Natural Selection

July 1, 2006
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Natural Selection
By Deborah Silver
Editor, ProvisionerOnline
Coleman, the natural meats pioneer, is taking on a new challenge – deli products.  

Coleman All Natural Meats is synonymous with the natural-meats movement. More than a quarter century ago, it introduced meats with no antibiotics, no added hormones, no preservatives — ever, as its marketing message reminds consumers — to a generation of processors and consumers, and the rest, as they say, is history.
Coleman is now poised to enter a new arena, deli meats, as it looks to diversify in the increasingly competitive world of all-natural meats. Indeed, three of the biggest conventional meat producers — Tyson Foods, Swift & Company and National Beef —have launched natural products in the last few months, joining niche players, such as Coleman, in the natural and organic meat arena. The ante has definitely been upped.
Growing consumer demand for healthier products is also behind Denver-based Coleman’s move into the deli category. According to consumer research and consulting firm ACNielsen, natural-meat sales nearly doubled in four years, to $681.3 million in the year ended April 22. By 2009, sales of natural and organic meats are expected to reach $13.8 billion.
The National Provisioner talked with Ed Jenkins, president of Coleman’s deli division to find out more about the company’s expectations for its deli program, as well as to explore the challenges inherent in introducing this new product line.    
NP: How did the new line of Coleman All Natural deli meats develop?
Jenkins: We started in early 2005, first developing turkey breast and chicken breast products. We worked with Snow Ball Foods, which specializes in turkey and chicken products for deli, retail and foodservice. It was an easy transition for them to work with us on an antibiotic-free all-natural deli product, because they had done natural before.
We then started developing ham, which is more difficult because it’s a cured product and we don’t use nitrites. After that came corned beef and pastrami, and finally roast beef. We had to use all-natural curing products. Our products are called uncured but they’re actually naturally cured, which is how it was done before nitrites entered the scene. We also don’t add binders, so each product has less water, giving the products an off-the-bone taste.
NP: To what segment are you targeting the deli meats -- retail, foodservice or both?
Jenkins: We’re introducing them to all segments. They’re the primary deli brand at Wild Oats, the natural retailer. The line is also in traditional retail operations like Shoprite, Safeway and Kroger. Stores like Costco and Trader Joe’s, while vastly different from each other, also cater to the kinds of customers that would buy our products, so those are a possibility for us. I can’t name all the stores that we’re talking to, but I can say that we’re in discussion with all channels.
Retail is recognizing that they have shoppers who shop for natural, antibiotic-free items. Right now that tends to be a very upscale consumer, but the trend is such that it will be mainstream in the next two or three years.
As for foodservice, our deli products currently are in organic-to-go chains, universities like the University of Colorado and some secondary schools. We anticipate that colleges and universities will be a big market for us. About two-thirds of all colleges and universities have captive feeders, and a growing number of those students are interested in natural and organic foods. We’re also pursuing primary and secondary schools, as well as health-care facilities, because healthier meats are appropriate there. And sandwich chains are a natural for us.  
NP: Who is your target demographic?
Jenkins: We focus on three demographic segments. First, concerned moms — that is, the new generation of moms that really care what their kids eat. They buy natural and organic products, if not entirely, at least substantially. Then there are the DINKs — dual-income-no-kids couples — and finally the empty nester, whose doctor may say, “You’re in good shape buy you could lose a pound or two, and you need to take better care of yourself.” Our biggest age group is 35 to 54 years old.
Education also is a huge factor for us. Our customers tend to be well-educated and fairly affluent. We find that as younger consumers gain in education and income, they move along a continuum of natural-product usage.  
NP: How many products does the new line include? Are more planned?
Jenkins: We now have 17 items — four turkey breast; a chicken breast; three ham; two choice roast beef; a choice corned beef brisket; a choice pastrami brisket; three cured sausage, including pepperoni, Genoa salami and hard salami; a turkey pastrami; and a Texas mesquite brisket sold in Texas and surrounding states. All products are developed and ready to market in both bulk deli and pre-sliced packages. For now, we’re sticking with those 17.  
NP: How are you marketing the line? What is the message of the marketing campaign?
Jenkins: Our marketing strategy is to target those chains that have a customer base that is interested in natural and organic. But within those chains, not every one of its stores is a good match, so we select only those stores that we know have consumers of natural products. A chain may have 200 stores, but only 120 of them are right for our products. It’s surgical marketing.
Most of our marketing is done in the store, using tools such as in-store couponing, $1-off easel cards and brochures at the deli counter that describe our products and tell our story. After all, there are a slew of competitors that are natural but aren’t made from antibiotic-free meats. These kinds of promotions are also important because, despite its growing popularity, natural beef still is a novel meal alternative for many shoppers. We also do intensive deli-operator training so those behind the counter can explain our process. Deli operators must be able to articulate to customers the features and benefits of the meats. As always, we promote the fact that our products never, ever have antibiotics, preservatives, added hormones or artificial ingredients. Because natural meat buyers tend to be well-educated and curious, they tend to ask a lot of questions. Retailers must be able to give good answers, especially if they’re trying to get shoppers to try the products.
NP: What are the most commonly asked questions about the line?
Jenkins: Most questions center around how on how the animals are raised and how the meat is produced. Also, customers are very interested in what the animals are fed and if the cattle are given antibiotics or hormones to promote growth. And of course they want to know why natural products are costlier than conventional beef.
NP: What is the deli line's anticipated sales for the first year? Expected growth?
Jenkins: We don’t give sales figures, but on the retail side, our goal is to be in 1,000 stores by end of year. As far as growth, we think there are at least 5,000 stores, both conventional and natural, that are appropriate for our deli meats. And we expect that number to grow. Logically our biggest markets will initially be in the Northeast and on the West Coast, but we plan to be nationwide.
NP: How will you keep the price of the deli products competitive?
Jenkins: We’re not price competitive with conventional deli meats. Our turkey, for example, goes for $9.99 a pound as opposed to $6.99, and our roast beef sells for $10.99 or $11.99 a pound as opposed to $7.99. Those customers who are interested in natural products are willing to pay the difference.
But we are able to keep costs down to a certain extent because we’re internally supplied for beef, pork and chicken. We externally contract for turkey breast, but we’re in negotiations for an assured turkey supplier. We know we’ll need that as the business takes off.
NP: Who is your competition in the deli-meats category?
Jenkins: At present there are no major meat companies in competition with us, none producing antibiotic-free deli meats. There’s all-natural but not antibiotic-free.
NP: To what do you attribute the increased interest in natural meat products?
Jenkins: There definitely is increased interest – and growth According to research from Datamonitor, between 2004 and 2009, the anticipated growth rate for natural and organic meats is 134 percent. Anywhere from 32 percent to 39 percent of consumers who purchase natural and organic have entered the market in the last year. That’s fueling the growth. There’s a natural progression of adoption that starts with dairy and produce, then moves to meat and deli.  
NP: What is the most difficult part, if any, of being in such a specialized niche? What are the benefits?
Jenkins: Internally we’ve historically considered ourselves as being in a specialized niche, which is also how we’ve been viewed externally. Now we’re in a transition in thought, where we’re viewed by consumers as an alternative. They’re looking at our products in traditional retail channels as an alternative to what they would normally buy there. Certainly the company is no longer just dedicated to the hard-core natural or organic customer. NP
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