Room to Grow
From simple tortillas to restaurant-quality curries, ethnic foods have been riding a growth wave at retail for some time now. In its January 2014 “Ethnic Foods — US” report, global market research firm Mintel reports that dollar sales here rose 15 percent between 2008 and 2013.
“Shifting U.S. demographics and a growing interest in flavor variety will contribute to continued growth in the category,” Mintel states in the report.
However, although 92 percent of consumers Mintel surveyed for the report admitted to eating some form of ethnic food in the prior three months — either at home or at a restaurant — the percentage of consumers who actually prepared those items at home is smaller: 74 percent.
“Keeping these products top of mind to shoppers, and infusing consumers with the confidence that they can easily and affordably prepare these dishes at home, will be key to maintaining a strong pace of sales growth,” Mintel notes.
Keep up with trends
Staying on-trend in terms of product development also will be critical to growing sales of store brand ethnic foods. One current trend tied to mainstream U.S. shoppers is that toward bolder flavors — and spearheaded by various chilies, says David Weinberg, director of marketing for Santa Fe Springs, Calif.-based Day-Lee Foods Inc.
“Millennials especially are leading this charge toward bigger and bolder flavors, having grown up with more spicy and internationally diverse ethnic dishes,” he says.
But the desire for big and bold isn’t limited to millennials. The majority of ethnic food consumers seek spicy flavors, Mintel says, especially when it comes to Mexican/Hispanic food. It’s also worth noting that more survey respondents indicated that they prepare Mexican/Hispanic items from scratch than from a packaged product or a meal kit — likely because this fare is typically easy to create.
“It may also be that consumers are bored with current packaged offerings,” Mintel says. “Packaged food manufacturers in the segment would do well to develop more complex dishes with more developed flavor profiles to allow home cooks to step up their ethnic food game. Regional Mexican cuisine or Central or South American favorites can be explored.”
Speaking of Mexican/Hispanic offerings, Tom Nist, vice president of sales and marketing for Boise, Idaho-based Fresca Mexican Foods LLC, also sees a growing trend toward clean-label products. To help meet demand here, his company is introducing the restaurant-quality, preservative-free Tortilla Revolution tortilla to retail.
Although Mexican/Hispanic fare makes up the largest ethnic foods segment at retail, Asian/Indian offerings continue to grow, Mintel notes, posting a 27 percent dollar sales increase between 2008 and 2013. (Italian offerings, now viewed as mainstream fare by most U.S. consumers, were excluded from the report.)
Some of the on-trend offerings here include aloe drinks, spicy Asian sauces and coconut-infused or coconut-flavor-infused products, notes Cheryl Tsang — who, with her husband David Tsang, founded House of Tsang, Oriental Deli, Starport Foods and Global Select Foods; they serve as consultants to Asian food manufacturers. Rice rolls and seaweed snacks also are booming, she says, as they are low in calories and mesh with consumers’ high interest in health and wellness.
Wayne Nielsen, vice president of sales and marketing for JSL Foods Inc., Los Angeles, adds fresh yakisoba, udon and rice noodles positioned in the produce department’s meat-alternative section to the list. Asian items that make for a quick, easy meal the shopper can personalize are popular, as are kid-friendly and restaurant-quality products.
The Mediterranean/Middle Eastern segment, dominated by hummus, reached $784 million in 2013, growing only 1 percent since 2008, Mintel reports. The segment is still recovering from a dip it saw in 2009 after the start of the economic downturn. But it should benefit from high consumer interest in healthful eating, with Mintel forecasting the segment to grow by 8 percent between 2013 and 2018.
“Vegetable and herb flavors rule among those who eat Mediterranean/Middle Eastern food,” Mintel says, “meaning the cuisine can be a strong attraction to non-meat eaters and health-conscious consumers.”
No matter the ethnic food segment, sauces and seasonings are trending up in terms of new product launches (between 2009 and 2013), Mintel notes, while meals and meal centers are trending down.
“This points to a focus on preparing scratch and semi-scratch meals at home, rather than relying on heat-and-eat products” the market research firm noted.
Watch what’s coming
Retailers also would be wise to pay attention to the most significant ethnic food trends on the foodservice side. After all, they likely will make their way to retail soon.
Nist points to a trend toward non-traditional spins on favorite staples — such as Buffalo chicken burritos or Caesar burritos — in Mexican-centric restaurants.
On the Asian side, Nielsen says entrée soups ranging from Vietnamese pho to broth bowls make for an exciting trend to follow.
“Foundations in authentic are giving way to regional interpretations and fusion,” he adds. “The format lends itself to outstanding combinations of flavor, texture and ingredients. Noodles to watch for [include] fresh ramen, soba buckwheat and udon. Emerging [is] green tea noodle.”
Asian food at foodservice increasingly is country-or region-specific. Weinberg says both Thai and Vietnamese fare have been popular within Californian restaurants for some time now, and that trend is expanding across the country.
“Korean is strong, too, and we’re surprised that Filipino food has not mushroomed more yet,” he adds. “And, of course, we see Indian food as becoming more and more popular.”
Ancient traditional foods such as fish sauces, seaweed and kimchi also are on-trend on the restaurant side, Tsang says, as are sea vegetables such as kelp, kombu and laver — which not only tend toward all-natural, but also feature a “wonderful nutty flavor” and are low in calories, rich in minerals and vitamins, and good sources of iodine. In addition, she points to fermented products, probiotics such as the Korean beverage Yakult, mixed grains and legumes, and reduced-sugar items as trends to watch.
“Today’s consumers are open to food and snack items that have lower sugar contents,” Tsang says. The market is moving away from refined sugar and [going toward] honey, date sugar, natural cane juice, rice syrup.”
Appeal to the eye
To attract mainstream consumers to new on-trend store brand ethnic items, retailers will want to invest in packaging with eye appeal. Most important, Weinberg suggests, is great food photography.
“From a packaging standpoint, the food shot has to be the ‘hero,’” he explains.
Shoppers also are attracted to packaging that features more product than a similar-priced competing item, says Amanda Topper, food analyst for Mintel. And functional attributes such as ease of opening, resealability and ease of storage are particularly important to high purchasers of store brands.
“Several private label products across food categories are incorporating either transparent packaging or packaging with windows,” she adds. “This type of packaging may influence purchases by allowing shoppers to see exactly what they are buying. Additionally, transparent packaging can help reduce the perception of poor-quality generic products that may still influence some consumers’ — especially older consumers’ — perceptions of store brands today.”
In conjunction with a strong food photo, the right callouts also can be huge influencers on the packaging front. Nielsen counts “no MSG,” “natural,” “whole grains,” “gluten-free,” “superfoods,” “convenient” and “restaurant-quality” among the attention-grabbers.
Tsang agrees that compelling health benefits and cleaner labels can help sell the product to the consumer, and notes that many Asian foods already skew toward the healthful side.
Get creative
Imaginative marketing, merchandising and promotions also could go a long way to attract attention to store brand ethnic food offerings.
“Retailers need to group products by meal occasion, not just type,” Weinberg maintains. “They need to think about their mom/dad primary grocery shopper who is rushed for time and looking for meal solutions. And provide complete meal components in one spot — whether in frozen, fresh or shelf-stable” areas.
Nielsen advises retailers to think “storewide” when it comes to cross-merchandising.
“Cross-merchandise with the dry Asian section and deli,” he offers as an example.
And retailers should invest in product demos for store brand ethnic foods and give them their due when it comes to end-cap placement and at-register promotion, Tsang notes. For Asian fare, Lunar New Year promotions also could reap positive results.
Finally, recognizing that almost two-thirds of surveyed consumers agreed they once they’ve tried one store brand product, they are more likely to try another, retailers might want to incentivize shoppers to buy multiple products at once, Topper says.
“Buy-one-get-one offers or weekly discounts on store brand products across complementary food categories are examples of ways these shoppers can be reached,” she says.