Improving On The Classics

Pasta and rice might be basic pantry staples, but health-minded enhancements, pricing tweaks and creative merchandising can help boost store brand sales here.

When it comes to stocking the pantry, few U.S. households bypass the pasta and rice aisle. In fact, the average person in North America eats more than 15 pounds of pasta per year, according to the Washington-based National Pasta Association. That's a whole heck of a lot of spaghetti and macaroni, but it doesn't even come close to the 26 pounds of rice the Arlington, Va.-based USA Rice Federation says the typical American consumes per year.

Although the strong growth both pantry staples realized at the height of the recession has slowed, store brand opportunities still are plentiful for retailers that are in tune with trends and willing to invest in a bit of brand-building.

Healthful spin

Speaking of trends, better-for-you pastas are driving overall category growth, says Pat Regan, senior vice president, consumer and customer marketing for the American Italian Pasta Co., Kansas City, Mo.

Mike Cunningham, director of private label sales for Dakota Growers Pasta Co., operating as a subsidiary of Viterra Inc. of Calgary, Alberta, agrees. As proof, he points to Nielsen data that show unit sales within the better-for-you pasta subsegment up 10 percent for the 26 weeks ending July 10. He attributes the heightened interest — and soaring sales — to the media attention on obesity, especially childhood obesity, as well as a growing understanding on the part of consumers that better food choices can lead to better overall health.

The national brands traditionally have led innovation in this area, Regan notes, but store brands are catching up quickly. Whole wheat and whole grain pastas account for more than two-thirds of the health subsegment, he adds.

One of the newest store brand offerings here is from Wegmans Food Markets Inc. of Rochester, N.Y. In September, the retailer introduced nutritionally enhanced Wegmans Super Pasta into its stores. The new line, said to look and taste like traditional pasta, boasts an entire serving of whole grains, extra protein and fiber, calcium, vitamin D and ALA omega 3s. Priced at $1.99 per package, the pasta comes in spaghetti, thin spaghetti, penne rigate, spirals and elbows varieties, the retailer says.

"Whenever you can make better-for-you pasta taste more like traditional semolina pasta, consumers will respond positively," Regan says. "Fiber and whole grain claims are strong now and will remain strong."

He notes that AIPC has a commitment to following new branded introductions "that deliver value and match consumers' quality and taste expectations." The company has innovated to allow its retail customers to be first to market with store brand launches such as gluten-free, he adds, and has many new products in the works that are aligned with new consumer needs.

Cunningham says Dakota Growers, too, is focused on developing store brand pasta products that not only deliver nutritional/health benefits, but also taste good — a critical factor for ensuring repeat purchase and brand loyalty.

With whole wheat and whole grain pastas, Regan says, the national brands have been implementing a successful line pricing strategy on a unit basis. He believes retailers have a "huge opportunity" to follow this pricing strategy as a means to encourage trial of store brand versions.

Of course, rice is no slouch when it comes to health benefits, either—it's nearly fat-free and rich in complex carbohydrates, the USA Rice Federation says. Brown rice and brown rice blends mesh particularly well with today's better-for-you food trends because the rice retains the nutrient-dense bran layer, making it a 100 percent whole grain food that also is rich in minerals and vitamins. Although regular brown rice might take too long to cook for today's time-pressed consumers (40 to 45 minutes), many rice product suppliers now offer quicker-cooking (and even microwavable heat-and-eat) brown rice products available for store branding.

Rethink the message

Despite all the interest and publicity regarding the benefits of whole grains in the diet, whole grain pasta and rice products are still somewhat limited, reports Mintel International in its Global New Products Database's Q4 2009 and Q1 2010 "Pasta, Rice & Noodles" category insight. The global market intelligence firm says it also believes retailers and manufacturers could better communicate the benefits of existing whole grain options to consumers — especially older consumers — by using clearer labeling and taglines that spell out positives (e.g., fiber-enriched for better digestion or for a healthier heart). Moreover, they could target different demographic groups who are turning away from dietary supplements and toward functional foods with specific functional health benefits (such as added calcium or omega-3).

Cunningham agrees that some retailers could improve here.

"I've seen some retailers rush to put new products on the shelf and not clearly define and communicate to the consumer what the product is," he says.

With the health and wellness sector "exploding" — and more and more functional foods that provide health benefits becoming available — he sees a need for true collaboration.

"Retailers have a lot of access to consumer data and trends, and we have expertise in product development and marketing new better-for-you pasta products," he explains. "We need to work together to seize the potential sales and capture the target consumer with clear front-of-package messages and appropriate claims."

A little fine-tuning

Retailers also can boost store brand sales within the pasta and rice segments by investing in packaging enhancements, convenience-minded products and premium items, Regan says.

And Agron Kosova, manager of Fine Italian Food, Naperville, Ill., adds quality to the short-list of investments. He believes some retailers still are focused more on price than on quality. Although a certain subset of shoppers always will buy the cheapest rice or pasta product on the shelf, most shoppers will not settle for subpar quality when they can get another brand they like more — or that offers a better nutritional content — for just a few nickels more.

"When you dry pasta at a high temperature, producing it at a lower cost and faster, you kill the nutritional value," he explains. "The slower pasta is dried, the more value [it has]."

Kosova also says today's consumers have more segment-specific knowledge than they did just five or 10 years ago. For that reason, he sees growing interest in higher-quality pastas and Italian rices.

Because private label is actually the number-one "brand" on the pasta side (with some retailers enjoying a share above 50 percent, or even in the 60 percent range), Regan believes retailers would benefit by dedicating more even space and focus to their store brands. And he also advises against a narrowing of the price gap between store brands and national brands in both segments.

"Category dynamics have changed dramatically over the past six months, and brands have been more aggressive in promotion depth and frequency," he says. "Many retailers are taking the additional branded dollars, to the detriment of store brands and total category growth."

Cunningham concurs, noting that 10 for $10 national brand promotions have been popular.

"Price shielding of your store brands when national brands are promoting heavily will maintain the price gap and continue to show value to your consumers," he says.

He points to a Willard Bishop study that examined this issue, linking dual promotions to stronger category performance and suggesting that "joint business planning between branded suppliers and retailers can generate mutual gains from coordinated promotion efforts."

And Regan says a study AIPC recently completed shows retailers that are protecting and maintaining the price gaps between the national brands and store brands in this new environment boast a category performance that's two and a half times better than retailers that are not. The same study shows that narrowing the average price gap between the national brands and store brands by just 3 cents a pound will result in lost share for store brands."

[Two] of the biggest mistakes we have seen is retailers leaving private label out of the promotional cycle and not protecting the gap to brands," he says.

Merchandising magic

A little inspired merchandising also will work to attract shoppers to store brand pasta and rice products. Although Cunningham notes that many retailers have moved away from creative themed displays to help sell a dinner concept, he believes the meal theme remains an important merchandising tool within the pasta segment.

"Pasta is a meal platform and provides the base of selling meal ideas with related food items," he says, "and the variety of pasta shapes provides seasonality to recipes. The simplest display of spaghetti with pasta sauce and Parmesan cheese provides a convenient weekday meal solution."

Retailers also could display high-volume pasta shapes in a half pallet, Regan notes, or display pasta with complementary items on end caps.

"One creative idea is to feature a unique pasta shape such as rigatoni or cavatappi with a recipe and complementary sauce and/or Italian wine," he adds.

Speaking of recipes, Cunningham notes that more elaborate recipes such as lasagna, provided in store, pull items from across the store and increase basket rings.

In-store recipes also work well on the rice side. And every September, the USA Rice Federation sponsors "National Rice Month," offering point of sale (POS) materials and ideas for using them in creative displays. The federation notes that for 2009, participating retailers realized a 24 percent average increase in sales.

Among the suggested ideas from the USA Rice Federation:

• Use POS with a recipe tear-off pad in the rice aisle to generate impulse rice purchases.

• Set displays in the deli section to encourage customers to sample rice dishes.

• Use POS to cross-merchandise spices, poultry, produce, sauces and other products that marry well with rice.

And for both pasta and rice, retailers would do well to convey the value message in any merchandising efforts, considering the still-lousy state of the economy.

"Customers [are] cooking more at home, and pasta and rice are two items that can be cooked easily," Kosova emphasizes. "Even if [they] buy an 'expensive' pasta or rice, it still will be much cheaper and healthier for a family to cook at home."

Do communicate the benefits of new and existing whole grain options to consumers.

Don't forget to emphasize pasta and rice's value proposition within merchandising and marketing.

Do protect the price gap between store brand items and the national brand.

Don't neglect quality in the quest to save pennies.