SO NATURAL

ROSEANNE HARPER

Deli meats with no artificial ingredients are going mainstream.

Like the perfect storm, several factors are coming together to accelerate the category's growth. To reach consumers looking for healthy and convenient meats, manufacturers known for conventional products are developing all-natural lines. At the same time, companies that specialize in natural lines are trying to boost sales to mainstream supermarkets. Conventional supermarkets in turn are setting aside more space for all-natural products.

By the end of this month, Wooster, Ohio-based Buehler's Fresher Foods will offer all-natural turkey breast and Black Forest ham from Applegate Farms in the service delis at four stores.

"We've had a resurgence of inquiries from customers and we do listen to them," said Dave Allen, deli/bakery merchandiser at 11-unit Buehler's. "We probably would have done this sooner if we had had the products. The number of all-natural deli meats was so limited for so long. Now there are a lot of options all at once. We've had three or four companies call on us just recently."

In fact, all-natural products are driving much of the growth in prepackaged deli meats. While unit volume sales of conventional, prepackaged lunch meats were down 3.3% from a year earlier, sales of deli meats making a "natural" claim on the label were up 12.5%, according to ACNielsen data for the 52 weeks ending Jan. 28. Dollar sales of conventional lunch meat, without a "natural" claim on the label, moved up less than 1%, while lunch meats making a natural claim shot up more than 14%.

As far back as six or seven years ago, the upscale Dorothy Lane Market stores tried in vain to interest

customers in all-natural deli meats. Just over a

year ago, following the meat department's success with Coleman all-natural beef, the three-store independent introduced a line of private-label, natural deli meats. Sales are healthy, said Donna Howell, the company's director of food service. Howell intends to begin test marketing a new all-natural line from a regional manufacturer.

In a cooperative effort with DLM's meat department, the deli also occasionally roasts Coleman Natural beef roasts and slices them to order in the deli.

"We have done that with corned beef around St. Patrick's Day in the past, but we're going to make it a year-round thing," said Jack Gridley, DLM's meat/seafood director.

Until this past year, conventional supermarkets, except for some pioneering chains, were not particularly interested in natural deli meats.

Rochester, N.Y.-based Wegmans Food Markets, the pace-setting chain of 69 stores, successfully introduced a private-label line in its service delis several years ago, and also began offering Applegate Farms' all-natural turkey breast around the same time.

But that was the exception. Now, mainstream consumers have become health-conscious. Boomers are getting older and more concerned about what they eat. Cable TV's Food Channel also gets credit for turning consumers toward healthy, fresh and all-natural products. At the same time, many credit Whole Foods Market for putting natural foods on the radar.

"Whole Foods is the real catalyst that's increasing demand. They're a force to be reckoned with," said Sherrie Zebrasky, an Atlanta-based consultant and former vice president of deli operations at Wegmans.

Other sources also pointed to Whole Foods for educating consumers about natural foods.

In fact, the retailer's phenomenal success has driven other supermarket chains to search carefully for the right line-up of natural deli meats.

"When you have Whole Foods all around you, you want to get some of those all-natural customers," said Richard Travaglione, vice president, perishables, at Morton Williams Associated, New York.

Just weeks ago, the 10-unit independent added two brands of natural deli meats, Applegate Farms and Coleman All-Natural Deli, to the service deli at three of the company's stores. With most of its units in the borough of Manhattan, Morton Williams goes toe to toe with Whole Foods in more than one location.

"We're putting these in stores that are near Whole Foods' stores," Travaglione told SN. "We're trying a limited variety at first, just turkey and a ham, and corned beef, but we'll probably add more. We've had Applegate Farms' prepacked deli meats, in all their varieties, for a couple of years."

Whole Foods' recent arrival in Buehler's market area in Ohio was one of the spurs that prompted the retailer to try all-natural deli meats again, Allen said.

Like Travaglione, other retailers told SN they see the groundswell of all-natural deli meats as the beginning of a long-term trend.

"This is something that's here to stay now," Allen said. "I could see us doing a private label in the future."

In fact, the companies SN interviewed have either introduced a private-label, natural line, are developing one, or plan to in the near future.

For the first time, Stop & Shop, the 376-unit Ahold-owned chain based in Quincy, Mass., is developing a line of natural meats and cheeses that will be unveiled in most of its stores in the next few months, officials said.

The line, consisting of six varieties, will be sold under the chain's Nature's Promise proprietary brand for all-natural products, said Kevin Cronin, Stop & Shops's vice president, deli sales.

Even at retails that run from 50 cents to $1 more per pound than prices for their conventional counterparts, all-natural deli meats are expected to do well in selected locations, retailers and other industry sources said.

Getting shoppers to sample the products is essential to promoting them and building sales, according to several sources interviewed by SN.

"Sampling and demoing will be key to sales because these products taste as good as anything in the case," Allen at Buehler's said.

Dierbergs Launches Natural Turkey

CHESTERFIELD, Mo. - Dierbergs Markets has introduced all-natural turkey in its service delis, the first in an extensive line of deli meats with no artificial ingredients, scheduled for rollout at the retailer's 21 stores.

The turkey breast was introduced last month as "Dierbergs Just Perfect" all-natural turkey line and includes three flavors, all retailing for $6.99 a pound. The product is part of a line-up of items launched by Carolina Turkey, Mt. Olive, N.C., under the company's new, Just Perfect label.

In the St. Louis marketing area, Dierbergs has an exclusive with the all-natural turkey breast as well as with Carolina Turkey's other deli products, a source at the chain told SN.

"This all-natural turkey is a great product," said a Dierbergs deli manager in a St. Louis suburb. "All of Carolina Turkey's products are. We've had an exclusive with them [for deli] for quite a while - their Grand Tradition label before Just Perfect."

On its website, Dierbergs noted that the slow-roasted turkey breast contains no artificial ingredients, phosphates, binders or trans fats, and contains 40% less sodium than other premium deli turkey breast products.

Deli meat manufacturers have told SN that the less processed a deli meat is, the better the flavor. A growing number of varieties with no artificial ingredients are hitting the market.

In fact, sales of pre-packaged deli meats, labeled "all-natural," have grown by double-digit percentages in both dollars and unit volume for the past three years, according to data from ACNielsen.

On the website, Dierbergs noted the stores have received many requests from customers seeking all-natural deli meats. Next up will be a premium all-natural roast beef and an all-natural smoked ham.

The Just Perfect brand turkey breast flavors offered at the chain's delis are Harvest Moon Slow-Roasted, Savory Beechwood Smoked and Sun-Dried Tomato/Sweet Basil. Deli associates at Dierbergs stores talked enthusiastically about the new products, pointing out the retail price for an all-natural product "that really tastes great" is reasonable.

A deli manager at one of the chain's high-volume stores said the retails compare favorably with just about any other premium turkey breast, at least among those offered in Dierbergs delis.

"In fact, Healthy Choice turkey breast is $7.49," the manager said. "And although [traditional] Butterball mesquite is on sale this week for $6.49, it's usually $6.99 a pound."

ROSEANNE HARPER

Good-Looking Dogs

GOLDEN, Colo. - Working with a handful of retailers, Coleman Natural Foods here is bringing an all-natural frankfurter to market.

The hot dog, which has no nitrites, nitrates or preservatives, is made from meat from animals that have not received hormones or antibiotics. The animals also grew up eating feed that contained no animal by-products. The suggested retail price for a one-pound package of all-beef franks is $5.99, for a one-pound pack of meat dogs, it's $5.49.

But that's not the news. The hot dog's appearance is the real breakthrough. It looks the way a frankfurter is supposed to look, and that should make it appealing to consumers at conventional supermarkets, said Chuck Fletcher, Coleman's chief marketing officer.

The company has offered all-natural hot dogs for some time, but the issues of shelf life, and particularly appearance, have kept sales from going very far in conventional food stores, Fletcher said. While they tasted good, the old dogs turned an unappealing gray when cooked. That was acceptable in health food and natural food channels, where customers didn't necessarily expect a pink hot dog, but not in mainstream supermarkets.

"We've surmounted the appearance problem by adjusting our processing methods," Fletcher said. "Experimenting with cooking times and temperatures, it took six months to do it.

"The all-natural meat market is underdeveloped," he added. "In fact, we see the market for all-natural processed meats as open territory. We have in our plan to provide a whole shopping basket of new all-natural items. Vacuum-packed deli meats probably will be one of them."

ROSEANNE HARPER