Improved refrigerated dinners meet the needs of time-starved consumers

Instant meals are helping grocery stores take customers from restaurants.
MINNEAPOLIS-ST. PAUL STAR TRIBUNE
The instant meal has moved from the TV tray to the center of the dining room table, catering both to convenience and the illusion of a prepared family meal while fattening the bottom lines of food makers and supermarkets.
Gone are the Hungry Man frozen dinners of the past. Instead, time-starved consumers are reaching for refrigerated, ready-to-cook entrees that feature names seemingly lifted from a restaurant menu -- Hormel's pork roast au jus or Smithfield's pulled pork with barbecue sauce.
"It's a hot area," said John Hauptman, vice president of Willard Bishop Consulting in Barrington, Ill. "Households are re-emphasizing spending time at the dinner table but have no time to cook from scratch. This is redefining what it means to have a home-cooked meal, even it takes just a few minutes to prepare."
Low-carb meals
The popularity of low-carbohydrate diets also has boosted demand for refrigerated, high-protein meat entrees. Sales of refrigerated entrees jumped 17 percent to $1.3 billion in 2003, according to ACNielsen. Analysts and industry executives say these higher-priced products are generating substantial profits for manufacturers such as Hormel Foods Corp. and Tyson Foods Inc.
Refrigerated entrees also have helped supermarkets increase customer traffic, lower labor costs and steal dollars away from restaurants.
Supermarket aisles today are chock full of products -- from precut fresh salad mixes to squeezable yogurt -- meant to appeal to consumer demand for convenience. Now, thanks to advances in food technology, a wide array of sophisticated, easy-to-cook refrigerated meat entrees, such as Tyson's chicken medallions with rib meat in sesame teriyaki sauce, far surpass the quality of frozen foods, analysts say.
"There is no longer a stigma attached to refrigerated meals," Hauptman said. "They are high quality, tasty and quite good for you. Consumers feel very comfortable offering these to their families."
Refrigerated entrees allow providers "to be involved" with preparation of the meal, said Phil Lempert, editor of Supermarketguru.com, a Web site that tracks food trends. Although it might take only four minutes to heat up Hormel's meatloaf with tomato sauce, parents can also add side dishes such as mashed potatoes or peas, he said.
Profitable
The category has been a boon to Hormel, which makes brands such as Jennie-O Turkey Store and Always Tender. For the first quarter ended Jan. 8, Hormel said sales of refrigerated products increased 7.5 percent to $544 million from $506 million during the same period a year ago, led by double-digit sales growth in fully cooked entrees.
Operating profit in its refrigerated foods segment jumped 178 percent to $30 million, "reflecting ... continued strength from value-added, branded products," the company said. Hormel is persuading consumers to "trade up," or pay higher prices, for these entrees, said Eric Larson, a food analyst with Piper Jaffray & amp; Co. As a result, Hormel is generating higher profit margins, he said.
Hormel is set to roll out variations on its core meat entrees, including Southwestern, home style and barbecue flavors. Such product extensions means the category will have staying power, said Jim Splinter, Hormel's vice president of consumer products and marketing.
Competition
Refrigerated entrees also have helped supermarkets compete for dollars that normally go to restaurants. With more Americans eating away from home, supermarkets over the years have added more store-prepared foods, such as rotisserie chicken, deli sandwiches and salad bars. The growth of refrigerated entrees is a natural extension of that strategy, analysts said.
And instead of simply diverting customers away from the deli and meat counters, as some had feared, refrigerated entrees are generating additional sales per store, said Vic Orn, corporate merchandise manager for Supervalu Inc., which operates Cub Foods.
For higher-end grocery chains such as Lund Food Holdings Inc., which already sells a lot of prepared food from its Lunds and Byerly's stores, the success of refrigerated entrees offers a significant market for store-label products.
Kroger Co., the country's largest supermarket chain, developed an extensive private-label line called Meals Made Simple.
But Larson believes the real opportunity lies with manufacturers like Hormel and Tyson. Supermarkets are relying more on manufacturers to develop ready-to-cook entrees for sanitation reasons and to lower the cost of hiring its own employees to prepare the meals.
"This provides real value to retailers," Larson said.