RETAILERS DEBATE ROLE OF VALUE-ADDED CHICKEN

JONNA CRISPENS

AVON, Colo. -- To add or not to add -- 'tis the question when it comes to the role that "value" plays in the poultry category.

At this summer's Broiler Marketing Seminar here, sponsored by the National Broiler Council, Washington, a three-member panel of retailers debated whether the future of poultry lies in moving more chicken or doing more with chicken.

Richard Kilday, meat manager for Shaw's Supermarkets, the 125-store retailer in East Bridgewater, Mass., warned attendees to approach value-added "cautiously," in light of the fact that "chicken is, and always will be, a commodity business that is based on high-tonnage production.

"It is imperative not to abandon your bread and butter, which is high volume, for value-added product, which, although profitable, will never pay the bills based on current and forecast usage," he said.

Kilday told attendees to "forget everything" they've heard about value-added products "feeding a time-starved society," because cost and freshness would always be an issue.

As for cost, Kilday said that middle-income consumers -- as a group representative of "tremendous buying power" -- often forgo value-added products because they question the actual value.

For example, asked Kilday, "Is boneless chicken breast smeared with barbecue sauce a value in the consumer's mind at $4.79 per pound, when consumers can regularly buy boneless breast at $1.99 per pound and a jar of barbecue sauce for 99 cents?"

Kilday told attendees to "concentrate on tonnage" by taking advantage of the fact that chicken can "drive traffic through the store."

Kilday cited statistics that show that raw meat still accounts for about 96% of meat-case sales -- a figure that should make retailers wary about providing too much space for value-added products.

"Although [value-added products] return impressive profits, [they] simply do not have the sales to support such space," he said.

Nevertheless, Kilday told attendees that value-added does "have a place in your future" and will "clearly play a major role" -- sooner, rather than later, if the new product is properly introduced to consumers.

Kilday urged attendees to focus on quality, freshness, convenience and ease-of-preparation when creating new products, and then to give away such products.

"Once customers pick up your product and experience the quality and convenience, they will begin to accept the product as having value and they will gladly pay the premium," he said.

"One low-price feature will not change customer-shopping patterns; you must be prepared to 'give it away' for a prolonged period," he added.

While Kilday admitted that such a strategy was "difficult to accept," he said that "value-added is not, and never will be, the cash cow, unless customers try it."

Paul Caldarazzo, fish and poultry manager for the Greenbrae, Calif., location of Mollie Stone's, a five-store independent based in San Raphael, Calif., agreed that value-added poultry was a "tough nut to crack.

"No one really knows what's going on with value-added," said Caldarazzo. "They haven't really discovered how to make money at it."

Viewing poultry as a commodity, he said, is the "only way to make money" on the category.

Caldarazzo said that although his store's meat department offers a number of marinated and tumbled poultry products, about 98% of the department's chicken sales were generated by non-value-added items.

"Poultry as a commodity is where we make all of our money," he said. Caldarazzo said that one of the problems with value-added poultry is moving enough volume and keeping labor costs in check.

"In our stores, value-added poultry is more of a small niche item that is mostly convenience-driven by singles and two-income households that haven't the time to cook," he said.

For Wild Oats Community Markets, a 62-store retailer in Boulder, Colo., Paul Gingerich, purchasing director for meat and seafood, said that his customers were "clearly" voting for doing more with chicken.

Gingerich urged attendees not to give up on the supermarket fresh-meals concept, because "sooner or later the consumers will let us know what they want from us."

He also outlined a number of areas that attendees should focus on to ensure success in the value-added category.

For example, he mentioned the areas of flavor, customer education and additional natural products.

According to Gingerich, low-cost production techniques have created products that are lacking in flavor and suffer from mushy texture.

Two ways to combat these problems are by using free-range chickens, which customers "equate with better flavor," and using product branding to build customer confidence.

In the area of customer education, Gingerich told attendees to help dispel the myth concerning unsanitary conditions at processing facilities.

In addition, he told attendees to concentrate on side dishes, as well as entrees, and provide recipes that take only minutes to prepare.

"The new generation needs cooking education," said Gingerich. "Increasingly, they are recreational cooks that need simple, yet elegant, recipes appropriate for entertaining."

Gingerich said that the mantra of "less is more" is also a good direction for the industry to take when it comes to additives and dietary practices.

For example, he said that replacing diets containing animal byproducts with those comprised entirely of grain created better-tasting chicken and helped renew consumer confidence.