Supermarket chains are adding space for premium frozen entrees to feed a heightened consumer appetite for higher-end items, frozen food buyers and merchandisers said.
To make room for upscale products, a number of retailers are trimming their array of lower-priced to midpriced frozen dishes and reducing space for other slow-moving frozen items.
"Dinners are still strong, but the biggest improvement has been the high-end, higher-priced entrees like Marie Callender's. Those have been selling a lot better. I'd say those are up almost 100% over what they were a year or two years ago," said Bill Campbell, frozen food buyer and merchandiser at Associated Food Stores, a Salt Lake City-based wholesaler.
Stores have added more Stouffer's and Marie Callender's items, Campbell said. "[Stouffer's] Lean Cuisine came in real strong, but then it faded out a little bit. People are going back to the regular, what they call the red label."
Bryan Ryckeley, grocery and frozens buyer at H.G. Hill Stores, Nashville, Tenn., also reported that upscale entrees have been on the rise. "We've brought in some higher-end items; for instance, Marie Callender's are doing well. It seems like the higher-end dinners and entrees are doing the best," he said, adding that Stouffer's, Lean Cuisine and Healthy Choice entrees are the leading sellers. "The Healthy Choice items have really come along in the last year," he said.
Some lower-priced entrees have suffered, he said. "On some of the items like Weight Watchers and The Budget Gourmet, we're down a lot from what we were a couple of years ago," he explained. "I just think they've got price competition. I was not seeing the deal structure that we have in the past, and things like Michelina's coming in a year or two ago really gave them some big competition on price points."
Many consumers associate higher prices with better taste, which has been edging out dietary concerns in importance, several buyers and merchandisers said. "People are spending more money for quality," Associated's Campbell said.
Still, inexpensive entrees garner significant customer attention, retailers said. At B&B Cash Grocery Stores, Tampa, Fla., Michelina's entrees have been selling particularly well, according to frozens buyer Bob Edenfield.
"It's under $1, at 99 cents, and they have international and regular entrees," Edenfield said. "The clientele we have in our stores are more of a price-point-oriented consumer, value-oriented."
Ed Werstlein, vice president of Kienow's Food Stores, Milwaukie, Ore., has seen good movement on both price ends. "We do the best job with Stouffer's products and next The Budget Gourmet. They do quite well," he said, noting that Marie Callender's also has solid sales.
Of the retailers and wholesalers contacted by SN, Associated was the only one with a private label in frozen entrees. "We have Western Family, which is very strong," Campbell said. "There aren't that many new items; maybe 10 or so items is all the private label.
"Private label is just a new entry into that category," he explained. "The private label has only hit the low end; it hasn't really gotten into any of the higher end. I think it's price is going to take away from some of the Banquets and stuff like that."
For the 52 weeks ended March 12, sales of frozen entrees and dinners totaled $3.4 billion, a 3.7% increase from figures the previous year, according to Information Resources Inc., Chicago. Healthy Choice recorded a 24% sales gain and Lean Cuisine sales rose 18.4%. Sales of Stouffer's remained level, while The Budget Gourmet's sales dipped 7.8%.
Ethnic entrees have seen brisk sales, retailers said, citing Michelina's, Goya, Yu Sing, La Choy, El Charrito and Patio as labels they carried.
Two-food Mexican entrees jumped 120% in dollar volume and 75.5% in unit volume for the 52 weeks ended Dec. 10, according to A.C. Nielsen, Schaumburg, Ill. In that segment, Lean Cuisine, Stouffer's and controlled brands showed large sales increases, while sales for Patio and El Charrito dropped.
Two-food Italian entrees rose 12.2% in dollar volume and 14.4% in unit volume, with Lean Cuisine and Michelina's showing increases and Weight Watchers, Stouffer's and Swanson having declines. In one-food Italian entrees -- where dollar and unit sales were up 8.4% and 11%, respectively -- Healthy Choice, Stouffer's and Michelina's had sizable gains, while sales of Lean Cuisine and Weight Watchers fell. "That's a big trend. I've tried some, and we just have not done that well with them. Our customer demographics are not skewed that way," H.G. Hill's Ryckeley said.
Pastas and combinations of vegetables, noodles, rice and meat are the most popular ethnic dishes, retailers said. "Italian is the No. 1 ethnic food group. Mexican is probably the biggest-growing ethnic food," said B&B's Edenfield. "Oriental, Mexican and Italian are your basic ethnic frozen foods."
The influx of entrees has created quite a battle in the freezer, with the dinner category looking to protect its turf.
"There's more entrees than there are dinners right now, I think. They're doing better," said Danny Wells, frozen food buyer at Minyard Food Stores, Coppell, Texas. "Companies keep coming out with new [entree] products it seems like every week," he said, naming additional Michelina's varieties and Stouffer's new Hearty Portions line, which includes Lean Cuisine.
Mark Duke, frozens buyer at Brookshire Brothers, Lufkin, Texas, said many consumers prefer just a main course. "Entrees are moving better than dinners are. I don't think the customer wants the fluff in the dinners," Duke said, referring to side dishes and desserts. "Customers are moving away from that. They want what counts."
But that hasn't tilted the space balance between entrees and dinners, he noted. "Right now in our stores, it's about even, but I think entrees are moving up. It's a growing category, generally speaking." Entrees have knifed into space for other frozen items but not for dinners, Associated's Campbell said. "The dinner section has stayed pretty stable. The single-item entrees -- there's been a lot of change in that. There's been more space allocated to that," he explained. "Some of the vegetable lines have been cut down."
At H.G. Hill, some frozen meals may be gobbled up by other frozen products hungry for more space, Ryckeley said. "What's really taking over right now is the frozen breads. We're trying to figure out a way to get more room for that, which may come out of the dinner section."
Save Mart Supermarkets, Modesto, Calif., plans to complete a reset of its frozen meals sections in August, said Pat Brooks, director of frozen foods, dairy and deli. The chain has about 425 stockkeeping units in the section, 280 of which are entrees.
"We have not increased space for the entrees this time. The Budget Gourmet dinners were not doing well, so we took that space and gave it more to the [Swanson] Hungry Man and more to the Marie Callender's items," Brooks said. "Banquet also came out with some pasta items. We made room for those." Stouffer's Hearty Portions and new Michelina's entrees also may be added.
Manufacturers help retailers regulate the potpourri of frozen entrees, said B&B's Edenfield. "They're pretty good about keeping their slower items weeded out," he said, adding that B&B's entrees are turned over quarterly.
However, supermarkets can't drop all slow movers, said Kevin Copper, vice president of merchandising at Sterk's Superfoods, Hammond, Ind. "You have to carry some things, even if the movement isn't great on them in order to get the variety you want to offer your customers."
New products lure shoppers into the section, he noted. "When an item is new, you need to carry it because that's usually when the promotion and advertising from the manufacturer is the highest. And that's when the consumer is most looking to try it."
Frozen entrees are promoted weekly or at least once a month, typically at reduced prices or with coupons and buy-one-get-one offers, retailers and wholesalers said. Hanging signs, aisle and coffin markers, shelf tags, coupon dispensers and banners often supplement media ads.
Customers tend to buy the entrees with advertised specials, retailers said. "I'm not sure how much brand loyalty there is anymore," Sterk's Copper said. "It keeps shifting as to what we're featuring in our ads in a given time period."
Of the chains contacted by SN, most said they use upright cases for frozen entrees rather than coffins, though some had both. Retailers said the at-a-glance quality of uprights makes it easier for customers to find advertised items and their favorite brands.
"We have begun to go more with a brand block, rather than dinners, then suppers, then entrees," said Brooks of Save Mart, which primarily uses uprights. "We felt that we did better when we had a brand-block recognition. We worked along with ConAgra and Campbell-Swanson and tried to come up with an area that we felt would be a good way to go. And we like the brand block. I think it's easier to shop if you are a brand customer."