THE FROZEN 500

As with many mature categories, frozen breakfast needs promotions and the kick-start of new products to thrive. To that end, manufacturers have been reinventing favorites like the frozen waffle -- with variations such as Kellogg's Waf-fuls with syrup inside as an option for those who find pouring syrup too inconvenient.According to sources who spoke with SN, this year's excitement comes from M&M Mars'

As with many mature categories, frozen breakfast needs promotions and the kick-start of new products to thrive. To that end, manufacturers have been reinventing favorites like the frozen waffle -- with variations such as Kellogg's Waf-fuls with syrup inside as an option for those who find pouring syrup too inconvenient.

According to sources who spoke with SN, this year's excitement comes from M&M Mars' Uncle Ben's, which is introducing a line of eight microwavable Breakfast Bowls. Based on the success of Uncle Ben's entree bowls, retailers are anticipating great things.

"People are buying them," said Dick Rissman, frozen food director for Dahl's Food Markets, Des Moines, Iowa, speaking of the new Uncle Ben's entry. "The dinner entrees fly out, really brisk sales. The breakfast ones we've had just a few weeks, and they seem to be doing fine."

The complete lineup includes: Bacon, Egg & Potatoes; French Toast & Sausage; Ham, Egg & Peppers; Sausage, Egg & Biscuit; Egg, Cheese & Salsa; Apple & Cinnamon Pancakes; Peach & Pecan Pancakes; and Seven Grain Cereal & Fruit. Each single-serve Breakfast Bowl is packaged in a recyclable bowl. They will be available nationwide next month and will retail at a suggested price of $2.79, according to Uncle Ben's, Vernon, Calif. Historically, waffles have driven the frozen breakfast category, along with related toaster items, and new flavors keep popping up in this segment in an attempt to court consumers. Making breakfast convenient and portable is the goal, retailers say.

The sales performance of frozen waffles, a $483 million category, according to Information Resources Inc., Chicago, outpaced that of other frozen breakfast food items, which generated sales of $368 million for the year ended Dec. 2, 2001. The waffle segment is dominated by Kellogg's Eggo brand, which witnessed sales of $255 million for the year. Still, the overall waffle category is flat, according to IRI, and even Eggo was down 4% in dollar sales, and by 6.9% in units.

Private-label frozen waffle growth is good, increasing 9.5% to sales of $53 million last year. "It's a small percentage of the business, but at least it's growing and helping profits," said one retailer who asked to remain anonymous. Federated's Hy-Top store brand does very well in Scolari's Food & Drugs, Sparks, Nev., according to Russ Hahn, buyer and merchandiser of frozen foods. "They're a lot cheaper than the national brands, so it's a lot more lucrative to promote it. Plus, we can promote it anytime we want," Hahn said.

Economy-size packs of Wegmans' own brand of frozen waffles were noticed by SN on a visit to its store in Princeton, N.J., last month, in a 35-foot breakfast coffin case that had toppings and syrups, many of them Wegmans' brand, on a shelf on top. In various stores and with various product lines, SN has noticed that, sometimes, private-label products cost more than the name brand. Packs of Eggo Homestyle waffles, 60 in a box, were $6.99, or 11.65 cents apiece during our store visit; Wegmans' brand, 48 Homestyle waffles, were $6.19, or 12 cents each.

While waffles may lead the bunch, retailers are increasingly adding to their frozen breakfast stockkeeping units, offering consumers a wide selection of product, some performing better than others.

Brad Baryenbruch, frozens buyer for Hometown Supermarket, Spring Green, Wis., observed, "With breakfast, you sell a ton of waffles but if you move to pancakes and french toast, it goes downhill."

Another retailer, from the Southeast, disagreed, saying his chain had brought in Farm Rich French Toast Sticks, adding them to the Murry's brand it already carried, and found that the new addition hadn't hurt Murry's. "Maybe it's taking from waffle users," he guessed. "Compared to waffles, it's not a large segment but at least a bright spot."

Baryenbruch also noted that meat alternatives, such as bacon and sausage substitutes made from soy, do well, as do EggBeaters and other brands of egg substitutes.

A growing consumer population, health-conscious shoppers continue to have an impact on the frozen breakfast section, not only with the cholesterol-free protein products, but also with waffles.

"We carry some organic waffles in every one of our stores, and that also is increasing in popularity," said Dick Billstein, category manager, frozen foods, for Dierberg's Markets, St. Louis. He said the soy category of frozen meat alternatives is also doing well.

D&W Food Centers, Grand Rapids, Mich., is also doing more work with organic and natural waffles, like Van's and Lifestream, said Tom Wolfiss, frozens buyer there. According to IRI's statistics, Van's sales increased by 45.9%, to $4 million last year. The brand is carried mainly in the natural food channel by specialty stores, such as Healthy Pleasures in Manhattan, where SN spotted a woman loading boxes of the wheat-free Van's product into her cart. "My son is allergic," she told SN. The waffles were priced at $3.19 for a box of six, but a spokesman for the maker said that was above the suggested retail range, and they've been seen in other stores on sale at $1.99.

As mainstream supermarkets expand their natural and organic sections, such products will probably continue to grow. One in every 160 people in the United States has an allergy to wheat and gluten, said Jim Kelly, chief executive officer of Van's International Foods, Torrance, Calif. "Our wheat-free business has been growing 25% a year."

Van's makes about 15 different varieties.

"In most natural food stores, we will have 10 to 15 of our items," he said. "Whole Foods, Wild Oats, all the gourmet specialty stores, like Gelson's, Draeger's, Andronico's -- that is primarily where we get a lot of our growth."

In the more mainstream supermarkets, like Vons or Ralphs in southern California, and in Stop & Shop on the East Coast, he said that often the natural and organic waffles will be found in a store inside a store, a section with frozen organic and natural foods. Other supermarkets will take two to four doors and commit them to the natural foods consumers. Van's supplies Costco in southern California and in the Northeast, also Wegmans Food Markets, Rochester, N.Y., Food Emporium and Trader Joe's.

"The mainstream channel is the area that is least developed so far. The costs involved with being a small company, slotting fees and all the programs that go with it, [are discouraging]," Kelly indicated.

Still, Van's is carried by Publix, Harris Teeter and selected Kroger stores, he said, and the organic version is carried nationwide by Albertson's stores.

The organic waffles are getting new packaging, stating they are 95% organic under the new Organic Rule, which goes into effect in October.

While package redesign is always a great way to draw attention to a product, retailers told SN that promotions in this category are a real key to sales. When there aren't any, it doesn't go unnoticed.

Hahn, of Scolari's, complained that Swanson's hasn't been promoting its Great Starts breakfast line in the last two years. "When I ask them, they say they will respond to it," he said.

He noted that Lender's continues to promote its frozen bagels, even though fresh bakery bagels and Sara Lee packaged bagels, among others, have taken a big chunk of its business.

With the new Uncle Ben's Breakfast Bowls, "our initial struggle was just to get them in our warehouse and on our shelves. There's no promotion yet, but we definitely will promote them, and if there are allowances we will pass them along to the customer, as we have now with Eggo waffles," said Dahl's Rissman.

"Red Baron has a frozen breakfast pizza and some good quality items; we promote those when they have them on promotion. Our warehouses are quite active about promoting items to us," he added.

To add excitement to the breakfast section, he suggested building an endcap display to promote a little more. "You can always do demos. You can make it as exciting or as basic as you want."

He said Dahl's has demonstrated many frozen breakfast items in the past, including Pillsbury products and Red Baron breakfast pizzas. "It depends on how aggressive a person wants to be. A lot of it has to do with merchandising and how much you put into it."