Veg-Solutions For Grocers

The reasons why the veg-product market in the U.S. has been growing at an explosive annual rate since the mid 1990's (20%-25% by some estimates) can be seen as a combination of many varying factors. These factors include: increased variety, taste and convenience, lower prices, more health-consciousness, and other factors such as religious beliefs, a regard for animal welfare, and the desire to return to a "simpler lifestyle".

An analysis of the veg-market reveals that it is being powered by a wide array of vegetarian aware and increasingly health-conscious consumers, broken down as follows:

Future demand growth promises to be even more dramatic in response to the public concern with the failing meat inspection system, the promotion of plant-based eating by the Produce for Better Health Foundation and other mainstream health advocacy organizations.

This has led in turn to a practically exponential increase in the amount of investment capital chasing the production and sale of these products. It has also got grocers scrambling to get a handle on which of the increasing variety of these products to stock and how to best market them.

This Veg-Market Overview will first summarize the veg-market's major driving forces, statistics and trends then discuss market positioning, category sales, and summarize various successful marketing techniques for veg-products. Further discussion of all these topics can be found in the accompanying Management Centers.

In response to this growing demand, the selection of meat alternatives, soy milk and other veg-products in major supermarket chains across the nation has improved in recent years. Here is the channel breakdown for Soy Milk for example.

This trend will only strengthen as many major chains are now introducing their own private brands, such as Kroger, Safeway, and Ahold.

According to a SPINS/SoyaTech/Arthur D. Little report utilizing year 2000 sales as a guide, the market is generally divided up in the following manner:

So how does the grocer maximize their position to best take advantage of this high flying market?

It is important to note that while these foods are getting increasingly popular and more heavily promoted by their well-known parent companies, most Americans still do not realize that meatless, in particular, can be good. This presents a problem as well as opportunity for the grocer.

While typically the grocer can rely on the manufacturers marketing efforts (i.e. some point-of-sale material, trade promotions, sampling and advertising in retailer circulars), the more savvy grocers (and distributors) will want to take a more proactive role and supplement the manufacturers' tactics with their own efforts.

TASTE - PRICE - HEALTH - AVAILABILITY should be a dominate themes in all marketing. Combinations of the following tactics have proven time and again to dramatically improve sales of these products.

This is, of course, in addition to solid store design, shelf design and placement.

Regarding placement, in particular, it is important to differentiate but at the same time offer the items within the context of the normal shopping experience (traffic pattern) - at least initially. While a dedicated section (the store within the store concept) is initially appealing, unless you heavily and continually promote and support this area the bulk of the shoppers are going to go to where they normally shop and bypass said sections. This is a main reason why many operations are opting for integration of veg-products within the normal shelf arrangement. A great example of the success of such a strategy is soy milk and now non-dairy ice-creams that are in the "normal dairy areas". Of course, occassional end aisle placement (stacks) works wonders.

MARKETING TACTICS YOU WILL NORMALLY NOT HEAR ABOUT THAT WILL NET YOU AN EXTRA 5%-10% IN SALES:

These extra tactics will not disturb your non-veg-aware customer patronage as they will either be ignored or just taken as evidence that your store(s) are being more health conscious and inclusive. A positive image which will lead to additional sales in all categories.

Sampling of Articles About The Veg-Product Marketplace -
(More available in our Management News Center)

MORE PEOPLE EATING SOY "MEAT" - Abstract: In a Reuters article, Linda Gilbert, president of Atlanta-based marketing firm Health Focus, said a nationwide study of 2,000 grocery shoppers this summer showed that 22 percent buy meat substitutes. She said this figure has steadily grown from 7 percent in 1992. "A big part of it is the greater variety of products and that you don't have to go to a health food store to buy them," she said. "In the past people bought these products to avoid meat, but the shift in emphasis is to avoid fat. It is the heart healthy trend that is driving the market. ... People want a low-fat hot dog, and if it's tofu that's great."
FAST GROWTH OF MEAT SUBSTITUTES GETS THEM INTO TOP TEN FASTEST GROWING - Abstract: Datamonitor, reports that the sale of meat substitutes expected to surpass $1 billion this year. The whopping 48 percent growth rate in the sale of meat substitutes has made it among the top ten fastest growing categories in U.S. supermarkets.
AMERICANS CONSUMING MORE SOY FOR GOOD HEALTH - Abstract: An annual survey conducted by the United Soybean Board (USB) shows that America's consumption of soy continues to rise, as does the recognition of soy's health benefits. Seventy-six percent of American consumers consider soy products to be healthy, up from 71 percent last year…. The number of Americans altering their eating habits to include soy products one or more times each week is growing -- 27 percent in 2000. The top products that consumers are aware of are tofu, soy veggie burgers and soy beverages. Consumers are also familiar with soybean oil, soy infant formula, soy protein bars and other soy supplements. For the second year in a row, consumers consider soybean oil to be the healthiest of all cooking oils. -Tofu and Veggie Burgers Are Favorites Among Soy Connoisseurs.
TEENS INCREASINGLY DEMANDING VEG OPTIONS - Abstract: The National Restaurant Association reports that, on any given day, nearly 15% of U.S. college students select a vegetarian option in their dining halls.
FANCY FOOD SHOW; SOY SALES SPROUTING AS HEALTHY SUBSTITUTES - Abstract: The increasing number of health-conscious shoppers is helping the soy category expand beyond its traditional specialty niche, said an industry expert at the 46th annual International Fancy Food and Confection Show. Retailer's steady incorporation of soy into the consumer marketplace means more supermarket items these days have a soy-based twin available for substitution.
MEAT ANALOGS CONTINUE TO GAIN GROWING MARKET SHARE - Abstract: According to SPINS and AC Nielsen, a wide variety of meat alternatives have been flooding mainstream retail channels recently, with annual sales of these products reaching $253.1 million. Sales of meatless deli products have also soared, growing 83.2 % in mainstream food, drug and mass merchandisers during the year.
NEW SOY-BASED ANALOGS OPENING PROCESSORS' EYES DURING FMI SHOW Abstract: A new contender in the growing meat analog market is Whole Soy Foods LLC, which introduced a new line of fully cooked, easy-to-prepare soy food products during the FMI Show. Marketed under the Heartland Fields brand name, Soy Barbecue, Soy Steak Strip and Italian-Style Soy Sausage are the first three introductions. … the market for meat analogs continues to grow, and new contenders seem to appear on an almost daily basis, as was evident at the 2000 Supermarket Industry Convention recently concluded here.
MANY OF US HAVE AT LEAST TRIED MEAT SUBSTITUTES Abstract: With nutritionists continuously analyzing American eating habits, the latest Zogby America discovered that one in three respondents have at least tried meat substitutes.
MOCK MEATS SHOW CARNIVORES THE SOY OF COOKING Abstract: Sales of meat alternatives, many of which are made from soy-based products such as tempeh and tofu, have had a boost from consumers looking for low-fat and healthier food, as well as growing evidence that soy itself has certain health benefits.
AMERICANS VOICE CONCERN OVER MAD COW DISEASE Abstract: According to a recent poll conducted by Roper Starch Worldwide, because of recent reports about the spread of mad cow disease in Europe, six out of ten Americans polled say they are concerned that the disease may affect beef here in the U.S. As a result, nearly 20% of Americans have already reduced their beef consumption (15%) or have stopped eating beef entirely (3%). 76% said they would reduce or avoid beef if even one case of mad cow disease is found in America.
Meat alternatives driving soyfoods market increases Date Posted: 5/3/2001 SAN JOSE, Calif.--(BUSINESS WIRE)--May 2, 2001--Soy-based meat alternatives were once a niche market with a small customer base. Makers of the world's leading food brands are expanding, bringing their deep resources to the marketing and supply of these products. New analysis from Frost & Sullivan (www.frost.com), "U.S. Soy-Based Meat Alternatives Markets," reveals this market generated $622 million in 2000 and is expected to reach $2.6 billion by 2007.
Soyfood sales up 21% in 2000, will grow 15 - 25% in 2001, says new report Date Posted: 10/16/2001
The market for soyfood products in the U.S. has experienced strong and steady growth during the past 20 years as food processors and marketers have met consumer's demands for healthy, tasty and convenient food products.
Fringe Food Goes Mainstream Once thought of as a 'fringe food,' soyfoods have now successfully crossed over into mainstream food outlets and are being marketed by some of America's largest food companies such as Kraft, Kellogg, ConAgra, General Mills, Heinz, Unilever and Suiza Foods. These names join well-established soyfood companies such as White Wave, Nasoya, Eden Foods, Vitasoy, Westbrae, LightLife, Yves, Worthington and Boca Burger, in bringing the message of soy to the masses.
Kroger's brand soymilk leads its natural foods line - Kroger's 160-SKU Naturally Preferred private label line of organic and natural food is growing ahead of the health food industry's 20% rate, according to Weinswig. After only nine months on the shelf in 2000, the Naturally Preferred line of soy milk captured a 25% share in Kroger stores. Priced in line with the mid-tier Kroger brand, Naturally Preferred still has opportunities to expand into energy bars, dairy products axed juices.
Soyfoods Chic: Americans showing more interest in soyfoods - PRNewswire/ via NewsEdge Corporation -- TOFUTOWN, USA -- A popular TV sitcom character reaches in the fridge for a carton of soymilk ... the local coffee shop offers soymilk lattes in tempting flavors from chai to mocha ... and neighborhood eateries tout exotic meatless alternatives like tofu and tempeh. Growing numbers of vegetarians. A wide variety of soy food options are also fulfilling the needs of young, hip, health-conscious consumers. An Archer Daniels Midland survey found 97 percent of colleges and universities now offer meatless entrees on their menu. "These days, it's not unusual to find veggie burgers or tofu stir-fry in the high school or college cafeteria," says Demos. As Americans of all ages develop a taste for healthier foods, overall sales of vegetarian foods have increased an average of 37 percent over the last five years, according to American Demographics.
Soy plays big role as vegetarian babies boom in U.S. - Environmental News Network, Sun Valley, ID via NewsEdge Corporation : Aug. 1--A medical doctor as respected as the late Benjamin Spock can have a major influence on the dietary habits of a generation of children. Since the publication in 1998 of the seventh edition of Spock's Baby and Child Care, more and more parents are raising their children as vegetarians or vegans. Spock, who died at the age of 94 just before the new version of his book was published, advised no meat or dairy products for children.In the new edition of his famous book, published in 1946, Spock recommended for the first time a vegan diet -- a diet free of all animal products -- for children as the optimal diet for human nutrition. This recommendation sparked a debate among doctors, nutritionists, and parents about what is the right mix of food for children.The American Dietetic Association supports vegetarian and vegan diets. "It is the position of The American Dietetic Association that appropriately planned vegetarian diets are healthful, are nutritionally adequate, and provide health benefits in the prevention and treatment of certain diseases," the association said in an official position statement.
Health Express USA breaks ground for healthful fast food restaurant - FORT LAUDERDALE, Fla.--(BUSINESS WIRE) via NewsEdge Corporation -- Health Express USA (OTCBB:HEXS), the country's first fast-food restaurant franchise to feature gourmet health food, announced that ground breaking is scheduled and construction is imminent in Boca Raton, Florida for the company's second "Healthy Bites Grill" restaurant."This... Read More