FORECAST: STRONGER GROWTH FOR SUPERMARKET MEALS

CHICAGO -- Food service inside the supermarket is one of only two segments of the meals industry that won't suffer, but indeed will see increases in sales, as a result of the Sept. 11 terrorist attacks, according to a revised Technomic forecast released last week.Supermarket food service -- which in Technomic's definition includes chilled prepared foods, as well as those served hot -- is tapped for

CHICAGO -- Food service inside the supermarket is one of only two segments of the meals industry that won't suffer, but indeed will see increases in sales, as a result of the Sept. 11 terrorist attacks, according to a revised Technomic forecast released last week.

Supermarket food service -- which in Technomic's definition includes chilled prepared foods, as well as those served hot -- is tapped for stronger growth now than it had been in Technomic's original 2002 forecast released in August. Vending also is expected to see growth increases as a result of a general trade-down.

"Our original forecast for supermarkets was 3.5% growth, and we've pushed that up to 4% now," said Kate Gamewell, senior consultant, Technomic. "The general feeling is that consumers will be trading down and supermarket food service is seen by consumers as a trade-down even from limited-service restaurants. They'll be looking for bargains and they see value in supermarket prepared foods."

Gamewell also cited convenience -- a big factor in these tense and uncertain times. Consumers who will already be in the supermarket doing their regular shopping are expected to pick up meals they don't have to cook on a more frequent basis, she said.

Other industry sources have predicted that the emotional impact of the terrorist attacks and the atmosphere of uncertainty following them will send people looking for comfort foods, such as mashed potatoes, macaroni and cheese and stew, in the next few months. That kind of fare has been offered in many supermarket deli and food-service departments all along so they are well-positioned to provide those items.

The recent forecast released by Technomic indicates that "retail hosts" as a group -- which includes food service in supermarkets, convenience stores, departments stores and other retail outlets -- should hold steady with growth of at least 3.5% forecast for the year 2002.

"That reflects consumers' willingness to select these outlets for convenience and in lieu of dining out," the report said.

But Gamewell pointed out that of all the segments within that group, the franchised limited-service restaurants inside "other" retail outlets such as Wal-Mart, Target and Nordstrom will not fare as well as those in supermarkets and convenience stores.

"People will not be as apt to treat themselves while they're out shopping. They'll want to get home for their food service," Gamewell said.

Not surprisingly, then, it's the full-service restaurants that will be hit hardest. They're now forecast for 0.2% growth as opposed to a 4.5% gain predicted in Technomic's original 2002 forecast. Limited-service restaurants' growth will not be as good as earlier predicted either. The original forecast indicated they would see 3.3% growth. That figure has been lowered to 2%.

The forecast for the total food-service industry has been greatly altered. From a 3.6% growth for the whole industry predicted in August, the figure is now 0.2%.

Technomic, a consulting firm that tracks the food-service industry and makes periodic forecasts for growth in each segment, said in its report last week that "given the high level of uncertainty, precise forecasts are no longer valid and that scenario-planning across a wide range of expectations is more appropriate."

The company plans to re-issue new growth estimates no later than January 2002, Gamewell said.