PACKAGING PERFECT

LYNNE MILLER

ARLINGTON, Va. -- Packaging companies have identified supermarket delis as a leading market for growth in disposables over the next five years, SN has learned.

According to a new audit by the Foodservice & Packaging Institute, some fourteen market segments will experience strong increases in disposables use over the next five years. FPI's "State of the Industry 2000" ranked supermarket delis fourth, trailing national quick-service restaurants, which were number one; independent/regional quick-service restaurants; and convenience stores.

That disposable packaging companies view deli departments as a hot growth market comes as no surprise to the president of FPI.

"Because of the surge of home meal replacement, or convenient meal solutions, in the last two years, that segment in the grocery industry has gone from almost non-existent to becoming a major force," said John Burke, whose organization includes disposable-package manufacturers and suppliers.

But as demand for their products grows, manufacturers are discovering that retailers have some unique packaging needs, he said.

"As suppliers, the challenge is to make the package fit the food requirement. The package must keep hot foods hot, and cold foods cold," Burke said, adding that temperature maintenance is going to become increasingly important as the fresh-meals category evolves.

"It's true that people are living further and further from where they work," he said. "Commuting times have to be factored into the performance of the packages."

Packaging is also expensive for retailers, so managing the cost can be a challenge. A top official with Dallo Enterprises, an independent operator of 11 stores in San Diego County, Calif., estimates packaging costs eat up 5% to 10% of sales in those departments selling fresh meals. He's seen at least two significant increases in packaging costs in the last five years.

"It's something you have to watch," said Doug Dallo, vice president of operations. "There's some nice packaging out there that probably costs more than the product. Sometimes the packaging is too expensive for the merchandise you're trying to sell." Rather than scrimping on packaging, and compromising quality and appearance of the food inside, many retailers have chosen to pass the expense on to customers, said Dallo, whose stores range in size from 16,000 to 30,000 square feet. Five stores in the chain currently offer fresh meals and there are plans to expand the program to at least one more store over the next year or so.

Diane Aulik, a veteran deli manager for a unit of Edina, Minn.-based Lunds-Byerly's, said her customers want packages to be good looking, easy to open and microwave-safe.

"Plastic that isn't microwaveable -- that does not go over real well with the customer," said Aulik, who manages the deli at the 40,000-square-foot store in Bloomington, Minn.

Take-out meals are among the most popular items sold in Aulik's deli. She thinks prepared meals will only grow in popularity. That means growth for containers, too, she said.

When reheating their dinners, Aulik's customers at Byerly's don't want to transfer the food from the store's package to a pot or microwave-safe plate. They want to take the package from the shopping bag directly to the microwave.

They also don't want to struggle opening the package. Particularly for older customers, "some of these containers are difficult for people to handle," she said. "They'll bring it to you and ask you to please put it in another one."

Almost five years ago, Bazemore's Friendly Market, Norfolk, Va., introduced ready-to-eat "Dinners for Two." The 10,000-square-foot independent struggled at first with lids that failed to stay shut and displayed other defects. Nearly two years ago, store officials discovered a sturdy line of containers "with a nice snap," said Joseph Raia, head of bakery and an assistant in the kitchen.

Bazemore's launched the product line modestly enough, preparing 20 dinners for two each day. This year, the store promoted the dinners through additional advertising, nearly doubling demand. One store official thinks there's plenty of room to grow.

"There's potential for another 50% increase in the next two years," said assistant manager Eric Brasseur, noting that the dinners account for roughly 5% of total-store sales. Dinners for Two in September ranged from $14.99 for chicken pot pie with barbecued lima beans, green beans and cornbread muffins; to $25.99 for medallions of beef tenderloin with ancho chile sauce, rice pilaf, green beans and whole wheat rolls.

Customers at Bazemore Market prefer having the entree and side dishes packaged in separate containers and the store obliges.

Finding containers that close properly solved one problem but did not address the issue of appearance. Employees who prepare the dinners aim not only for tasty menus but attractive, colorful dishes that look good on in the case. The containers "sometimes do not do the food justice," Raia said.

Looks definitely count. While customers rarely compliment Aulik on the container holding their lasagna, they definitely notice it. "If the packaging intrigues them, they'll look in it," she said.

Added Dallo: "The biggest challenge is not cost but how it's merchandised. If it's merchandised and promoted properly, you can get the markup you need to sustain the packaging costs."