PUT ON A PEDESTAL

AMITY K. MOORE

Heavy promotional support and lifestyle changes form the columns on which this year's Top 10 grocery categories rest, retailers said.

While there haven't been any major changes since last year in the highest sales volume categories -- carbonated beverages, cold cereal, chips and snacks, cigarettes, beer and ale, frozen dinners and entrees, ice cream, coffee, cookies, and soup -- several areas, including ice cream and chips and snacks, improved their standing, according to supermarket sales figures from Information Resources Inc., Chicago, for the 52 weeks ending April 21, 1996.

Retailers told SN the ranking changes reflect an increased interest in healthier options. Though consumers are paying more attention to fat and calories, they're not giving up sweets and salty snacks. Rather, they're choosing reduced- and low-fat versions of their favorite products.

For example, ice cream generated $3.6 billion for the 52 weeks, a 1.9% increase over the same period the year before. This sales jump moved it from the No. 8 slot to No. 7. In comparison, for the 52 weeks ending Jan. 2, 1994, ice cream generated $3.3 billion.

"The inroads into the low-fat, no-fat and no-sugar have allowed more people to eat some kind of ice cream who couldn't in the past," said Tom Outlaw, vice president and director of frozen foods at Ingles Markets, Black Mountain, N.C.

Ice cream has taken on a new group of people who now can enjoy a better-tasting and better-for-you product that previously didn't exist, he said. In addition, there's been an influx of flavors and varieties in the indulgent ice creams, he said.

Healthier alternatives have driven the chips and snacks category from fourth to third place, said Roger Burks, senior vice president at The Mad Butcher, Pine Bluff, Ark. The category generated $5.6 billion, a 3.2% increase.

"The low-fat introductions have really helped the chips. There's more new items," Burks said.

He added that promotions have increased over the last three to five years as well. He said his company used to advertise chips and snacks about twice a month, but now promotes it every week.

Promotion at the retail and national level has helped keep sales of carbonated beverages on the rise as well. The category jumped 6.5% to $10.9 billion, according to IRI.

Most retailers advertise soft drinks every week of the year, said Rod Boni, grocery merchandiser at Pay Less Supermarkets, Anderson, Ind.

There are an increasing number of soft drink alternatives available -- bottled waters, teas and other new age beverages, Boni noted. However, he didn't think those introductions would significantly affect the position or sales of carbonated drinks.

Bob Jennings, beverage buyer and merchandising manager at Raley's Supermarkets, West Sacramento, Calif., said frequent promotion has also benefited the No. 5 category: beer and ale -- which went up 2.4% to $5.1 billion. In comparison, for the year ended Jan. 2, 1994, it generated $4.7 billion.

The leading beer and ale manufacturers maintain such large advertising budgets that it enables supermarket operators to promote those items regularly, he said.

"They have great programs -- great tie-ins with barbecue items, charcoal and ice," Jennings said.

Additional growth is due to the microbrew segment. Microbeer sales at Raley's account for over a 7% share of the total beer category, he added.

Though coffee sales are down 2.8% to $3.4 billion this year, the category has shown impressive growth over the past three years. For instance, for the year ended Jan. 2, 1994, it had $2.5 billion in sales, which left it out of the Top 10. But the category jumped to No. 9 last year, and to No. 8 this year.

Carl Lang, director of merchandising at the John C. Groub Co., Seymour, Ind., said the category was stagnant until the debut of gourmet blends and coffee houses.

Part of the decline this year may be due to a decrease in sales of soluble coffee, Lang said.

Frozen dinners/entrees and soup have maintained their Top 10 standing on levels six and 10, respectively.

Pat Brooks, frozen food, dairy and deli director at Save Mart Supermarkets, Modesto, Calif., and Pat Redmond, grocery merchandiser and buyer at Rosauers Supermarkets, Spokane, Wash., agreed these items appeal to the American consumer due to their preparation ease and low cost.

Brooks said Save Mart has continued to add space to frozen dinners/entrees, which went up 2.3% to $4.3 billion, because he feels the category is growing.

"We began to add space in the uprights and add additional doors, so we would have additional space for the rollout of new items," Brooks said. The chain has also begun to promote the category more heavily, he added.

Redmond said he expects soup, which grew 2.2% to $3.29 billion, to stay in the Top 10. "It's something kids like. It's something older people like," he said.

But it probably won't move from the No. 10 spot until soup manufacturers address shopper's concerns about salt. "Even with the advent of the Healthy Choice soups or the low-fat and low-salt, people are still going to shy away from it," he added.

Meanwhile, cigarettes, which experienced a 2.5% sales decrease to $5.6 billion, slipped to fourth place.

"Cigarettes are less accessible in supermarkets today because they're behind the counter, vs. years ago when they used to be out on the sales floor," said Mike Bossi, a buyer at Dierbergs, Chesterfield, Mo. At his stores, the cigarettes are displayed in a 15-foot self-serve area located near the express checkout, he said.

The health craze is also what has caused cookies to lose sales, said John Hant, buyer and merchandiser at Spartan Stores, Grand Rapids, Mich. The category, which ranks No. 9, fell 3% to $3.4 billion in sales.

"There is a lack of low-fat products out there. The cookie industry is beginning to address the situation with items like Snackwell's, but they are still behind in coming out with products that have the low-fat content with the taste consumers are looking for," Hant said.

Cold cereal has remained at the No. 2 standing despite a 3.7% sales decrease, which brought its sales down to $7.8 billion. An executive at a leading cereal manufacturer said the category was losing sales to other breakfast items, like bagels and muffins. However, industry observers predict the recent wave of price cuts and new product introductions from leading cereal manufacturers will boost the category next year.

Statuesque Sales

The majority of Center Store's Top 10 categories show no signs of slowing down.

Ranking Category Dollar Sales (in billions) % Change

1. Carbonated Beverages $10.9 6.5%

2. Cold Cereal $7.8 - 3.7%

3. Chips and Snacks $5.65 3.2%

4. Cigarettes $5.62 - 2.5%

5. Beer and Ale $5.1 2.4%

6. Frozen Dinners/Entrees $4.3 2.3%

7. Ice cream $3.6 1.9%

8. Coffee $3.45 - 2.8%

9. Cookies $3.42 - 3.0%

10. Soup $3.2 2.2%

Source: Information Resources Inc., based on supermarket sales for the 52 weeks ending April 21, 1996.