Instead of simply cutting prices to provide value, editor Dan Malovany urges bakers and snack producers to up the ante by providing more wholesome, innovative products.




Value's Trump Card

In the bread aisle, the big bet of late among the brand players has been on deep discounting. Unfortunately, nearly everybody seems to be making the same bet, and when that happens, nobody ends up winning in the long run.

Gone are the days when 1.5-lb. loaves of branded premium bread were sold on promotion at two for $5 or $6. Now the ante goes at two loaves for $4 in many markets and even less in others.

Penny poker, anyone?

When it comes to trumping value, maybe there is a wild card that allows bakers and snack producers to place the smart bet in this business environment, according to the folks at Roman Meal.

“A lot of companies-if they are not stopping-are certainly slowing down in terms of their innovation, and I think that is exactly the wrong thing to do at this point in time,” says Gary Jensen, president of the Tacoma, Wash., company. “I think we have got to figure out how to make better products, more nutritious products and more unique products because that is how you trump a value-based perception. You give consumers something more and something different.”

Certainly, consumer behavior has fundamentally changed over the last few years as the economy dove into a recession and unemployment increased to 10% nationally. In mainstream supermarkets, many of them are shifting to private label or are only purchasing products that are on discount. Coupon redemption, Jensen notes, rose 17% in 2009 as Americans attempted to find small ways to stretch their budgets. In other cases, he adds, they’re shopping in different channels such as dollar stores, which have exploded from some 13,000 units in 2001 to more than 20,000 in 2008.

This real shift in shopping behavior toward getting the biggest bang for the buck can be broken down into two ways.

“One, you just don’t have as much disposable income so you have to be more careful,” Jensen says. “Two, you have the disposable income, but the mentality is more about value.”

Slashing prices alone is simply a dumb play at best and a stupid move at worse. Of course, that is just my palooka opinion so let’s have Luis Pedroza, vice president of marketing for Roman Meal, explain it in a more intelligent way.

“Consumers out there are looking for a better price point, but the risk from a marketing perspective is, if you only focus on price point, you can’t win,” he says. “That’s because there are multiple bread products to choose from, and if they are seeing them all as similar, they are going to pick the ones that are the cheapest. Our goal is to create value beyond price to give consumers a reason to pay a premium for Roman Meal bread.”

To address today’s value proposition, the company currently is working with its baker partners to roll out a 100% Whole Wheat bread that comes in a 1-lb. roundtop configuration and sells for around $2 a loaf. Sold under the Roman Meal Sun Grain brand, the tagline on the package boasts “Good Value for Your Family.”

A much larger initiative, Jensen notes, involves another line of new breads that will roll out later this year and provide a specific health benefit along with the wholesome goodness and nutrition of whole grain bread. Specifically, Pedroza adds, the varieties target the benefits of Hunger Control, Sustained Energy and Healthy Digestion. The goal has been to identify the needs of its core consumers, who are women between the ages of 50 and 64, and create meaningful products that can help them solve some of the challenges they face as they try to manage the aging process.

In many ways, that’s the key to trumping the value card in today’s economy. Place the sure bet that most consumers today are interested in living longer and healthier lives. You’ll like your odds.

In this issue, find out how bakers across the board are redefining value and discovering new ways to go beyond the benefits that high fiber and whole grains offer to create unique products that meet the needs of today’s and tomorrow’s consumers.

“It’s a great time for innovation in this industry,” Jensen says.

That’s always a winning hand in the long run, but only the best players have the guts to play it in these times.