A shifting category responds to change.
Nearly every subgroup within the canned meat/specialties category improved sales last year, enabling the entire category to move ahead by 7.8%.
Prepared dishes, particularly those with an ethnic flair, performed better than plain meat products last year. Consumers seem to be looking for more flavor and convenience in the canned meat/specialties they purchase and they want products that can function as a single meal.
The biggest increase within the category was recorded by Spanish/Mexican dishes, which jumped by more than 20%. Sales of these dishes have more than doubled since 1976, when they accounted for $128.9 million in sales. Last year, for the first time ever, Spanish/Mexican dishes supplanted plain meats as the category leader, as they accounted for more than one-fourth of sales within the category.
"Mexican food is one of the fastest growing segments of the good industry," says Thomas Brenker, executive director of the Mexican food & Beverage Board, New York. "People are eating out in Mexican restaurants, enjoying the food and becoming interested in preparing it at home."
Brenker predicts the category will continue to grow as the major packers and food companies put more marketing expertise into Spanish/Mexican products. "The canned meat category has been depressed for years, so the packers are looking for new products to keep production going," he says. "Mexican food is a viable alternative that is helping many firms increase sales despite the problems they are having with canned meat." He cites Hormel as an example of an old-line packer that is going into the Mexican category, primarily through meat products such as chili.
Italian dishes, the second largest subgroup within the category, also did well in 1983. Close to $250 million of canned Italian dishes were sold in supermarkets last year and this subgroup should remain a star performer for several years as marketers put renewed effort into selling Italian dishes.
"We have experienced double digit growth in our Franco-American line," says Paul Masaracchio, director of marketing at Campbell Soup Company's grocery's business unit in Camden, N.J. "We improved the products and have maintained a consistent level of advertising in order to revitalize the category. With the baby boomers now having children, this category should grow dramatically during the next five years."
Canned Italian dishes have always been consumed primarily by children as a luncheon meal and as kids' interests have changed so have these dishes. Since children of the '80s are more interested in video games, science fiction movies and other futuristic pursuits, the canned pasta people have launched many products appealing to the Star Wars generation.
In February 1983, Franco-American introduced UFO's, a takeoff on Spaghetti O's. Some of the products have meteors (meatballs) in them. Since coming out 18 months ago, UFO's have shown significant sales gains.
The other player in canned Italian dishes--American Home Products' Chef Boy-Ar-Dee-has also been upgrading its image and changing its personality during the past year. "Chef Boy-Ar-Dee has always been synonymous with quality and nutrition. Our most recent effort in this product line has been to expand the popularity of Chef Boy-Ar-Dee brand with children," says Jack Wood, public affairs officer for American Home Products in New York.
In late 1982, the Chef introduced Zooroni (animal-shaped macaroni in tomato sauce) and Cosmic Kids (pasta cut in the shape of a space ship). To meet the growing popularity of chicken-flavored products, Chef Boy-Ar-Dee brought out a chicken ravioli product in 1983. The company introduced three new products in a Pac-Man line in early 1984.
"Our canned pasta sales are growing because we have introduced new products and supported them with extensive advertising and promotions," says Wood. "Children have always been satisfied with the taste, and now we're getting them excited about the style."
Whereas Mexican and Italian food recorded strong growth last year, Oriental dishes experienced a mediocre 1983. Yet grocers still love the Oriental products because they contribute the top gross margin of any subgroup within the canned meat/specialties category.
Although Oriental cooking has become more popular, much of the extra business is going to fresh vegetables and fruits. Also, food companies have started to push frozen Oriental-style food, chilling sales of the canned products.
"The interest in Oriental cooking helps some of our products and hurts others," says a spokesman for La Choy Foods of Archibald, Ohio. "People are eating more Chinese food, but many are making it from scratch. They buy fresh bean sprouts instead of canned. But the building interest in nutrition should be good for Chinese food. La Choy products are perceived as low calorie and nutritions. They are what people want today."
Prepared meat dishes recorded a hefty sales leap in 1983, and now account for almost 13% of sales in the canned meat/specialties category.
Packers are canning and selling more prepared meat dishes than in the recent past. According to the American Meat Institute, the amount of hash that was canned rose 18% last year, to a total of 87.8 million pounds. More than 150 million pounds of meat stew was canned in 1983, an increase of 15%.
But, "The Meat Outlook: 1987," a report published by American Can Co. of Greenwich, Conn., says the future is bleak for canned entree products, with the exception of pasta with meat and chili con carne. Hash products are expected to grow by a meager 0.5% a year through 1987, while meat stews are expected to drop by 0.8% annually.
"Competition from other processed meat sectors, canned meat imports, lack of new product introductions and the decline in military and government procurement programs will limit the growth of domestic canned meat production to overall population gains," the report says. Deli takes slice of business
Sales of plain meat products in supermarkets increased only 1.6% last year, lending credence to American Can's predictions. With service delis becoming more common in supermarkets, consumers are increasingly turning to fresh meat.
"Our canned meat sales were down a little last year and in 1982 they were down from the year before," says Norman Iler Jr., a buyer for the Creasey Co., Louisville, Ky. "Canned meat is just not selling like in the past. The only time we can move a lot of it is when we get a super low price so the retailers can pass the savings along to the public."
American Can expects canned luncheon meat production to drop by 1.7% annually through 1985 because of the increasing popularity of deli-sliced meats, the rising popularity of fast food outlets and the consumer trend to upgrading their diets. The report says Vienna sausage production should slip by 0.3% a year through 1987, and canned potted products are expected to drop by 0.1% annually. Domestic canned ham production is projected to slide even more drastically--2.2% a year through 1987.
To prevent the decline, some packers are altering their products to appeal to the nutritional concerns of consumers and erase the perception that the products are unhealthy. For example, a recent advertising campaign for Hormel's Spam stresses that the product is made from spiced ham and lean pork shoulder. (The mere fact that Hormel has embarked on its biggest ad campaign for Spam in decades is evidence that the plain meat subgroup of the canned meat category needs a shot in the arm.)
"We have to be much more aggressive if we want to maintain sales," says Arnie Cronquist, general manager of refrigerated meat for Armour Foods of Phoenix. "We must help retailers move the product off the shalves and that is accomplished through increased advertising and promotion. When you're selling something in a can, you have to convince people that they will like what they cannot see."
To make its canned hams more palatable to nutrition-conscious consumers, Armour has reformulated the product. "We have removed almost all of the fat. In canned hams today, leanness is next to godliness," Cronquist says.
In contrast to the mediocre year the plain meat category suffered through, the plain poultry segment performed quite well.
"We've been selling as much poultry as we can get into a can," says Jimmy Beasley, owner of Sweet Sue Canned Poultry in Athens, Ala. "As beef consumption has gone down, poultry consumption has gone way up. We're seeing that just as much in canned goods as in fresh meat."
Beasley says sales of boned chicken are increasing, as well as sales of prepared foods like chicken and dumplings, and chicken a la king. He speculates that more women are buying these products to cut their time in the kitchen. "Cooking chicken and dumplings from scratch takes all day. Modern women don't have the time or the patience for that," Beasley says.