Remember home meal replacement? The 1990s industry jargon for fresh prepared foods—convenient products designed to fill in for labor-intensive homemade meals—isn’t used so much these days. But the concept is alive and well and has produced a brand new generation of fresh refrigerated entrees. Retailers like Publix, Supervalu, and Fresh & Easy Neighborhood Markets are on the cutting edge in this arena, now more frequently described with terminology like “retailer meal solutions” or “prepared meal solutions.”
Three-fourths of all supermarket retailers polled by Technomic Information Services, Chicago, Ill., report that they consider retailer meal solutions (RMS) “very important” to their future (Technomic, 2008).
By 2006, RMS sales (which include pizza, sandwiches, rotisserie chicken and more, in addition to prepared meals) had reached nearly $25 billion, according to Sara Monnette, Senior Manager, Consumer and Market Research with Technomic. Between 2001 and 2006, the compound annual growth rate for RMS was more than 7%, outpacing other grocery category segments, says Monnette.
Clearly, consumers are solidly on board with the concept of retailer meal solutions. In an online survey Technomic conducted in June 2008, 82% of those polled reported purchasing prepared meals in a grocery or convenience store in a typical month, and 10% of purchasers said they did so 10 or more times monthly (Technomic, 2008).
Meanwhile, given the economy’s distressing downturn, it’s not surprising that as of late summer, 56% of Americans reported eating out less frequently (GfK, 2008). In this environment, many industry watchers see an opportunity for retailers to build additional sales of fresh prepared foods. Count Krista Faron, Senior Analyst with Mintel Research Consulting, Chicago, Ill., among them. Refrigerated entrees “have that association with quality and freshness” and “mirror what consumers are getting at restaurants,” Faron observes.
Consumers already are turning from restaurant fare to retail prepared foods with increasing frequency, says Bonnie Riggs, Restaurant Industry Analyst for the NPD Group, Rosemont, Ill. Six percent of the roughly 62 billion commercial foodservice meals and snacks consumed annually are purchased at retail stores—food, drug, discount, department, and price club retailers, according to NPD Group’s 2008 Retail Meal and Snack Solutions report (NPD, 2008). Additionally, purchases of retail ready-to-eat meals and snacks climbed by 2% for the year ending August 2008 (NPD, 2008).
Monnette says Technomic’s research shows that consumers view retailer meal solutions favorably for a variety of reasons, including the economic ones. “They found it [RMS] to be affordable, an overall good value, and convenient—those were the things that we found were really driving consumers to retail meal solutions,” she notes.
“It’s like a happy medium,” she continues. “You don’t have to cook, and you’re not spending to go out. It’s kind of filling this middle niche.”
And—at least with some of the higher-end retailers—the quality and variety of the offerings are impressive. “When you go to a Whole Foods or a Wegmans, it’s food that you would think came off an ethnic restaurant or fine dining menu—or at least it’s been inspired by that,” says Trendologist Kara Nielsen of the San Francisco-based Center for Culinary Development (CCD).
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Here’s a look at how some progressive retailers are approaching the category of fresh prepared foods.
• Supervalu. Launched in September 2008 to provide an affordable alternative to restaurant food, Culinary Circle offerings from Minneapolis, Minn.–based Supervalu include a variety of prepared refrigerated entrees and side dishes sold in the company’s network of grocery chains. Not all of the 150-plus Culinary Circle items are refrigerated; the line also includes frozen desserts, cookies, and marinades.
Supervalu press materials describe the products as “premium food lovers’ foods.” According to spokeswoman Susan Bell, Culinary Circle products are priced about 15%–20% below casual restaurant fare and 10%–15% below other premium national brands.
Entrees featured in the lineup include General Tso Chicken with White Rice, Chicken Marsala Over Buttered Linguine, and Turkey and Wild Rice Stuffed Peppers.
• Publix Super Markets. Always a retail innovator, Lakeland, Fla.–based Publix borrowed from the meal-assembly business model when it launched its Apron’s Make-Ahead Meals program late in 2007 in a Jacksonville, Fla., store. Customers register online to participate in meal-assembly sessions where they may prepare a variety of fresh menu items in family-size portions that can then be packed up, taken home, and consumed later. Six-, eight-, or 12-meal packages are offered.
The enterprising grocery retailer also offers a Make-Ahead Meals to Go program that allows customers to pick up pre-assembled meals. The Apron’s meals programs are cross-merchandised within the supermarket deli department.
• Fresh & Easy Neighborhood Market. This chain, a California-based offshoot of leading British grocery retailer Tesco PLC, follows in the tradition of its parent company by providing an array of appetizing, and sometimes exotic, fresh prepared meals within a modest store footprint of approximately 10,000 sq ft. Offered in portions that range from single servings to family-size, the line includes hundreds of offerings, with the Carne Asada Burrito, Shepherd’s Pie, and Ahi Poke among the best sellers, reports spokesman Brendan Wonnacott.
Fresh & Easy made its debut in 2007 amid considerable media fanfare thanks to its positioning as a grocery/convenience retail hybrid. The retailer plans to continue opening stores at a rate of two or three per week for the remainder of 2009, says Wonnacott.
• FreshDirect. This online gourmet food purveyor/delivery service supplies prepared meals and other fresh products to customers in metropolitan New York and parts of New Jersey. FreshDirect opened for business in 2002 and currently has more than 250,000 customers. Meals are prepared in separate hot and cold kitchens at the company’s state-of-the-art facility in Long Island City, N.Y.
FreshDirect’s line of upscale, refrigerated 4-Minute Meals includes offerings such as Tamarind-Glazed Salmon with Poppin’ Spice Potatoes, Black Pepper Braised Lamb Shank with Mint & Cashew Quinoa, and New Indian Pork Rib Vindaloo.
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Manufacturers Do Their Part
Although retailers are driving the category of fresh prepared foods, manufacturers play a major role, of course, producing private-label entrees for retailers as well as their own branded products, typically sold in the refrigerated section or meat case in the store.
Hormel Refrigerated Entrees, a line of hearty prepared meats in varieties such as Slow Simmered Beef Stroganoff and Herb Rubbed Italian Style Beef Roast, provide three or four servings per package and are ready to put on the table with just four minutes of microwave heating.
The Hormel products head Information Resources Inc.’s (IRI) list of branded refrigerated dinner entrees sold in food, drug, and mass merchandisers, excluding Wal-Mart (FDMx), second only to private-label brands.
Launched in 2000, the line continues to build household penetration, driven by a national media campaign that began in 2007 and will continue this year, reports Hormel Product Manager Bryan Kreske. Hormel Foods Corp., Austin, Minn., also markets Lloyd’s refrigerated barbecue brands, which come in at No. 3 on IRI’s 2008 list of top-selling refrigerated entrees.
Kreske notes that feedback from retailers indicates that they are committed to building the emerging refrigerated entrees category since it is “on-trend” in terms of addressing consumer needs.
Overall FDMx sales of refrigerated entrees were down 2.3% for the first 11 months of 2008 vs the prior year, according to IRI. For 2007, sales were flat at $933.7 million, but in 2006, they were up nearly 6%, and in 2005, they climbed 4.2%., also according to IRI.
What Consumers Want
Whether a product is produced by a retailer or a manufacturer, consumers’ expectations of fresh prepared foods are increasing. “The American palate is demanding more and more from meal solution choices, according to CCD’s Culinary Trend Mapping Report: Prepared Meal Solutions. “Restaurant-quality” and “chef-inspired” are key descriptors, according to CCD’s Nielsen.
Ditto the terms “healthful” and “wholesome.” Nielsen observes: “If you look at the CPG (consumer packaged goods) world, health and wellness is driving a lot of product trends. I don’t see that going away, but I don’t think they [refrigerated products] will be so healthful that they’re not comforting or filling or good. Whole-some is a direction I think we’ll be seeing.”
And if ever there were a time when our collective national psyche could use some soothing, it’s now—which translates to opportunities for economical prepared comfort foods, Nielsen notes. Think pot pies, stews, meat loaf, and braised dishes/entrees.
Rice and noodles provide “an easy base for flavorful vegetables and protein sauces,” perhaps with an Asian flavor, Nielsen continues. Such menu items can simultaneously address several items on consumers’ culinary wish lists—they’re hearty and economical and they deliver a dash of the exotic.
Mintel’s Faron suggests looking to the United Kingdom for inspiration for spicing up the U.S. menu of refrigerated prepared foods. “They do some really incredible things with ethnic in the UK—African, Moroccan, Thai, and Indian flavors,” she notes. “We have yet to see that kind of diversity.”
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Processing and Packaging
Bringing fresh prepared foods to market is not a simple proposition, however. “There are a lot of things you have to worry about,” reflects Robert Ross, President of Business & Technical Consulting LLC, Trumbull, Conn., a food scientist who worked with refrigerated foods for Campbell Soup and Nestlé earlier in his career.
Without the advantage of freezing or canning technologies to extend shelf life and reduce the threat of microbial contamination, refrigerated foods have a relatively short shelf life and require stringent quality assurance efforts.
It can be tempting—but unwise—to push the envelope too far when formulating new refrigerated prepared foods. “There’s a temptation to innovate in a way that might compromise food safety,” says David Lakey, Vice President of Marketing for Reser’s Fine Foods, a Beaverton, Ore.–based maker of refrigerated and frozen foods. This might include combining ingredients that don’t function well together or formulating without preservatives, he notes.
“Reser’s has gained some business in the past year because our competitors have taken risks,” says Lakey.
Fortunately, advances in processing and packaging technologies are helping to bring about new product development opportunities. One example is Sealed Air Corp.’s Cryovac Simple Steps self-venting microwaveable packaging system that offers extended shelf life for refrigerated products and allows for easy microwave, steam-assisted food preparation.
Emerging post-packaging pasteurization (PPP) applications, including high-pressure processing (HPP) to improve product safety and extend shelf life, have potentially valuable applications for refrigerated prepared foods, says Sean Brady, Marketing Manager for Ready Meals for Sealed Air Corp., Duncan, S.C. This USDA-accepted process destroys foodborne microorganisms or an array of pathogens by subjecting them to extremely high pressure without affecting product taste, texture, appearance, or nutritional value compared with other post-packaging treatments.
Concerns about food safety are prompting a growing number of processors to subject their products to post-packaging processing applications, Brady notes.
Packaging and processing technologies will continue to move the refrigerated foods market forward, Ross predicts. “Active packaging, controlled-atmosphere packaging, and advances in moisture management will all be helpful,” he observes. Irradiation may also play a role in the refrigerated prepared foods of the future, according to Ross.
The nature of refrigerated foods allows vendors to experiment with different packaging configurations because less microwave heating time is required compared with frozen products. While many frozen foods use flat, shallow trays for ease of microwave heating, deeper, bowl-type packages can be a good option for refrigerated entrees, Lakey notes.
In a separate vein, Lakey says that he has observed more use of twin packs wrapped in a cardboard sleeve, particularly for refrigerated side dishes.
Even with advances in packaging and processing technologies, the category of fresh prepared foods faces challenges. There’s the issue of consumer expectations, for example.
“When you bill it [an entrée] as restaurant quality, the expectations go way up,” notes Ross. “It’s all about meeting expectations.”
Visual presentation is another issue. Reser’s Lakey puts it like this: “Does the consumer perceive these items as delicious fresh meals or are they viewed as some type of leftover? I think the jury’s out. If the consumer can get past the first impression and eat the product, some are absolutely delicious.”
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Something else that’s sorely needed to help advance this category is better in-store merchandising. It starts with the need to create a bona fide retail destination for refrigerated prepared foods. And, yes, it would help if that destination is convenient—say at the front of the store with its own checkout.
Currently, for many retailers, the way in which fresh prepared foods are merchandised tends to be a bit disorganized and confusing. Products often are inconveniently scattered throughout the store—prepared meats in the meat section; side dishes in the refrigerated case; and some entrees in the deli department and others in the refrigerated case.
Brady says he would like to see retailers do a better of job cross-merchandising products in the deli department. That way, if a shopper rushes in to scoop something up for tonight’s dinner, she may be inspired to grab a refrigerated prepared meal or meal kit for the next day—or the day after that. “That’s where I think retailers have missed a cue on merchandising this total segment,” he says.
Lately, though, Brady has been heartened to find more retailers taking steps to consolidate offerings in “grab and go” sections of the store. “
You walk into the store and are starting to see ready-meal sections that make sense,” he continues. “In the last couple of years, the hot deli case has been getting a little bit bigger, and refrigerated meat entrees and starches are starting to get put side by side in the store.”
Next, he’s hoping for more collaboration between retailers and manufacturers. “The biggest opportunity that we see would be if the processor and the retailer could get together and work on better merchandising this segment,” says Brady.
NPD’s Riggs agrees that despite the efforts of some progressive retailers like those cited here, many could be doing a considerably better job of positioning themselves as a destination for fresh prepared foods. NPD’s research has shown that consumers like the variety and healthfulness of retailers’ fresh prepared foods, but they don’t think in terms of going to a supermarket to seek out a specific menu item, she says (NPD, 2008). “
To stay competitive, they [retailers] are going to need to stay on top of consumer wants and needs,” says Riggs.
What’s for Dinner?
Certainly economics will affect fresh prepared foods—at least in the short term. Despite the fact that refrigerated prepared meals represent a cost-effective option when compared with restaurant fare, he category may still feel the effect of consumers’ tightening purse strings in the months ahead.
“Consumers in 2009 will want a deal,” says Lakey.“They won’t stand for full price.”
The appeal of convenience remains compelling, however, particularly for those households where unemployment and the credit squeeze are not issues. “Even in these stressful times, some consumers would rather buy time than cook,” says Riggs.
Nor should the appeal of the freshness factor be underestimated. “Freshness as a driver is so critical [to consumers],” says Mintel’s Faron. “And there really is no category that embodies that more than refrigerated. So refrigerated meals are very well positioned because freshness is such a primary attribute.”
Faron sees category activity concentrated at the premium and value ends of the spectrum in coming months, with less activity in the mid-range, where a consumer might opt instead for an upscale frozen entrée—and still pay less than for a refrigerated product.
Brady says that Sealed Air focus group research has indicated that younger consumers in particular are not fond of meal preparation chores, especially when it comes to handling meat—which should provide a boon to the prepared meals category.
Lakey agrees. “We’re very optimistic [about the future of refrigerated prepared foods]. We think refrigerated foods are even more relevant to younger consumers who don’t cook or have time … or to consumers who want to experiment with new flavors. We can do exotic flavors—often better than the consumer can.”
Center for Culinary Development. 2008. Prepared Meal Solutions Culinary Trend Mapping Report. 5(2) San Francisco, Calif. www.ccdsf.com.
GfK Custom Research North America. 2008. Roper Reports U.S. Core Survey 08-7. New York, N.Y. www.gfkamerica.com.
NPD Group. 2008. Retail Meal and Snack Solutions. Rosemont, Ill. www.npd.com
Technomic Information Services. 2008. The Retailer Meal Solutions Consumer Trend Report. Chicago, Ill. www.technomic.com.