Why Del Monte Foods is moving new products to the perimeter
Del Monte Foods is innovating with new products and positioning itself in the store perimeter where more customers are shopping, Randall Freeman, the recently named sales director for the company's perimeter and convenience areas, told Food Dive.
Freeman said that while the 132-year-old brand has historically focused on the center of the store with its iconic canned fruits and vegetables, "Shoppers today are in the perimeter, looking for convenience snacks and the best bang for the buck." In response, the San Francisco-based company has introduced convenience items such as Del Monte Fruit & Chia, Grab and Go Fruit Cups and Plastic Fruit Cup Snacks.
Sales during its fiscal third quarter ended Jan. 31 reflected some growth in the four key categories of canned vegetables, canned fruits, plastic single-serve fruit and broth. The company's sales had declined 1.6% in the previous quarter, although canned fruits and plastic fruit cups saw 3% market share growth during the fiscal second quarter, in part because of increased marketing efforts.
Perimeter sales are key for today's retailers. Sales growth there jumped 3.8% from 2012 to 2016, according to IRI market research figures — 2.7 times higher than growth in the grocery store as a whole. Produce was the main driver of that growth, followed by meats, seafood and bakery. And, like most CPG companies, Del Monte Food wants a piece of the action.
Best known for its Del Monte, Contadina, College Inn and S&W brand products in canned and aseptic packaging, Del Monte Foods also produces plastic cups of single-serve fruit items. The company is looking for more innovation in its business areas. This is a different company than Florida-based Fresh Del Monte Produce, which sells fresh fruits and vegetables and was spun off in 1989.
Randall Freeman brings professional experience with both Del Monte Foods and Fresh Del Monte Produce and is in position to help Del Monte Foods expand in the face of changing trends and increasing consumer interest in convenience, on-the-go snacking and less preparation. In February, the company also brought on Bibie Wu as its new chief marketing officer. She had previously held management and marketing positions with Campbell Soup and General Mills, and her role will be to work with Del Monte Foods' innovation team to bring more products to market.
Freeman told Food Dive the company is developing fruit products that could be sold in the produce, dairy or deli departments. He said these new items will be launching the first of next year, but he wasn't ready to share details.
"We like to keep these things behind closed doors as long as we can," he said. "I will say over the next year we will be coming out with several different unique items both in the fruit and vegetable base to meet millennial purchasing preferences for more healthy snacking convenience items."
Beverages are another area Del Monte Foods has considered, although Freeman said it's an extremely competitive space with a lot of other players. He said that with a stronger focus on innovation and a forward-thinking president and CEO — marketing veteran Greg Longstreet, who came to Del Monte Foods last summer from Hormel Foods — the company's attitude is "never say never."
"The brand is pretty strong and well-recognized. Millennials may not have that recognition, but there’s some value there that we can work with," he said.
Freeman noted that the company's canned products are doing well and numbers are growing. However, as tastes and trends shift, Del Monte Foods has to adjust accordingly.
"We recognize the consumer is changing and that’s why we’re going out to the perimeter of the store," he said. "As we look at the future, you’ve got to comply with what the consumers’ movement is and that’s to the perimeter."