Weary of restaurant operating restrictions and stay-at-home recommendations, consumers are craving new foods and flavors like never before. This has prompted grocers to introduce prepared dishes whose exotic tastes and healthy ingredients take in-store foodservice further beyond the traditional world of mac and cheese and rotisserie chicken.
Sophisticated dishes are bold and full-bodied. They use chilis, other hot peppers, exotic herbs and spices, as well as flavorful oils like grapeseed and coconut. Grocers are also featuring more authentic Mexican and Indian foods and adding non-sushi Asian choices. Meal-kit ingredients and selections are broader, too, with offerings changing regularly.
“Restaurant operating restrictions have fostered interest in unique ingredients,” affirms Phil Kafarakis, former president of the New York-based Specialty Food Association and senior advisor to boards, CEOs and governments. “There’s experimentation. Retailers are getting beyond their traditional base, expanding prepared food to replace restaurants’ innovation. You’re seeing spices and seasonings, extravagant ice creams, unique olive oil blends and replacing other ingredients with mushrooms. Instead of [regular] mac and cheese, there’s upscale versions using specialty cheeses.”
COVID-19 has increased health-and-wellness concerns, with shoppers demanding more clean labels, natural ingredients and vegetarian fare. Retailers are emphasizing meat substitutes and whole grains. Chickpeas and cauliflower are becoming “alternative” ingredients in everything from ice cream to pizza crust. The list of antioxidant-rich “superfoods” continues growing, with new dishes containing cranberries, sea greens and ever-popular kale.
“Consumers want protein-focused flavors and plant-based ingredients,” notes Pat Brown, group VP of deli/foodservice at Boise, Idaho-based Albertsons Cos. “They’re interested in clean-label products that are GMO-, cage- and antibiotic-free. We’re looking into many options in prepared foods containing plant-based and healthier ingredients. This market is growing. Thinking outside the box and keeping items trend-fresh and interesting draws customers.”
A Competitive Edge
New ingredients let retailers differentiate from other grocers and restaurants. They could also help grow a grocery prepared food category that represents just 5.5% (about $26 billion) of the entire $477 billion takeout/delivery market, according to Rockville, Md.-based Packaged Facts.
Always ahead, Hy-Vee, Trader Joe’s, Wegmans, H-E-B and Mariano’s are aggressively addressing new trends. Other chains are doing so to varying degrees. “It’s evolving by retailer,” observes Rob Wilson, managing director at Boston-based L.E.K. Consulting. “Those stuck in the old world serve too much fried chicken and sushi. Ones that have evolved make you feel you’re in a food court.”
Exotic flavors and vegetarian cuisine, however, won’t dominate most prepared food sections; rotisserie and fried chicken still rule the roost. But new foods “romance” core offerings. “Foods offering excitement and differentiation enhance core products,” says Randy Burt, a managing director in New York-based Alix Partners’ Consumer Products Practice. “Rotisserie chicken and sushi won’t disappear; they’re volume drivers and, sometimes, loss leaders.”
Distinctive foods also give grocers a hedge against Amazon. “It’s a key defense mechanism,” explains Wilson. “You can’t get a same-day prepared meal at Amazon — at least not today.”
Recipe for Success
Success involves more than dabbling in exciting flavors, however. Supermarkets need comprehensive assortments. “There’s many opportunities to offer alternative ingredients,” advises Albertsons’ Brown. “The key is having enough to make a presence so customers know you’re a destination for foods that satisfy their needs.”
Ingredients should appeal to customers who want to eat healthier much of the time (but not always) and aren’t purely vegetarians. Alix Partners’ study “Cracking the Code on Health and Wellness,” released last September, found that 47% of shoppers avoid meat two to three times weekly; just 4% do so regularly.
Brown compared this dichotomy to a Venn diagram. “There’s overlap,” he notes. “You have customers who are wholly health conscious, those who want comfort food and are not concerned with ingredients, and customers in the middle that balance meals across the week to be healthy, but allow indulgence. The middle is growing.”
According to Joseph DeCicco Jr., partner/head of merchandising at DeCicco & Sons, a nine-store specialty chain in Pelham, N.Y., healthy choices appeal largely to shoppers in their mid-20s to 40s. “Older consumers are usually satisfying cravings,” points out DeCicco.
Meanwhile, COVID-19 fears and economic uncertainty have driven some shoppers to embrace more comfort foods. “On the other end, there’s a big need to satisfy nostalgic choices like casseroles, mac and cheese, and chicken pot pie,” says Brown. “Quality store-prepared items fill that desire.”
Media influences affect food choices, too. Since the COVID-19 crisis began, 25% more consumers watch cooking shows daily, according to the Hartman Group, based in Bellevue, Wash., in the August 2020 report “COVID-19 and the New Modern Convenience.” Further, 37% are swayed by online reviews and 17% by online influencers and celebrities, Alix Partners has found.
John Ciraulo, SVP, fresh foods at San Bernardino, Calif.-based Stater Bros., says that influencers often partner with brands for promotions and discounts. Some Instagram accounts are dedicated to discussing discoveries at particular stores, for instance. “Many people on Instagram share new finds from Trader Joe’s,” observes Ciraulo. “Whole Foods is also very active on social media and partners with chefs and wellness advocates to demonstrate use of their brand.” He adds that consumers also seek health-and-wellness articles and food tips from medical professionals.
While grocery sales have climbed in recent months, purchasing frequency and in-store visits have declined. This, along with ingredient shortages, has hurt some retailers’ prepared food sales, notes Brian Baker, managing director, retail practice at New York-based Deloitte.
DeCicco’s market was hard hit by the pandemic early on, but his chain’s online sales explosion “has had little impact on foodservice sales,” which, along with bakery, declined 75%, he says. Sushi and sandwiches in particular are suffering, but packaged meal sales grew 25%.
Albertsons, which recently partnered with San Francisco-based DoorDash, has reported positive results. “More customers are buying prepared foods in stores and online,” says Brown. “Trips are down, purchases are up. But occasions and meal sizes are different. For example, people want breakfasts they can heat up in their microwave versus hot breakfast sandwiches purchased en route to the office.”
One thing that COVID-19 hasn’t changed is consumers’ thirst for exciting ingredients, a trend that began 20-plus years ago. Interest is continually fueled by word of mouth, the internet, celebrity chefs, and growth of ethnic populations and cuisines. This trend is unlikely to reverse itself.
“Years ago, I went to Ohio, and ketchup was considered salsa,” says Armando Martin, president of Denver-based advertising and marketing agency XL Edge. “Now there’s pupusas, arepas, hot chilis and other Mexican options. Prepared food competition continues growing.”