While budget-friendly pasta has shown its resilience during the recession, an influx of better-for-you varieties ensures long-term success and profitability of the category.
By Richard Turcsik
Pasta is the perfect recessionary food, as it is high in protein and carbs, easy to prepare and—most important—cheap. Coupled with a jar of 99-cent, on-sale sauce, a nutritious and delicious meal can be had for only pennies per serving.
“More people are looking for affordable meal options and pasta provides that,” says Kirk Trofholz, president of industry-leader Barilla America, Inc., based in Bannockburn, Ill. “Pasta is easy to make. It is not time consuming and anybody can do it if you use a jarred sauce.”
“It has been a long time since the pasta category has seen growth, but for the last 12 to 18 months, the category has been growing volumetrically at about 2-3 %,” says Pat Regan, senior vice president, consumer and customer brands, American Italian Pasta Co., based in Kansas City, Mo. “Because of all of the pain consumers have gone through the last two years with the economic downturn and more unemployment, they are looking for pasta to provide healthy, low cost meals that can serve the whole family.”
According to SymphonyIRI Group, a Chicago-based market research firm, for the 52 weeks ended May 16, pasta sales in the food, drug and mass merchandiser channels, excluding Wal-Mart, were basically flat at $1.45 billion, a slight decline of 0.9%. Some of that can be attributed to a drop in wheat prices; the unit price of a box dropped about 3 cents during the same period. On the positive side, unit volume increased 1.6% to 1.1 billion packages, with several major brands posting high single-digit and even double-digit hikes.
“The insurgence in pasta has been really great for the whole category,” says Regan, whose company is a member of the National Pasta Association. “What we’re trying to do is figure out how to extend that growth because eventually the economy will recover. We’re looking at ways to teach consumers how to use more shapes and how to think of pasta more broadly for other meal occasions.”
Hotbed of growth
For most manufacturers the key to keeping sales “al dente” is by developing new upscale products offering improved health and taste benefits.
“Overall, that better-for-you pasta category is really a hotbed of growth, especially with products that deliver on taste,” says Liz Housman, director of marketing for Dakota Growers Pasta Co., the Carrington, N.D.-based manufacturer of Dreamfields brand and a major private label supplier.
Dreamfields is one of those “better-for-you” brands, and according to SymphonyIRI data, its sales are up almost 25%. “Dreamfields delivers some very unique benefits,” Housman says. “It is made primarily with durum wheat semolina, but we have found a way to protect most of the carbohydrates from digestion. As a result, it has a much lower impact on blood sugar than other pastas.”
While better-for-you offerings may cannibalize some mainstream product, Barilla’s Trofholz says they are bringing users scared off by the 1990s Atkins diet craze back to the category. “The good news for the retailers is that the better-for-you brands are priced at a premium to the regular semolinas, so it is a trade-up opportunity.”
Barilla offers several better-for-you options. Barilla Whole Grain is made with 51% whole grain to retain a traditional pasta taste, while Barilla Plus is made with multi-grain, along with omega-3 and egg whites to provide additional protein.
Barilla Whole Grain is available in over a half-dozen varieties. “We’re trying to get people to eat pasta more frequently,” Trofholz explains. “If we provide more cuts for them to have broader recipe options then there’s a greater chance that pasta finds its way into the daily menu more often.”
Many retailers have been setting their pasta sets apart by beefing up their selections of private label items. With the exception of Barilla, the other three national players—American Italian, New World (the Harrisburg, Pa.-based manufacturer of the former Hershey brands) and Dakota Growers—are also key private label suppliers. “Private label has gained steady share increases over the last two to three years and is now the largest player in the category,” says American Italian’s Regan. Private label accounts for about half American Italian’s business, he says, with the rest split between the company’s six regional brands—Pennsylvania Dutch noodles, Mueller’s in the Southeast, Ronco in the Deep South, Luxury in New Orleans, Anthony’s in the L.A./San Diego market and Golden Grain in Northern California and Hawaii.
In recent years American Italian has culled some of its regional brands; in St. Louis, R&F was discontinued and replaced with a stronger private label presence in market leader Schnuck Markets. “We worked with Schnucks to add more products to their lineup, spread the shelf space out and try to get that volume to move into their private brand,” Regan says.
Prior to culling R&F, the category makeup at Schnucks was one-third split between R&F, Barilla and private label. “Now it is 60% private label and the remainder is Barilla,” Regan says. “That’s a win for the retailer because there was great rationalization, more utilization of space, faster turnover of SKUs and all retailers like to build their private label.”
Retailers who are members of the Skokie, Ill.-based Topco Associates have three different tiers of private label pastas at their disposal. On the premium level there is World Classics Trading Company and Full Circle natural and organic; Food Club national brand equivalent; and the Valu Time and Clear Value budget labels. “In the case of pasta, private label quality is equal to national brands, but is priced below anywhere from 10 to 20%,” says Paul Best, director of product and brand innovation.
While Food Club, Valu Time and Clear Value are on par with national brands, Best says World Classics is a world apart. “It is very much targeted to people with more demanding palates, what you might call ‘foodies.’ The World Classics Trading Company pasta is made in Italy of 100% Italian semolina, which in my and many pasta experts opinions, is the finest type of wheat flour that you can use for pasta, and the single most important ingredient in any pasta product.”