THE READING ON LABELS

LOUISE KRAMER Additional reporting: ROSEANNE HARPER

BALTIMORE -- For some deli and bakery executives, the new federally mandated nutrition labels are causing indigestion.

That is because there is still considerable confusion about what products, exactly, must be labeled in the deli and bakery under the Nutrition Labeling and Education Act, and by what date. While many products in the departments are exempt from the law, especially those produced at store level and those portioned out to a customer's specifications, others decidedly are not.

What's more, even federal regulators themselves and the state and local officials who will be called on to enforce the law acknowledge that the law contains gray areas.

To get a sense of how retailers are gearing up to comply with the law, which went into effect May 8, SN polled deli and bakery executives who gathered recently for the annual seminar and exposition of the International Dairy-Deli-Bakery Association here.

Many said they already have put labels in place and have worked closely with their manufacturers to make sure labels are supplied for the retailer's use. Others said they are still trying to figure out which products must have the labels, and how they can win exemptions from the law.

For their colleagues in the grocery aisles, these issues do not apply in the vast majority of cases. That is because the packaged products are generally sold to the retailer in the form in which they will be sold to the grocery shopper.

For the deli and bakery, much of the manufacturing may be done in-store or in a central plant.

Some retailers polled by SN called the law a nightmare, while others said the labels ultimately will be a helpful marketing tool.

Fred DiQuattro, director of bakery, deli, seafood and food service at Riser Foods, Bedford Heights, Ohio, said shoppers are, indeed, reading the labels on the products, but not every word.

"People are interested in only three items on the label: fat grams per serving, calories from fat and sodium. That's it, unless they're diabetic, and then they look at sugar."

Retailers said they are concerned that sales of sweet goods with high fat content will dip when consumers see the truth in black and white, but they also added that bread sales stand to gain. Many said they are searching for more reduced-fat and sugar-free items to fill in the potential sweet goods gap.

Here is a sampling of what retailers had to say:

Fred DiQuattro director, bakery, deli, seafood, food service

Riser Foods Bedford Heights, Ohio

From the Retail Bakers of America convention on we went nuts with this because nobody understood it. We probably made thousands of phone calls trying to get answers and we kept getting different answers even sometimes from the same people.

I said we were not taking any chances. Any manufacturer that sells to my warehouse had to supply me with nutritional information prior to the 8th of May.

It is a consumer-driven law, and if the customer wants to know what is the fat content in French bread, just because we're exempt, it doesn't mean we shouldn't have the labels.

The biggest problem we had was getting the software program, because everybody wanted it at the same time, and having the labels done. It was a nightmare, and of course, the exemption list is so vague. We have combination bakeries in some of our stores. If you have a service area with breads, how do you know what is frozen bake-off and what is mix or scratch? There is really no identification, but one is exempt and one isn't. I believe that in the next couple of years the customers will demand nutrition. The biggest result of it so far is it has increased business in our bakeries, especially breads and rolls. They told us it was going to hurt muffin sales, but we haven't seen too much of a hit. Our bread sales have been phenomenal.

Bakery/deli executive California chain

It's an incredible task to get the labels up to speed, No. 1, and No. 2, to keep up with it is going to require a lot of labor. And three, there is always another cloud hanging over you that something can go wrong.

Packaging costs are going to go way up and customers are the ones who are going to have to pay for it.

I think it will have a tendency to impact business. You take a large muffin. Our buyer is already having to look for fat-free-type muffins. It's probably good for us to find all of this stuff out in the long run. At first glance as a person I'm happy. As a retailer I'm sad.

Everybody is going to have an interpretation of how it's supposed to be done. There's such a fear of using the wrong wording.

Jack Murdock director of deli operations

Minyard Food Stores Coppell, Texas

It hasn't affected our deli business. Everything's already labeled. Salad manufacturers put the information on prepackaged products. And for meats, as long as we have the information on the whole piece, we're OK.

We won't be reprogramming our scales to produce nutrition labels.

Bea Harden bakery-deli merchandiser

Consumers Markets Springfield, Mo.

It hasn't affected us so far. Our cakes are centrally done and we're in the process of getting labels.

I think it's pushed us in the direction of developing some lower-in-fat products. We're using low-fat cream cheese in Danish pastries, stollen and coffee cakes.

Ginger Edwards deli-bakery director

B&B Cash Grocery/U Save Supermarkets Tampa, Fla.

By July we'll have all our scales programmed for nutritional labeling. Right now, we're adding the labels. It's not causing a big increase in labor. Except for initial cost, it will have no big effect on business.

Bill Schuyler deli supervisor

Giant Food Landover, Md.

It hasn't affected us. We've had no problems. We've had some positive feedback from customers. I wouldn't be surprised if we have our scales reprogrammed to produce nutrition labels.

Deli executive Midwest chain

It's too early to tell what effect it'll have on the deli business. Our suppliers have been sending us labels as fast as they can. We've had no customer inquiries or complaints.

The larger cost is for the supplier right now. We'll have a complete new scale management program completed in 1995 for printing labels, etc. That's going to cost about a quarter-million dollars.

Paul Van Gilder manager, perishables

VG's Food Center Fenton, Mich.

We've always labeled our fresh bakery products. We haven't yet put the new label on.

It may have some sticker-shock effect on some customers when it comes to higher-fat products like muffins and cakes and other sweet-dough products. But bread will stack up very well. We're exempt as long as we don't bake centrally, but we'll eventually do it because customers will want it.

The scale companies haven't yet developed the software needed. It'd be a long, complicated process for us to retrofit all our scales to print labels. We've had good supplier support.

Nancy Rand deli coordinator

Quillin's La Crosse, Wis.

It has taken a lot of time figuring out what we need to do. We are revising and expanding the ingredients label on our sandwiches in self-service because we believe that's what customers want. But as a direct result of the labeling law, we've streamlined our sandwich line, cut back by 10 varieties that we package up. An example would be some of our croissant sandwiches. They've been decreasing in popularity anyway, possibly because, I guess, people see them as less healthy.

We haven't had any trouble getting nutrition labels from suppliers for anything we repack, like salads. I just wouldn't consider buying a salad if we weren't guaranteed labels. We have one supplier that's giving us labels with our name on them.

We're not happy that some of the products are almost completely covered up with labels, but I'm sure nobody else is either. It presents a merchandising problem. At sometime in the future, we may use more or different signage to compensate.

But there are real positives. For instance, I think all the talk about the labeling law has made consumers think more about what they're eating. That can boost the sales of particular products. We took on a reduced-fat potato salad a year ago that's doing at least twice as well as I had thought it would. It's now our second-best-selling potato salad and we usually offer four types.

Bakery buyer California chain

As a buyer, I like to judge a product by its quality. When I talk to a salesperson or a manufacturer, the first question I ask is, "Do you have nutritional labels with this?" If he says yes, I'll continue looking at the product. I'm worrying how shoppers are going to react when they see that the muffin they've been eating for years has 600 calories. What are we going to do to replace that?

You could turn it around and use it as a marketing tool. It could be a two-way street.

We've already spent $600,000. I had to purchase all new labels.

Official Southwest chain

We're not commenting at this point because we think there will be changes, such as maybe the information panel can be placed elsewhere than on the front of the product. It certainly can affect business if the label covers up the product. How can you merchandise?