WRAPPED AND READY

LYNNE MILLER

Improved quality and a new generation of brand names are just two of the reasons retailers love prepackaged deli meats and cheeses.

The better-tasting, higher-profile lines can also mean fewer frustrated customers jockeying for position at the service case with numbered tickets. On busy weekend mornings or during evening rush hours, prepacked deli can help satisfy customer demands for convenience and alleviate pressure on service associates, retailers and industry analysts told SN.

From where he sits, Doug Estermann of FoodMaxx has seen the tide turn in favor of prepacked cold cuts. Half a dozen years ago, FoodMaxx stores introduced presliced meats in 8-ounce packages. The response was poor, so the retailer discontinued the program, and returned to slicing all deli meats in the stores and packaging them on tray packs, said Estermann, director of meat for the price-impact, warehouse store division of Save Mart Supermarkets, based in Modesto, Calif.

"There just wasn't enough customer awareness," he said. "Sometime during the last six years, it's caught on. It's not a new idea anymore. I think there's more customer awareness."

Media accounts of listeriosis linked to deli meats and product recalls led Estermann to revisit prepackaged meats. In recent months, the stores rolled out a large variety of lunch meats, including several in 1-pound resealable packs. The rollout sparked new business. Sales are up 4% to 5% above last year's same-store sales, said Estermann.

Right now, FoodMaxx stores are testing about two dozen prepacked deli meats from such brands as Tyson, Butterball, Ekrich and Pocino Foods, a Los Angeles-based company specializing in Italian meats. FoodMaxx normally doesn't carry such a large assortment; the company will streamline the offerings when it's clear which products generate the most sales, Estermann said.

One challenge was finding quality products in 1-pound sizes. Estermann worked with manufacturers for some time to develop larger packages for the 40-store chain. The size appeals to the retailer's consumers, and is cost-effective. Eventually, Estermann said he hopes to discontinue the 8-ounce packages entirely.

"For every two 8-ounce packages, you have twice the cost of packaging," he said. "We're actually able to give them a better price per pound with the larger packages."

Unlike meats sliced in the stores, these products are delivered case-ready, thereby minimizing the risk of contamination in back rooms, display cases or on slicers. Packaged products require little labor, and stores have an easier time keeping products in stock, he said. Unlike freshly sliced meats, these products stay good for weeks. Customers and retailers like the extended shelf life and the product quality.

"It's a lot different from the deli wall with bologna and hot dogs," Estermann said. "We wanted to maintain the same quality and integrity with the prepacked meats as we do with the product we slice. It's the same high-quality muscle product that we'd slice at store level."

FoodMaxx delis haven't stopped slicing meats altogether. Customers who prefer the meats sliced in the stores can still buy those products. "We don't want to run those customers away," Estermann said.

Offering high-quality products is critical for successful self-service programs. But delivering quality isn't hard to do these days, since there are plenty of good products available from familiar brands, a marketing official with Tyson Retail Deli said.

"Service deli meats are generally perceived to be of higher quality than pre-packaged lunch meats," said Erik Long, vice president of marketing of Tyson Retail Deli. "However, many supermarket shoppers are not able to have their need for convenience met at the service deli counter. At the same time, traditional deli shoppers have avoided self-serve deli meats as very few actually delivered a true deli quality experience. Self-serve deli meats offer a best of both worlds scenario _ true deli quality meats with the convenience of a pre-packaged lunch meat." Compared to 10 years ago, "the quality of products has greatly improved."

For chains with service delis, image is also important. Consumers are more inclined to buy prepacked items if the lineup includes the same brands and quality as those available in the service cases, said a representative for Penn Traffic, based in Syracuse, N.Y.

Well-known brand names also help drive sales, said Joe Ramirez, spokesman for the chain of 206 stores.

"I think people realize the prepackaged foods from manufacturers can be just as good as foods they get sliced fresh," Ramirez said. "Once customers become familiar with the freshness and quality of prepackaged foods, they'll buy more."

Prepack is a growing part of the deli business for Penn Traffic. The chain, with stores in six states, is expanding its existing lines of items to offer consumers a better selection, he said.

However, SN found that acceptance of, and demand for, prepacked deli depends on variables like the image the chain wants to project and the traditions it has fostered through the years. For example, consumers who shop the delis at Roche Bros. stores in the Boston area prefer ordering fresh roast beef or Swiss cheese sliced to order, in whatever quantity they desire. According to officials with the Wellesley Hills, Mass., retailer, stores offer a limited assortment of prepacked items only at certain units in less-affluent neighborhoods.

Nevertheless, "I think that's going to be the future in the deli, hands down," said Frederick "Rocky" Anzalone, Roche's food development specialist. He has noticed a larger selection of prepackaged items at competitors' stores.

Food-safety concerns no doubt are driving the growth, along with the convenience of self-service and labor issues, Anzalone said.

"There's consumer awareness of sanitation," he said. "I think that's a great selling point for the product. We have standards. We clean and sanitize our slicers every two hours. I know that's a huge commitment. I don't know how many other places do it. Some stores that suffer with labor issues cannot facilitate that."

Convenience and food safety exemplify consumer-related drivers of prepack deli purchases, but retailers also look at it from a business point of view. They can use self-service to offer some items that otherwise wouldn't make it in the service case. A line of all-natural lunch meats has found a niche in the self-serve cases at Kowalski's Markets, St. Paul, Minn. The retailer carries a selection of some of the most popular prepacked meats and cheeses from Applegate Farms, which specializes in natural and organic meats, including nitrite-free deli meats. They're convenient, but they're also billed as healthier than traditional cold cuts.

"People are more conscious of what they're eating, and want more natural things," said Diane Odegard, deli manager at Kowalski's store in Woodbury, Minn. "It's the only line of all-natural lunch meats we carry. It's flying out of here now."

Kowalski's introduced the line a couple of years ago, and managers have seen steady growth in sales, said Odegard. In fact, she thinks the line has attracted some new customers to the deli. Sampling events conducted at the stores at least twice a year always generate new sales. The products sell at a higher price than conventional lunch meats. As far as flavors go, customers like the basics. Odegard stocks cases with several varieties of turkey in seven-ounce packages, salami and ham in four-ounce packs, and three varieties of sliced cheese in eight-ounce packages.

"They're becoming a more popular item," she said. "I've noticed in the last year I'm bringing more in each week. People like grab-and-go items. That's a big part of the appeal."