WESTVACO'S TRAYFRESH PULLBACK UNZIPS STRONG REACTIONS

RICHMOND, Va. -- Westvaco's decision to stop production of its TrayFresh packaging for chilled, prepared foods has stirred up some strong reaction from supermarket officials in the industry.The packaging company's decision reflects what's going on with the market for chilled, prepared food: it hasn't matured as fast as had been projected, said those interviewed by SN.As a result, ancillary suppliers,

RICHMOND, Va. -- Westvaco's decision to stop production of its TrayFresh packaging for chilled, prepared foods has stirred up some strong reaction from supermarket officials in the industry.

The packaging company's decision reflects what's going on with the market for chilled, prepared food: it hasn't matured as fast as had been projected, said those interviewed by SN.

As a result, ancillary suppliers, such as packaging companies, have been forced to re-assess profit potentials, and, in some cases, to retrench. But retailers said a company like Westvaco -- one of the largest packaging manufacturers in the country -- with its resources, could have stayed the course.

"They could have done more research, could have retooled, done whatever was needed to increase sales and eventually get the line profitable. The demand for prepared food will grow. People aren't going to start cooking again," said one TrayFresh customer who asked not to be named.

At Westvaco's consumer packaging division here, officials explained that an adequate number of high-volume customers could not be found.

The division here of New York-based Westvaco created the TrayFresh line in 1994 specifically for short-shelf-life, chilled, prepared foods (the package cannot be gas-flushed). Notable for its design, its air-tight seal, its paperboard and film and for being dual-ovenable, the package got good reviews for the most part, and industry sources said it had tremendous potential.

Indeed, Ukrop's Super Markets here, which collaborated on the design of the package and invested money in its development, credited the TrayFresh product with taking its sales of prepared foods to a new level.

"It enabled us to go to central packaging. We're not at all happy about Westvaco's decision, but it's their decision," said Jackie Legg, vice president for solution shopping at the 26-unit Ukrop's here (see "Ukrop's Homestyle," SN, Oct. 4, 1999).

Previously, the company's prepared foods had been delivered in bulk and packaged at store level.

Ukrop's, Westvaco's largest retail user of TrayFresh, shipped four million packages of chilled, prepared food from its central kitchen to its stores last year and most were TrayFresh packages, Legg said. The chain has not decided what packaging it will use when its inventory of those runs out.

Other retailers have faced the same challenge since TrayFresh production was stopped in August, including Lund's-Byerly's, Edina, Minn.; Hannaford Bros., Scarborough, Maine; and Martin's Super Markets, South Bend, Ind.

The decision to stop production lay, in part, in the fact that there were no more than 25 supermarket companies using TrayFresh, said Steve Whiteside, Westvaco's sales-market specialist for the consumer packaging division.

One chain -- Price Chopper Supermarkets, Schenectady, N.Y., with 90 some units -- that had been using the packaging for about two years, discontinued its prepacked chilled, prepared program early this summer, prior to the Westvaco decision. And no large-volume producers were signing on.

"Whether it be a supermarket chain or a food manufacturer who brings extremely large volumes to the table, we needed one or two drivers -- the ones that keep the machines going nearly 24 hours a day -- but that never happened," Whiteside said.

All of that is understandable, some retailers told SN, but they also said Westvaco could have communicated better with them.

At Urban Epicurea, an alternate-format meals store in West Hollywood, Calif., co-founder and president Wayne Davis said he was shocked by what Westvaco did.

"So much of our business is dependent on our image, and right now, you just see a lot of white-topped containers in our cases," he said, explaining that Westvaco supplied generic lids after it stopped printing custom ones. The store has just found an alternate supplier.

Other retailers told SN that the dual-ovenable quality of the containers wasn't as important to them as the fact that the design of the package with a film-and-cardboard top lent itself well to a differentiating look.

"You could print your logo and even photography on the white board, and make it stand out. They had a wonderful design staff," one customer said.

Westvaco's Whiteside was quick to say that the division here has not given up entirely on the chilled, prepared-food category, or on packaging for other types of fresh food.

"We're not selling the TrayFresh equipment; we're mothballing it. We could resurrect it pretty quickly if the right customer came to the table," he said, and added that he does expect that to happen in the future.

"We're also working on some other packaging for fresh products," he said, but declined to elaborate. The bulk of Westvaco's business is in packaging for frozen and dry grocery products.

Some TrayFresh customers said it seemed particularly untimely for Westvaco to discontinue the paper-based line just when the cost of plastic packaging is soaring.

"It's unfortunate that the TrayFresh line didn't work out for Westvaco because I think with the cost of packaging like it is you need to have as many folks as possible being competitive in order to drive the costs down," said Marty Greeley, category manager of deli/prepared foods at Hannaford Bros.

Hannaford Bros. had been using TrayFresh containers for packing up fresh products at store level, not for a menu of prepared items it sources from regional manufacturers.