Aisle Chatter

It seems that meal delivery kits may be putting a dent into the sales of prepared meals. That’s according to John Owen, senior food and drink analyst at market research firm Mintel. Sales of Healthy Choice, Lean Cuisine and Banquet have noticeably dropped in the past five years as a result of the changing perceptions and behaviors of consumers, most notably Millennials. The meal kits are “appealing to the same trends that prepared meals need to answer to,” said Owen at a recent annual meeting and expo at The Institute of Food Technologists. He further pointed out that 21 percent of adults and 40 percent of Millennials have tried meal kit delivery services due to their convenience and their desire to eat fresh. A lack of cooking ability was also cited as reason for trying the services. The meal kit delivery segment has become a $1.5 billion market over in the past few years and is expected to grow as more companies, including grocery retailers, are looking to join the trend. To counteract the growing competition, Owen added, prepared meals companies need to overcome the perception of being overly processed, stating that, “two thirds say they would eat more prepared meals if they were less processed.” He also said that consumers are more likely to purchase prepared meals with a label that has a “no additives or preservatives” claim. Prepared meals companies such as Evol and Amy’s Kitchen, which seemed to be doing these things, both posted double-digit growth in 2015.

Grocery stores are giving fast-food restaurants a run for their money. With grocery prices dropping due to lower commodity costs, more people are eating at home. Both Wendy’s and McDonald’s have put the blame on falling grocery prices for their company’s slowdown in sales growth. “If I’m not mistaken, it’s the biggest gap we’ve seen [between food at home and food away from home] in the last 10 years,” stated McDonald’s USA president Mike Andres. “This is clearly impacting the whole eating-out industry.” Many grocery stores are also transforming parts of their space into ‘grocerants’ where there is a focus on offering good restaurant quality prepared foods According to a report by global market research company the NPD Group, in-store dining and prepared food takeout at grocery stores has seen a growth of almost 30 percent since 2008 and accounted for $10 billion of consumer spending in 2015. Wegmans is a great example of this with a large section of the store devoted buffets of fresh foods and its in-store Burger Bar. 365 by Whole Foods Markets is another retail format that has made the ‘grocerant’ a focal point of their setup. Expect to see more fast-food restaurants struggle as this trend continues to spread through the retailers.

While we are on the topic of Whole Foods, Goldman Sachs seems to think that their glory days of being on top have come to end. In what was essentially a two-notch downgrade, the multinational banking firm cut their rating from ‘buy to ‘sell’ at the end of last month. This is due largely in part to the fact that what used to be unique to the retailer is becoming commonplace among most grocery retailers. Additionally, the competition is more willing to operate on smaller margins. “Whole Foods is experiencing a competitive barrage, losing share in its core natural and organic business to a variety of players,” said analyst Stephen Tanal. “Wellness has gone mass, and it is not coming back, never again to be relegated to niche specialty retailers serving price-insensitive, early adopters.” While Tanal believes that Whole Foods will grow stores, he does not think that we will see a real return to same-store sales growth until 2018.

On a more philanthropic note, the Giant/Landover Our Family Foundation has given the Capital Area Food Bank a $350,000 grant as part of its new three-year ‘Fighting Child Hunger’ initiative which works to increase access to nutritious food for children in need. “We are privileged to be a community partner in the mission to alleviate hunger in the Washington, DC area. Since our founding 80 years ago, giving back has been a cornerstone for our company,” said Gordon Reid, president of the Landover based division of Ahold USA. “Our partnerships with many food banks and pantries across the region, including five Feeding America Food Banks in Virginia, Maryland, Delaware and the District of Columbia, allow us to continue a shared commitment to combating hunger across the communities we serve. This new three-year grant supplements our existing efforts and increases our impact on childhood hunger in our region.” Nancy E. Roman, president and CEO of the Capital Area Food Bank, added, “Good food is essential for kids to grow and learn, but for many of the children we serve, there is no meal waiting at home. Our partnership with Giant and Our Family Foundation is helping to change that.” The ‘Fighting Child Hunger’ grant program helped more than 16,000 children and provided more than 1.5 million meals last year in 2015.

Meanwhile, Landover’s sister company, Giant/Carlisle and Martin’s, donated $599,688 to the Children’s Miracle Network (CMN) through their paper balloon campaign. “This year marks our 20th anniversary of supporting CMN,” said Tom Lenkevich, president of Giant/Carlisle. “Together with our customers, associates and vendors we have raised more than $41 million to help provide brighter and healthier futures for thousands of children within our local communities.” The following CMN Hospitals in Giant/Carlisle and Martin’s communities benefited from this summer’s paper balloon campaign: Penn State Hershey Children’s Hospital, The Children’s Hospital of Philadelphia, The Janet Weis Children’s Hospital at Geisinger, Children’s National Medical Center, University of Virginia Children’s Hospital, Pittsburgh Children’s Hospital, Johns Hopkins Children’s Center, and Children’s Hospital of Richmond at VCU.

Also making a large charitable donation this month was Safeway Eastern, which chose the Children’s Cancer Foundation as the beneficiary for its May point-of-sale promotion. Customers were given the option to donate to help fight pediatric cancer at each checkout during the month. The in-store promotion raised over $314,000 for the local charity.

And finally, the Coastal Companies, East Coast Fresh’s parent company, held a building dedication ceremony late last month for its new state-of-the-art distribution and processing facility in Laurel, MD. The new company headquarters, at 330,000 square feet, is three times the capacity of its former facility in Savage, MD. Governor Larry Hogan was on-hand to offer remarks as was Howard County Executive Allan Kittleman. After a brief opening ceremony, there was a tree planting and ribbon cutting to commemorate the new building. Congratulations, Coastal Companies and East Coast Fresh – wishing you many more years of success and growth in your new headquarters!

Till next month…