Spread the Word

December 1, 2007
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Spread the Word

With evolving consumer preferences, sales are down in segments of the dips and spreads category. But an increase in innovative merchandising and new product development could turn the category around.

The key consumer:
From football tailgates with friends to cocktail parties with clients, social gatherings everywhere have the potential to offer the perfect accoutrement — dips and spreads. But as people continue to gather, dips and spreads aren’t making it onto the guest list. According to Chicago-based Information Resources Inc., dollar sales for one mainstay in the dips and spreads category — processed cheese sauce — have decreased by 2.9 percent in the total category, and are down 1.3 percent in private label over the 52 weeks ending October 7, 2007.
Although the decline in the processed cheese segment is minimal (as of now), it represents a persistent trend in the dips and spreads category: Demand is down.
In an effort to grow the category, retailers are putting forth more efforts to merchandise to the key consumer in the dips and spreads aisle. Typically identified as 18- to 35-year-old males, these key consumers have shifted the way they shop the category. Whereas an item such as processed cheese sauce at one time was used as a meal accompaniment, eating habits have changed — consumers just aren’t “pouring it on” anymore.
Processed Cheese Sauce
Sales (in millions) and promotion lift
ACTIVITY PRIVATE LABEL TOTAL CATEGORY
$ Value$415.4$2,144.4
% Change vs. Year Ago-1.3-2.9
% Dollars, Any Merchandising36.534.2
% Change vs. Year Ago-5.9-3.7
% Dollars, Display Only6.110.3
% Change vs. Year Ago-0.4-0.8
% Dollars, Feature Only 14.29.6
% Change vs. Year Ago-0.9-0.6
Source: Information Resources Inc., total supermarkets, drugstores and mass merchandisers (excluding Wal-Mart), for the 52 weeks ending Oct. 7, 2007.

The private label skeptic:
Similar to other categories within grocery retail, the dips and spreads aisle is shopped by customers who have loyalties to the national brands. These consumers often are leery about serving private label dips and spreads to guests or including private label items as meal ingredients.
Therefore, in an effort to appeal to the private label skeptic, be sure to showcase the health attributes of your dips and spreads, putting forward the more upscale offerings in the category — some customers equate premium with healthfulness.
What’s more, many consumers view the dips and spreads category as being viable only during holiday get-togethers or sporting events. Taste-to-compare demonstrations inform consumers of the product quality and let them know that the category has offerings throughout the year, which helps convert the skeptics.
Outlook, opportunities and strategies:
In addition to emphasizing the value of category mainstays such as processed cheese sauce, many retailers have successfully merchandised the category with the help of more exotic flavors available in each segment. Items flavored with wasabi or avocado, for example, are doing well in the category, and all signs point to their continued growth.
And in the dips and spreads aisle, the old concept of quality over quantity certainly still is relevant. Overall, many retailers have noticed that consumers who shop the category are concerned more about the experience of enjoying the preferred accoutrement than with the bells and whistles often associated with merchandising the category (e.g., packaging sizes).
Overall, the dips and spreads category is an excellent space for retailers to experience steady growth, especially in private label. From the deli department to the dried goods aisle, the possibilities of cross-merchandising dips and spreads are endless. All it takes is a little creativity and innovation to “spread” the word to consumers about the benefits offered by the various items in the segment.

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