FROZEN MEALS -- STICKING IT TO STOUFFER'S

August 18, 2010
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“Simply heat and eat” - the phrase has a nice ring to it, eh? It certainly does to most time-starved consumers out there, whether they’re warming up a breakfast burrito in the morning or sitting down in front of the television with a tray of Salisbury steak and potatoes at night. And although Schwan’s and Stouffer’s dominated many consumers’ freezers in years past, it seems that private label is becoming more and more appealing to value-conscious Americans looking for easy-to-prepare single-serve goodness.



“Simply heat and eat” - the phrase has a nice ring to it, eh? It certainly does to most time-starved consumers out there, whether they’re warming up a breakfast burrito in the morning or sitting down in front of the television with a tray of Salisbury steak and potatoes at night. And although Schwan’s and Stouffer’s dominated many consumers’ freezers in years past, it seems that private label is becoming more and more appealing to value-conscious Americans looking for easy-to-prepare single-serve goodness.
 
For the most part, private label outperformed the national brands in the frozen meal categories covered, according to data from Chicago-based SymphonyIRI Group.
 
For instance, breakfast certainly seems to be the most important meal of the day. In the 52 weeks ending June 13, private label frozen breakfast entrée dollar and unit sales increased 27.7 percent and 27.1 percent, respectively. Also, private label frozen breakfast handheld entrée dollar and unit sales rose 95.3 percent and 149.0 percent, respectively.
 

IRI data show other private label frozen meal categories posting growth during the same period - frozen pot pies gained 7.9 percent in dollar sales and 8.3 percent in unit sales; and frozen single-serve dinners/entrées gained 5.7 percent in dollar sales and 2.6 percent in unit sales.

 

PROMOTE AS A BRAND

“Retailers are promoting private or store labels as [true] brands, rather than simply relying on a pricing differential to attract shoppers,” says Jim Rudis, chairman and CEO of Overhill Farms Inc., Vernon, Calif. “They are emphasizing that their private label frozen foods have quality and flavor equal to or better than the national brands.”
 
“Frozen Processed Food – US” - an October 2009 report from Euromonitor International, Chicago - says that although many consumers are becoming increasingly interested in purchasing fresh, local meal ingredients, they remain uncertain about when the economy will recover. Therefore, many of these consumers will turn to more economical options.
 
“Additionally, frozen food manufacturers are beginning to introduce fresher and healthier products, such as flash-frozen foods and reduced-sodium items,” the report states, noting that health is as important as two other attributes consumers are demanding from frozen meals: convenience and value.
 
Matching all the attributes consumers are demanding requires elaborate private brand strategies. Rene Ouimet, CEO of Quebec-based Cordon Bleu-Tomasso, says he notices many retailers’ own brand strategies becoming more elaborate.
 
“In many cases, we are now working on multi-tiered own brand strategies to cover not only the basic [national-]brand-equivalent products, but also premium, ethnic, natural, health and organic,” he explains. “We are also seeing demands to innovate before the brands do, as well as an ability to match the branded products’ innovation more rapidly, which is what we are doing now with our handheld sub [sandwich] program, which matched Stouffer’s.”
 

Ouimet notes that certain products are particularly popular with consumers.

“Lasagna is still a classic and one of the highest-volume SKUs in the frozen entrée category,” he says. “Bag entrees, sandwiches and ‘regionally relevant ethnic’ products also are gaining in popularity.”

But depending on the retailer’s region, different products could perform differently on the market, Rudis says.
 
“We are seeing more-pronounced geographic differences than we have in the past,” he notes. “Items that sell well on the West Coast, such as some ethnic meals, may be much-less popular in the East. And conversely, more traditional, hearty meals seem to do better in the East and Midwest.”
 
But it’s safe to say that no matter what region they’re located in, most American consumers need a good balance between price and quality, says Allan Kliger, president and CEO of Toronto-based Victory’s Kitchen. Set a price point too high, and a customer might not buy the product. Drop the quality too low, and many customers won’t return for more. It might be tough to offer both a low price point and high quality, but Kliger believes that retailers need to try to offer an appropriate balance.
 

“You need innovation. No one can dispute that,” Kliger says, noting that products need to not only taste great, but also have a great texture. For example, consumers don’t want to chew on chicken that feels like rubber, no matter how inexpensive the product might be.

“You’ve got to come up with ways to build a better mousetrap and make it cheaper,” Kliger adds. “We’re still going to be price-aware and price-conscious, but mostly, we’re going to err on the better-quality product. And if that costs a little more, that’s OK, because in the long term, that will be the driver of our success.”

 

A QUALITY MESSAGE

Obviously, a retailer’s own brand frozen meals should be of excellent quality. And obviously, packaging should display the quality message.
 
“Clearly, the retailers are putting greater emphasis on packaging - the visual appeal of the product in the freezer case,” Rudis says. “The quality of the packaging and presentation is much higher today, just as the quality of the meals is higher.”
 
For example, if a retailer brings out a better-for-you product, it might want to consider lighter colors on packaging to communicate the better-for-you message, Kliger says. Retailers shouldn’t try “to fill every space with color or information,” he adds.
 

Also, retailers might want to consider a better-for-you message when it comes to the environment.

“We’re seeing obviously much more recyclable materials being used and things that are easily recyclable,” Kliger says, adding that a frozen meal in a paper tray could send a more eco-friendly message than a meal in a plastic tray. It also adds to a product’s desirability.
 
“Although plastic can be recyclable, not a lot of people want to put a plastic tray in the microwave and then eat the food that’s heated up in it,” he explains. “We’re seeing entrées that are being packed in paperboard, screaming health and wellness. The consumer looks at those, and in a millisecond, their brain is saying, ‘This is good!’”
 
And naturally, packaging should reflect the product’s tier. If it’s a value-tier product, the product should have simple packaging.
 
“The packaging needs to reflect … the own brand’s value proposition,” Ouimet explains. “Often, we can see the same format packaging for a premium product and a value product; the packaging needs to reflect the identity of the brand.”
 

But Ouimet warns retailers that packaging might not be the most-important way to boost shelf appeal.

“The biggest challenge may be how the products are placed on the shelves,” Ouimet says. “We still see frequently the own brand being placed in the least desirable locations on the shelf; furthermore, the products need to be placed next to the national brands, and they should be grouped together on the shelf to boost shelf appeal. How often do you see the own brand scattered across the freezer doors? Typically, [it’s] at the bottom of the shelves.”
 
Of course, retailers will want to make sure they keep the manufacturer involved in the merchandising process from the very early stages, Rudis says.
 
“Retailers need to involve manufacturers in their planning and product development early on, in order to get meals of the highest quality at the right cost for the intended sale price,” he explains. “The more closely we can work together from the earliest stages, the more successful the result will be.”
Rudis believes the best way for retailers to keep products consistent and sourcing uncomplicated is by committing a large portion of their product line to a single manufacturer partner.
 

“There is more of a partnership relationship when the manufacturer has an equal stake in the outcome.”

And throughout the whole process, retailers will want to make sure they’re keeping a close watch on the national brands for when they try to take share from store brands through price promotions.
 

“National brands have been closely watching the continuing success of private label frozen foods,” Rudis says, “and they have been responding with aggressive price promotion.” PLB

 

 

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