Slower but steady progress for dinner kits: ethnic line additions, more choices help fortify category sales

DSN Retailing Today, May 3, 2004 by Debbie Howell

After a flood of entries into the packaged dinner kit category in 2002, the segment seems to have settled down and lost some of its luster, perhaps due to the influence of low-carb diets that are impacting sales in multiple food and beverage categories.

The segment became a hot commodity when ConAgra debuted the Banquet Homestyle Bakes line in 2001. The convenient preparation of these casserole-style meals in a box, including meat, resulted in a rash of new competitors to the standby Hamburger Helper that included Dinty Moore Classic Bakes, Hamburger Helper Oven Favorites, Campbell's Supper Bakes and Betty Crocker Complete Meals.

This past year, additions to dinner kit lines subsided as suppliers coped with weaker demand and heavy competition. Data from ACNielsen for a 52-week period ending March 20, 2004 showed sales of non-pasta dry dinner mixes dropping 18% to $108 million. Regardless of this trend, suppliers remain upbeat.

"Our business has been growing modestly," said John Faulkner, director of brand communications for Campbell, regarding sales of the Supper Bakes line.

ConAgra's Kay Carpenter, director of communications for the grocery and food group, characterized Banquet Homestyle Bakes as a "very steady business" that continues to be the top-selling brand in the meat-included dinner kit segment. The Banquet brand was one of the stronger performers for ConAgra last year.

Neither Campbell nor ConAgra added new varieties to their packaged dinner lines this past year, although ConAgra did launch a new line called Chef Boyardee Deep Dish Meals. This meal kit offering comes in five varieties, complete with meat, pasta and cheese to make a deep-dish casserole in an oven-baked crust.

General Mills, which markets the various "Helper" lines for hamburger, chicken and pork, added some ethnic varieties. Chicken Helper debuted its first Mexican flavor, Cheesy Chicken Enchilada and also recently added Chicken Teriyaki.

Packaged side dishes, meanwhile, are struggling due to some consumers' move away from carbohydrate-rich pasta, rice and potato products. Rice mix sales declined 4.5% and pasta mixes dropped 5% during the 52-week period measured by ACNielsen for sales at food, drug and mass outlets excluding WM-Mart.

Rather than try to formulate low-carb options, suppliers have mainly embraced choice, realizing that for some shoppers taste overrides wellness issues. Examples of these more indulgent "comfort" foods include two new flavors of Betty Crocker Deluxe Potato casseroles: Loaded Au Gratin and Creamy Scalloped. Each comes with a crunchy breadcrumb topping and bakes in just 20 minutes.

Convenience and portion control are other trends in the sides segment. General Mills will launch Side Dish Smarts, single-serve versions of its Betty Crocker seasoned mashed potato mixes. Uncle Ben's recently added Ready Rice, seasoned rice pouches that simply cook in the microwave without even adding water.

Should category sales declines continue, suppliers will likely add low-carb reformulations of meal kits and side dishes to entice health-conscious consumers. Since low-carb dry pasta products have already been launched, packaged mixes of seasoned noodles, rice, pasta and dinner kits are sure to follow.