DRESSING FOR SUCCESS 2004

CAROL ANGRISANI

Sales of that major household staple -- salad dressing -- are dripping out of the grocery channel and into alternative outlets.

Supermarket retailers will have to lay it on thick to prevent further sales erosion, and there's no better time than the start of summer, when fresh produce is abundant and salad consumption hits its annual peak.

Mainstream supermarkets account for the highest salad dressing prices: an average of $2.06 a bottle, compared to $1.88 at mass merchandisers and $1.42 at club stores, according to ACNielsen, Schaumburg, Ill.

While consumers are amenable to paying more for their favorite bottle of French or Thousand Island, cost-conscious shoppers are seeking out stores that offer the best value for the money. This, in turn, has led to a shift in sales of the "dressing and sauces" category as a whole from supermarkets and toward other formats.

In 2003, 75% of "dressing and sauces" sales occurred in the grocery channel, a 1.8-point decrease from 2002. In comparison, mass merchandisers represented 11% of sales, a 1.3-point increase; club stores, 6%, a 0.1-point increase.

Salad dressing sales had a lot to do with this. In club stores, dressing and sauce dollar sales grew 5.8% in 2003, vs. 2002. Of this growth, 48% came from salad dressings. In mass merchandisers, dressing and sauce dollar sales grew 16.3%. Of this, 20% came from salad dressings.

Since salad dressing continues to be a household staple, carrying an average household penetration of 88%, the category is an important one for supermarket retailers.

Now that produce is in season and salad consumption is on the rise, the time is right for retailers to highlight the category and all it has to offer.

Sampling, demonstrations, cross merchandising and pallet displays are among the tools being used to keep consumers of salad dressing in supermarkets, retailers told SN.

To capitalize on the peak produce-selling period, Fresh Encounter, Findlay, Ohio, cross merchandises salad dressing in shippers in the produce department, where Wishbone is among the featured brands. The shippers typically go up in April and stay up throughout the summer, according to John White, the retailer's director of procurement. Fresh Encounter also merchandises pallet displays of other types of dressings, including Miracle Whip sandwich spread.

While cross merchandising like this can spur impulse sales, departmental boundaries often make it difficult to display a grocery item in the perimeter department, retailers said.

"The produce department wants to keep all the space it has, just like grocery does. So it's difficult to cross merchandise," said Mark McFadden, grocery category manager, Foodtown, a Carteret, N.J.-based chain with more than 50 stores.

Retailers who face this problem have other alternatives. One is enticing consumers to try more dressings through sampling.

Foodtown does just that, especially during the summer season, when it samples various salad dressings about once a month.

Like Foodtown, Clements' Marketplace, Portsmouth, R.I., isn't heavily involved in cross merchandising, focusing instead on salad dressing samplings and demonstrations. To generate incremental sales, Clements also promotes salad dressings as a dip for vegetables and other foods.

"We'll set up a table with carrots and celery sticks by the deli for people to enjoy while they're waiting in line," said Mark Clements, the retailer's grocery buyer.

Manufacturers are making it easier for retailers to encourage alternate uses for salad dressings. Hidden Valley Ranch, for instance, is being promoted as a dressing and salad topping; Wishbone's Ranch Up line of flavored ranch dressing and dip is marketed as a way to dress salads, coat Buffalo wings, dip French fries, and spread on sandwiches; and the Hellmann's brand has expanded into "Dippin' Sauces."

Caputo's Fresh Markets, Addison, Ill., differentiates the salad dressing category in its three stores by concentrating on specialty dressings rather than mainstream brands.

"Jewel and our other competitors focus on Kraft and other mainstream brands, so we instead highlight flavors like vidalia onion and sweet raspberry vinegarette," said Dale Ohman, Caputo's business development manager.

Specialty items like these often carry a higher price tag, sometimes reaching as high as $2.99. Caputo's relies on sampling to show consumers the taste is worth the price.

"People are used to Ranch and Thousand Island, not sweet raspberry vinegarette. So it's important for us to get them to try it," Ohman said.

Another way retailers can cater to salad dressing consumers is by focusing on product variety. The low-carb craze that's taking the food industry by storm is one way to do that.

Along with specialty manufacturers like Atkins and Keto, mainstream marketers are investing more heavily in low-carb dressings.

Kraft Foods, Northfield, Ill., just launched a line of Carb Well dressings in four flavors: Ranch, Italian, Caesar and Blue Cheese. In addition, salad dressings are an integral part of Unilever Bestfoods' popular Carb Options line.

"Low-carb consumers are definitely paying more attention to the salad dressings they choose," confirmed Jana Wright, communications specialist for the Association for Dressings and Sauces, an Atlanta-based trade organization.

The low-carb craze has benefited the category because it enables retailers to offer selections in two areas of the store: in the traditional dressings aisle and in designated low-carb sections. Fresh Encounter favors this merchandising option.

Not all retailers support this approach, however. Clements' Marketplace, for instance, merchandises dressings only in the in-line dressing aisle.

"We keep them in the aisle because that's where people look for them," said Clements.

Emphasizing private label is another way for supermarkets to compete with alternative outlets. Consumers not only buy private-label salad dressings, some actually prefer it. According to White of Fresh Encounter, there's a significant purchasing change occurring in the salad dressing category.

"The mid-tier brands are decreasing in sales, while the lower-priced and higher-priced brands are increasing in sales," he said.

He attributes this to the economy, saying high-end consumers are willing to spend money for what they see is a higher-quality product, while price-sensitive shoppers want value. Fresh Encounter's private-label salad dressing, marketed under the Our Family brand, is a strong category performer, White noted.

"People who have money will spend it on the higher-priced dressings, but the remaining 80% want to save money and will buy the lower-end brands," he said.

Savor the Flavor

Along with salad dressings, another segment within the sauces and dressings category is getting retailer attention: mayonnaise.

This close relative of salad dressing is changing the way consumers prepare their sandwiches. Rather than having just turkey and Swiss with mayo, people are adding kick to their lunches with products like Sun Dried Tomato and Wasabi Horseradish, along with other flavors in the "GourMayo" line from French's. There's also Hot N Spicy Miracle Whip, and Bacon & Tomato Twist and Garlic Paradise Hellmann's Light Mayonnaise, among others.

Clements Marketplace, Portsmouth, R.I., did not have the shelf space to cut in all the new items, so it decided to give flavored mayonnaise a separate display.

"There was too much product to cut into the aisle, so we created new space," said Mark Clements, grocery buyer.

Flavored mayonnaise is now merchandised in a four-foot display at the end of the mayonnaise aisle. The display abuts an endcap, but faces the aisle.

"It looks like regular shelving, although it's not as deep," said Clements.

Along with flavored mayonnaise, the display unit holds sandwich spreads and several dipping sauces.