HOT TO TROT

KELLY GATES

Frozen breakfast items have been getting the cold shoulder from consumers, most of whom no longer have the time for a sit-down meal.

So the category is innovating itself. Products are now tailored to match the mobile lifestyles evident in U.S. households.

"Convenience is the biggest factor in any breakfast food because parents are wanting to get their kids off to day care or, soon, off to school so they can go to work themselves," said Tim Cummisky, grocery manager for Highland Park Markets in Glastonbury, Conn. "Homestyle Eggo waffles are always good sellers, but our frozen breakfast category does tend to slow down a little during the summer and pick up again when kids go back to school."

French toast sticks and character-themed foods like Scooby-Doo, Sponge Bob and Shrek waffles are also big sellers because they capture kids' attention, Cummisky stated.

With overall sales in the frozen foods category down 0.5% compared to a year ago, only a handful of frozen breakfast items actually showed an increase during the same period, according to sales data from Chicago-based Information Resources Inc.

Such unimpressive results make it difficult for retailers to determine how to stock their freezer cases with breakfast items that will turn a better profit.

Among the top sellers this year are toastable quick foods like bagels and muffins, as well as products affiliated with a popular children's character, such as Shrek. Anything handheld is also moving better than its plate-dependent counterpart.

"Generally speaking, demand for these products is being driven by American consumers' quest for convenience and time-savings in meal preparation," said Todd Hultquist, spokesman, Food Marketing Institute, Washington. "Manufacturers are responding with a greater variety of one-step meals."

While IRI's 52-week report showed an overall decline, things have been looking up in recent months. IRI's 13-week report ending June 27 shows an increase of 0.5% in the frozen breakfast food category.

The numbers will rise as the nation's students return to school, explained Nevin Montgomery, president and chief executive officer, National Frozen and Refrigerated Foods Association, Harrisburg, Pa.

"With working families, with both spouses working out of the house in many cases, the person who's responsible for breakfast-feeding sessions feels better about preparing something for their families, even if it isn't made completely from scratch," said Montgomery. "I believe that most of the items from the latest IRI report will show even more growth once we're back in a school year again."

NFRA is currently promoting a "Fuel for School" program, prompting retailers to include heat-and-eat frozen bacon, french toast, potatoes, waffles, orange juice and other frozen breakfast items in their back-to-school campaigns.

"Retailers could really make a big impact at the beginning of the school year by promoting healthy breakfasts with food choices that are virtually never-ending," said Montgomery. "The choices are so plentiful that each retailer will have to see what their individual frozen breakfast sales are, and make merchandising and promotional decisions based on their specific data."

While some frozen breakfast items are expected to do better during the school year, Sonja Tuitele, spokeswoman for Wild Oats, the Boulder, Colo.-based natural foods chain with 102 stores, said frozen waffle sales remain consistent at Wild Oats' stores virtually year-round. "Not only are children eating the waffles, but their parents are, too," noted Tuitele.

Because Wild Oats offers a wide variety of natural food items, frozen category managers within the chain not only consider which frozen breakfast products are selling well, but also which products meet the special needs of their unique mix of shoppers.

"Category managers use internal data and [external] data to determine what is happening in the natural channel and how a product is growing in sales and units to determine which stockkeeping units are performing and which are not, also taking into consideration niche items," she explained. "Gluten-free is a great example. So many people are wheat-intolerant and want gluten-free convenience items."

Frozen finger foods like mini pancakes, french toast sticks and waffle sticks are becoming increasingly popular in Wild Oats' stores, similar to items geared to other meals, such as mini tacos and burritos that are also fairing well, observed Tuitele.

Terry Bickers, frozen dairy and grocery manager for Strack and Van Til Supermarkets, Schererville, Ill., conducts thorough studies of the frozen breakfast cases in his chain's stores twice a year, rating the individual unit sales on a percentage-based system. Any products that fall into the bottom 5% of the category are subject to elimination, he said.

"We try to only keep the top-selling items since the space is so limited to begin with," stated Bickers. "But I'll usually give a product one full year before I pull it from the case if it's not performing well enough."

Bickers agreed there are far too many existing products within the frozen breakfast category to make elimination an easy process, not to mention the multitude of new items that are launched each month.

"There are always the regular items like pancakes and waffles that do pretty well, but there are now more Toaster Strudels from Pillsbury and Jimmy Dean has come out with new products like the McDonald's knock-off breakfast sandwiches with egg and sausage," said Bickers. "It makes it hard to choose which products should stay and which should go."

Brian Barrett, frozen and dairy manager for Leeker's Family Foods, a six-store chain in Wichita, Kan., has a similar routine for weeding out underperforming frozen breakfast foods.

"The best way to allocate space for the category is to periodically go through and review everything, looking at movement reports and determining which products are the slower-moving items," said Barrett. "As new products hit the market, I'll replace the slow-movers and keep an eye on the new products for a while to see how well they do."

The newest frozen breakfast additions to Leeker's Family Foods stores are omelets, Toaster Strudels, and a variety of french toast sticks and waffles with dipping sauces, he added.

Compared to Leeker's Family Foods' management of other frozen items, Barrett only evaluates the frozen breakfast food segment twice a year. Dinners, entrees and other frozen products are given a once-over at least every quarter, sometimes more often, he said.

When manufacturers of frozen breakfast foods offer promotional allowances, Leeker's Family Foods will adorn its freezer cases with exaggerated tags promoting temporary price reductions.

"Every two to three weeks, we'll include frozen breakfast foods in our weekly ads, too," revealed Barrett. "We'll occasionally promote new items, but because the category is so small, we usually only highlight the best-sellers."

Larry Brown, grocery and frozen foods buyer for Ball's Food Stores, the 29-store supermarket chain based in Kansas City, Kan., reported that the chain's stores run occasional ads in circulars, promoting the top-selling frozen breakfast foods.

"At the same time, the products that are being promoted in circulars are also tagged at the store level with sale signs," said Brown.

Because Ball's Food Stores is a member of Associated Grocers, most sales and volume data are processed at the wholesale level first, eliminating the need for individual store managers to predict which frozen foods will sell the best, he added.

FROZEN IN TIME

Category data shows sales and volume of frozen breakfast foods won't be warming up anytime soon.

Dollar Sales Current; % Chg vs. Year Ago; Unit Sales Current; % Chg vs. Year Ago

FROZEN BREAKFAST FOOD: $243,342,880; 0.5%; 116,560,280; -3.2%

FROZEN BAGELS: $14,878,203; -20.4%; 11,593,857; -21.3%

FROZEN EGG SUBSTITUTES: $3,273,848; -28.1%; 1345,790; -29.8%

FROZEN MUFFINS: $1,120,321; -19.7%; 535,902; -22.3%

FROZEN OTHER BREAKFAST FOOD: $105,076,512; 4.9%; 42,361,136; -4.4%

FROZEN WAFFLES: $118,994,000; 1.4%; 60,723,600; 3.4%

Note: 13 weeks ending June 27, 2004

Source: Information Resources Inc.