HOME MEAL REPLACEMENT SEEN EATING SUPERMARKETS' LUNCH

PAMELA BLAMEY

LAKE TAHOE, Calif. -- The concept of home meal replacement, typified by the Boston Market chain, will consume approximately $8.5 billion of supermarket sales, according to a consultant to the food-service industry.

"Home meal replacement has the potential to be about the third-largest food-service segment or about one-half the size of quick service fast food and one-half the size of full service," said consultant M. Jay Heilbrunn of Clinton Associates, Deerfield, Ill., speaking at the National Broiler Council marketing seminar here.

"However, it really has a long way to go to reach this level," he added. "At best, it's most likely well under $2 billion, probably closer to the $1 billion range, but clearly the potential seems to be there."

Heilbrunn went on to break down the potential volume that HMR operators would grab from several supermarket departments, most significantly from deli.

"What I did was take a look at where home meal replacement might displace current volume now. At 10% of the supermarket deli business, that would yield about $800 million," he explained.

Additional volume for the HMR operators would come from fast food operators, full-service restaurants and cafeterias.

Supermarkets are going to have to devote some time to addressing the competition from home meal replacement, based on Heilbrunn's assessment.

"The real issue is, where will [consumers] stop: at the supermarket or at the home meal replacement concept? What will the consumer see as the location of choice for fresh cooked meals? How much time does the consumer have available? Which situations offer the desirable, most

appealing variety?"

Major branded companies are not waiting around to find the answers to these questions, but are taking a more aggressive approach, Heilbrunn said. "They are becoming more proactive in getting their brand and their products to where the customers will be and can buy."

Some of these companies are behind the trend of individual units and even "restaurant mini malls" being installed in supermarkets, Heilbrunn said.

A timely example is "The Lineup," a food court installed recently in a Vons store in Laguna Niguel, which includes a Moose Bros. pizza unit, a Cinnabon outlet, a Panda Express unit and a 44-seat dining area where customers can also consume deli purchases such as salads and hot chicken.

Food-service operators are not alone in jumping on this particular bandwagon. Brand manufacturers are squeezing on as well, Heilbrunn said. "National brands are hedging their bets on what direction supermarkets will take in the future.

"There are several examples: Oscar Mayer's Hot Dog Construction Co.; Dannon [has] a concept they're developing called Yogurt Cravings; Kraft has come out with Maxwell Cafe; Pillsbury, with Poppin' Fresh Express; Sara Lee, the Sara Lee Deli, [and] Hillshire Farms' Country Smokehouse."

Heilbrunn called these efforts a reaction to shifting consumer lifestyle trends. "What [manufacturers] are finding is that there clearly are shifts in where food is prepared. There are better profits available in food service, with less pressure in discounts, allowances and fees that are charged."

In addition, food-service opportunities provide greater exposure, advertising and paid sampling for national brands, Heilbrunn noted.

As to the future of HMR concepts, healthy food will play a major role, Heilbrunn said. "The emerging concepts are starting to look at products with better nutritional values, lower fat, cholesterol, sodium and caloric levels," he said.

Yet taste and variation will remain the keystones on which consumer loyalty is based. "Americans are not willing to sacrifice taste," Heilbrunn said.

"The next step for the HMR group beyond expanding units will be in further menu expansion and variation. This will be the key to keeping the customer interested and coming back.