Instead of running extreme discounts that make the bottom line bleed red, maybe going “green” is an alternative to add value for consumers, says editor Dan Malovany.





Double Dipping

Double dipping is never a good idea, especially at a snack show. It doesn’t matter if you’re healthy or sick. Dude, never dip a chip after it touched your lip.

Double dipping also isn’t good when it comes to business. Okay, maybe the economy hasn’t taken a second full plunge, but in many cities, housing prices have begun to dip again at the beginning of this year. Furthermore, many deal-seeking, tightwad consumers have retailers and foodservice chains asking bakers and snack producers to slash prices, squeeze profits and come up with “whatever” ways to get people to loosen up their wallets. For many of them, the slow recovery is like a fiscal root canal that seemingly goes on forever inflicting more pain upon pain as time goes on.

Sure, the optimists suggest the slowdown has stabilized, but that’s not what I’m hearing. Rather, consumer sentiment simply stinks.

“Since the summer of 2009, outside of the thin bun phenomenon, it has been the horrible economic conditions that are on top of the mind with consumers in the Midwest,” notes J. Bohn Popp, vice president of marketing at Aunt Millie’s Bakeries, Fort Wayne, Ind. “Business is converting to private label, and overall volume appears to be down since last fall. I believe that consumers are still interested in bread as a health vehicle, but everyone is looking for a bargain. This trend has been exacerbated by retailers and by manufacturers who are willing to sell below costs, at prices not seen in [more than] 10 years.”

The adage that the food industry is recession-proof has become a broken theory, and profits are being squeezed by the extreme promotional activity in the bread and snack aisles. Unlike in the past when they were needed to boost sales and grow the category, such discounts are now defensive in nature. They’re being used by companies to simply maintain the status quo, Popp says.

To make matters worse, new product innovation has waned as bakers and snack producers are taking a more cautious approach to the market. Talk about putting a tourniquet on the lifeblood of the food industry.

“First, our customers are demanding more lead time,” Popp explains. “Second, our customers are demanding SKU [stock-keeping unit] rationalization so you cannot just try new things and expect them to get authorized. Third, we need to grow volume in this difficult economy so we realize we can’t always be the first to the market, but we need to be ‘right’ to the market - introducing the right product at the right time.”

Instead of running promotions that make the bottom line bleed red, maybe going “green” is an alternative to add value. In December, Aunt Millie’s converted the inner wrap for all of its hearth breads to degradable film. When exposed to sunlight, moisture and heat after disposal, this film decomposes completely into carbon dioxide and biomass over time without the release of toxic by-products.

“Degradable inner wrap costs 50% more than non-degradable film, but we thought it was worth it for the sake of the environment,” notes Melissa Dunning, Aunt Millie’s marketing director.

Likewise, Sara Lee is tapping into the environment with its EarthGrains bread made with Eco-Grain wheat, which is grown using farming techniques that benefit the environment because they promote more sustainable agriculture practices. The environmentally friendly product is being promoted as a part of the brand’s “Plot to Save the Earth” that educates consumers how they can take small steps in everyday life to have a positive impact on the environment. It’s another innovative way to add value without discounting, says Tim Zimmer, vice president at Sara Lee North American Fresh Bakery, Downers Grove, Ill.

Double dipping isn’t necessarily bad if it’s done right. In fact, it can be a good thing when wrapping natural, wholesome products around an environmentally friendly message.

Just make sure those chips don’t touch your lips before they hit the dip.

Dan Malovany, editor
malovanyd@bnpmedia.com