A CASE FOR VALUE

DONNA W. CROTHERS

The deli/food-service department, by virtue of its experience with prepared foods, has cornered the in-store meals market, right?

Certainly not, according to retail meat department executives who, in growing numbers, are sprucing up their value-added meat programs with an eye toward snatching a piece of that home-meal replacement pie.

In interviews with SN, meat department strategists said home meal replacement belongs as much in their domain as it does anywhere else in the store -- as long as your definition of HMR does not necessary stipulate cooked or ready-to-eat product.

In stores across the country, retailers are giving their value-added meat items in service and self-service forms a serious second look. And in many cases, meat directors are expanding their programs to add more meat that's been marinated, stuffed, seasoned, cut, or otherwise given added value.

While some retailers' value-added programs are as much as 10 years old, lately the segment is starting to take off. Some meat executives said value-added items are accounting now for double digit percentages of total meat sales, hitting marks of 30% or more in some individual stores.

In fact, several retailers said the value-added items constitute the fastest-growing sales performance in a department where sales overall are flat or sinking.

"The regular meat is on a downslide, so for us to keep our distribution up, we have to come up with new items, most of which are value-added," explained John Besmer, senior merchandiser for meat and deli at Pick N Save Supermarkets, West Bend, Wis.

Is it just that the value-added meats are riding on the coattails of deli's HMR efforts? No again, said meat executives. Before HMR ever became the catch phrase that it is today, consumers used to turn to the meat counter for help in answering that now ubiquitous question: What's for dinner tonight?

Once people find how easy it is to have a home-cooked meal using value-added meat, "They will bypass fast food," said Phil Plummer, director of meat and seafood at Martin's Super Markets, South Bend, Ind.

To keep customers in the meat department -- and away from hamburger and pizza restaurants -- Martin's has added service programs that focus on value-added meats to all of its stores, Plummer said. Currently, he estimates that 15% of Martin's meat sales are value-added or ready-to-cook items.

One advantage for the meat department is there are clear and appealing choices with regard to nutritional values as well as quality, said John Kovach, director of meat and deli for Schear's Food Centers, a six-store operator based in Dayton, Ohio.

"If people look at the nutritional value of fast food, they may want to get away from it. But they still want convenience," Kovach said. "You see a lot of two-income families that want to go home at night and have something nice for dinner, but they don't want to spend all night in the kitchen."

Schear's meat departments offer a 6-foot convenience meat section, called Schear's Own, where it merchandises items such as marinated roasts, cabbage rolls, stir fry mixes and other ready-to-cook, fresh meat-based products.

Besmer said Pick N Save stores have a gourmet section in the meat case with items such as stir-fry meat with vegetables, or premade meat loaf ready to go in the oven.

He said he has found it important to advertise both the value and availability of the meat department's new ready-to-cook items, which may be unfamiliar to some consumers.

"I put a couple items in the ad every week, and sometimes we demo them, too," he said.

For wholesaler Spartan Stores of Grand Rapids, Mich., ready-to-cook meat offerings such as marinated and dry-seasoned boneless chicken breast, kebabs and stir-fry mixes "make up a small portion of our business, but it's starting to grow fast, especially in the case-ready area," according to Gary Evey, spokesman for the wholesaler.

Marsh Supermarkets, Indianapolis, expanded the value-added meat program "to a nice assortment of 100 to 150 items," said director of meat merchandising Dave Young. The effort started with ready-to-cook marinated items some 10 years ago, and now it ranges from stuffed flank steak to kebabs to shrimp scampi. "At any one time, Marsh will have about 20 to 25 items on display and the others we can make on request," he said.

Judging from retailers' comments, there is no pat formula. Product offerings, and the reception they get from customers, depends on the particular store's demographics, according to retailers.

For example, Minyard's Food Stores, Coppell, Texas, offers ready-to-cook items such as meatballs and marinated chicken in all of its stores, except for its smaller and more ethnically oriented Carnival Food Stores, according to Arley Morrison, vice president of meat and deli for the chain.

Young of Marsh estimated that ready-to-cook items account for about 7% to 8% of Marsh's overall meat sales. But the program is a significantly better performer in certain stores.

"I wouldn't hesitate to say it's over 10% of sales in our high-profile stores," he noted.

At Furr's Supermarkets, based in Albuquerque, N.M., "The oven-ready items and other items that are precooked are more popular in our upscale stores, or stores that are around apartment dwellings where younger, unmarried consumers may shop," said Clyde Lujan, director of meat and seafood.

In such units, Furr's often offers a heat-and-eat section of two to six feet, with products ranging from stuffed game hens to chicken-fried steaks.

"We have some stores that are doing a very large percentage of sales in these items," said Ron Vancour of Bozzuto's, a wholesaler based in Cheshire, Conn., which has offered ready-to-cook items such as marinated and stuffed meats for about five years. "I would say some are doing upwards of 20% to 30% of their fresh-meat business in prepared meats."

While performance varies from store to store and company to company, retailers agreed that the appeal of the segment is consistent.

First and foremost, the items are convenient and easy to prepare. But ready-to-cook entrees also make consumers feel like they've got a made-from-scratch dinner. And they come in at a lower price point than consumers would pay for restaurant fare, fast food or even the precooked items from the deli.

"I think the key to the success of these items is the value, as compared with buying it or making it at home, and the eating quality of the product," said Chuck Hendryx, a meat industry consultant based in San Antonio.

Many meat directors said their ready-to-cook products taste as good as -- or even better than -- many food-service offerings.

"The raw product you take home and cook tastes better than the precooked food you reheat," said Vancour of Bozzuto's.

Young at Marsh agreed. "Consumers have learned they can have a very elegant and tasteful meal for a lot less than a restaurant meal or a meal solution, yet with minimal effort," he said.

Most of the prepared meat items can go directly to the oven, microwave or grill. "All the customer has to do is put it in the microwave for three minutes or 40 minutes in the oven, while they make a salad or clean the kids' faces," Young offered.

Not only do many consumers lack the time for making a home-cooked meal, but many also lack the knowledge and the accoutrements, such as spices, for putting together a meat-based main dish. Indeed, the personnel in many service meat departments are focusing more on helping consumers with preparation than on giving them special cuts of meat.

"You have meat departments where the butchers are no longer butchers as much as they are producers of ready-to-cook items and counselors telling consumers how to prepare meat," explained Brian Salus, president of Salus & Associates, a home-meal-replacement consulting firm based in Richmond, Va.

"Generation-X may have had moms who had a job and didn't have time to teach them to cook," suggested Plummer of Martin's, "but now they are willing to learn because they are tired of fast food."

Plummer added that it's important to have explicit cooking instructions with ready-to-cook meat products. "We want to make it as simple as we possibly can," he said. And toward that end, many Martin's stores offer an 8- to 12-foot section of Easy Entrees, like stuffed peppers or stir-fry mixes with recipes and cooking instructions on the package. A big plus for ready-to-cook items is that they usually are more economical than ready-to-eat items. Several meat directors observed that ready-to-cook meat products often are significantly lower priced than comparable precooked items found in the supermarket deli.

"You are taking the labor cost out. When you buy things out of the deli, it is precooked and that makes it more costly because there is more labor," said Vancour of Bozzuto s.

Marinated items, which are among the most popular in this category, save consumers not only the time needed to marinate meat properly, but also the necessity of buying lots of costly spices that are necessary for preparing a marinade. Retailers think that's worth something.

Besmer of Pick N Save said he usually adds 50 cents per pound to the price of marinated fresh-meat items, which he considers a good deal for consumers because "the seasonings we use are very expensive."

Furthermore, Pick N Save last year installed tumblers in its stores that marinate the meat under vacuum conditions more thoroughly than might be done at home, he added.

Marinated fresh-meat sales have been "extremely good" for Bozzuto's, and Vancour attributed this to several factors. "Consumers don't have the time to marinate meat for 24 hours, and they don't have to buy all the ingredients. There are a lot of spices used that people wouldn't have in the home, and that may be the spice that makes the dish," he said.

He estimated that marinated products cost 10% to 15% more than the fresh-meat item without marinade. "It is pretty much the rule of thumb that you will see the $3.99 [a pound] boneless chicken breast selling for $4.59 after being marinated."

Marsh's Young also said that his chain's value-added meats are still a bargain.

"We add 20 cents a pound for dry seasoning, 40 to 50 cents for regular marinade and sometimes 80 cents for more complex marinades, such as Szechuan," Young said, adding, "If the consumer had to buy what we add, it would be more than 80 cents a pound" for the cost of ingredients.

While most meat departments tend to prepare their ready-to-cook items on premises, some are picking up products prepared by the supplier. For example, Besmer of Pick N Save utilizes case-ready marinated pork products, and also buys breaded, precooked chicken strips and patties in bulk for repackaging in individual portions. As meat departments add to their convenience lines, some are even edging into the deli's territory with precooked items, whether they are entrees or barbecued chickens prepacked by suppliers, or pork roasts that are seasoned and cooked and need only be reheated.

"We are kind of crossing the line, but we try to stay out of [the food-service department's] territory," said Besmer of Pick N Save.

However, other meat merchandisers saw this crossover as less of a concern.

"We don't care where we serve it and sell it in the store, as long as we give customers what they want," said Morrison of Minyard. His chain is presently adding to the meat case a line of six precooked, microwavable entrees processed by an outside supplier in such varieties as green pepper steak, beef burgundy and pot roast.

Salus said he has found that both the deli and meat departments can meet different needs for home-meal replacement, depending upon the consumer's situation on a given day.

"Consumers may have a time crunch on weekdays and are thinking, 'How fast can I get a meal on the table?' and may turn to precooked supermarket items in the deli," he explained. "But on other days, consumers may want to have a simulated cook-from-scratch meal," and that can revolve around a value-added meat item. "It's really a win-win situation for the consumers because they have more choices."

Meanwhile, some meat departments are trying to pull supermarket departments in, as they seek to meet consumer demand for convenient meals.

Plummer of Martin's said, "We are trying to tear down the merchandising walls within the store," by offering a weekly advertised Meal Solution in which all ingredients for a meal are brought to a central location in the store.

For example, he said, on Italian week the stores displayed ground beef, pasta, pasta sauce, garlic bread and a 1-pound fresh-cut salad mix, with the grocery items displayed around a bunker cooler for the meat and other perishable items.

Meat executives said there can be no doubt that they will continue to cultivate their department's role in the industry's play for the HMR dollar, whatever form that role takes on.

Said Lujan of Furr's: "Those types of items are the focus of what we are going to be putting into the meat department in the future."