Dressing Up

Premium refrigerated products offer a wealth of opportunities for cross-merchandising.

Milk and cookies. Bacon and eggs. Ice cream and cake. These are all classic pairings that present ideal scenarios for cross-merchandising. They're also all far enough apart in the store that bringing them together requires a bit of merchandising legwork.

Sharing those attributes are premium refrigerated products — such as dressings, dips, salsas and juices — which grocers and brand manufacturers alike hope to connect with beyond-the-ring companions in the minds — and carts — of customers.

The recent recession, while a challenge to most businesses, has presented a new opportunity for these high-margin items as consumers shifted their eating habits to favor quality vs. quantity in certain key categories.

"Over the past two years, we have seen our customers purchasing more and more items that they used to go out and eat," says Ron Hurd, general manager of Kansas City, Mo.-based Cosentino's Food Stores, which operates 25 stores in the metro Kansas City area under the Cosentino's, Sun Fresh, Apple Market and Price Chopper banners. "The down trend in the economy has forced our customers to focus on home-prepared meals. They seem to be looking for replacements to the 'dinner at Applebee's' experience — quick to fix, and fresh. This trend has definitely affected the refrigerated sections in all departments."

Liquid Assets

At Cosentino's, Hurd says the most popular refrigerated items have been bagged fresh salads, refrigerated prepared side dishes, grab-and-go prepared deli meals and entrees, and meatless selections, along with assorted refrigerated juices like branded products; açai, cherry and cactus juices; and coconut water.

Refrigerated juices are indeed a hot item: sales are up nearly 5 percent over the past three years, though they slipped a bit — 1.4 percent — for the year ending May 15, to just under $3.7 billion, at food stores with at least $2 million in annual sales, according to data provided by The Nielsen Company.

As popular as they are, though, juices — in common with most refrigerated items — present a challenge for cross-merchandising with items in other parts of the store.

"The key hurdle with cross-merchandising non-refrigerated items is the difficulty of getting the item you're promoting with to be in close proximity to your display of juice," says Lou Rotell, national sales manager for Winter Haven, Fla.-based Noble Juice. The family-owned company offers a wide variety of all-natural and organic refrigerated juice products, including its latest, Tree to Bottle, a new line of citrus juices in bottles made from a plant-based plastic known by the trade name Ingeo.

But such challenges haven't stopped Noble from collaborating with retailers on cross-promotions within the produce department with products like strawberries, tangerines and assorted cut fruit, Rotell says.

"We are seeing an uptick in demand for 100 percent juice items," he notes, adding that "customers are looking for all-natural items that do not contain any additional sugars or additives. What was good for you 50 years ago is still good for you."

That demand has given rise to a growing list of new juice varieties. Jumping on the superfruits bandwagon are products like the recently released Zola Light Açai Juice. Interest in ethnic foods has also inspired new releases like Tri- Melon Aqua Fresca, featuring agave syrup, from Hood River, Ore.-based Columbia Gorge Organic, which offers a line of fruit and vegetable juices, ciders and smoothies as well as whole fruit. And longtime carrot grower Bolthouse Farms crosses from solid to liquid with its own line of carrot juice and other fruit-and vegetable-based beverages. Bakersfield, Calif.-based Bolthouse also offers a line of yogurt-based refrigerated salad dressings perfect for cross-promotions of its own.

The bagged salads on the move at Cosentino's — along with celery, carrots and other raw vegetables — also fall into the good-for-you realm and are easily teamed with another popularly cross-merchandised segment: premium refrigerated salad dressings and dips.

Dressings are doing particularly well, with dollar sales up 3.6 percent in the past year to more than $215 million, according to Nielsen; volume is up nearly 9 percent, to more than 67 million units. Dips weren't quite as dynamic; Nielsen reported flat sales over the past year, at nearly $437 million, with units up nearly 3 percent to almost 343 million.

That trend bodes well for companies like Buellton, Calif.-based Santa Barbara Bay, which offers an extensive line of refrigerated dressings and dips. Newest among its products are the brand's All-Natural Dips, Salads and Spreads, and its All-Natural Greek Yogurt dips with live and active cultures, all launched at the recent International Dairy-Deli-Bakery Expo in Houston.

"Greek yogurt dips and hummus are among consumer favorites, as these products are part of the health-and-wellness trends that are driving the market," says Emily Alfano, marketing manager at Santa Barbara Bay. "In the past, we have cross-promoted with Barefoot Wine and King's Hawaiian Bread. We've also done public relations promotions with Kettle brand chips. Retailers will often tie us in with crackers, pita chips or produce items."

Of course, crossing that far down the aisle brings other challenges, Alfano notes. "There are distribution gaps among both [types of] products — perishable vs. nonperishable — and the logistics involved in getting these products to the retail destination," she says.

As Alfano suggested by her company's wine and bread tie-ins, cross-merchandising opportunities for refrigerated dressings can extend well beyond salad. Manufacturers like Santa Barbara Bay, Marie's and Marzetti offer various products that can be teamed with other fresh produce items as well as snacks.

Within the produce department, sacks of spuds are a great accompaniment for positioning next to products like Marie's potato salad dressings. Cabbage and carrots — in either traditional packaging or pre-shredded convenience formats — could adjoin Marzetti slaw dressings. Fresh salsas could be paired up with tortilla chips and perhaps avocados, along with a take-home guacamole recipe. For less ambitious consumers, the chip display could highlight Wholly Guacamole's expanding line of ready-to-eat dips and salsa. And complementary products like croutons, bacon bits, dried fruits or more elaborate salad topping blends like Salad Finishers from Plymouth, Wis.-based Sargento Foods and Fresh Gourmet Crunchy Toppings from Sugar Foods Corp., based in Sun Valley Calif., are ripe for cross-promotional action with dressings as well as designer salad greens.

Looking further down the aisle, blue cheese dressings and dips could be cross-promoted with chicken wings, tied in with key snacking events like Super Bowl Sunday. Closer to home, meatless products from Lightlife present cross-marketing opportunities within the refrigerated department itself. Lightlife, owned by Omaha, Neb.-based ConAgra Foods, offers its soy-based Smart Wings in sauce varieties like Buffalo and Honey BBQ that could be paired with blue cheese and ranch dressings. Further, Lightlife's Smoked Style Smart Sausages could be part of summertime cookout promotions including hot dog rolls, condiments and traditional encased meats.

ConAgra offers data showing that while less than 5 percent of consumers are occasional or strict vegetarians, as many as 40 percent of consumers are aspiring vegetarians looking to reduce their meat intake. As such, creative cross-marketing could provide a boost for the premium refrigerated meatless segment.

Meanwhile, meat, poultry and seafood present cross-promotional opportunities for premium refrigerated sauces. Ready-to-use products such as Fortun's Finishing Sauces, from Kirkland, Wash.-based Fortun Foods, Inc., are designed to be poured over prepared proteins shortly before serving, offering a convenient way for consumers to add variety to their dinner tables with minimal hassle. A range of ethnic flavors, including Asian Style Pepper, Mulligatawny Curry and Spanish Romesco, might inspire purchases of complementary products that would otherwise walk out the door.

Marketing Investment

The folks at Cosentino's agree that while cross-marketing out of the refrigerated case can be tricky, it's typically worthwhile. "Equipment seems to be the most prevalent challenge for us," says Hurd. "We have a limited amount of mobile refrigeration, but have experienced the benefit of the investment and will continue to add to our inventory."

In fact, the benefits have been such that cross-promotion has been a key marketing topic at Cosentino's for the past two years. "We have engaged our store directors in monthly merchandising contests to increase product movement and excitement in the stores," notes Casie Broker, director of marketing. "We have had great success with 'build-a-meal' merchandising. Refrigerated display bunkers and end caps have transformed from price and item to one main featured item and several cross-merchandised items and recipes, to build a meal."

The results have been evident at the register, Broker says. "Over the past two years, we have experienced an increase in ad item movement and, therefore, ad loss," she says. "However, cross-merchandising the right items with the ad items has allowed us to offset this loss as well as increase our basket size."

Likewise, branded product manufacturers recognize the mutual benefit. "What we see on cross-promotions is that we attract many consumers who would not ordinarily purchase our product," Noble Juice's Rotell explains. "We see an increase during the promotion and a residual lift in volume over the following three weeks."

Alfano didn't have data to share but acknowledged "strong product movement" during cross-merchandising campaigns. "Promotions really work for our brand and definitely help move product," she says.

And as retailers like Cosentino's build successful track records, it has become easier to launch further cross-marketing initiatives. "We have had some success with branded partnership," says Broker. "As we have been able to prove growth, the vendors are more willing to participate in the cross-merchandising programs."

Gauging Success

The success of these promotions is most often seen by their impact on the average basket ring rather than verbal feedback from consumers.

"Customers don't always tell us when we have a great idea, but we can see it by what they are purchasing," observes Broker. "Along with the success of our build-a-meal program, we have also seen an increased movement on impulse items that are merchandised appropriately."

What are the most important ingredients for a successful cross-merchandising campaign? Perhaps they're timing and teamwork.

"My suggestion is to execute these promotions on a quarterly basis with high-volume seasonal items," concludes Rotell. "This opens your item up for maximum exposure to consumers who ordinarily wouldn't purchase your product."

Hurd concurs: "Selling requires the whole team's involvement. Plan, promote and communicate your expectations. Track your successes and capitalize on them."

Sounds like just the kind of recipe aggressive grocers would be wise to borrow.