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Meal Makers

October 28, 2009
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The skeptics among us who question the accuracy of recent headlines pointing to a resurgence in home cooking might want to think again. If half-empty restaurants are not adequate proof, then recent dollar and unit sales gains in cooking oil and salad dressing - two meal-preparation staples - should be.
Indeed, dollar and unit sales within the total cooking and salad oils category (excludes olive oil, shortening and sprays) rose 18.2 percent and 2.4 percent during the 52 weeks ending July 12 (U.S. supermarkets, drugstores and mass market retailers, excluding Walmart), while private label renditions racked up impressive 28.5 percent and 10.7 percent dollar and unit sales gains.
Although dollar sales in the total shelf-stable pourable salad dressings category rose just 2.9 percent (while unit sales actually fell 2.4 percent), private label fared extremely well here - posting dollar and unit sales gains of 15.8 percent and 10.1 percent. And the growth story continued on the refrigerated pourable salad dressing side, with the total category showing 6.0 percent and 1.2 percent dollar and unit sales increases. Private label, meanwhile, posted incredible 98.4 percent and 129.4 percent respective dollar and unit sales gains (albeit from a small base).

Oils Overhaul

Today’s oils look very different, composition-wise, from their earlier cousins. Although cooking and baking performance is still critical to consumers, that performance cannot come at a health-compromising cost.

Bernardo Hussing, business development manager for Miami-based Transnational Foods, stresses that today’s consumers are demanding better-for-you oils at a competitive price. He points to health-minded private label oil blends (such as soybean oil and extra virgin olive oil - high in vitamin E and “good” fats) as examples of this trend in action.
Kim Hannaford, national business manager for Memphis-based Stratus Foods LLC (a joint venture between ACH Food Companies and Archer Daniels Midland Co.), agrees with the better-for-you trend. He says omega 3 and other nutrients increasingly are making their way into retail oils, including private label renditions.
With the consumer eye on health, olive oil volumes also are growing, says Eryn Balch, marketing manager for Rome, N.Y.-based Sovena USA.
“Private label continues to be the clear growth area in the olive oil category,” she adds.
Mark Coleman, vice president of the retail division of Ayer, Mass.-based Catania-Spagna Corp., takes Balch’s comments one step further, noting that private label represents a growth opportunity for all oils.
“Branded sales will continue to be challenged during these times due to private label products and the perception that private label oils are just as good as the brands, or at least an acceptable version of the brand,” he says. “We have seen our private label sales soar this year, mainly due to this consumer perception.”
Although much of the growth is in olive oil, Hannaford also sees very strong consumer interest in specialty and gourmet oils that bring added flavor to home-cooked fare, as well as healthful safflower and sunflower oils.
In addition to having store brands present in every size and popular segment, Balch recommends including multi-tiered offerings such as organic and flavored items, or items tied to a specific country of origin.
Coleman also expects the trend toward at-home family dining to continue throughout 2009 - possibly into spring 2010. To make the most of this trend, he advises retailers to offer the key products and sizes the national brands are providing within each oil category.
“Store brands really are the ‘brand’ leader,” Hannaford adds, and as such, should think like a leader.

Private label innovations within the oils category not only can help boost sales, he says, but also can help retailers build that all-important emotional connection with shoppers.

Pour On the Flavor

Although healthful options (such as vinaigrettes) continue to be popular in the salad dressing sector, flavor appears to be becoming even more important to consumers overall. According to “Sauces, Dressings and Condiments in the USA,” a new report from Euromonitor International, Chicago, trends toward spicier and ethnic items in general - as well as in-home dining - are at play here.
Indeed, the Global New Product Database (GNPD) from Mintel International Group, Chicago, agrees that spicier flavors have the potential to become popular, tapping into consumers’ heightened interest in ethnic dishes - including Asian and Mediterranean-inspired salads.
But companies also would do well to focus on the healthful aspects of particular vegetables and fruits (e.g., superfruits), GNPD says. Although dressings that serve healthful niches such as low-calorie, fat-free or organic still have their place, GNPD points to a number of newer innovations that present growth opportunities, including:
• Spray varieties that allow consumers to carefully regulate the amount of dressing they use.
• Dressings reformulated with yogurt, building on yogurt’s healthy halo.
• Incorporation of omega oils, as well as extra virgin olive oil. Such ingredients can help retailers market both full-fat and lighter varieties in terms of flavor, wholesomeness and functionality.

Stand Out On the Shelf

To really build store brand momentum in the oils and salad dressings sector, retailers need to merge formulation trends with trends related to packaging, merchandising and promotion. On the packaging side, Balch notes consumers’ shifting preference toward larger containers of olive oil, including 1.5-liter, 3-liter and even gallon-sized offerings. The ongoing shift from glass to PET packaging for olive oil also is a positive, Balch says.
“We’ve witnessed many national chains and mass merchandisers make the switch from glass to PET in the past year with success,” Balch says. “Not only does this switch support sustainability initiatives, but it also provides opportunity for retailers to offer even greater value, which is consumers’ top priority right now.”
Although Coleman says olive oil consumers have “always been very finicky” when it comes to the PET plastic concept, Walmart’s recent introduction of its olive oil in PET packaging has not gone unnoticed.
“We feel most retailers will follow suit over the next 12 months,” he says. “The freight and damage savings alone really drives this trend. Your typical upscale grocer and organic retailer will wait until the very last minute to change and will certainly fight the good fight to the end on this concept,” he adds.
For both oils and salad dressings, Hussing advises going against the packaging norm.
“The U.S. market is not innovative,” he stresses.
He points to opportunities for square bottles and other alternative packaging in both segments to help products stand out in the crowd. Clear labeling also is called for, particularly in extra virgin olive oil, blends, healthful items and economy offerings, he says.
Hannaford also recommends that retailers take a hard look at their demographics - and tailor oils and salad dressings to their unique shoppers.
“For example, smaller sizes might fit better in a store with older consumers or a singles-oriented store,” he says. But no matter what the size, ease of handling and sustainable packaging innovations also should come into play.
And when it comes to merchandising and promotion, Hussing recommends BOGOs and cross-marketing between categories.
“Consumers are looking more than ever for deals in which they get all ingredients needed for their meals, at a great price, [and are] always hoping to find a product for free,” he says.
Finally, retailers should be treating their store brand items as “real brands” and innovating ahead of the national brands, Hannaford stresses. Merchandising and promotion tactics should include private label-related ad placement before national brand promotions, store brand tie-ins with retailer loyalty cards and much more.
“Store brands are already the leaders [in oils and salad dressings], and retailers need to act as such,” he says. PLB

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