Prepackaged Options Expanding

Prepackaged food sales are booming nationwide and new choices are springing up to help convenience store retailers grow in-store sales.

Successful prepackaged food merchandising is all about display, said Jerry Weiner, vice president of foodservice for Rutter’s Farm Stores in York, Pa. “Grab-and-go sales have tripled since we moved products from four-foot open-air cases to six-foot-by-eight-foot walk-around, open-air islands,” Weiner says. “Our sales just exploded.”

The growing popularity of the grab-and-go format, which is highly desirable among today’s time-pressed consumers, is responsible for the boost. “The demand is there, but the key is to offer a wide array of high-quality, fresh products,” Weiner said. “I really think variety is crucial, which is why you need so much space to present it.”

Rutter’s new display space allowed stores to add a tremendous amount of variety and attracted customers the company wasn’t able to reach before. It ultimately began making the 50-store chain a top destination. “I think a lot of the growth is in the grab-and-go, assuming you can give a customer a wide choice of high-quality, fresh products,” Weiner said. “I really think variety is the key, which is why you need so much space to present it.”

Bigger Check Averages
Prepackaged food sales growth is also driving Rutter’s ancillary product sales, resulting in bigger check averages. “I’m finding that sandwiches and salads went up proportionally, but the bulk of the increase is coming from all of these ancillary products,” Weiner noted. “I went much deeper with the ancillary offering, something I couldn’t do before because I couldn’t present the products together.”

The large display cases that house Rutter’s prepackaged segment have a base shelf and two mezzanine shelves that provide 28 feet of merchandising space. Weiner grouped the sandwiches, fresh fruit and salads and subs produced by Rutter’s on the bottom, freeing the mezzanine shelves for the ancillaries. “On the side that holds wraps, I’ll put cut fruit, veggie trays, yogurt and naked juices,” Weiner says. “On the opposite eight-foot where we may have subs, I’ll put desserts—parfaits, mousse, et cetera. On the ends we display our own out-of-the-ordinary products, like the baloney, cheese and hardboiled eggs, which we sell a ton of.”

Like an old-style automat, the format gives customers a large variety from which to choose, with everything ready to go.
Rutter’s grab-and-go prepackaged sales success is leading Weiner to consider using the prepackaged format for other dayparts. He wants to target late-afternoon snack-seekers and is currently looking for items that fit into the dinner segment. “Because of all the late-afternoon and early evening demand, I really think dinner is our next big opportunity,” Weiner said. “There are dollars being left on the table, and once we convince customers our options offer them a quality product at a good price and speed of service, we can harvest those opportunities.”

Rice Packaging: Edible and Cost-Effective
Another big question Rutter’s is looking to answer is what kind of packaging to use. Weiner said this remains unanswered due largely due to his ongoing quest to unearth the best eco-friendly packaging on the market.

“For our own products, we use containers with a black plastic base and clear lids, hinged containers that are clear all the way around,” Weiner said. In line with the company’s strong green initiative, he is getting ready to test a completely biodegradable base made of rice. “I’m looking for ways to get us as green as we can be,” he said. “I just made a change from white paper napkins to brown unbleached, from white bags to brown bags.”

The company tried using plastic containers made of corn, but abandoned them because the corn-based plastic, while biodegradable in compost, does not biodegrade in the landfills where they usually end up. Corn-based containers are also more expensive than the plastic ones Rutter’s uses now. “The rice models are less expensive, and according to the manufacturer, the containers themselves are actually edible. Not that I tried,” Weiner said with laugh.

Packaging a Brand Identifier
Like Rutter’s, Famima, the 13-store U.S. subsidiary of Japan’s FamilyMart based in Torrance, Calif., is heavily invested in a prepackaged foodservice format. It offers a wide variety of unique fare ranging from inari sushi, California rolls and an ultimate salmon lover’s platter to tomato mozzarella paninis and bacon and egg breakfast burritos, all for usually less than $8.

“Packaging is very important, very much a brand identifier,” said Hidenari Sato, Famima’s executive vice president. “I think we are unique for a convenience store because about 40% of our sales are prepackaged foods made fresh daily.”
Famima uses regular plastic containers at the moment, but is also in tune with the need to be more “green.”
“We have been looking into using corn-based containers, but with the limitations on the quantity required to make them cost effective, it’s very tough for us to use those here,” Sato said. The company uses corn-based containers it manufactures in Japan in its 14,000 stores throughout Asia, but can’t use the same containers stateside because they have not yet received FDA approval.

“There are so many containers in Japan we could use at a cheap price, and I’m paying quite a lot here, so that makes it much tougher to go into corn-based containers,” Sato said. Because it sees the green movement as important to its consumer base, Famima has begun selling canvas eco-bags that allow customers who buy them to receive a 10% discount on other purchases.

Famima doesn’t favor a specific packaging manufacturer because the vendors who produce the fresh items choose the containers. “We give them the recipes and do all the product choosing and development,” Sato said. “We also choose the kind of containers to use, but vendors have more buying power for the packaging, so they choose the manufacturer.”
More importantly, Famima is predicting strong sales of prepared packaged foods over the next few years. “Because gas prices are going up, convenience stores need to get more profit out of their stores,” Sato observed. “While they have been selling fast foods, they are now looking into packaged products starting off with salads and sandwiches. If they improve quality and price, with the convenience aspect they should be able to do very well, and that would change the image of c-stores to the public.”

An Easier Sell
Aside from the convenience of prepackaged items, an added benefit is the reduction in labor at the store level.
“It’s easier to sell something when it is prepackaged,” said Sandy Arrasmith, operations manager for J & H Oil Co., which operates 30 Exxon, Mobil and Marathon convenience stores based in Wyoming, Mich. “Consumers are already in our stores, and buying prepackaged food from us saves them from making another stop.”

Arrasmith credits the increase in prepackaged food sales to consumers’ growing need to be more careful with money and to the chain’s marketing efforts.

“Prepackaged food sales over the last six months have risen in our stores by at least 15%. Given the economy for the Michigan area that’s pretty good,” Arrasmith said. “I have some stores that have increased upward of 20%, and a few that are down. Given the pressure on consumers these days, I expect a slight gain over the next six months to a year, but not as much as in previous years.”

Arrasmith estimates that 33% of the company’s customers never come into the store, simply paying at the pump for the gas they buy and leaving. She figures another third come into the stores but don’t go past the cash registers, while the remaining third actually shops the store.

To get customers into the stores and make those prepackaged sales, J & H uses advertising at its gas pumps, which play Muzak and announce in-store specials.

Arrasmith plans to experiment with different types of packaging for the salads and fruit cups it anticipates selling in the next six months.

“The more appealing the product is to the customer, the more likely you are to sell the product, especially where there are female customers,” Arrasmith said. “Packaging is a big part of that appeal because women want food to look appealing as well as taste good. From a food safety standpoint, we want a container untouched by as many hands as possible.”

The Future of Packaging
Manufacturing companies have heard these concerns before and are responding with innovative new packaging concepts. Nanotechnology—which allows control of materials at a molecular or atomic level—may well be the future of food packaging, providing manufacturers with the ability to put the fundamental building blocks of packaging materials together more easily and cost-effectively than they can now.

Indeed, food packaging is a major focus of food industry-related nanotech research and development. “Smart” packaging made with nanomaterials could repair itself and respond to environmental conditions by alerting consumers to contamination and the presence of pathogens.

Nanotechnology has the potential to reshape the food packaging industry in the decades ahead. These product scenarios will help set a roadmap for successes in regulation and consumer acceptance.

“Clearly, nanotechnology offers tremendous opportunities for innovative developments in food packaging that can benefit both consumers and industry,” said Robert Brackett, chief science officer for the Grocery Manufacturer Association (GMA). “However, before these packaging innovations can be brought to market, we must ensure that the food-packaging industry, through working closely with government, understands the regulatory framework currently in place along with its many requirements.”

Several years ago, industry analysts estimated the U.S. market for smart food and beverage packaging at $38 billion. They expect it will surpass $54 billion by the end of this year.

Bayer Corp. already produces a transparent plastic film that contains nanoparticles of clay that can block oxygen, carbon dioxide and moisture from reaching fresh meats or other foods. Nanoclay also makes the plastic lighter, stronger and more resistant to heat.

Researchers are working on a “release on command” nanoparticle preservative packaging with a bioswitch that will release a preservative if the food the package contains starts to spoil.

The importance of developing packaging that can detect food-borne pathogens extends well beyond industrial agriculture and large-scale food processing: The U.S. military has made it a national security priority.

Existing technologies take two to seven days to test for microbial food contamination, and the sensors developed thus far are too big to be transported easily. However, several U.S. research groups are developing biosensors that can detect pathogens quickly and easily, “super sensors” that could play a crucial role in the event of a terrorist attack on the food supply.

And while sensors that can detect foodborne pathogens will be useful for monitoring the safety of the nation’s food supply, they won’t do much to correct problems that created the contamination in the first place.
There are ongoing challenges in food packaging, such as the large distances between food processors, producers and consumers;  fewer inspectors; minimal corporate and government accountability; and fewer people willing to work for relatively low wages.

Food packaging, it seems, still presents challenges that even the most innovative technology has yet to solve. CSD

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