Joining the club
December 6, 2010
by Lynn Petrak
Bigger is better for many grocery and mass-merchandise items sold in club stores, including in the deli section. In the hot case and prepared-food areas, portions and the accompanying packages are sizable enough to feed a large family – and then some. In the sliced deli-meat section, customers can pick up lunch meats that can stretch their dollar as well as their lunch and dinner menus.
In a down economy, sizes are still up at club stores, in comparison to traditional supermarkets, as consumers seek value buying in bulk and increasingly turn to affordable and convenient yet satisfying foods. Club stores and their processor-suppliers are working together to provide packages that deliver value by size while assuring freshness, safety, convenience and even sustainability. That translates into packages that reflect some outside-the-box thinking.
One example of the evolution of deli-meat packaging in club stores is the move toward multipacks as opposed to single large packages. “You have a freshness issue and you have the issue of club stores that need a certain minimum price point, and that goes across the product categories. The consumer doesn’t want to open a huge can of green beans and keep it stored, for example, so they are packaged in a group of six cans instead. That’s the same principle with processed meats,” explains retail and packaging consultant Huston Keith, principal of Marietta, Ga.-based Keymark Associates. In essence, a processor can use the same materials and equipment to package products for customers in both the traditional supermarket and club store segments. The difference is in number of packages.
“It helps processors,” Keith says. “In the fact that they don’t have to have a separate packaging line for club stores – they use the same package, but may just turn off the diecut settings every other cycle. And they also get higher-volume sales through club stores. And the club store gets the price point they desire,” he points out, adding the consumer also wins by paying less per lb. for high-quality products while making fewer trips to the supermarket. Membership’s privileges
Costco, the Issaquah, Wash.-based warehouse retailer, has taken that approach to much of its deli-meat packaging, from its Kirkland Signature brand to other brands produced by national or regional processors. “We try to do a couple of packages together. If you look at the sliced meats in the Kirkland program, it’s a modifiedatmosphere package. The product performs better and stores better,” explains Charlie Winters, vice president of fresh meat, deli and produce operations for Costco. In addition, the single chamber and top-film format allows for better visibility as well as easier stacking and merchandising on the shelf, he says.
One processor that has worked with Costco in its deli-meat program is DaBecca Natural Foods, based in Clifton, Texas. According to the company’s president, David Pederson, a club store like Costco generally wants a totally larger SKU than traditional supermarkets, up to 1.5 lbs. or 2 lbs. in total weight. A multi-pack, then, accomplishes multiple goals. “We just leave two packages attached together, where they may not get cut. It’s the same package attached together,” Pederson says, adding that club stores and their customers also prefer packages with easy-opening features.
Tied in with volume is shelf-life. Multiple packages are one step in ensuring a longer shelf-life for consumers, who have the option of opening just one package at a time.
Other processors have been working on packaging materials and systems that enhance quality and shelflife for the distinctive needs of mass merchandisers. For example, Livingston, Calif.-based Foster Farms utilized high-pressure pasteurization (HPP) for its chicken and turkey deli meats, designed to offer extended shelf-life by way of uniform, high water pressure instead of chemicals. “We first began using HPP in early 2008 with our grilled-chicken strips, as well as our oven-roasted sliced turkey and honey-roasted and smoked sliced turkey,” says T.J. Johnson, Foster Farms’ director of marketing for turkey products. “All of these products are sold through Costco,” and the company continues to explore product possibilities to expand its shelf presence in such channels.Sustaining growth
As interest in green packaging continues rising, sustainability is on the minds of those who make and market foods sold in the deli department, both at club stores and traditional supermarkets. Some processors have already gone forward in that area, using more Earth-friendly packaging for deli products, including corn-based materials and packages with less outer materials.
At the club-store level, Winters says Costco is looking closer at products utilizing recyclable packaging, across the meat and deli area. While the movement toward greener packaging is not as evident in prepackaged deli meats, the hot-food and prepared-food area of Costco stores are showing changes. “All of our entrées are shifting to aluminum trays. They are stable, and recyclable everywhere, compared to plastic. Some plastics can be recycled, but you have to have special equipment,” Winters remarks. He says green packaging is evolving to include not only food packaging at the stores, but also general merchandise. “Clearly, everyone is paying attention to sustainability.”
Keith says sustainability is a buzzworthy topic, but sustainable packages for deli meats are still a work in progress. “There is a practical aspect to it. You say you want a more sustainable package, but with processed meat you need a high-oxygen barrier and hermetic seal and have to be able to label and merchandise it,” he comments. A recyclable material that accomplishes all of those packaging goals remains a somewhat lofty goal at this point, he says.
Another giant blip on the radar of consumers, retailers and processors is the economy. During the economic crunch of the past couple of years, mass merchandisers have been faring well, or at least less badly than other retail and foodservice outlets. Beyond Costco and Sam’s Club, other big box stores are venturing into deli meats, too, with the notable example of Minneapolis-based Target Corp., which recently kicked off a campaign focusing on expanded food offerings in its stores around the country.
Deli meats as a category are holding their own in club stores and supermarkets alike.
“Turkey and chicken deli-meat products will continue to be strong sellers as consumers monitor both their spending and eating habits,” predicts Foster Farms’ Johnson.
Adds Pederson: “Lunch meats have been great. In a weaker economy, people are eating more at home instead of going out, and brown bagging to work.”
The category success cuts different ways. DaBecca’s Winters points out that working with processors on a regional basis helps ensure that customers can get the product they want, including deli meats, in a format that works for them.
Processors and warehouse stores like Costco benefit, too.
“It also supports local economy, which we always like to do, with the local wholesalers and processors,” he says.