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Challenges to frozen food heating up, Winn-Dixie president tells convention.

Challenges to Frozen Food Heating Up, Winn-Dixie President Tells Convention

The proliferation of over 1,000 new frozen products introduced annually to the United States market has placed retailers in a "precarious position," according to the president of Winn-Dixie Stores, Inc. "This represents more items than most of us have in our cases right now."

That's what James Kufeldt told delegates listening to the keynote address delivered to the National Frozen Food Convention in Atlanta, Ga. The chain store executive said that consumer demand, limited cabinet space and high mortality rates for new items has "put us on the hot seat."

His message to packers at the annual gathering was that they have to do more to meet today's competitive challenges. While encouraging detailed market research to better prepare manufacturers to cater to consumer tastes, Kufeldt noted that despite the advent of larger supermarkets across the nation, FF display space increased by only 6% last year. And he warned that retailers will be asking suppliers "for more and more `guaranteed' sales on new item introductions."

The veteran food marketer stressed that much has to be done to eliminate non-producing assets. "Monuments do not produce net profits," he remarked.

But Kufeldt was mindful of the ongoing need for basics to maintain stability. He elaborated: "In the search to keep up with consumer changes and demands, our company went too far. We forgot about volume merchandise that's in our frozen food case. In an effort to take advantage of the new items, we have placed too many products in our cases. We found we could not do justice to the volume merchandise. When we say the consumer's needs must be fulfilled, it also includes the items that she has learned to enjoy over the years."

While Winn-Dixie is now in the midst of weeding out poorly performing products, its frozen food sections remain robust. Many have doubled in size during recent years to accommodate up to 400 different offerings. "I believe the future of frozen is bright," declared Kufeldt.

However, he pulled no punches when discussing the impact of FF rivals. Among the major threats identified were fast food and specialty restaurants. "Consumers who once spent up to two hours in the home kitchen each day now want to spend less than 30 minutes. They have found that they can meet their needs from sources other than supermarkets," advised the chain president.

Noting that some industry analysts have predicted that only 40% of the American food dollar will be spent on home-prepared fare by the year 2000, Kufeldt nonetheless suggested that manufacturers should not despair. "This doesn't necessarily mean we'll be eating at home less - just that we'll be cooking less."

As a matter of fact, he perceives the challenge of take-out meals to be a golden opportunity for the retail trade. "Frozen food can be a front line defender in keeping food dollars in our stores," stated Kufeldt. "With the advent of the microwave oven, we have an opportunity to expand our frozen food departments so that everyone will be able to choose a convenient, good tasting, top quality meal to take home and pop into the microwave."

On the other hand, he admitted, the FF department is not the only supermarket section that has the potential to gain from the microwave boom. Entrees sold from instore deli's can just as easily be prepared domestically in the same fashion. Meanwhile, fresh seafood counters continue to offer customers portion control meals which can be conveniently heated.

And that's not all. A contender that is still in its infancy in the U.S. is seen in shelf stable products. "Even though (distribution) problems have been experienced in the early stages, this new industry provides great promise for the supermarket," warned the Winn-Dixie president. "Innovation, without the need for refrigeration, is sweeping the dry grocery lines."

Kufeldt urged the FF industry to stay on top of new computer technologies that are capable of capturing extensive data and analyzing purchase patterns, demographics and attitudes. He suggested that smart marketers will develop niche products for a maturing U.S. population that is increasingly dominated by citizens aged 45-55 and the over-85 segment.

The ethnic minority sector also offers solid sales promise, said Kufeldt, since by the year 2000 some 25% of all Americans will be of African, Hispanic and Asian heritage.

On Diversion

While market segmentation is all the vogue, the nation is also viewed by many as becoming "one total market" in terms of distribution. And as the diversion of discounted products from one region to another continues to irk manufacturers, retailers are calling for the establishment of a national wholesale pricing policy. Indeed, such would save them the trouble and cost of transporting diverted merchandise to outlying stores.

"It appears that forward buy programs are beginning to make more and more financial sense in the frozen food industry," commented Kufeldt. "Artificially high list prices and price promotions do tend to give instant orders, but we must remember the high cost of refrigeration and storage facilities which rob us of the needed gross profit.

"The message to manufacturers is a simple one: Increasing tonnage is far more important than developing a market share system that fosters diverting and arbitrary boundary lines...

"Looking into the decade of the '90s, the most successful companies will be those which determine and respond to their own unique customers," said the retail executive. "They will be pro-active, not just reacting to change."

The Winn-Dixie head reminded conventioneers not to forget the obvious in regard to marketing to shrinking family units. "One fourth of all households are now one-person households, and over half are occupied by only one or two people. This means more male shoppers, more teenage shoppers, and a need for smaller packages and portion sizes. In turn, it also means that we have to put the excitement back into the shopping experience to attract these customers."

Plate of Foodservice Issues

On Tap for NFFA Workshop

Waste management, school lunch programs, supermarket delis and the senior market will be among the hot topics at the National (U.S.) Frozen Food Association's workshop, Foodservice Sales and Marketing of the 1990s, Feb. 15-16 in Loews L'Enfant Plaza Hotel, Washington, D.C.

Packaging that allegedly aggravates the garbage problem will be the focus of the waste management session at the workshop. What does and doesn't sell to senior citizens will be the subject of another talk; and the impact of commodity cutbacks and demographic changes on school lunch programs yet another.

Restrictive truck regulations that impede delivery of frozen food in some metropolitan areas will be discussed at one session. Workshop topics also include non-bid foodservice contracts, and how to handle public relations in a crisis. Tentatively scheduled is an address on foreign trade opportunities. And are supermarket delis "retail" or "foodservice?" Still another session will try to thrash that one out.
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Title Annotation:James Kufeldt; Frozen Foods in North America
Publication:Quick Frozen Foods International
Date:Jan 1, 1990
Words:1150
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