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GROCERY: Hanging in there

Once pegged as a category with little variety, packaged luncheon meats now come in a variety of flavors and forms to address the shifting needs of consumers, and are even competing with retailers' sandwich meat programs in the deli.

Yet as retailers strive to pay more attention to their packaged meat sections, they're encountering a number of challenges, including where to place the products.

Sales of packaged luncheon meats grew slightly in the year ended Aug. 8 to about $3.1 billion, according to data from Information Resources, Inc. To boost the category, packers are developing products with a more healthful profile and improved flavors. As demand for leaner packaged deli meats continues to grow, manufacturers are offering lines of light, low-cholesterol, and MSG-free meat and poultry products.

Consumers are responding by purchasing leaner products, as long as taste isn't compromised. A recent American Meat Institute study showed that packaged luncheon meats described as "lean" (90 percent to 94 percent fat-free) had higher growth than those falling in the fat-free, light, and low-fat categories, which have different fat contents.

Other trends in packaged meat include thin-sliced varieties, higher quality, whole-muscle cuts, and bolder flavors, such as those offered by Farmland's Carando Deli Quick brand of Italian-style meats and ConAgra's Butterball and Healthy Choice brands. High-end private label products are also finding success.

On the retail front, however, merchandisers are looking for ways to make cold cut sales meatier without jeopardizing sales in their deli departments. Part of the task involves better understanding the customers who buy packaged meats.

"I think the service deli customer has a little higher demographic and a little more expendable income, and is a little more concerned about quality and freshness than the person who buys prepackaged luncheon meats," observes Steve Erdley, v.p. of perishables at Penn Traffic.

While sales have been relatively flat at Penn Traffic's eight-foot prepackaged section, which is in the meat department, meat and seafood category manager Stan Manwaring says, "The Ultra-Thin line from Hillshire Farm has done a tremendous job, Oscar Mayer has stepped up their promotions on their Deli-Thin line, and Healthy Choice has developed a value-added line with a reusable Tupperware-like tub to compete with the Hillshire Farm line at similar retails in a similar size."

Packaged convenience

Mike Huegel, the deli-bakery buyer at four-store independent Stauffers of Kissel Hill in Lititz, Pa., says that packaged luncheon meat sales are even with last year, despite promotions once or twice a quarter. Stauffers' sections, also eight feet, are adjacent to the deli in three stores, and in the same line with fresh meat in the fourth and largest store.

However, an upcoming remodel at Stauffers' largest store will move packaged luncheon meats near the sliced-to-order deli, according to Huegel. "We put in a 12-foot section of prepackaged salads right next to our fill-to-order salads," he says, "and our largest increase was shown there. Hopefully, they'll be a parallel with packaged luncheon meats, with people who walk up to the deli and say, 'Oh, gosh, what a line' and go to the prepackaged case."

Huegel says his best sellers are local producers Seltzer's Lebanon bologna and Baum's sweet bologna, but notes that Louis Rich, Oscar Mayer, and Healthy Choice's eight-ounce bologna all sell well, too. "I really struggle to move any kind of volume, though," he admits.

Huegel also feels that demographics influence packaged luncheon meat sales. "I've worked city stores," he says, "and where you have a fixed or lower income, or a cultural diversity where language is a barrier, those customers understand the dollars and cents on a prepackaged item and aren't as comfortable trying to interact with clerks in the deli."

At Baker's Supermarkets, Inc. in Omaha, Neb., meat manager Jason Graves says his packaged luncheon meat sales are up about 13 percent to 15 percent, which he attributes to a couple of resets in the section. "I think the vacuum packs have been coming in a little better," he says, "so you don't get as many leaks or damaged products."

Graves sees convenience as a big factor in packaged luncheon meat sales. "I think today there are more on-the-go parents who don't have a lot of time to cook, so lunch meats are an easy way to get their kids fed," he says.

The big sellers, according to Graves, include Lunchables and any other Oscar Mayer product, as well as the Hillshire Farm and Healthy Choice items in the reusable bowls. "If they keep bringing in the variety, it's going to keep the future looking good," he concludes.
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