RETAILERS BEEFING UP DIET AID PROMOTIONS

'Tis the season for supermarkets to help shoppers, overstuffed by holiday feasting and armed with New Year's resolutions, to start slimming down.Health and beauty care executives at food stores across the country said they are staging major promotions this month and next to boost the meal replacements and diet aids categories.Supermarkets are using off-shelf promotions, major temporary price reductions,

'Tis the season for supermarkets to help shoppers, overstuffed by holiday feasting and armed with New Year's resolutions, to start slimming down.

Health and beauty care executives at food stores across the country said they are staging major promotions this month and next to boost the meal replacements and diet aids categories.

Supermarkets are using off-shelf promotions, major temporary price reductions, advertising and even contests to accomplish this. HBC buyers contacted by SN said that as early as Jan. 2 they noticed an increase in the category's sales -- particularly for ready-to-drink meal replacement products.

"We start promoting the category with the first ad of the year," said Christie Frazier-Coleman, HBC buyer-merchandiser for the 70 stores of Bashas' Markets, Chandler, Ariz. "The two main players are Nestle's Sweet Success and Slim Fast and we run an ad every week on one or the other. I've been focusing on the six-pack ready-to-drink items because they've been the best sellers for the past year. Then, I subfeature or do temporary price reductions on the powders and the bars."

Bashas' has endcap displays of both major meal supplement brands in its stores, said Frazier-Coleman. Both Slim Fast and Sweet Success are holding display contests at store level, in which the chain is also participating.

"We do a lot to hype the category between Jan. 1 and March 1," she added. "The category starts to drop off about mid-March."

David Sinwell, director of nonfood operations at Dahl's Food Markets, Des Moines, Iowa, said each of his chain's 14 stores will

give away a NordicTrack fitness machine as a tie-in with its sales of Nestle's Sweet Success.

"We have a three-month promotion, mostly featuring the ready-to-drink products," said Sinwell.

Dan Van Zant, HBC/GM buyer-supervisor for C&K Markets, Brookings, Ore., said his 30-store chain will tie-in videos with meal replacements to motivate consumers not only to lose weight, but to buy products.

"We usually get a good burst [in meal replacements] for the first two or three weeks of the year, and this year, we ran our ad for Jan 4. We tie-in with the video department with Kate Smith exercise videos and a few others," he said. "We got some good pricing on Kate Smith and decided to run a tie-in promotion. In most stores [the diet products and the videos] will be sold together.

"We tried the tie-in last year for the first time," Van Zant continued, "and it was pretty successful. Everything is on TPR. There's a one-week ad and a 30-day TPR. We promote the category every year. We run an ad on the liquid and on the powdered diet supplements and then we tie-in the diet drinks and diet foods to create a theme. We either have an endcap or a lobby promo area devoted to the promotion too."

Shari Steinbach, dietitian and spokeswoman for Spartan Stores, Grand Rapids, Mich., agreed "[January to April] is definitely the biggest season for diet products." She predicted ready-to-drink diet shakes from Sweet Success and Slim Fast will continue as this year's hot products. Spartan is using displays, signs, advertisements and TPRs to give the category a boost in the early part of 1995, she said. Baker's Supermarkets, Omaha, Neb., is running a Weight Watchers sale to boost its diet aids and meal replacement sales. The advertised theme ties-in Nestle's Sweet Success and Slim Fast products with Weight Watchers frozen entrees, according to Joe Doran, category manager of GM/HBC for the 15-store chain. "That ad theme has been very successful for us in the past," said Doran. "We run the ad the first week of the new year or some time in January. Everything's run on a TPR, which erases the margins. These diet products are almost a loss leader to drive traffic but they generate a huge amount of volume."

A buyer from one of North America's top five chains, based on total dollar volume, said her chain will promote the diet pill and meal replacement category with ads featuring bonus packs and buy-one-get-one-frees, TPRs and in-store displays.

Annabel Joe, HBC buyer at Randalls Food Markets, Houston, said her chain will feature meal replacements and diet pills in January advertisements to capitalize on the post-holiday diet craze.

HBC executives were split when asked if they thought category sales this year would be higher than they were last year.

Steinbach of Spartan said she expects her company's sales in diet aids and meal replacements will run about 15% higher than last year because of new flavors and products, related freestanding insert drops and increased space devoted to the category at retail. She added Spartan's sales in the category also traditionally rise 15% between December and January.

The retailer from the top-five chain said she expects diet product dollar volume for January and February 1995 will run about 5% higher than in 1994. She added there is usually about a 500% increase in category sales between December and January.

Sinwell of Dahl's said he also "expects this year will be a little bigger than last in the category."

But Frazier-Coleman of Bashas' disagreed, saying she was "afraid it's not going to be as big a category this year as it was last year, when the ready-to-drinks were new and there was a liquid diet frenzy. I just don't think people are quite as encouraged to diet right now. The biggest boom is fat-free products. But still, [meal replacements] is always a big category."

Doran of Baker's said he also expects "somewhat of a decline. The category is not as strong as it once was."

Van Zant of C&K said it will be hard to predict if this year's diet category sales will top last year's, but he added he is hopeful January 1995 will at least remain on par with the "strong" results of January 1994.

Whether sales of meal supplements and diet aids rise or fall compared with last year, all retailers said they expect fierce price competition in the category.

Peggy Wilk, GM/HBC Buyer at Ashcraft Markets, Harrison, Mich., said it is "hard to beat the mass merchants with anything. We never look at trying to beat Wal-Mart's [prices], we just try to stay competitive and stay creative with our displays.

"There's not much of a margin in the diet category, but it's not a loss leader," she continued. "The [diet product] manufacturers have a lot of money to dish out, so retailers will sell the heck out of their products." Van Zant agreed meal supplement margins will be "pretty weak for the duration of the promotion. We cut our margins trying to build store traffic. The competition in the category is extremely tough."

The buyer from the top-five chain, however, said her stores make 10% to 30% margins in the category.

Doran of Baker's said category price points range from 88 cents to $4.99, while Frazier-Coleman said Bashas' category prices range from 88 cents a can for ready-to-drinks to $5.99 for other products.

"In this market, ready-to-drinks are really competitive," she said. "And powders sometimes sell at cost."

As Sinwell said, margins in the category are "getting slimmer all the time, just like the products try to do [for people]."