Broad Street Licensing Group Food News

Frozens Category: Niche Growth over Next 5 Years

February 6th, 2012

A new study estimates the frozen food category will grow 2% to $17bn in 2010.[1]

Long term, the category could hit $19bn in the next five years (a 10% increase). Overall the category will not shine, but will expand in niches like frozen pizza, handheld breakfast foods and prepared vegetables. Growth in the category will depend on the challenges from fresh/chilled convenience foods, restaurant takeout and meals assembled at home or prepared from scratch.

Competition from fresh/chilled drove down the frozens category from 2005-10 period because of consumer perceptions frozens are less nutritious, tasty but a good value. Supply chain issues have slowed the acceptance of fresh-prepared foods as retailers demand ridiculously-long shelf.

Frozens’ problems are not good news, however, for restaurants: the success of frozen pizza and handheld breakfast items came at the expense of restaurants and foodservice outlets as a low-cost alternative to dining out. Restaurants, however, who do not have a retail presence are likely to be marginalized. Saying “no” to retail doesn’t mean your in-restaurant menu will be more valuable to consumers, or that they’ll choose to eat out over heat & eat.

New items, especially in the ethnic niches of Indian, Japanese and Middle Eastern flavors or in flavor fusions such as Mexican-style, Thai-topped and Jamaican Jerk pizzasare fueling growth, too.


[1] Source: Packaged Facts in its “Frozen Convenience Foods in the U.S.”

Posted in Consumer Package Goods (CPG), Retailing, The Restaurant Business | No Comments »


Broad Street Licensing In the News

February 3rd, 2012

 

This article about Quick Serve chain breakfasts features Broad Street Licensing Group as the “experts” in the piece.

We often comment for publications about the restaurant business (which we monitor every day), retail trends, leveraging brands to grocery, etc. Other licensing agencies have food clients, but our company focuses on food and food only.

If your brand is looking for t-shirts at Kohl’s, then we’re not for you. We turn down business that wants lifestyle applications like clothing, toys, hard goods, etc.

Chains like Wendy’s, Burger King and others have launched, pulled and re-launched breakfast “makeovers” repeatedly (in Wendy’s case, at least three times we know of). The problem is that ad spends by chains other than McDonald’s just don’t move the needle. BK used to find that touting their breakfast items resulted in a spike of sales of Egg McMuffins. Not a great marketing strategy.

Without deploying a broad strategy, including good coffee and having items at retail, chains risk marginalization. IHOP’s licensed retail products, for example, are tearing up trees at Walmart. Yet you’d be surprised how many chains continue to think that retail is risky for them.

Posted in Consumer Trends and Habits, Marketing Trends, Opinion, The Restaurant Business | No Comments »


KFC Shows How to Do it Right in China

February 2nd, 2012

If you want to know how to succeed in the world’s most-populous country, look to Yum! Brands.

KFC is now the most-successful foreign restaurant concept in China. The chain has grown to over 3,0o0 stores in 650 cities since opening its flagship restaurant in Beijing in 1987. McDonald’s, for example, has fewer than 400.

This article from the Harvard Business School is very informative about how Yum! has succeeded, in part by adapting to the local tastes and marketplace.

One key factor in the chain’s success has been adapting the menu to local tastes: for example, the Chinese prefer dark meat to white, the opposite of Americans. But the managerial flexibility shown by China CEO Sam Su. At the time, KFC was owned by PepsiCo (the company purchased KFC from RJ Reynolds in 1986 and then spun it off in 1997 into what became Yum! Brands). Because PepsiCo who didn’t have a lot of restaurant expertise, so they let Su run things his way. He focused on hiring Chinese-speaking locals over importing American managers, cultivating workers with the Asian “the company is my family” model, and bringing in local specialties like shrimp burgers, fried dough sticks, soy milk (many Chinese are lactose-intolerant), as well as regional specialties.

But lest we all run out and dilute the brand equity that makes foreign markets accept international brands, it’s not always about embracing everything local. We’ve had some experience with this in licensing internationally, and there is always a tension between bringing in the flavors and textures of the foreign brand vs. having something indigenous. When we masterminded the Burger King license for potato chips, there was resistance from some parties who thought we’d need to have Asian flavors like shrimp crackers.

Nope. The American flavors of ketchup & fries did phenomenally well around the world. It just goes to show you still have to do your due dilligence when making any international moves.

Oh, and hire the right licensing agency, one with proven international bona fides.

 

Posted in The Restaurant Business, World News | No Comments »


BREAKING NEWS: Carrefour CEO Sacked

February 1st, 2012

Longtime readers will already know that French mega-retailer Carrefour has been in trouble for some time.

We wrote about Lars Olofsson‘s struggle to right the world’s #2 retailer back in 2009 and again last year.

Aren’t you glad you read us every day now???

Now comes word that Olofsson is “stepping down” to be replaced by French clothing exec Georges Plassat at Carrefour’s annual shareholder meeting in June. No reason was given, other than saying Olofsson had not asked to have his contract renewed. Share prices for Carrefour plunged by as much as 38% in 2011, and its core hypermarket business seems out of touch with European trends towards smaller footprints, value pricing and local products. The company has announced that its profits will be 20% lower for 2011 than the disappointing performance of the preceding year. Investors have been shedding shares of the retailer in advance of a pending EU summit in Brussels intended to tackled the the ongoing European debt crisis.

His replacement arrives from French fashion retailer Vivarte, though there is no indication Plassat will have any more luck changing the company culture of high prices and missed opportunities, both at home and abroad.

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Marketing Around the World

January 31st, 2012

  • GenghisGrillTV is the creation of the Genghis Grill restaurant chain, and includes Genghis Grill TV (where the chain’s blog, music video and event posts reside), Genghis Live (where guests can nominate and vote for their favorite indie artist in the Dallas, Houston, Austin and Atlanta markets), and Genghis Mayors that recognizes the restaurants that receive the most Foursquare check-ins each month.
  • And Starbucks was the first brand to win 10 million followers on Facebook. It happened in July. Hasn’t seemed to have changed the world…
  • Optimists estimate China’s organic food market could reach $3.6-$8.7MM by 2015, but many hurdles remain, including the country’s difficulties in stopping food adulteration and fraud.
  • Walgreens has opened its first “wellness center” at its DC in Mount Vernon, IL. Employees and their families who are on the company health insurance plan can see a primary-care physician, a nurse practitioner or other health care professionals for a $5 co-pay. The center is run by Take Care Health Systems, and likely will set a trend among companies looking to control health care costs and prevent workers from getting sicker.
  • Family Dollar is now back in expansion mode with plans to open 300 stores in 2011, and remodel all 6,800 locations by 2015.
  • Both food marketers like Kraft, General Mills and Sara Lee, and retailers are cautiously raising prices to reflect higher commodities pricing, though both are concerned how much they can pass along.
  • Portland, OR’s Meadow has opened a store in New York City selling over 100 kinds of salt and 400 different chocolate bars. The salts come in a profusion of colors, including black, pink, magenta, gold, beige, brown, and blue, with differing textures.Domestic vodka distillers are making artisanal vodkas with ingredients like organic corn and maple sap resulting in “unusual” flavors.

Posted in Marketing Trends, The Restaurant Business, World News | No Comments »


Marketing Tidbits

January 30th, 2012

  • Hannaford has switched its private-label household brand to Home 360, the line sold in other Delhaize-owned stores (Harveys, Food Lion and Sweetbay).
  • In other private label news Great Atlantic & Pacific Tea, owners of A&P, The Food Emporium, SuperFresh and Waldbaum’s banners, will market a line of international specialty foods under the Food Emporium Trading brand.
  • In Belgium French retailer Carrefour is letting customers use hand-held Motorola scanners at its hypermarkets and supermarkets to reduce labor costs and let the consumer get closer to the products being sold.
  • Jamba Juice has been one of the more-aggressive licensors, and their latest retail product is a line of ready-to-drink coconut water fruit juice blends sold under license by beverage maker O.N.E. Distribution is through the Pepsi Beverage Company in grocery, convenience, and other retail outlets.
  • Although advertisers continue to chase the 18-35 demographic, a new report says that Americans over 50 control 75% of our nation’s wealth, and 70% of its disposable income.[1] Over 100MM of its citizens are currently over 50.

  • [1] Source: Varsity’s white paper “Understanding Mature Consumers’ Perspective on Food and the Factors Driving Purchase Decisions.”

 

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This & That

January 27th, 2012

  • YUM! Brands will acquire China’s Little Sheep Group, Ltd. The purchase is through a privatization “scheme” that will require court approval in the Cayman Islands (does anyone seriously think the court will demur?). The chain sells Mongolian-style hot pot across China. Its founders, Zhang Gang and Chen Hongkai, will retain minority shareholder status, and will stay on has brand consultants with Mr. Zhang having the title of “Founding Chairman.” Little Sheep is China’s first native restaurant chain success story. Our blog first reported the likely acquisition of Little Sheep by Yum! in May of 2011.
  • Longtime restaurant  licensing icon Boston Market has entered into an exclusive contract with Overhill Farms, Inc. for frozens including meals, gravies and other products. Boston Market Corporation operates approximately 490 restaurant nationwide. The Boston Market brand has been at retail for the past decade The term of the contract is five years with options for two additional five-year renewals beginning July 1, 2011. Until that time, Boston Market products will continue to be produced by the current licensee, Heinz.

Posted in Licensing News, The Restaurant Business, World News | No Comments »


Old News: Sides Are No Longer Just Sides

January 26th, 2012

If you don’t know this, you haven’t been paying attention to this blog: anyone in the food business knows that side dishes are, well, meals these days.

Especially with Millennials, who take snacking to new levels. Now there’s a study to tell us what we know.[1] Hard economic times, the need for convenience or just dressing up meals assembled at home (the new “cooking”), snacks are in the spotlight. The top trends in sides are:

  1. Seasonal: consumers want fare that’s in-season, both for freshness & sustainability.
  2. Grow Your Own: anything grown in the back yard or the local community is popular.
  3. Roasting: meet the new grilling, with fried definitely out.
  4. Potatoes: not your grandmother’s kind, but healthier (non-fried) versions and especially sweet potatoes.
  5. Rice: whole grain rice blends are turning up in fancy risottos, along with black, red rice and other varieties.
  6. Regional flavors: whether for nostalgia or a belief in authenticity, regional favorites are being discovered and re-discovered.
  7. Roots: root vegetables were once the Winter staple, but are being sought out by cooks for their robust flavors and cheap price in hard economic times.
  8. Ethnic: anything ethnic in side dishes is now on target.
  9. Less is more for protein: meat portions are shrinking and even morphing into sides.
  10. Color:whether it’s purple cauliflower, purple potatoes, or purple corn, consumers want brightly-colored fruits and vegetables believing they have the highest levels of antioxidants and phytonutrients.

[1] Source: The Food Channel, CultureWaves, Mintel International, and the International Food Futurists in a study sponsored by McCain Foods USA.

Posted in Consumer Trends and Habits | No Comments »


Report from the Fancy Food Show in San Francisco

January 25th, 2012

While residents of the Bay Area are reeling from the NY Giants defeating the San Francisco 49ers for a chance to play in the Super Bowl, we are back from the Fancy Food Show held January 15-17th at the Moscone Center.

The Show encompassed 2 1/2 halls of foods from around the world. The emphasis is on small producers and importers, so you won’t see the monster booths from the big CPG houses like at the National Restaurant Show or FMI. The typical booth is a 10′ front with an average of 3-5 products.

The trends we saw included an ocean of olive oil, most of it bearing all manner of fancy (and fictitious) labeling, including:

  • All Natural
  • Vegan
  • Trans Fat-Free
  • Garlic-Infused Extra Virgin Olive Oil (as well as countless other spices)
  • Italian Olive Oil (even though the bottle showed “grown & processed in Spain”)

Of course, anything including metal and wood could be considered all-natural, and olive oil is by definition vegan and free of trans fats. Labeling laws forbid calling anything that isn’t 100% olive oil as “olive oil,” but who’s going to enforce the laws? As for Italian olive oil, the country can’t produce enough oil to satisfy its own consumers, so Spanish (and other) olive oil can be “repackaged” there and exported as “Italian.”

Other trends showed vegan candies, many organic products, and a glut of small producers hoping to catch lightning in a bottle.

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Philadelphia Story: A Close-Up Look at Food Retailing Today

January 24th, 2012

Some of you may know that Broad Street Licensing Group has its roots in the City of Brotherly Love. As it turns out, a recent analysis of the Philadelphia grocery marketplace will tell us a lot about the changing state of food marketing.[1]

The #1 chain in terms of market share is regional brand Wakefern’s ShopRite banner.

But more telling: the #4 “grocery” store is C-store chain Wawa.

That’s right, a convenience store.

These 20 chains account for 92.1% of the total grocery market. And over $3.8bn of the $13.7bn or 28% of the spend on food in Philly was racked up by “non-traditional” retailers like CVS, Walgreens and Rite-Aid, not to mention 7-Eleven. The latter’s rather poor numbers explode the myth that 7-Eleven dominates the c-store category, which is mostly made up of small chains and single operators.

And if mass merchants Target, K-Mart and Wal-Mart, and club store BJ’s are excluded from the totals, and only traditional grocery stores are factored in ($7.66bn), then the percentage of sales by non-traditional retailers rises to almost half (49%). Clearly the food marketplace is VERY different than what it was just a few years ago, and those changes are having real impact on the way food is sold in the U.S. But just when you think the traditional grocery store in on the way out, North Carolina-based Food Lion (part of Belgium’s Delhaize Group) has announced its intention to tackle the Philly market in a big way.

Go figure!

Store Name

Number of Stores

Sales ($MM)

Share (%)
1. ShopRite 43 1,700 11.42
2. Acme 69 1,570 10.56[2]
3. Giant Food Stores 47 1,530 10.29[3]
4. Wawa 280 1,440 9.65
5. Rite-Aid 252 884.1 5.94[4]
6. A&P/Superfresh/Pathmark 40 850.8 5.72[5]
7. Wal-Mart 37 SuperCenters 831.1 5.59
8. CVS 187 817 5.49
9. Genuardi’s 28 733.7 4.93[6]
10. Target 29 534.4 3.59
11. Walgreens 90 480.9 3.23
12. BJ’s Wholesale Club 12 413.9 2.78
13. Wegmans 6 371 2.5[7]
14. Save-A-Lot 34 258 1.74
15. Sam’s Club 7 238.2 1.6
16. Thriftway/Shop’N’Bag 21 230.5 1.55
17. Redner’s Market 10 222.7 1.5
18. K-Mart 29 210.9 1.42[8]
19. 7-Eleven 179 201.3 1.35
20. Whole Foods 8 191.6 1.29

 

[2] Parent company Eden Prairie, Minn.-based Supervalu Inc. shuttered seven stores in 2011.

[3] Owned by Dutch retail conglomerate Ahold, Giant is projected to overtake Acme in 2012 as the #2 grocery chain.

[4] The Camp Hill, PA company has a pilot program with Save-A-Lot in North Carolina to co-brand 10 stores carrying a full line of groceries and drug products.

[5] Parent company Great Atlantic & Pacific Tea Co. has been closing stores since filing for bankruptcy protection in December, 2010, shuttering seven in the greater Philadelphia market, while opening only one Superfresh.

[6] Parent company Safeway will sell 16 stores to Giant Foods, close three and seek buyers for the remaining eight.

[7] The Rochester, N.Y.-based company will open two new stores, and at 140,000 ft.2 are 2x the size of a conventional supermarket.

[8] K-Mart closed four stores in Philadelphia in 2011.

Posted in Grocery Stores, Retailing | No Comments »


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