Category Focus: DIPS, SALADS & SPREADS

Healthy food options, often with gourmet/ethnic taste profiles, continue to spark strong sales in dips, spreads and specialty side salads.

In the 12 weeks ended March 23, supermarket sales of refrigerated dips climbed 5.2% to $98.0 million, although units dipped (forgive us) by 0.4%, according to Information Resources, Inc., Chicago. The refrigerated flavored spreads sub-category, driven by hummus, jumped by 27.6% to $54.9 million, with units ahead 24.7%.

Higher costs of commodities, packaging and shipping again pushed dollars higher than units, with some vendors reporting retailers taking slightly longer margins than before. Suppliers are bullish, saying cash-strapped shoppers are more likely to eat and entertain at home rather than go to restaurants.

“As budgets get tight and many higher-priced items become out of reach,” consumers will turn to reasonably-priced upscale items from retailers, says Dominick Frocione, vp of sales for Cedar’s Mediterranean Foods, Bradford, Mass.

DELI SALADS UP 12.2%

Consumers will still seek the convenience of fresh prepared foods from retailers, notes Shirley Leonard, marketing manager at Sandridge Food Corp., Medina, Ohio. Supermarket deli salads are experiencing continued strong growth in supermarkets, with Leonard citing a 12.2% gain between 2005 and 2007 as tracked by Mintel International Groups’ report on refrigerated foods.

Industry observers predict continued double-digit spreads growth. Historically dominated by upscale shoppers with discretionary income, today’s mainstream consumers are trading up to healthy and flavorful options within the dips, spreads and salads segments, says John McGuckin, exec vp of sales at Sabra Go Mediterranean, Astoria, N.Y.

“The consumer is responding to the spreads category due to the quality it offers and the health and wellness position it owns,” says McGuckin. The dips category is vulnerable because “it has not as yet captured the consumer’s confidence in either of these crucial areas,” he believes.

Dairy dips are used for many occasions and can be targeted to any consumer who likes to snack, says Brian Groves, director of marketing communications at Ventura Foods, Dallas, the Dean’s Dip licensee. “Most often, refrigerated dairy dips are not near the snack aisles,” which can create challenges for boosting sales, Groves says. “Consumers may need to be reminded to visit the dairy case after picking up their favorite crunchy snacks,” he explains, noting the opportunity for retailers to place refrigerated displays near crunchy snacks/chip aisles or endcaps, or to use instant redeemable coupons for cross-merchandising.

NEW PACKAGING

New packaging for Dean’s Dip has been a hit on shelf due to bolder graphics and on-pack product tags including 0g trans fat per serving and “Packed with Dairy Goodness,” notes Groves. Showcasing refrigerated dairy dip usage occasions and recipe ideas can also increase dairy dip sales. The newly revamped Dean’s brand web site (www.deansdip.com) celebrates the dip eating experience with updated product information, entertaining ideas, recipes and dip etiquette information.

The segment is branching out into gourmet and specialty dips. For instance, Sandridge’s success with Buffalo Chicken dip and Spinach Artichoke dip to satisfy the home entertaining market led to this spring’s rollout of Savory Jarlsburg Swiss, Shakin’ Bacon and Horseradish dips as well as Gorgonzola dip and Kickin’ Krab dip.

This spring also found Cedar’s tapping into consumer interest in the health benefits of yogurt and Mediterranean foods with the launch of Authentic Greek Tzatziki Dips, a five-flavor line made with real Greek strained yogurt. “These are yogurt based dips that go beyond traditional Yogurt and Cucumbers,” Frocione says. Flavors include those popular in hummus, including Roasted Red Pepper, French Onion and Sundried Tomato.

Taste, healthy lifestyles and entertain-at-home needs play into consistent growth in the 30% range for the spreads segment. Sabra, the No. 1 brand, was up by 53.4% in the supermarkets in the March 23 ending period.

Package appeal has a major role in spread segment growth, Frocione reports, noting that new European-style containers have helped turn some niche players into overnight sensations. Eye-catching packages have caught the attention of consumers, and, in turn, buyers.

MORE SPACE

Slowly, this is translating into more shelf space for spreads. “Retailers need to make space for the category in order for customers to first see the items,” Frocione says. The segment has proven retailers who make room can first build customer demand, then eventually scale back slightly on space without losing unit sales, observers say. They add that creating a Mediterranean section helps attract new shoppers.

Cedar’s remains one of the few suppliers with both natural and conventional product offerings in an array of packaging options. “We are strong believers that more of a good thing is easy to sell,” Frocione says, alluding to the launch of his company’s value-size hummus. At roughly $1 more than competitors’ 10-ounce hummus packages, Cedar’s best-selling 10-ounce flavors will be priced to move in new 20-ounce packages.

Hummus manufacturers continue to bolster the product’s upscale image, particularly with ‘open and serve’ packaging. But the demographic profile of the user is widening to include health-conscious consumers of all types. “We still see our customer base as health conscious, active, on-the-go professionals who enjoy great tasting convenient foods,” Frocione says. “But I really feel that we have transcended the health conscious consumer and have become a mainstream category.” To sell more spreads more profitably, Sabra advises retailers to add some theatre behind the Mediterranean destination proposition, to expand the space to align products with consumer lifestyles and to make it profitable every day. “No need for deep discounting, but no need to gouge; be practical in your everyday retail pricing strategy,” McGuckin says. “This is a potential gold mine for sharp merchandisers.”

Growing consumer demand has retailers expanding fresh prepared foods, natural products and healthier functional foods offerings. “Retailers are building up their grab-and-go sections to address consumers’ needs for convenience along with high quality, great tasting food,” Leonard says. Gourmet-style salad skews toward single households and older couples, (55 and older) seeking more upscale, ethnically diverse meals for two, Leonard says. ‘Better-for-you product’ growth and bolder flavored products appeal to both groups, she adds.

NEW TWISTS

New twists on side salads continue to boost the segment, such as Sandridge’s spring launches of ethnic Singapore Salad and Chipotle Potato Salad and artisan-style Grilled Chicken and Fennel Salad and Herb Chicken and Pasta Salad.

Digestive health is getting increased consumer attention, along with demand for fiber and foods fortified with probiotics commonly found in yogurt, Leonard notes. A new Sandridge line of low-fat yogurt-based salads this spring includes Atlantis Grilled Chicken Salad, Cucumber Garden Salad and Shoreline Seafood Salad.

Cedar’s is likewise putting a strong emphasis on its salad line this year, with new packaging and new items including Chick Pea Salad to build on proven Cedar’s winners like Taboule Salad and Salsas, Frocione says.