THE BIG DEBATE

BOB BAUER

Big packages of frozen vegetables are producing a mixed bag of retail sales.

In interviews with more than a dozen frozen-food buyers from across the nation, SN found wide differences of opinion regarding the trend's current impact on sales, and its likely disposition in the future.

Most retailers offering the products said they are pleased with the results, but even they are proceeding carefully with expansion. Some who have yet to offer the larger sizes said they're waiting until the products prove themselves. Still others said the larger bags, offered primarily for the past two to three years, could soon be a thing of the past.

Debate over their effects aside, the most common offerings of large packs by the retailers contacted were 4-pound bags of peas, corn, green beans and mixed vegetables.

Retailers who said they believed in the larger bags named convenience as the No. 1 reason for their popularity.

Retail arguments against the new trend included slimmer profit margins and skepticism

about the extent of consumer acceptance.

All the retailers did agree, however, that their interest in the larger sizes and the segment's expansion were direct responses to competition from warehouse clubs. The overall frozens business is continuing to grow in clubs, fueling the debate over how to respond to that form of competition. Frozen vegetables are part of that ongoing debate.

Pat Brooks, a buyer for Modesto, Calif.-based Save Mart Supermarkets, is a believer in the larger sizes of plain vegetables. Indeed, he said his sales of larger packages are already 40% of that of the 2-pound varieties. And that's without any advertising support for the large packs.

Brooks said Save Mart offers 4-pound bags of corn, mixed vegetables and peas.

"We haven't done any advertising on the larger bags," Brooks said, "but I'm sure they'll continue to do well."

Brooks said he understands why some other retailers have stayed away from larger packages, however.

"Our margin is much better on the 2-pound packages," he said. "The 4-pound bags don't give us much of a margin at all. It's all positioning. People are trying to compete with the warehouses.

"There's a place for the larger packages if they're handled properly," he added. "We're always looking at everything that's available, always looking for that little edge. If customers continue to respond to the larger packages, we'll continue to offer them."

At Brookshire Bros., Lufkin, Texas, there is apparently little debate about the big packs' effect so far.

"The larger sizes will continue to catch on," said Doyle Burnaman, a buyer for Brookshire. "They do quite well. We offer 3-, 4- and 5-pound packages of corn, mixed vegetables, peas and green beans. We've done some low-key advertising and some temporary price reductions. People are buying them all the time, but obviously we get a bump up in sales when they're on sale."

Dick Perkins, vice president of produce for Consumers Markets, Springfield, Mo., conveyed a cautious approach to the larger sizes.

"We're offering the basic main-line items such as corn, mixed vegetables, peas, cauliflower and broccoli. There's some trend there. I think they'll grow, but at a slow, steady pace," he said.

"We need to make the larger packages available," he added. "The customers will then make a choice. Customers are looking for more convenience and economy."

A frozen food director at another Midwestern supermarket chain, which is offering 4-pound bags of corn, mixed vegetables and peas, said he is also treading lightly with the program. "It's hard to tell" how it is doing so far, he said. "It's not something we've had for a long time. The industry is being pretty selective about the larger packages. I don't think manufacturers are just jumping into this. They're only doing it in items they know make sense. People don't want to be stuck with inventory. "The smaller bags have always done well. It may be hard to establish a new market. There's a bare-bones margin on vegetables, so some may be leery of taking a chance. In spite of that, I think there will be some growth," he said.

Tim Bellanti, a spokesman for the Springfield, Mo., division of Dillon Cos., was more optimistic about expansion for the segment. Bellanti said the trend "absolutely" had staying power and room for growth.

"We're seeing a real interest. It's definitely an expanding category. Customers like the larger, convenient nature of the larger bags. They can relate to the quality and convenience. There's a high interest level in those products where you pour out what you need and put the rest back in the freezer for the next time it's needed.

Dillon has devoted some in-store merchandising and advertising on the larger packages. The result, he said, is that "they sell well on a regular basis, regardless of whether they're on sale or not."

Bellanti joined other retailers in acknowledging the trend's link to warehouse club strategies. "Obviously, the warehouses were the first with the idea of the larger packages. Supermarkets are cherry-picking the lines that seem to work well."

A buyer with a West Coast upscale supermarket agreed that the move to larger sizes is strictly designed to combat the clubs, and that's why his company has not gotten involved.

"We don't deal with large sizes. Being an upscale supermarket, our customers wouldn't respond. We're a little different than your typical supermarkets. They're all letting the club stores run them scared," the buyer said.

However, retailers in closer competition with wholesale clubs said they have been feeling intense pressure to offer larger packages. And some other retailers, not in the shadow of club competition, are experimenting with large bags nonetheless.

Peter Crawford, a buyer for Copps Corp., Stevens Point, Wis., said although his company isn't faced with club competition, it still offers larger sizes.

"We've been doing it all along, and have had strong sales all the way through," he said. "We're not in the Milwaukee area, so clubs are not present in our area. Our own stores have a strong presence in our area."

Copps' selection of larger-package vegetables includes peas, corn, mixed vegetables, California blend, broccoli and cauliflower.

"We've been offering the larger sizes for over two years," Crawford said. "We've done some two-for pricing and advertising in the store and have had success.

"Vegetables are a stable item with us. We're constantly looking at blends, but I don't expect we'll expand to larger sizes in those areas," he added.

The trend's detractors often mentioned lack of convenience as a strike against it.

"We're always open to ideas, but I don't think a 4-pound bag is convenient," said Jack DeMoulas, a buyer for DeMoulas/

Market Basket, Tewksbury, Mass.

"From a retailer's point of view, we can make money selling 1-pound bags. Sometimes you have to look at what you've got and work with it. You have to be careful and not just add new products without thinking it through. I've talked with some people who say if you take the top 100 larger-packaged items, it's only the top 10 of those larger sizes that are doing well," DeMoulas said.

Larry Brown, a buyer with Ball's Super Food Stores, Kansas City, Kan., agrees with DeMoulas. "Most people are slowly putting in some large sections. Grocery retailers are just playing around to see what works. We haven't done large packages of vegetables yet."

Haggen, Bellingham, Wash., hasn't either. Buyer Milt Lowe said it's a matter of making space. "Definitely, sales of the 2-pound and 1-pound bags are way up. The 10-ounce sizes are not gone, but they're weak. We could probably use a portion of that space if the bigger bags are in demand. If movement figures justify, and if the space-to-sales ratio warrants, we'll add the larger sizes."

While retailers may have trouble finding space in their freezers for larger packages, some said customers may face the same problem.

"Maybe people just don't have room in their freezers for 4-pounders," said Lee Salo, buyer at Raley's, Sacramento, Calif., which offers 4-pound bags of peas, corn and mixed vegetables. "Price is another problem," he added. "People can look at the price of a 2-pound bag and know whether they're getting a good price. With the 4-pound bag, they may not feel they can compare prices."

Salo said sales of 2-pound vegetable packages are down, but when the 4-pound bags are factored in, total frozen vegetable sales have increased at Raley's. Still, he said, the 2-pound packages continue to be popular with customers.

"We can advertise the 2-pounders and know it's going to be a blowout." The 4-pounders have also been advertised, but less frequently. He said the 2-pounders continue to receive more advertising and shelf space.

Ross Nixon, vice president of merchandising for Dahl's Food Markets, Des Moines, Iowa, said he doubts the larger packages build substantial market share over the long term. "Everyone says 'bigger, bigger, bigger,' but families are getting smaller. A lot of megapacks will be short-lived," Nixon predicted.