Deli processing: Cost crunch
While deli processors, thus far, have worked to use innovative new products as a defense mechanism against macroeconomic factors, such as rising commodity costs, it appears that little has changed as the 2011 calendar year comes to a close. Indeed, innovative new products have continued to hit the market, but processors are bracing for the real impacts from rising and/or volatile commodity costs.
In The National Provisioner’s Deli Report in July 2011, Jonna Parker of the Perishables Group explained that supermarket delis in particular were successful in the prior year because they managed price increases and used convenience to create innovative opportunities for consumers. This in spite of fewer new product introductions in 2010, according to data cited from the International Dairy Deli Bakery Association (IDDBA) a few paragraphs later.
Much like the rest of the meat and poultry industry, it appears that rising commodity costs will continue to be of high concern to processors. Don Baker, director, Sara Lee Deli, certainly thinks they are one of the key challenges facing deli processors at the moment, from an operations standpoint.
“It’s a balancing act between the increased cost of commodities and the manufacturers’ ability to stay ahead of pricing,” he explains. “At Sara Lee, we are committed to providing our consumers with a high-quality product that tastes great. In a challenging commodity environment, it’s important for industry leaders to maintain quality and deliver on consumer expectations while balancing pricing discipline.”
This doesn’t mean that innovation has vanished from the deli product landscape. In fact, there have been plenty of innovative products that have been launched in the last few months, covering everything from line extensions to entirely new artisan lines.
For example, earlier in 2011, Creminelli Fine Meats, of Salt Lake City, Utah, unveiled a new line of hand-crafted artisan deli meats to the foodservice community, through specialty food distributors.
At the time, several of the new varieties were unique to the United States and were expected to be available across the country by September. The artisan offerings each featured its own natural flavor profile, from garlic and wine to clove and nutmeg.
Furthermore, larger processors, including Bar-S Foods, Sara Lee and Butterball, among others, have been active in the innovation space, launching several line extensions and new flavor profiles throughout 2011.
Certainly, food safety and quality remain at the top of the heap where deli processing operations are concerned as well — another challenge that faces most every segment of the protein-processing industry, but one that the deli marketplace knows just as well as any of the other segments. Baker says Sara Lee is able to deliver quality products in this challenging commodity environment.
“It’s through our ability to pursue cost effectively, price responsibly and maintain quality that keeps us properly positioned in today’s challenging commodity environment,” Baker says.
For the entire deli segment to stave off the effects of commodity costs, it will take proper planning and management on all fronts — combined with the right balance of innovation and cooperation with customers.