CONSUMER TRENDS

New Rules for Ready-to-Eat
The $115- to $150-billion ready-to-eat (RTE) segment is exploding. Information Resources, Inc. reports that portable beverage, snack, breakfast, snack meal products, and recent “do-it-for-me” dinner solutions reached $12.7 billion just in the supermarket channel alone in 2003, enjoying a 12% compounded annual growth rate since 1998. Shelf-stable dinners with meat (up 46%), skillet and bowl dinners with meat (36%), nutrition/breakfast bars (32%), and salad kits (11%) were among the strongest gainers. Dinner solutions grew an additional $1.5 billion, prepared ingredients $721 million, breakfast solutions $590 million, and lunch solutions $387 million in incremental supermarket sales. But as the category matures, a number of consumer demands are growing in importance.

With “fresh” still the most desirable food labeling claim and two-thirds of food shoppers extremely/very concerned about product freshness, it’s not surprising that fresh-prepared, refrigerated dinners and side dishes are growing faster than shelf-stable or frozen counterparts. Refrigerated products, including salad dressings, were up 14.7%, dinner solution meat/poultry products 11.5%, meat/poultry entrees 9.4%, side dishes 9.2%, prepared salads/coleslaw 7.2%, and breakfast meats 7.1%. Pre-packaged fresh-cut salads reached $3 billion in the grocery channel. Salad toppings jumped 12.6%, while salad kits from Fresh Express and Dole added another $50 million to the bottom line, with Dole’s kits up 88%.

Although frozen food consumption is at an all-time high, combined bowl brands lost $60 million in supermarket sales during 2003 and frozen skillet brands $30 million, perhaps as a result of their relatively high prie, shoppers looking for options closer to fresh or shoppers simply shopping the perimeter of the store. Kraft’s Fresh Prep line passed the $30-million mark in its introductory year. However, frozen hand-held meals, pies, rolls/biscuits, complete frozen dinners—as opposed to entrees—and convenient pre-seasoned and pre-cooked frozen meat, poultry, and fish products are enjoying close to double-digit growth.

Completeness—providing the nutritional “Basic 4” groups as well as the respective meal components—is among the most desired new RTE meal parameters. For example, shelf-stable, all-inclusive dinners with meat gained $19 million in grocery sales, while similar dinners without meat were soft. Portionable and reclosable packaging which allows consumers to select as many servings as necessary—such as Tyson Foods’ line of individually frozen, pre-prepared, ready-to-cook meats and poultry—is another important product option. Fresh products that are ready-to-serve in their own attractive but disposable tableware—like Bistro Gardens’ fresh gourmet soups and portable products like yogurt that are packaged with a spoon—are another desirable factor.

Watch as the demand for even shorter preparation times grows, as products such as Kraft’s StoveTop Stuffing provides a “homemade taste in five minutes” and Jimmy Deans’ Fresh Taste Fast! precooked breakfast meats set a split-second pace for breakfast preparation. With only one-quarter of Americans using more than one appliance to cook dinner, expect a heightened demand for side products and meal-companion products, like potatoes, that cook in similar times and at similar temperatures to RTE entrees.

At the same time, watch for fully cooked products and cooking technique–based flavors to help reduce the use of additional appliances, such as “hard-to- clean” grills. Watch for Byran’s Grilled Juicys grill-flavored franks or Quaker Maid’s Philly Home-style Beef Patties, a line of fully cooked, grilled burgers, Philly steaks, and meatballs. With consumer cooking skills slipping fast, devices such as pop-up timers or all-in-one, heat-and-eat foods such as those baked or barbecued in foil pouches with minimal cleanup, will create a new generation of added-value meals. And taking the work out of cooking, whether by eliminating more frequent shopping trips, providing restaurant-branded and quality food to take home, such as Boston Market or T.G.I. Friday’s, or simply helping to shred, chop, wash, or peel, will remain a dominant product differentiator.

With restaurants only posting 1% growth in 2003 and takeout sales flat, the future remains bright for RTE foods. More than eight out of ten people continue to prepare their evening meal at home, and RTE and frozen foods are expected to overtake “homemade” as the most common type of evening meal preparation within five years. Kitchen changes are irreparable. The number and variety of cookware and utensils in American kitchens have fallen dramatically, replaced by kitchen shears for convenient opening, pre-made hamburgers and cookie dough, and paper plates. And with consumers viewing cooking as one of their least favorite chores, ranking 24th out of 25, the opportunity for RTE will grow for years to come.

by A. ELIZABETH SLOAN
Contributing Editor
President, Sloan Trends & Solutions, Inc.
Escondido, Calif.
[email protected]