TASTE OF THE ORIENT

WILLIAM SMYTH / BARBARA MURRAY

While retailers continue to struggle with how to merchandise the fluctuating category, Oriental foods have been inching their way onto supermarket shelves and into shopping carts as an offshot of consumer fondness for Asian takeout food.

Total dollar sales for the Oriental food category for all three channels -- food, mass and drug -- grew a slight 1.8% to $279.5 million for the 52-week period ended Oct. 10, 1999, according to data from Information Resources, Inc, Chicago, with only marinades and oriental sauces witnessing substantial growth, up 6.3% to $161.8 million in sales. Other oriental food items, including bamboo shoots, water chestnuts, chow mein noodles and cooking oils, all saw sales drop 5.4%, 2.2%, 1.5% and 3.2% respectively.

Of the marinades, Kikkoman International Inc.'s Oriental sauce/marinade led the way with a 7.8% increase over the previous season, generating $66.4 million in sales. Other brands that rounded out the top five best-sellers included Lawry's Foods Inc., with a 40.7% increase and $4.8 million in sales, CV Finer, up 38.7% to $4 million in sales and House of Tsang, up 1.2% with $7 million in sales.

Private label experienced one of the biggest growth spurts in the category with a 24.3% increase and $4.5 million in sales. Notable increases were also seen in brands like Lee Kum Kee Company Limited, up 16.1% to $2 million; Sharffer Clark, up 9.7% to $2 million; Yoshida Food Products, up 47.8% to $1.8 million; and Epicurean International Inc., up 15.8% to $1 million.

Oriental cooking oils, although dropping 3.2% as a category, for the most part did well individually. Sales of House of Tsang ($1.4 million) and Sharffer ($1.2 million) were up 2.3% and 6% respectively. Novalia Limited (up 19.9%) and Lee Kum Kee (up 10.6%) also witnessed an increase in dollar sales. Yet, Hunt-Wesson's sales were down 87.7% from the previous season, with sales slipping to $58,000 for the year.

Mirroring the category's all-across-the-board performance, retailers' take on the segment is diverse, and industry sources told SN that although some stores are experiencing success with Oriental foods, the genre can be a difficult one to sell.

"Sales of Asian products to American supermarkets have at least doubled in the past five years," according to William G. Chase, national sales manager for American Roland Food Corp., New York, an importer. "It's a good category; there's a lot of competition in it. If you have a high level of people taking Asian products home, it's logical to expect they would go to a grocery store for the ingredients to do it themselves. I wouldn't have said that 20 years ago; back then, all you saw in supermarkets was soy sauce and water chestnuts.

"Now there is a wide range of Asian sauces and condiments. We have a lot, as do all of our competitors. In a stir fry, sauces can change the whole flavor profile of what you are cooking. For example, we have garlic honey barbecue sauce, lemongrass, black bean, hoisin -- all of them and more can be used in one variety of stir fry cooking or another," Chase said. "In addition, some natural food stores consider Asian a more healthy category, because they don't use animal fats, and they do have soy products."

Despite all this, some chains still have not experienced a huge growth in Oriental and Asian foods. Save Mart, Modesto, Calif., has seen a growth in sales, but not a giant increase as it has with Hispanic food items. "We're not doing a whole lot with Oriental foods," said Randy Slentz, buyer at Save Mart. "We're not seeing a jump with the products even though we have seen a jump in our Asian demographic base. It's a tough category to get into."

According to Slentz, the soy and teriyaki sauce category has done well, but is not marketed in the Asian and Oriental food sections of their stores. "Kikkoman [and brands like this] soy and teriyaki sauces are taking the place of barbecue sauce and other marinades. We merchandise them in that section and sell them as more of a condiment," he said.

The Asian sections within Save Mart stores average between 4 and 16 feet. There are no displays or endcaps, and they hold a wide variety of items like water chestnuts, bamboo shoots, dehydrated mushrooms, fortune cookies, the entire Happy Snacks line, rice, noodles and sauces. The many brands include the Dynasty line, Taste of Thai, Well Pack, JFC and Lee Kum Kee.

According to Slenz, the category remains a hard one to master for various reasons. For one, Slentz said "most people that visit these sections are not Asian. Most play comes from Caucasians experimenting by cooking Asian food. It's mostly people who are cooking outside of their ethnic background. We see the complete opposite with Hispanics, which are a big customer base, in that they frequent the Hispanic sections for staples."

But, Slentz also said competition spawned by the rise of independent stores makes it hard to grab a piece of the business. "A lot of huge supermarkets that cater to Asians take away business," he said. "It's almost impossible to compete with them in dry grocery because they do so well with perishables and get a big customer base. We just sold a store in Fremont to an Asian independent. Inside they have floor to ceiling fish tanks that customers can buy from and they also have roast ducks in the window. We don't have the personnel for that and that's not our game. As soon as an independent opens they take a run at you."

Jungle Jim's in Fairfield, Ohio, attracts shoppers of Asian heritage to its 150,000 square-foot store from a radius of about 100 miles, according to Tom Hann, the international grocery buyer.

Hann said the one-unit independent carries about 40 different brands of soy sauce among its six, 52-foot aisles of Asian products. It has an additional 72 feet of Asian ethnic frozen products, too, he said.

"We have developed the business over a number of years, and we cater to the international customer. They buy a lot of fresh produce, then they started asking for one item and it leads to another, so we now have 4,000 Asian products. I carry rice by the pallet, 30 different brands, and customers buy 25- or 50-pound bags at a time, and it's a staple. We work off of closer margins on rice to help attract that particular customer," Hann told SN.

"Everybody's demographics are changing," Hann continued. "It's not exclusively a big-city thing any more. That population is spread out, although they gravitate toward the larger cities." He said the Asian customers are from all walks of life, not just high tech or university professionals. For Asian-Americans, he said, Jungle Jim offers a store within a store, where shoppers can find the same brands as in their local community of Taiwan or Vietnam. Plus, he said there is a lot more interest on the part of the American consumer.

To advertise, Jungle Jim sends a flier to about 60,000 homes in the local area every week, and it does TV advertising on Cincinnati stations. Still, Hann said, "a lot of it is word of mouth. It's like Field of Dreams: 'Build it and they will come."'

The store offers a good deal of entertainment value, as well, he said, with animals that sing or talk, a giant shrimp boat and, he said, "We are putting a monorail up around the store right now."

Merchandising strategies, such as the ones described by Hann, could be all retailers need to help move the segment along, according to Chase.

"It gets down to how many stores integrate rather than having an Asian section," Chase said. "Grand Union in my area has an international section, but has the Asian products spread around the store, too. Canned mangoes are in the fruit section, which I was glad to see, because that way, someone might be introduced to it.

"In the Midwest, you'd find a bigger Asian section because they don't have the competition from Asian stores. In the port cities, stores have to figure their trade area. A lot probably depends on the store manager and what his perception is," he concluded.