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Dry dinner mixes have some heavy competition from the refrigerated and frozen aisles
As a result of increased quick meal options, the dry dinner mix and shelf-stable meal market in general is a mature market. Private label buyers and retailers need to be able to read between the lines of consumer behavior to find a way to boost sales.
Both national brand and private label dry dinner mixes are up against some strong shifts in consumer behavior. Today’s health-conscious shoppers tend to stay away from the center store and, as a result, dry dinner mixes, once a mainstay in every home’s cupboard, face tougher competition from refrigerated and frozen dinner foods, which “win out when it comes to taste and health perceptions,” according to a September 2010 research report from Mintel Group Ltd., Chicago.
Sales of shelf-stable meals and dry dinner kits rose nine percent from 2005 to 2010 to reach $2.1 billion, but after adjusting for inflation, these sales actually represent a two percent decline, Mintel reports. Why the drop? Blame consumer perception that the economy was finally emerging from the recession as their impetus to eat out more often and buy more expensive fresh food options.
Dry dinner mixes will post only minimal growth from 2010 to 2015, largely for the same reason. Mintel predicts. Data from SymphonyIRI, Chicago, also shows private label dry dinner mix sales in supermarkets, drugstores and mass merchandisers, excluding WalMart, down sharply for the 52 weeks ending Nov. 28, 2010. Private label dry dinner mixes with meat sales plummeted 94.6 percent; private label dry dinner mixes without added meat fell 15.6 percent.
But a slowly improving economy isn’t a sure thing, and consumers who felt more comfortable eating meals out may well return to combing the middle aisles for value-priced meals. And they’ll likely look for dry dinner mixes and other shelf-stable meals in places other than just supermarkets. Sales of these products in drug stores and mass merchandisers grew seven percent from 2008 to 2010, to reach $125 million, according to Mintel. Target alone launched 33 new private label shelf-stable meals in several segments during this time period.
Fern Phillips, CEO of Little Big Farm Foods in Portsmouth, N.H., believes that, “none of the changes we have seen over the past decade will stop, even as the economy improves. The tiered private label approach makes sense in most categories and consumers are delighted when they find a good value or a top quality product, whether it’s national or own-branded.” The key to improving sales of products like private label dry dinner mix is addressing the taste and health issues, Phillips says.
Consumers consistently rate convenience and price as the top reasons to buy dry mixes. Yet they balk for two main reasons: taste and health. Mintel’s consumer survey found that one in four respondents who do not use shelf-stable meals say that they prefer frozen meals, refrigerated meals, or even takeout. Smart private label buyers will realize that enticing a shopper’s taste buds is as important in this category as appealing to their frugal side. Today’s taste buds are decidedly international.
Far removed from the ubiquitous Hamburger Helper Beef Stroganoff, introduced in 1971, today’s dry dinner mixes cover a wide variety of ethnic flavors. “Sophisticated palates are becoming the norm for discerning consumers,” Phillips of Little Big Farms, says. She sees more sweet/savory and salty/sweet combinations hitting the private label market as shoppers seek to expand their culinary experiences at home.
Linda Lee, director of marketing at Williams Foods, a division of San Antonio-based C.H. Guenther & Son, agrees. Dry dinner mix flavors like Thai, Korean, and Indian are gaining popularity even as Tex-Mex taco and chili flavors continue to rack up strong sales, she notes. Private label buyers shouldn’t ignore the latter flavor signal, according to Mintel.
Hispanics buy more shelf-stable meals than non-Hispanics and this population segment is expected to grow by 35.7 percent from 2010 to 2015, while the non-Hispanic population is expected to grow by only 5.8 percent. Hispanics also buy greater amounts of dry dinner mixes that include a bit of extra preparation, say a kit of sauce and noodles that also requires additional meat or vegetables. Emphasizing the cook’s personal touch with private label dry dinner mixes – call it hybrid home cooking –is one way for retailers to reach the rapidly growing Hispanic market.
Mintel’s research also shows that 40 percent of consumers it surveyed don’t consider shelf-stable food products as healthy. Just a few years ago, sales of organic and natural dry dinner mixes were strong but only chili marketed this way remains so. Mintel suggests that instead of trying to market dry dinner mixes as natural or organic retailers position this category as a healthy alternative to fast food. Retailers can promote economical private label dry dinner mixes as a comparably cost-conscious but better-for-your-family alternative to yet another drive-through meal. But while dry dinner mixes and other shelf-stable foods may rarely win over the die-hard fresh or frozen food shopper, Phillips cautions against downplaying health claims. “All natural has become the price of entry in most categories. This is the consistent with the trend toward healthier foods and better-for-you foods,” she said. Lee at Williams Foods sees reduced-sodium dry mixes gaining in popularity.
To increase sales, Lee sees creative retailers promoting their own private label in a meal deal. They’re promoting the dry dinner mixes as a loss leader to drive sales on other items. Reatilers who entice customers to buy a pound of hamburger by offering a deep discount on (or even free) private label chili mix are getting customers to try private label products that they might not normally buy, she says.
Phillips says, “I love the Buy the National Brand and Get Ours Free idea for a direct comparative.” She also suggests that private label retailers continue to establish a consistent look and identity “rather than a knock-off of a competitor” and focus on advertising and coupons to further their own private label dry dinner mix brands.
Once on the shelf, “a private label line should have a least three SKUs in a category, all merchandised together, to stand out among the competition,” she adds.
And don’t forget that looks count. “A stunning on-shelf presence should be the focus of identity design development,” Phillips says. “Even the national brands have updated and improved their product shots and design.” But she cautions that making packaging more sustainable can be tricky. “There’s a fine line between being ‘green’ and keeping costs down. Most secondary cartons are now made from recycled papers, but a true non-treated surface is difficult to print on, particularly when it comes to appetizing ‘product-as-hero’ shots,” she says.