Packaged meats offer consumers convenience and value while expanding opportunities for retailers.
By Nina Amir
Packaged meat is a dependable but historically slow-growing category—sales are typically up just 1% to 2.5% a year. However, it leads most other grocery categories when it comes to rolling out new products and line extensions, according to industry executives.
Experts say much of the current innovation in the category centers around consumers’ focus on value, which Tom Buddig, executive vice president of Homewood, Ill.-based Carl Buddig & Co., defines as “the quality of the product, the convenience of its use and the taste appeal at a given price. In any research we have done recently, value and taste are the major concerns that consumers seem to be expressing.”
Recent economic conditions only have made this trend more pronounced, industry executives say. “The brands that offer the greatest value and convenience are the ones that continue to see the strength and growth in sales,” according to David Van Eekeren, president of Lansing, Ill.-based Land O’Frost.
Current sandwich trends include unique flavor combinations, hot sandwiches and updated takes on classic combinations, according to research from Northfield, Ill.-based Kraft Foods. “To that end, consumers seek bold lunchmeat flavors,” says Gary Berger, brand manager for Oscar Mayer. In response, Oscar Mayer recently expanded its Deli Fresh Meats offerings. “These new varieties of shaved meats feature premium Angus Beef Bologna and Turkey Pastrami with pepper and garlic flavor,” Berger says.
These varieties join a flavor-packed lineup that was unveiled last summer, Berger says. “To add a fresh taste to lunch, the Oscar Mayer brand introduced four bold new varieties of Deli Fresh Shaved Meats: Black Forest Ham, Cracked Black Peppered Turkey Breast, French Dip Flavored Roast Beef and Cajun Seasoned Chicken Breast,” he says. “Sliced, packed and sealed at the peak of freshness, Oscar Mayer Deli Fresh Shaved Meats deliver the fresh-taste of the deli but are more convenient.”
Land O’Frost’s has also upped the flavor profile with its Bistro Favorites. “We have taken a higher-scale quality product and still offered a great value to the consumer,” Van Eekeren explains. “This is much closer to the deli-style lunchmeat in both flavor profile and grade. This product has taken off for the higher-end consumer looking for a roast beef, a peppered beef, or a Black Forest ham—high-end deli-style lunchmeats. We have been offering it with recloseable packages again, so you have convenience.”
Consumers are also looking for convenient packaging that preserves taste and freshness, according to industry executives. “The trend is towards use of recloseable containers and tubs and resealable bags,” says Scott Rouse, senior vice president of customer development for Springdale, Ark.-based Tyson Foods, Inc.
One example of a product that meets these needs is Land O’Frost’s Sub Kit. “By offering something recloseable or resealable without waste, we’ve tended to see a better acceptance by the consumer,” Van Eekeren says. The kit involves “opening a package and literally taking out three slices of lunchmeat interleaved with parchment paper and slapping them on a six-inch sub roll,” he says. “We introduced this to the market a year ago, and it has been a tremendous success everywhere we’ve placed it.” He says that since sub rolls tend to be sold in packages of six, Sub Kits contain enough meat for 12 sandwiches. “It’s designed around the bread component,” he adds.
While consumers want convenient packaging, they are mindful of waste, experts note.
“When it comes to packaging, we have environmentally great packaging,” Van Eekeren says. “We are not wasting anything. Our target consumer is generally families of four or more; they to consume a lot of lunchmeat. So the size of the package is relevant. They are able to consume it and not waste.”
Other companies also are targeting families. “Households with the presence of children are good consumers of pre-packed deli meats, so our one-pound and 30-ounce variety packs are naturals for this segment,” Buddig says. “Our two-ounce single-serve is ideal for the growing segment of smaller and senior households, while the presence of children dictate larger sizes to deliver the value proposition,” says Buddig.
Healthier options are also giving the category a push, experts note. “We’re seeing more better-for-you options like low-sodium lunchmeats,” says Rouse.
Berger reports that the turkey and chicken segments represent the fastest growing parts of this category as consumers seek “better-for-you” options. Oscar Mayer recently introduced Turkey Pastrami and its Oven Roasted Turkey Breast continues to be a favorite, according to company officials.
Hold the fat
To meet consumers’ health concerns, Berger adds, “We offer fat-free and low-fat deli meat options. And we continually look for ways to reduce sodium in our products. For example, we have reduced the Oscar Mayer Meat Bologna line by 15%, our Turkey that comes in the resealable pouch by 30% and our ham that comes in the resealable pouch by 30% as well.”
Carl Buddig & Co.’s Deli Cut products have qualified for the American Heart Association endorsement. “We are proud of being one of the first processed meat products to qualify and believe that the AHA logo is important to a growing segment of our population,” says Buddig. Carl Buddig Deli Cuts have no fillers, are 97% fat free, gluten free and have no MSG. “It only seems natural to expand our product line and offer that product in a 1 pound tub as well as a smaller portion for the smaller households and seniors,” says Buddig. “The one-pound Deli Cuts will be packaged in two 8-ounce portions to ensure freshness.”
While retailers tend to limit packaged meat displays to the deli area, experts say that multiple displays outside of the department can boost sales “Building special displays or bunker displays is the single most impactful and efficient, as well as inexpensive, thing a retailer can do to drive this category,” Van Eekeren says.
Land O’Frost partnered with the Iron Man 2 movie release and asked retail partners to build displays in stores with an Iron Man tie-in. “We saw lifts of 60% and 70% in sales over previous years in the stores that built those displays,” he says.
Oscar Mayer is teaming with retailers to provide in-store sandwich centers for quick, one-stop sandwich shopping. The company also supports its products with robust consumer marketing.
Carl Buddig & Co. officials say the company strives to customize promotions to achieve its mutual goals and the retailers it serves. With its Old Wisconsin products, for example, it offers a number of merchandise racks, shipper displays, clip strips and canisters.
Berger suggests retailers design sandwich-themed CMG programs, combine display with recipe ideas and meal solutions to encourage purchases, and change themes regularly to tie in with holidays or special occasions.
In terms of promotion, Rouse says retailers can achieve a higher rate of return by focusing on timing and price point variance, between private label and branded items to capture sales from different consumer segments. He also suggests enhancing the shopping experience by refining the assortment and improving signage.
Tap into loyalty
Buddig says the most innovative things grocery stores are doing to promote this category involve their use of consumer data driven by loyalty cards. “Many retailers are using direct-to-card couponing, electronic coupons and social media to drive people to their stores, as well as segment targeted flyers,” he says. Carl Buddig & Co. has started the Buddig Lunch Club as its introduction to social media and brand loyalty. Participants earn coupons and other incentives.
“Our coupon redemptions have nearly doubled, and we are using more coupon vehicles in addition to the FSIs we have traditionally run,” he says. “We work with retailers to try to achieve certain price points and promotional ad points to drive maximum sales without creating a situation which the products must be on sale to move regular volume. We work with retailers to achieve a balance of promotional volume and regular price to drive volume.”
As part of its online marketing strategy, Land O’Frost launched Landomoms.com earlier this year. The site features “mommy bloggers” but only one reference to Land O’Frost in the form of a coupon.
“We have seen a phenomenal interest and hit rate on the couponing,” says Van Eekeren. “In first 48 hours of launch we had over 60,000 coupons pulled of the site. That number was four times larger than anyone thought we’d get in the first two weeks.”
Van Eekeren suggests retailers focus more attention on supporting the long-standing brands that have created awareness of this category. “Retailers need to focus back on partnering with the brands that really have helped promote the category from the beginning,” he says.” These brands are putting the marketing dollars behind the category in TV and the consumer publications. Putting some focus back on supporting those brands would be a healthy thing for the entire category.”
Keep it fresh
Although experts expect the category to continue on its slow-growth path, the manufacturers that understand the consumer and work to keep the category fresh will keep it growing. Rouse says Tyson plans to offer products with fewer ingredients, more convenient packaging and pre-packaged entrées such as ribs and brisket, as well as offerings made with traditional processes and flavors.
Buddig & Co. will be previewing a number of products for retailers in late summer and early fall, including new package designs uniting the Buddig original products under one banner and Deli Cuts products under another. The company is also adding a Variety Pack Tub, a one-pound Deli Cut Tub, a 3- and 4-ounce Deli Cut product, a Cheese Ball Pinwheel Kit and a Gridiron Beefstick Conqueso Dip entertainment tray.
“If we become stagnant, the category will become stagnant,” Van Eekeren says. “Our category is one of great innovations. Both retailers and consumers should expect to see new things all the time. Some will make it, some won’t. These new products, however, give the retailer the chance to test out new products all the time.”
As long as the economic downturn remains an issue, Buddig predicts that the value side of the lunchmeat segment will continue to be strong. “People will continue eating a little less fast food and preparing sandwiches and dollar stretching recipes at home.”