Think Outside The Deli Case
Store brand opportunities abound in the prepackaged deli-style meat and cheese arena for retailers willing to invest in innovation.
Whether shopping for hot dogs and bratwurst for a backyard grill-fest or scouting out Genoa salami and imported cheeses for a party-worthy platter, consumers will find a wide variety of deli meats and cheeses from which to choose within today's grocery stores, supercenters and more. And the time-pressed consumers among this bunch need not even wait in line at the full-service deli — thanks to a growing range of prepackaged options marketed both inside and outside the deli area.
Retailers looking to jumpstart store brand sales in prepackaged deli meats and cheeses would be wise to look, in general, to less-expensive products, more variety and more frequent sales/specials, notes Alan Hiebert, education information specialist for the Madison, Wis.-based International Dairy-Deli-Bakery Association (IDDBA). He counts these among the top sales-driving factors consumers cited in IDDBA's recent "Consumers in the Deli: Attitudes, Buying Behavior & Purchase Drivers" study.
"At the same time, nearly two-thirds of respondents said they were making a serious effort to cut back on fat, and over half said they were trying to cut back on calories, trans fats, sugar, sodium or carbohydrates," Hiebert says. "Looking forward, I think that we'll see more perishable products with health claims."
Although reduced-sodium claims are getting much attention, he says IDDBA research shows that "no additives/preservatives" actually has been the most popular health claim during the last several years.
"To me, this is in keeping with the trend toward locally produced and sustainably farmed that we've been seeing," Hiebert adds.
Quality, differentiation count
On the prepackaged meat side, in general, consumers now are more demanding about store brand quality, says Edward Kelly Jr., national sales manager for Telford, Pa.-based Godshall's Quality Meats.
"In many cases, [they] are expecting a retailer's private label to be at least the same quality, if not better, than the leading national brands," he says. "It appears that in their search for value, consumers are becoming much more educated as well. Creating quality product which is not solely based on price is the key to expanding private label sales in the meat segment."
Also gaining traction are more healthful/ nutritious meats, Kelly adds, as well as meats that deliver something a bit different than the national brands.
"No reason to stick with mirroring the national brands," he stresses. "Get creative. Experiment a little; create a point of difference from national brands and competitive retailers."
Within the lunchmeat category, Mark Russell, director of business development for West Liberty, Iowa-based West Liberty Foods LLC, says sustainability — or at least consumer perception thereof — is huge. Anything retailers can bring to the table in terms of sustainability-minded packaging, logistics or product enhancements (such as natural and/or organic) is critical, he says.
Although low-fat also remains a lunchmeat trend, Russell says it's largely been played out. Lower sodium, on the other hand, is getting a lot of attention in the category.
Going forward, true innovation — not just promotions — will be critical to store brand growth in the lunchmeat category, he stresses.
Lunchmeat packaging, in particular, is in dire need of an overhaul, Russell contends.
"We've been sitting on tubs and zipper packs for 10 years," he says. "There's better packaging out there. There's packaging that's resealable and more sustainable than tubs, which from a sustainability standpoint are just terrible — they have a ton of plastic, and you're shipping air."
Outside the lunchmeat space, packaged hot dogs and sausage are trending toward more natural and premium.
With consumers still eating out less frequently than they did pre-recession, they want to buy a better hot dog for at-home consumption, contends Eliot Kaufman, vice president of sales for Vienna Beef, Chicago. He points to "tremendous interest" in all-beef formulations, as well as simpler ingredient statements.
Store brand sausage products, too, can benefit from the inclusion of beef — specifically Angus beef, notes Tom Chermak, president of Cher-Make Sausage Co., Manitowoc, Wis.
"Angus beef has built-in branding power; it's a differentiator," he says.
Speaking of differentiators, Chermak says cooking flavors and ingredients such as grilled, charred, roasted garlic and applewood smoked also hold appeal, as do cheese ingredients such as cheddar and jalapeno and pepper Jack. And because consumers are looking for more "real food," natural or uncured items and items featuring sea salt are rising in popularity. He believes lower-sodium products will continue to expand, too, as products are perfected to deliver a better flavor and eating experience, as well as an adequate shelf life.
Artisan appeal
A number of trends also are impacting prepackaged deli-style cheeses. According to a December press release from the Wisconsin Milk Marketing Board (WMMB), Madison, Wis., consumers' desire for foods that are natural, small-batch, fresh and sustainably produced continues to be strong, and cheese is benefiting from these preferences. WMMB says it expects the proliferation of new specialty and artisan cheeses to continue. In Wisconsin alone, specialty cheese production amounted to 477 million pounds in 2009, an increase of 40 million pounds, or 9 percent, over 2008.
WMMB also sees "no end in sight" for growth of Hispanic cheeses, noting that Mexican-style cheeses will see continued growth, and Central and South American cuisines will foster broader application.
Although the cheese category is not immune to the better-for-you trend, consumer concerns related to sodium intake are having little impact on purchase behavior, Mintel International notes in its "October 2010-March 2011 Category Insight: Cheese." The global market research firm concludes that "companies should either stop emphasizing low-in-salt formulations or really emphasize the outstanding taste of their low-sodium options." On the cheese packaging front, Mintel also points to opportunity for "more launches made from sustainable or biodegradable materials."
Give 'em their due
No matter how differentiated the product, prepackaged store brand deli meats and cheeses still need to receive their fair share of in-store attention.
Chermak believes proper merchandising is especially critical to the sausage category, which he says is being "watered down" thanks to pressures to contain retail price points.
"Many of the attributes of a high-quality old world sausage are getting lost," he says. "They need to be merchandised correctly in order to have the value understood by the consumer. This would be much like breweries have done with craft micro beers [and] the cheese industry has done with the great variety of high-end natural and imported flavors."
And when it comes to summer sausage, Chermak believes many retailers could take a lesson from Wisconsin - where the product is promoted year-round for all kinds of entertaining occasions, not just for the winter holidays.
Store brand lunchmeats also can be tied in with holidays and events to build sales. Kaufman points to one retailer's success with a St. Patrick's Day Rueben promotion featuring corned beef, cabbage and cheese. And he notes that hot dogs cross-merchandise well with numerous products, from store brand soda and chips to name brand beer, for myriad occasions.
For store brand prepackaged deli-style cheese, IDDBA believes demos and sampling are the best ways to educate consumers and sell more product, Hiebert says.
"One of the most effective ways of generating extra sales is to appeal to people's senses," he says. "That is, to have customers see, touch and taste the product.
Demos need not be limited to cheese, however.
"Private brands are the wave of the future," Kelly emphasizes, "and those retailers who do the best job conveying their quality to the consumer will stand the best chance of getting more consumers into their stores and filling carts."
Do
consider consumer interest in better-for-you deli meats that feature simpler ingredient statements and less sodium.
Don't
just follow the national brands' lead - invest in innovative packaging that can take store brand lunchmeat to category-leader status.
Do
invest in demos for new store brand artisan cheeses to educate consumers and boost sales.
Don't
put pricing first and quality second when it comes to product development on the deli meat side.
*Excludes specialty and imported cheese.
Source: The Nielsen Co. Food, drug and mass merchandiser stores, including Walmart, for the 52 weeks ending Feb. 19, 2011.
