) showcased its MobileCheckout platform, an easy-to-use white-label shopping

InContext Solutions allowed visitors at the Virtual Reality Pavilion to engage with several VR demonstrations, including its ShopperMX flagship SaaS VR platform, through HIVE (Hi-Immersion Virtual Experience). The demo transported users into a virtual store environment, where they could interact with products, shelf sets, store layouts and in-store displays to assist with category management and create more engaging shopping experiences.

app that merchants can offer customers. With app in hand, shoppers go about their routine, but scan items as they are placed in the cart. Once the shopping trip is complete, the patron pushes a “check out” button and pays via smartphone, card or Apple Pay. The company also showed its new MobileCheckout self-install kit, which contains individualized instructions, checkout beacons and cameras, and more. Setup takes one to two hours and is activated remotely by FPR, with phone support available if needed. PG

| Progressive Grocer | Ahead of What’s Next | February 2017

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Supply Chain

Digital Solutions

Retailing on

Demand

As new technology impacts the way consumers shop, retailers must accommodate with changes to their supply chains. By Jenny McTaggart

ome of the latest technologies being designed for consumer use sound more like science fiction than practical solutions. Will people really come to rely on self-filling refrigerators, or actually enjoy shopping in fully automated grocery stores without human interaction? Only time will tell whether these and other ideas will gain common acceptance, but one thing is certain: Technology, and its impact on the food industry, is only going to grow. Further, as the definition of grocery shopping continues to evolve — with shoppers finding new ways to make their lists and fill their baskets — retailers must frequently contemplate how their supply chains need to change. Several experts who spoke to Progressive Grocer agree that grocers’ supply chains need to become faster, more accurate and definitely more demand-driven to accommodate consumers’ growing thirst for the convenience of technology. There are also new considerations when it comes to store layout, inventory, and how retailers’ store and online operations fit together.

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“Supply is now meeting demand in whole new ways,” observes Brian Kilcourse, managing partner of Miamibased market intelligence company RSR Research LLC. “In a number of ways, new consumer behaviors have fundamentally broken the serial nature of the value chain. It was serial in the old days — the retailers bought big, shipped product to their warehouses, and then broke it down and shipped it to the stores. The assumption was that you brought supply to demand … in the store. But it isn’t necessarily happening that way any longer.” Paul Chang, global supply chain subject-matter expert at Armonk, N.Y.-based IBM, concurs. “Retailers today need to have a more robust supply chain, and perhaps one that’s more flexible, to be able to meet changing consumer demands,” he notes. “Those demands can shift so quickly nowadays, because of things like social media.”

Old and New Challenges As RSR’s Kilcourse sees it, grocers still must contend with the age-old challenges of getting the right inventory to the right place. They also have a new problem, however: how to get supply directly to the point of demand. While he says it’s safe to assume that some shoppers will continue to prefer to pick their own produce while they’re in the store, grocers must recognize one of their own weak spots — the mundane task of buying the same routine products week after week. “As the digital domain improves, those things are easy pickings if the digital world finds a way

| Progressive Grocer | Ahead of What’s Next | February 2017

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Supply Chain

Digital Solutions

to make it easier to just push a button than it is to go to a store,” he observes. “Of course, that’s what Amazon is after with Amazon Dash.” Kilcourse further contends that changes in consumer behavior are forcing retailers to essentially localize their offerings in the physical space, which has huge implications for the way they manage their supply chains. “As the Internet of Things in the home becomes a real concept, it’s feasible that in the future, routine shopping lists will be filled automatically, so retailers will be forced to think about making their stores more convenient,” he observes. “That means more localized assortments, as well as different floor sets that are based on what neighborhood you’re in. Food retailers currently have these huge 60,000-squarefoot boxes that have highly standardized assortments. Now they need to think about whether or not that box is too big, whether or not they’re carrying too many products, and those kinds of things. It basically breaks a lot of the basic assumptions of their supply chains.” While this more futuristic vision “Retailers are of the supply chain may sound a little daunting, Kilcourse points out that going to have to “the good news is that if retailers can make sure that achieve more localized stores, then whatever they’re theoretically they could have less doing in the store, inventory in their entire enterprise.” they’re doing on As grocers work to create more the web.” localized assortments and store —Pete Catoe, ECRS layouts, they’ll need to strive for a much higher level of inventory visibility, he adds. “Grocery already has a fast replenishment cycle, but they need to work toward having perpetual inventory.” At least a few retailers are already on board with this thinking, he notes, pointing to Cincinnati-based Kroger, which is trying to establish real-time visibility into all of its inventory. The national retailer is also using technology to monitor cold boxes.

Merging Store and Online Functions Retailers also need to seriously consider their response to the direct-to-consumer trend, advises Kilcourse: “Looking at their supply chain, and particularly their distribution centers, they need to think about how they’re going to ship to consumers. Are they going to have a whole separate warehouse, like Ocado in London, or are they going to pick from the same inventory in their warehouse?” In addition to the picking and shipping conundrums, retailers need to think about how their online and store presences fit together. At least one technology company is advising grocers to follow

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| Progressive Grocer | Ahead of What’s Next | February 2017

the example of Amazon when it comes to directto-consumer retailing. Pete Catoe, president of Boone, N.C.-based point-of-sale solutions provider ECRS, maintains that “retailers have to make it really easy for consumers to do business with them, wherever they want to do business.” Catoe’s company is in the process of rolling out a solution called Catapult WebCart Click and Collect 2.0, which is designed to give grocers the same transactional system in the store and on the internet. “These solutions can’t just be pieced together,” he explains. “If you look at the Amazon solution, you see a holistic approach. That’s exactly what retailers are going to need to do. They’re going to have to make sure that whatever they’re doing in the store, they’re doing on the web.” With ECRS’ new design, if a grocer has a store with 12 lanes, but also offers online ordering with store pickup or delivery, it’ll now have a 13th lane that’s essentially its web store. “To us, it’s just another lane,” notes Catoe. “The consumer will make their transaction online, but it will be tied into the store POS system. It’s the same data, same customer, everything. This allows the consumer to look up their historical transactions, whether they were made on the web or in the store, redeem their loyalty points, use coupons, etc. We call it ‘unified transaction logic.’” The new technology also promises secure transactions, as payments are typically made via Token instead of using credit cards, according to Catoe. So far, several of ECRS’ current POS customers, including Langhorne, Pa.-based McCaffrey’s Food Markets and LaBonne’s Markets in Connecticut, have signed on to start rollouts of Click and Collect 2.0. Catoe hopes to have hundreds of deployments by the end of 2017. He says his target customers are smaller upscale grocers and “super regional” chains. As both smaller, regional grocers and large chains turn to technology firms like ECRS to aid them in supply chain fixes, RSR’s Kilcourse advises them to “start small” with discrete projects, and to seek active advice from people on the outside who have experience in other industries. Last but not least, “fail fast,” he says, encouraging retailers to move on quickly if the technology isn’t working. At the end of the day, even the flashiest technology doesn’t matter if it isn’t addressing a business’ operational issues, he observes. “Trying to drive transformation through technology is a mistake,” he cautions. “You want to drive technology adoption through business transformation.” PG Read about how Walmart is building food safety with blockchain technology at progressivegrocer.com/blockchain.

Food, Beverage & Nonfood Products

Soup’s On

Campbell Soup Co. is bringing a fresh perspective to packaged soup, which has long been seen as overly processed and high in preservatives — attributes not too popular with today’s health-conscious consumer. Souplicity is a line of chefinspired refrigerated soups with short ingredient lists and unique, vegetableforward flavor combinations. The organic, non-GMO and preservative-free soups come in four varieties: Roasted Red Pepper Tomato Gouda, Carrot Curry Ginger, Broccoli Parmesan Lemon and Corn Poblano Lime. The SRP for the soups is $5.99 per 17.6-ounce container. www.souplicity.com

Bar Raised

Responding to consumers’ love of protein, simply made products and unique sweet-and-savory combinations, Krave Pure Foods Inc. has officially launched Krave Bars, available in four sweet-andsavory flavors that meld meat with quinoa and dried fruit: Chipotle Cherry Beef, Cranberry Thyme Turkey, Mango Jalapeño Pork and Wild Blueberry Beef. Each bar is made with simple ingredients and contains no gluten, added nitrites or artificial ingredients. The SRP is $2.89 per 1.25-ounce bar.

Better Cheddar

Pure, simple-ingredient products rule with many consumers today, as do better-for-you, protein-rich snacks. Understanding this, Schuman Cheese has expanded its all-natural line of Cello Whisps with a new cheddar variety. The rBST-free, calcium-rich, and gluten- and wheat-free snacks provide 10 grams of protein and zero carbohydrates per serving. They can be eaten out of the box, added to a salad or even placed atop an appetizer plate. The SRP is $4.49 per 2.12-ounce package. http://schumancheese.com

www.kravejerky.com

Boozy Berries

With so many variations on the traditional in the current craft cocktail craze, it’s expected that the same would apply to garnishes. Enter Twisted Cherries’ colossal, handpicked, USA-grown maraschino cherries infused with alcohol, which, at 6 percent ABV, can be consumed straight from the jar, added to cocktails, used in baking or employed as an “adult twist” to treats like ice cream sundaes. The product comes in three varieties: Island Rum, Original Cherry Bomb and Balls of Fire (cinnamon). Twisted Cherries come packaged in recycled-plastic containers with an SRP of $7.99 per 375-milliliter jar. www.twisted-cherries.com

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| Progressive Grocer | Ahead of What’s Next | February 2017

Mix It Up

Although baking mixes have seen suffering sales recently, sales of products featuring sprouted grains are anticipated to surpass $250 million by 2018, suggesting that a new line of sprouted-grain pancake mixes from Pamela’s Products could breathe some new life into the category. Pamela’s mixes are made with nutrient-dense sprouted grains, which are easier to digest and contain a host of health benefits. The wheat-, gluten-, corn-, soy- and egg-free mixes come in five varieties: Buttermilk, Buckwheat, Protein, 6 Grain and Non-Dairy. They retail in 12-ounce boxes with an SRP range of $6.49-$7.99. www.pamelasproducts.com

No Stains Here

Americans today barely have enough time to drink their morning coffee, so getting fresh deodorant marks on clean clothing — and then removing them — can really throw off one’s day. To combat this issue, Unilever has introduced Anti-Marks Antiperspirant Technology, which prevents white marks on dark clothes and the formation of yellow stains on white clothes. Spanning five brands — Degree Men, Degree Women, Dove, Dove Men+Care and Axe — the technology is incorporated in 24 variants, each of which features 48-hour odor and wetness protection, and carries an SRP range of $4.99-$5.49. www.unileverusa.com

Mochi for Millennials

Mochi ice cream — small balls of the perennial frozen treat covered in mochi, a soft, pounded sticky-rice cake — has been a growing trend in recent years, and a new line from the delicacy’s creator is intended to grow product appeal, especially among Millennials. Mikawaya’s MyMo mochi ice cream offers seven flavors tailored to the American palate: Ripe Strawberry, Sweet Mango, Double Chocolate, Vanilla Bean, Cookies & Cream, Green Tea, and Mint Chocolate Chip. Each pre-portioned MyMo ball contains roughly 110 calories, and a box of six 1.5-ounce pieces carries an SRP of $4.99. www.mochiicecream.com

Drink Your Greens

Jumping on the trend of extreme hydration and nutrient density in onthe-go beverages, Complex Beverage has developed Lettuce Organic Tea, fortified with lettuce nutrients, a key ingredient that aids in quick rehydration and offers soothing and balancing benefits, according to the company. The ready-to-drink tea may help support a healthy immune system; maintain healthy cholesterol, blood sugar levels and blood pressure already within normal range; and keep off excess weight. The teas come in 16-ounce bottles, each containing 80 calories, in Mango, Pomegranate Passion Fruit and Exotic Apricot flavors. The SRP is $1.79. www.complexbeverage.com

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cuterie line 24 New Products, Available Now!

NEW!

All Niman Ranch proteins and products are third-party certified for humane animal welfare practices by Certified Humane®.

The ingredients are simple: Our all-natural* pork, is raised by small, independent U.S. family farmers committed to sustainable and humane practices to deliver the finest tasting meat. We developed this line to honor the time and care the farmers put into raising the animals, by producing a high quality dry-cured product using old world fermentation- aged with time and not with heat.

No Antibiotics – Ever • No Added Hormones** – Ever No Additives or Fillers, Such as Dry Milk or Corn Syrup For more information CONTACT MELANIE.COUREY@NIMANRANCH.COM *Minimally processed. No artificial ingredients. **Federal regulations prohibit the use of hormones in pork.

Index 5 Generation Bakers Airius Amy’s Kitchen Apex Supply Chain Technologies Avocados From Mexico Beaver Street Fisheries Better4U Foods Biro Manufacturing Bland Farms Blount Fine Foods Boston Beer/Samuel Adams Brewery Campbell Soup Company Cargill Meat Solutions Coca Cola NA CSM Bakery Products DecoPac Dietz & Watson Inc. Domino Foods Dr. Oetker USA LLC Food Marketing Institute Forte Products General Mills Inc. GenerationNext Godshalls Quality Meats Inc Goya Foods, Inc. Grimmway Farms Heineken USA Inc. House Foods America Idaho Potato Commission IGPS International Deli Dairy Bakery Association Jack Link’s Beef Jerky Johnson Ventures Mars Chocolate NA/ Wrigley MasonWays Indestructible Plastics Mondelez International NCR New Hope Network Nielsen Niman Ranch Ole Mexican Foods Perdue Farms Inc. Perfetti Van Melle USA Inc. Robbie Flexibles Ruiz Foods Products, Inc. Self Point USA, Inc. Siggi’s Dairy Smithfield Fresh Stemilt Growers, Inc. The Hershey Company The Wonderful Company/Fiji Water Tito’s Trion Industries Inc. Truly Good Foods TW Garner Food Co / Green Mountain Gringo Tyson Foods Unified Grocers Unilever North America

57 67 64-65 4, 42 41 83 32 30 89 24-25 33 9 85, 103 49 55 36 79 14-15 69 91 96 16-17 73 81 19 93 46 86 75 107 105 Insert 35, 45 95 43 38 3 99 39, 56 51 112 29 Cover Tip, 76 109 63 70-71 Inside Front Cover Back Cover 7 92 13 23 21 Insert 67 90 59 10-11 60 Inside Back Cover

Progressive Grocer (ISSN 0033-0787, USPS 920-600) is published monthly by EnsembleIQ, 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 ©2017 EnsembleIQ 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.

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February 2017 | progressivegrocer.com |

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The Last By Meg Major

Wholly Transparent?

Whole Food needs to extend its fervor for transparency and authenticity to how it communicates its commitment to creating a convenient, affordable, digitally-enabled shopping experience.

hen I ponder the many factors at — and in — play for Whole Foods Market, coupled with a recent personal experience, I must candidly admit: I’m just not sure what to think. Faced with a herculean task of putting its supernatural genie back in the bottle, the Austin, Texas-based retailer is, by all estimations, waging an arduous uphill battle. After it arrived more than a tad late to the party with a lower-price campaign, digital coupons, a loyalty rewards program (that’s reportedly set to roll out nationwide this year after two-year pilots in Dallas- and Philadelphia-area stores), and a value-positioned, small-format model (three stores open, with another 23 in development), Whole Foods’ plot has thickened further of late with a few more eyebrow-raising actions. Following a prolonged stretch of rocky performance, including a 2.6 percent decline in 2016 Q4, the chain late last year dismissed co-CEO and 25-year company vet Walter Robb in a bid to return to its roots, with co-founder John Mackey now manning the fort solo. While the jury remains out — and will likely continue to be so for the foreseeable future — on the validity of that move, another speculative hotspot surfaced at press time with the news of planned closures of the company’s three regional central kitchens in favor of an outsourced network of suppliers that will use its recipes. The company said the decision was “based on a movement toward streamlining operations for prepared foods,” which, for many observers, seems at odds with the role and reputation of its widely admired signature category. While there’s a clear business case to be made for outsourcing to central kitchens — the transition to which promises to be precarious and complex — some read it as a telling sign of Whole Foods’

Meg Major

Chief Content Editor mmajor@ensembleiq.com Twitter @Meg_Major/@pgrocer

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| Progressive Grocer | Ahead of What’s Next | February 2017

larger awakening as it comes to terms with the merciless barrage of competition that’s collectively smothering its ability to gain a meaningful edge. With little room for error, Whole Foods is at a real crossroads on its journey to reinvention, which includes a beefed-up marketing and advertising plan that Mackey described last year as “the next big step. We can lower prices here and there, but if people don’t know about them, we won’t get the full lift.” While Whole Foods is clearly doing more to toot its own horn by actively encouraging consumers, through advertising and related multimedia efforts, to shop its stores, I would respectfully suggest that it’s also time for the company to rethink its grass-roots game plan — especially as it pertains to grand-opening events — which is easily within its control and devoid of competitive considerations. Case in point is an interesting experience I had during a recent, open-to-the-public sneak peek at one of the company’s newly opened stores. I pre-registered to attend one of the daylong series of guided tours held three days before opening day, staged in 15-minute intervals, for a look-see at select departments, whose team leaders discussed sourcing practices and ingredients used in the coffee bar, meat/seafood, bakery and prepared foods areas. While the vast store perimeter was clearly not ready for primetime, with fresh cases and displays still under wraps prior to being set and ready for the main event, attendees’ efforts to peruse the full store were thwarted due to “safety reasons.” Further, when considering its stance as an early, vocal adopter of “transparency” — which was, incidentally, voted the Word of the Year for 2016 by members of the Association of National Advertisers — I believe Whole Foods would be wise to get out of its own way and talk about the things people really want to hear – lower prices, convenient solutions and digital offerings – which just so happen to be the identical things the company is investing in heavily to improve. After nearly singlehandedly setting the natural food marketing framework for the rest of the industry to follow, Whole Foods is now in a plum position to take a page from conventional supermarkets’ playbook by authentically communicating all it’s doing to broaden its appeal with price-sensitive shoppers throughout the whole store. PG

Each portion of our Garden Market Chicken

recipe contains a half cup of vegetables and is high in protein. ®

Knorr Sides makes nutritious, delicious meals quick and easy.

Inspired consumers are whipping up Knorr® SidesTM recipes with lean protein and fresh vegetables. Partner with us in our commitment to drive improved well-being, nutritious choices and category growth. Contact your Unilever representative to learn more about our Positive Nutrition campaign. ©2017 Unilever XTM17004

thank you for making us the fastest-growing yogurt brand 3 years in a row

dollar sales growth

based on national brands, total siggiâ&#x20AC;&#x2122;s growth vs. year ago, Nielsen Total US Food, 3 years ending 12/31/2016

INNOVATE TO ACCELERATE GROWTH! Meaningful innovation drives expansion.

n the meat snacks category today, new products are everywhere. But leveraging meaningful innovation to drive growth for retailers can be a bit more complex. Historically, mature brands have relied on line extensions (typically new flavors) for innovation news. Flavor innovation can help keep brands relevant over time, and it helps brands grow share of snacking. Meaningful innovation includes new products and platforms that will help retailers expand the number of category buyers and encourage current buyers to buy more.

HOUSEHOLD PENETRATION – SNACKING CATEGORIES UPSIDE POTENTIAL FOR MEAT SNACKS Chips/Pretzels

97% Cookies/Crackers

88% Nuts/Seeds

64% Meat Snacks

49% Source: Nielsen Scan Data xAOC+C, Salty Snacks & Nuts, 52 weeks ending Jan. 23, 2016

CLOSING PENETRATION GAP WITH NUTS/SEEDS =

$1.8-BILLION OPPORTUNITY!

As a result, meaningful innovation will accelerate category growth by keeping news in front of shoppers who are constantly seeking new solutions. Retailers can utilize innovation to show and tell shoppers how they can engage with the meat snacks category as a regular part of their shopping trips. Strong messaging in support of innovation will also drive sales and expand consumer bases. Overall, snacking trends continue to be strong. There is significant upside potential for meat snacks in particular, especially among consumers who are looking for higher-protein, lower-carbohydrate options for themselves and their families. Jack Link’s Brings Big Innovation Jack Link’s has developed new products for 2017 that truly deliver on the criteria for meaningful

INNOVATE TO ACCELERATE GROWTH!

innovation. Seeking to satisfy protein solutions for breakfast that are convenient and capturing a new marketplace of meat snack consumers who would prefer a softer texture, Jack Link’s introduces Jack Link’s AM and Jack Link’s Extra Tender.

Jack Link’s A.M. is available in four varieties: • Breakfast Bacon – Applewood • Breakfast Bacon – Brown Sugar & Maple • Breakfast Sausage – Original • Breakfast Sausage – Hot & Spicy

With these new innovative products, Jack Link’s is set to put products into the marketplace that will allow retailers access to key growth drivers:

Love Me Tender Studies also show that there is a segment of the population that doesn’t prefer the traditional rip-andtear jerky. To address this need, Jack Link’s innovated based on texture – a top consumer attribute.

• Bring new consumers to the category by creating a solution for an unmet need • Give existing consumers another opportunity to spend more in the category

(Jack Link’s Protein Snacks Research 2016)

Jack Link’s Extra Tender meets the needs of a new segment, now offering extra tender jerky for those seeking a softer product. Jack Link’s Extra Tender is available in four varieties: • Original • Teriyaki • Peppered • Sweet & Spicy MOST IMPORTANT NUTRITION WHEN BUYING BREAKFAST FOODS High Protein 39%

Convenience Sells! If you ask consumers today if they’re in a rush and eating on the go, the answer will undoubtedly be “Yes!” Across demographics, people seek convenience, as shown by the influx of on-the-go packaging, packaging that allows for consumption on-the-go, as well as the presence of single-serve packaging across segments.

Low Sugar 38% High Fiber 37% Whole Grain 37% Source: Lightspeed GMI/Mintel

Convenience sells and will continue to make an impact in the marketplace as consumers lives get busier and busier. Studies have shown that consumers who prefer eating protein for breakfast on the weekends credit the fact that they have more time to prepare and eat a protein-rich meal. Their reason for not consuming protein on weekdays is because they are rushed and thus choosing other convenient, more portable options. Jack Link’s A.M. is a solution to this dilemma – consumers who prefer protein for breakfast can now have portable breakfast sausages and bacon. This innovation will bolster a new daypart by providing portable protein for breakfast. Platforms that address new dayparts provide clear opportunity to expand household penetration.

WHAT CONSUMERS WANT TO SEE MORE OF IN THE MEAT SNACK CATEGORY More Tender Options 35% Hotter and Spicier Flavors 33% Larger Sizes 33% New Protein Types 25% Sweeter Flavors 23% Source: Jack Link’s Protein Snacks Research 2016

INNOVATE TO ACCELERATE GROWTH!

Q&A

CHRISTIAN FITCHETT VP INNOVATION, JACK LINK’S PROTEIN SNACKS

Q. What is currently capturing the most attention in terms of a snacking occasion/day part and why?

A. While afternoon snacking is the largest single occasion, I think what has been capturing the most attention recently is how snacking is growing across all day parts. IRI reported earlier this year that 46% of consumers (up five points in the past year) eat more than three snacks per day.1 These occasions range from early morning to late evening. As consumers look for ways to fuel their busy lives, they are seeking portable solutions that provide nutrition that will sustain them through their next activity. Protein and simplicity are at the top of their list in terms of wants in snacks, which is why I think we’ve seen portable, protein-rich solutions grow so quickly. Examples include Greek Yogurt and Jerky. Q. Which snacking occasion and day part offers the best opportunity for retailers to find organic growth?

A. Consumers are reporting increased snacking across all day parts, so there is plenty of opportunity. Traditionally, afternoon snacking occasions have dominated retailers’ and manufacturers’ offerings. Since 2010, however, the percentage of consumers reporting snacking during morning occasions has more than doubled1. So we believe morning has a lot of untapped opportunity. Q. What does Jack Link’s need from its retail partners to best support and grow through product innovation?

A. Jack Link’s looks for a category-partnership mindset with its retail partners. Our goal is to grow our retail partners’ categories. If we are effective in doing this, our partners benefit. And as the category leader, we naturally benefit as a by-product of growing the category as well.

46% of consumers (up five points in the past year) eat more than three snacks per day. (IRI, Chicago)

I think our best partnerships start by having open and honest dialogues about how the category and the brands within are performing and aligning the category, through data on how the retailer judges performance. With this mutual understanding we can then brainstorm solutions, either tailoring existing assortments, or developing new offerings based on consumer insights to take advantage of opportunities that we see. Retailers have the benefit of being the first point of contact with consumers, so hearing their feedback and their customers’ feedback is incredibly helpful as we develop new offerings. Additionally, we want to push the boundaries of categories for growth, so we love partnering with retailers to test in market. Q. What are some innovations or opportunities retailers can expect to see in the meat snacks category in the short- and long-term future?

A. The meat snacks category is very well positioned for continued growth. A mentor of mine is fond of saying: “Let the trend be your friend.” When you think of the tailwinds the meat snack category has — portable, simple ingredients, great taste, protein rich and low in sugar and fat — it’s not surprising that meat snacks have been one of the fastest-growing categories over the past 15 years. However, meat snacks have typically been typecast as the snack for hunting and road trips, generally by males. I think the next phase of growth for the category will be found by appealing beyond the traditional meat snack consumer and by being more relevant to more people in more occasions. Jack Link’s was the category pioneer in the jerky segment, and we are determined to push and grow the category. I think you’ll see us experiment and try many ideas. Likely not all of them will work, but inevitably some will and we believe our category, and as a result our retail partners and our company, will benefit from them. 1 IRI Report: “How America Eats: 2016 State of the Snack Food Industry”, April 6, 2016.