FMI echoes price-sensitivity concerns: loyalty, marketing among other prevalent topics - Food Marketing Institute convention

DSN Retailing Today, May 20, 2002 by Debbie Howell, Mike Duff

CHICAGO -- Getting consumers to buy more food proved quite a challenge last year, with industry sales (adjusted for inflation) down 1.1%. Yet that hasn't stopped retailers and vendors from tapping into shoppers' demands for convenience, taste and nutrition in an effort to grow sales. Further complicating the issue is the fact that consumers are more price-conscious than ever and inclined to shop at a variety of store formats. That all adds up to a tougher time for traditional supermarket operators, but new opportunities for supercenters, clubs, price-impact stores and dollar stores.

"This year, price reasserted itself. Shoppers say without question they have cut their spending on food," said Michael Sansolo, senior vp of the Food Marketing Institute at the association's annual convention May 5 to 7 in Chicago.

Sansolo, in his state-of-the-industry speech that opened the 25th annual convention, said more shoppers now buy food at alternative formats: 28% at discount stores, 16% at clubs and 10% at low-price, limited-assortment stores.

For any retailer to survive in this challenging, increasingly competitive industry requires getting to know shoppers "as intimately as possible," Sansolo said. Opportunities to win customer loyalty include marketing to Hispanics, America's largest and fastest-growing ethnic group, and adding convenience services, such as gas pumps, pharmacy and self-checkout.

Innovation certainly wasn't lacking in products launched at the show by an estimated 1,200 vendors. The predominant trend was convenience, along with foods that were fortified, organic or featured ethnic, spicy flavors.

Multiple companies debuted snacks squeezable from tubes, trying to cash in on the success of Yoplait's portable yogurt lines Go-Gurt and Expresse. Rip-and-slurp snacks included Hershey's portable pudding and Jolly Rancher gel snacks from ConAgra, extreme-flavored Jell-O gel sticks from Kraft and freezable coffee-flavored ice snacks and gel snacks by Jel-Sert Company.

Snacks sold in containers that fit in vehicle cup holders was another craze. Frito-Lay's Go Snacks and Campbell's sippable soup were two examples.

In a similar vein, McCormick is trying to make mealtime easier. McCormick's new line of 1 Step seasonings features recipes that can be prepared in less than 30 minutes using meat and a few common ingredients found in most pantries.

Ethnic and spicy foods took center stage in another show trend. The growth of Hispanic shoppers is impacting retailing strategies across the country. Hispanics spend more money on food--$117 per week versus $85 for a typical shopper--and frequently prepare authentic meals from scratch. A high priority is placed on fresh produce and meat, as well as authentic ethnic ingredients.

Business is definitely booming for Goya Foods, according to sales representative Nick Karras. The company that specializes in Mexican food items added a new line of authentic salsita hot sauces, in flavors smoky ancho chile, tangy arbol chile, plenty-hot jalapeno chile and pure-fire habanero.

Other unique ethnic flavors are making their way into new foods, as well, from Asian to Mediterranean cuisine influences. Lipton, for one, debuted five flavors of Asian side dishes in such varieties as beeflo mein noodles and teriyaki noodles. Wild Garden launched a line of hummus dips, while Lindsay unveiled Olivada, a line of chunky Mediterranean-style olive spreads.

Organic or healthy foods, meanwhile, continue their steady growth rate. Most major food companies now dabble in natural food lines. New this year is the Healthy Harvest line from New World pasta in four of its brands, featuring no sodium or preservatives, low fat and high fiber content in a wheat blend product. And entering the arena for the first time is Snyder's of Hanover with a line of organic pretzels and all-natural snacks, such as Veggie Crisps.

In addition to its new sweet and spicy Mango Chile dried fruit product, Frieda's offered dessert and baked tofu, a product the company is urging food retailers to move into natural/organic displays for greater success. Frieda's also is urging retailers to move its elephant garlic next to tomatoes. "We increased sales by 300% when we're merchandised in the tomato section," said spokeswoman Lyn Hughes.

Among the new products at Melissa's was South African baby pineapple. The advantage of the baby pineapple, said Bill Schneider of Melissa's: You only need to remove the outer skin as even the core is edible. Melissa's also has expanded its organic dried fruit selection and added My Grinders spices in a package that puts the crush on sea salt and Italian and garlic and herb mixes.

Amy's Kitchen offered a new line of bowl meals in its naturally oriented products, brown rice and vegetable, teriyaki, Santa Fe enchilada and stuffed pasta shell. Alexia also is after the natural food aficionado with a line of pouch frozen potatoes, including Yukon gold and sea-salt flavored items, among others.

Snacks targeting kids trended toward miniatures and popular licenses. Kellogg's unveiled its Scooby-Doo brand cereal, while its Keebler division launched Nutri-Grain minis and miniature Club cracker sandwiches. One of Nestle's new candies this fall will be Nestle Crunch assorted miniatures. The candy flavors include double chocolate, caramel, peanut butter and original. Following the same trend is Poppers, a new bite-sized snack line from Lance.