Brown-bagging goes upscale

by Allison Sebolt
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While the economy might be making business tough for some segments of the food industry, processed and packaged meats is not one of them. In fact, as consumers are pinched by rising energy costs, they increasingly are turning to this segment for inexpensive sandwich meal alternatives.

Jeff Dryfhout, director of product innovation for lunchmeat at Hillshire Farm, Sara Lee Corp., Downers Grove, Ill., said current economic conditions have boosted the lunchmeat category as more consumers are brown-bagging lunch instead of going out and getting sandwiches from quick-service restaurants such as Panera Bread and Quiznos.

"So while (consumers) might be willing to sacrifice on building (a sandwich) on their own versus someone else building it … they are looking for high-quality ingredients and high-quality meat to create that same sort of sandwich," Mr. Dryfhout said. "So it’s actually benefiting the packaged meats category because of that upward trend of brown-bagging."

Mr. Dryfhout said much of the brown-bagging taking place is occurring among higher-income, white-collar consumers who are open to more premium offerings. He also said the club channel has seen significant growth in lunchmeat sales as consumers are looking to buy in bulk.

"While Americans are packing their lunches more often, they are still looking for more flavorful options," said Jared Baker, brand manager at Oscar Mayer, a division of Kraft Foods Inc., Northfield, Ill.

Mr. Dryfhout agreed, saying in the future he sees the continued trend toward premium and highly flavored offerings. Hillshire Farm has flavors such as cracked black pepper turkey breast and mesquite smoked turkey breast, both in the ultra-thin variety.

Another example of a bold taste profile includes the Jimmy Dean Seriously Hot sausages from Sara Lee, which were launched in December 2005. Mintel International, Chicago, said the use of ethnic flavors to deliver "food adventures" is becoming widely used in the category.

"This is no longer a bologna-driven category as it was 20 to 30 years ago," Mr. Dryfhout said. "Consumers are looking for higher quality offerings, better flavor and better packaging to keep their products fresh."

Part of this freshness includes re-sealable packaging, which also makes the products more convenient. One way Hillshire Farm is able to cater to the convenience trend is through deli offerings packaged in tubs, a concept that has proved to be successful.

"The convenience of pre-packaged is you don’t have to stand in line at the deli and consumers also see the product actually lasting longer, and that’s a great deal associated with the tubs," Mr. Dryfhout said.

In addition, Oscar Mayer recently expanded its line of Deli Fresh items to include shaved oven roasted turkey, smoked ham and thick-carved rotisserie chicken. The products are available in either singles, thick-carved or family-size packs so consumers don’t waste any product.

Enjoying hearty options

One product line Hillshire Farm has added recently is a line of Premium Hearty Slices of meat to its Deli Select products, which includes flavors such as signature honey ham, Virginia brand baked ham, honey roasted turkey and oven roasted turkey. The idea is for the offerings to join the Deli Select Ultra Thin line and allow consumers to choose the thickness they prefer.

"(The hearty slices are) for those consumers who like the thicker cuts of meat, but also with that it’s more real to them," Mr. Dryfhout said. "The ideal is meat that is cut right off a turkey breast or a ham."

John Morrell, Cincinnati, Ohio, also is emphasizing heartier cuts of meats as the company recently introduced Off the Bone lunch meats, which are home style carved meats that are thick-sliced.

"Our thicker sliced Off the Bone sandwich meats provide a great option in addition to the shaved or ultra-thin offerings that are on the market," said John Pauley, executive vice-president at John Morrell. "This line of product really combines the best of both worlds — convenience with hearty, thick-sliced sandwich meat."

The products from John Morrell also are offered in re-sealable tubs.

One new trend in offerings is more of an interest in chicken as a deli meat.

"But we are seeing a lot of growth in new proteins like chicken," Mr. Dryfhout said. "As such, consumers are going there because it’s obviously a very popular protein."

Some chicken options from Hillshire Farm include ultra thin slices of hickory smoked chicken breast and hearty slices of oven roasted chicken breast.

Beyond just meat

Furthering the convenience trend, many packaged meat brands are looking into full sandwich solutions. Oscar Mayer has introduced flatbread sandwiches as a part of its Deli Creations line. The products include flavors such as buffalo-style ranch chicken and chicken & bacon ranch.

Sara Lee also recently introduced individually packaged sandwich dressings that come in a variety of flavors. The idea is for consumers to be able to enjoy different flavors on sandwiches and be able to wait to apply the dressing until it’s time to eat so the sandwich won’t become soggy.

"The dressings offer the restaurant-style taste people prefer without the added expense of buying and eating out," said Jonathan Drake, vice-president of Sara Lee Deli. "If someone is on the run, the small packaging makes it easy to transport and can be spread on a homemade sandwich right before eating to preserve freshness."

A look at the numbers and trends

According to Mintel’s Global New Products Database, product introductions in the meat products category have remained fairly steady with 465 new products introduced in 2007 compared with 435 in 2006. As of Aug. 19, there were 362 new product introductions in 2008.

Mintel said the best way for companies to compete in the breakfast and sandwich meat category is through premium flavor innovations, high-quality preparation, and packaging and attributes that provide added convenience and additional ways to use the product. Mintel suggested bacon suppliers provide bacon slices cut in sizes appropriate for sandwiches, and Italian sausage makers may partner with a pasta sauce maker to promote a combination of items for use with pasta as an entire meal solution for a family.

Demographic shifts are important as well, with a growing number of Asian and Hispanic consumers. Mintel noted Asian consumers are less likely to use products in this category, so this would be a market area to grow.

Private label offerings are another area contributing to the market. According to Mintel’s database, Target,

H-E-B, and Aldi all have introduced processed meat products in recent years. As examples, Schnucks recently introduced smoked ham slices, and Winn Dixie launched pizza size pepperoni.

Other trends include portion control, and as an example Buddig recently introduced Original Deli Thin 90 Calorie Packs, according to Mintel.

As in other segments, natural products are hitting the packaged meat market with success. Hormel Foods, Austin, Minn., has a line of 100% Natural Deli Meats and its Natural Choice line of products, which the company has aggressively expanded in the past few years. John Morrell has introduced Bistro Naturals, a line of sausages with no artificial ingredients or preservatives. The sausage products are marketed as fresh, never frozen cuts of pork and beef.

According to The Nielsen Co., New York, total packaged meat sales for the year ended Aug. 10 in channels excluding Wal-Mart Stores, Inc. were $10,109,685,795, up 1.2% from the previous year.

When it comes to luncheon meats specifically, total sales in supermarket, drug store and mass merchandise outlets excluding Wal-Mart for the year ended Aug. 10 were $3,417,874,000, up 1% from the previous year, according to Information Resources, Inc., a Chicago-based research firm. Top individual brands of refrigerated sliced lunchmeat included Oscar Mayer, private label, Hillshire Farm Deli Select, Buddig, and Land O’ Frost Premium.

 

Number of new meat products launched in the U.S.

 

2008 (year-to-date)* 362

2007 465

2006 435

2005 438

2004 438

2003 482

 

*2008 includes only products tracked through Aug. 19, 2008

Source: Mintel Global New Products Database

This article can also be found in the digital edition of Food Business News, September 2, 2008, starting on Page 37. Click here to search that archive.

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