Spotting the Next Food Trend

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THE DIGITAL RESOURCE OF FOOD PROCESSING MAGAZINE

SPOTTING THE NEXT FOOD TREND

WHERE WERE YOU WHEN THE LOW-CARB TREND HIT?

Food trends are like waves … and you’re the surfer. Catch a wave too early and you may have hitched your board to the wrong wave. It may not be much of a ride. Or you could wipe out early. Jump on too late and the ride is short and not so exciting … certainly more satisfying for other surfers who arrived there before you.

But keep an eye out for the perfect wave, get yourself prepared and jump on at just the right moment and you could have the ride of your life. Or the biggest profits of your company’s life. And you return to the beach a hero.

Also like waves, food industry trends come and go. Snackwell’s certainly had a stellar low-fat ride in the 1990s, but even that wave didn’t last forever. At least not in the form that Nabisco was suited up for. Low-carb is already on the wane; but will it disappear?

Here’s a little help in spotting the waves and picking out the right one to ride and for how long. Every month of the year, Food Processing tries to help its readers stay abreast of changes in the food and beverage marketplace. From changing American demographics and tastes to new ingredients, equipment and packages to new products landing on the market from home and abroad, we try to keep you afloat in this churning sea that is the food industry. We’ve packaged some of the best of these stories in this report in the hope that this helps you figure out where to point your surfboard and which wave to ride on.

Happy surfing … and hang loose! FP04_WHITEPAPERS.qxp 11/12/04 4:39 PM Page C2

THE DIGITAL RESOURCE OF FOOD PROCESSING MAGAZINE SPOTTING THE NEXT FOOD TREND

1PRODUCT DEVELOPMENT ELECTRIFIED Our R&D readers predict 2005 will be a year of truly novel new products backed by slightly higher budgets. BY FRANCES KATZ, SENIOR TECHNICAL EDITOR

4PROFIT IN BATTLING OBESITY Every 1 percent change in what America eats represents a $1.5 billion market. BY DAVE FUSARO, EDITOR IN CHIEF

5CHANGING THE FACE OF FOOD PROCESSING The shelf-stable milk bottle, aseptic box and stand-up pouch and will make museum pieces out of gabletop cartons, cans and many other packages. BY DAVE FUSARO, EDITOR IN CHIEF, AND JUDY RICE, CONTRIBUTING EDITOR

8THINGS EVERYBODY WANTS There’s probably no more critical or far-reaching issue right now than healthier foods. BY DAVE FUSARO, EDITOR IN CHIEF

9 ECONOMIC AND POLITICAL TRENDS IMPACT FOOD Terrorism, economy, energy costs weigh on processors.

9 GROWING DIVERSITY Minority segments of the population are growing faster than whites.

10 LOOK FOR BASE HITS, TOO “Swinging for the fences” shouldn’t come at the expense of hitting singles. BY JOHN L. STANTON, CONTRIBUTING EDITOR

11 DIABETIC DILEMMA Reading food labels for carbs and net carbs, and why there needs to be a difference. BY DIANE TOOPS, NEWS & TRENDS EDITOR

12 A MESSAGE FROM YOUR INGREDIENT VENDORS Ingredient suppliers want to be called into your product development process as early as possible. BY DAVE FUSARO, EDITOR IN CHIEF

13 DIFFICULT YEAR FOR PRODUCT ROLLOUTS Survey finds processors unhappy with 2004 results.

14 DEATH OF THE MASS MARKET There are no more masses, just many smaller markets that demand to be delighted. BY JOHN L. STANTON, CONTRIBUTING EDITOR FP04_WHITEPAPERS.qxp 11/12/04 4:39 PM Page C3

THE DIGITAL RESOURCE OF FOOD PROCESSING MAGAZINE SPOTTING THE NEXT FOOD TREND

15 TASTY PROTOTYPES Suppliers create some wonderful foods for the IFT show, just to sell ingredients. BY DIANE TOOPS, NEWS & TRENDS EDITOR

16 MARKAGING: YOUR IN-STORE SALESMAN The marriage of marketing and packaging creates a powerful tool.

18 FEAR AND OPPORTUNITY IN VENDING MACHINES Who is better suited to solve the obesity epidemic than the food industry? BY DAVE FUSARO, EDITOR IN CHIEF

19 LAY A LITTLE LOW-SUGAR ON ME, HONEY Barry Sears, author of the “The Zone” low-carb diet book, was the keynote speaker, and his session was packed. BY DIANE TOOPS, NEWS & TRENDS EDITOR

20 CONSUMER PERSPECTIVES ON OBESITY Current messages on weight management are not working.

20 PORTABLE FOODS MOVE SHORT DISTANCES Most on-the-run meals are eaten in the home.

21 PRODUCTS THAT CREATE BUZZ IRI identifies pacesetters and transformational new products. BY DIANE TOOPS, NEWS & TRENDS EDITOR

22 TEENS SEEK HEALTHIER FOOD OPTIONS Teens may say they are giving up junk food, but they rarely mention substitute snacks. BY DIANE TOOPS, NEWS & TRENDS EDITOR FP04_WHITEPAPERS.qxp 11/12/04 4:39 PM Page 1

PRODUCT DEVELOPMENT ELECTRIFIED Our R&D readers predict 2005 will be a year of truly novel new products backed by slightly higher budgets. BY FRANCES KATZ, SENIOR TECHNICAL EDITOR

The key word for R&D in food companies is more: more new products, more product improvement, more attention to regulatory detail, more variety, more excitement, and in some cases, more hands to share the burden.

Despite concerns about terrorism, their own jobs and the economy, almost 42 percent of the research and development officials who answered our 33rd annual Top 100® R&D Survey were able to add at least one person to their R&D department in the past year. Roughly 19 percent lost at least one person from the department, and about 39 percent remained the same.

Our survey was sent to all companies in the Food Processing Top 100® list of the largest food and beverage processors in the U.S. and Canada. Recipients were vice presidents of research and/or R&D, research directors, directors of quality control/assurance and managers of specific research projects. It was circulated in August and September, about the time most were heading into their companies’ last fiscal quarter with a pretty clear picture of where R&D would end up in 2004 and where the budgets would take their departments in 2005. A total of 250 surveys were sent out; 109 were returned, representing 87 of the Top 100® companies.

In addition to an extra body or two, it found research departments: • Focusing on truly novel products rather than safe line extensions. • Coping with shorter development cycles. • Making more use of outside resources, especially supplier expertise. • Expecting to develop more products next year than this year.

But not everyone sees more. Kraft served notice at an investor conference in early September that it will be crafting fewer but more novel new products. “While we remain focused on driving out costs through productivity, the key to delivering sustainable earnings growth over the long-term in the food industry is consistent revenue growth,” said Roger Deromedi, CEO of the largest U.S. food company. “To that end, we continue to evolve our new product development process by focusing on fewer, bigger and better ideas and improving our speed of execution.”

Kraft has always formed close alliances with its select suppliers and has always had a fairly formal product development process. The number of new products on its plate is daunting, and the company’s interest in organic products, revealed by Deromedi at that conference, will further strain resources.

STILL TEAMS, BUT MORE VIRTUAL The product development process, for Kraft and for most other large food companies, involves several departments and includes some international activity and outside suppliers, as well. But the process has changed somewhat, especially in the past year or two.

The concept of teams has been around for decades. As they evolved, these teams have become more wide ranging - cross-functional - but also virtual. Members in many of these groups no longer pick up a team notebook and attend a meeting. But these in-person or virtual members represent not only research but also (in descending order) marketing, plant operations/engineering and finance.

These collaborative teams have adopted a mind-set that takes them from the business of the team to the business of the firm. This means that a number of the R&D staff are no longer, strictly speaking, strictly food scientists. As they pick up additional credentials, those credentials are often in marketing, finance, engineering or information technologies.

The backbone of the team remains a group of similarly minded individuals who have to invent a product or fix a problem. About 85 per- cent of the groups use teams for cost cutting. About 60 percent use teams for improving product quality, with shelf-life extension an often- cited goal. Teams also are put to work for developing product prototypes (20 percent) and even developing package design (22 percent).

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Teams or alliances are formed according to their uses. About half of the companies we surveyed use more formal organizations, with all team members starting work on a given project at the same time and continuing through a pre-decided end-point. The other half general- ly phase in various disciplines as needed.

With so many different personalities from different backgrounds, the true R&D people we surveyed lodged an occasional complaint about personality difficulties on teams, but the members generally noted they worked things out … usually.

Our survey also looked at how R&D personnel see their companies. We asked section leaders, research directors and chief research offi- cers whether their companies are primarily technically oriented, marketing oriented, manufacturing oriented or finance oriented.

Most of the research managers say their employers primarily are marketing oriented. Companies that are global, and especially those headquartered in Europe or Japan, generally feel their companies are financially oriented. The 10 percent of companies that are smallest in shipments generally believe their companies are manufacturing oriented.

Most of the research departments report to the CEO of the company or to the general manager of an individual operation. But 9 percent of the respondents report to marketing. If research occupies different positions within companies, its functions change, too.

We asked which activities were considered part of R&D. Of course, 100 percent say they primarily are involved with product develop- ment, but about 72 percent of the departments included pilot production, and 56 percent included initial plant production. Sixty percent of the departments have partial responsibility for regulatory activities, and about 17 percent have some responsibility for market research. Often, the top research officer or a representative is involved with strategic activities, but generally not as a representative of the research department.

Most research departments prefer to hire people with at least a bachelor’s degree. Larger companies hire master’s-level personnel, and quite a few hire more Ph.D.s. The supplier community, especially, seems to hire Ph.D.s in preference to others – quite possibly because most retail and foodservice companies ask for technical assistance from their suppliers. Technical assistance has gotten more complex and companies need it faster, so more basic research is required to solve complex problems quickly. But most research directors and vice presi- dents of research are Ph.D.s, or at least master’s-level scientists with experience, sometimes plus an MBA.

While research departments generally are growing in head counts, they also are taking on more responsibility and generally doing more. Seventy-four percent of the respondents expect to be asked to develop more products this year than last. Only 19 percent think they’ll develop fewer products.

SHORTER AND ALSO LONGER TIMES The development time for new products overall appears a little shorter than in our previous surveys - paradoxically, there also was notable growth in projects that take a full year. With 68 percent of respondents attacking a portfolio of new products (which scatters development times somewhat), 18 percent of the R&D teams say “most” of their products are developed in about three months (that number was 5 per- cent in last year’s survey), 14 percent of teams are wrapping up products in six months, another 14 percent are ready to launch in nine months and 54 percent have the luxury of working a whole year on a new product.

That increase in the full-year development process is explained by a number of research directors who tell us they are looking for more “outstanding” products, with clear differentiation from the mass number of new products. “We’re looking for home runs,” notes one research director, “products with technical content that can’t be reproduced immediately by competitors. It costs too much to make little products. They should be blockbusters that will be around for a while.”

So, how do you build a blockbuster? Most of those R&D teams get some help, not just internally but also from outside the company. Every firm surveyed said it will call on suppliers for higher levels of support this coming year. (Supplier companies say they expect this, and may prioritize assistance for customers. Criteria for prioritization are complicated. Some say prioritization will be by special agree- ment, such as if the vendor is a preferred supplier, by profitability or by other financial relationships.) When asked which organizations provide the most help in product development, 100 percent of the companies say they depend on suppliers, 62 percent depend on aca- demic institutions, 32 percent on government agencies, 32 percent on industry and society meetings, and 62 percent depend on patent information. Consortiums are helpful to 30 percent of companies, and journals and trade publications are used by 48 percent.

While money has been tight during the past few years, a few companies have increased the size and complexity of their research cam- puses. H.J. Heinz Co. recently announced plans for an expanded international research and technical facility, moving the Heinz Food Innovation and Quality Center - also known as the Heinz Food IQ Center - from downtown Pittsburgh to a suburb in mid-2005. It will focus on a broad range of products, including frozen foods and soups.

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“The 100,000-sq.-ft. facility will become our international center for food and nutrition research, hosting some of the world’s leading experts in nutrition, cuisine, quality assurance and product and packaging design,” according to Heinz Chairman William Johnson.

While money remains tight, capital equipment budgets don’t look as squeezed as they did at this time last year, respondents indicate. With a little more money in hand, companies and departments are looking ahead and, especially when planning for capital equipment, they try to predict the general types of products and projects they will be working on.

A whopping 98 percent plan to be more involved with developing healthy products, while 82 percent expect to modify or reformulate existing products. Then there’s the drudgery: 88 percent expect to be more involved with regulatory questions and 44 percent will be attending to online analysis (see infographic).

THE CRYSTAL BALL FOR ‘05 One interesting outgrowth of this question is that fewer companies expect to be doing more line extensions - a two-thirds drop from last year’s responses. In several phone interviews, it became clear a growing number of companies have limited interest in line extensions any- more.

While the timeline for new products has shortened and line extensions once were viewed as quick and safe base-hits, R&D teams and their upper management appear to have decided that endless line extensions cannibalize product lines and squeeze shelf-space. They are clearly looking for better products that will have longer life cycles, and they believe enhanced technical content staves off immediate com- petition.

On the other hand, some companies that have recently taken over smaller processors are still in the line-extension business, especially if the products gained from the smaller firms have strong brand name recognition and few extensions. Of the companies in the upper 30 percent (based on sales), all had bought another company within the past few years and are in varying stages of absorbing the new mem- bers of these acquisitions.

Polishing their crystal balls, the R&D officials we surveyed have some definite ideas about what products would be popular in five years. We asked about new ethnic foods, microwavable foods, fortified foods, functional foods, reduced-fat foods, reduced-carb foods, fat-free foods and “natural” or “wholesome” foods. While most of the companies indicate their portfolio will include numerous new food types, the exceptions were most informative.

Less than 20 percent of the respondents believe they will be working on reduced-fat or fat-free foods. When questioned, several of the respondents say lipid technology is more likely to involve fatty acid ratios than fat content per se.

While nearly 60 percent of the respondents expect to be working on lower-carb foods, several comment that the quality of carbohy- drates was more likely to be front and center than quantity of carbs, at least for longer-term development.

Microwaveable foods are on the drawing board for about half of the companies, but microwaveability seems to be a packaging concept instead of being a primary descriptor. Functional foods evoke more interest than fortified foods. Said one research director, “If we’re forti- fying, it’s more likely that we are aiming for a structure-function claim than a straight fortification concept.”

A question that we didn’t ask was the impact of nutrition policy. Nevertheless, an unsolicited comment describes this new concern, pos- sibly triggered by the new Dietary Guidelines draft. “We’re looking for products that narrow the gap between what consumers like to eat and what they know they should eat,” comments the technical director of a large food company. “We think consumers are ready for those products that assist their health, but taste good enough to eat every day. Especially if they’re very, very convenient.”

Healthful, tasty, convenient. That’s all it takes.

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PROFIT IN BATTLING OBESITY Every 1 percent change in what America eats represents a $1.5 billion market. BY DAVE FUSARO, EDITOR IN CHIEF

Lest anyone think obesity is solely a liability for the food industry, an assortment of food industry experts, including one Wall Street food analyst, said there’s big money to be made in helping Americans fight the battle of the bulge.

“Everyone knows fat’s bad. The problem’s been identified since 1955. It’s time we did something about it,” G. Leonard Teitelbaum, a managing director and food analyst at Merrill Lynch, said during a panel discussion at July’s IFT meeting and expo in Las Vegas. “Obesity and the food manufacturer” was the title of the session, and the panel included representatives from Atkins Nutritionals, McDonald’s Corp., Irwin Broh & Associates, Pepsico/Tropicana and our own Market View columnist Professor John Stanton.

Teitelbaum said food companies that have made healthy eating a part of their strategy have done well in the stock market. He singled out Campbell Soup, ConAgra, Dean Foods, General Mills, Heinz and Kellogg. Teitelbaum also noted there’s a huge opportunity in chang- ing consumption patterns. “Every 1 percent change in what America eats represents a $1.5 billion market,” he said.

Nancy Green has the interesting title of vice president of nutrition technology at Pepsico/Tropicana. She noted that obesity is a problem throughout the world, not just in America, and predicted, “Wellness will be the single largest growth driver in the food industry. The chal- lenge is making it easier and more rewarding.”

Pepsico has numerous wellness initiatives and product developments under way. In fact, the company for several years has been build- ing a better-for-you portfolio, having added such “healthful” brands as Tropicana, Quaker Oats and Gatorade.

Cathy Kapica, director of worldwide nutrition at McDonald’s, said her company is responding with more salads, adult “happy meals” that are carb- and calorie-conscious, apple slices as a dessert option and 1 percent milk in resealable plastic bottles. She also promised a slimmer Ronald McDonald and said McDonald’s is stepping up efforts to print nutritional information, largely on tray liners.

Obesity is a problem and a challenge, to be sure. But some food processors are seeing the silver lining and turning this problem into opportunity.

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CHANGING THE FACE OF FOOD PROCESSING The shelf-stable milk bottle, aseptic box and stand-up pouch and will make museum pieces out of gabletop cartons, cans and many other packages. BY DAVE FUSARO, EDITOR IN CHIEF, AND JUDY RICE, CONTRIBUTING EDITOR

Credit Napoleon for all these wonderful food packages.

As the Little Corporal and later emperor remarked, “an army travels on its stomach.” Neither his soldiers nor their stomachs were doing so well in 1795 when a lack of safe food put his world conquest plans in jeopardy. But Parisian Nicholas Appert claimed a government reward when he came up with the technique of canning (or retorting, essentially, since he first used glass containers). Napoleon’s fortunes improved, as did Appert’s.

Indeed, much of the world exploration of the late 18th and early 19th centuries may not have been possible without the subsequent advances in the preservation and packaging of food, headlined by names like Louis Pasteur and Englishman Peter Durand.

Some may argue the rate of technological change in food packaging has slowed in the past couple of decades. But packaging innovation does live on. It is especially evident this time of the year with the annual co-located shows Pack Expo and Food Processing Machinery Expo plus a handful of end-of-year packaging award programs.

Food processing and marketing often are only about the food itself. But packaging, as any astute marketer will tell you, is a vital part of the equation. And in the case of the three packages we’ve picked for this cover story, the packaging is revolutionizing the food inside and the way it’s being marketed.

MILK IN A RAINBOW OF FLAVORS Milk has always suffered from schizophrenia, along with delusions of grandeur. “Nature’s perfect food” on the one hand was considered such a critical commodity that the same government-established standards of identity that ensured its purity and (pardon the pun) homo- geneity also restrained it for years from stretching out into new directions.

While its packaging made leaps from glass to paper to plastic, some would argue those advances actually set back some of the freshness in its taste and its shelf life. As for flavor experimentation, chocolate certainly is an established flavor but even widely accepted strawberry, stuck for a couple years at just 4 percent market share, seems like a crap-shoot to some milk processors. Egg nog is economically viable only in short runs for the holidays.

What about vanilla, America’s favorite ice cream flavor, as a milk option? How about banana or orange creamsicle? Why not root beer and pina colada?

Why? Because processors could not economically make them in short runs, and retailers could not sell enough of them within milk’s traditional 14-day shelf life. But what if milk could last for months? Maybe even a year?

For decades in Europe a large percentage of the milk had been sold in shelf-stable, aseptic boxes. In part this dated back to many coun- tries’ less prevalent use of refrigeration, from the distribution channels right through to homes. Shelf-stable milk could be shipped at ambient temperatures and stored similarly, by retailers or by consumers, then chilled before use. Shelf life typically was six months.

The higher temperature needed to sterilize this milk gave it a cooked or even burnt taste, many first-time tasters say. While there were several attempts at similar packaging and processing in the U.S., it never caught on.

Meanwhile, here in the U.S., several consecutive years of declining milk consumption spawned category-wide marketing programs (Milk PEP’s Milk Mustache campaign and Got Milk?). Not only did they re-establish the numerous benefits of gallon-milk, but they began to promote single-serve milk as a viable, even hip, beverage option. However, one of the first obstacles was to take single-serve milk out of

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the unresealable, unattractive little gabletop cartons and put it in sleek resealable plastic bottles. Although it still came only in white and chocolate, milk began fighting back.

The two technologies converged at the turn of the millennium when four European machinery-makers created systems to take Euro- pean-inspired shelf stable milk and put it in American-inspired single-serve plastic bottles. It would be an expensive and arduous task to be the first company to prove to the FDA that such milk was safe. When consolidation in the dairy industry finally produced a billion-dol- lar national milk company, that company, Dean Foods, took up the task.

Further armed with contracts to bottle Hershey’s chocolate milk and shakes and Folgers Jakada coffee-milk drink, Dean in December 2001 applied for FDA approval to distribute and sell its milks warm or cold with 180 days shelf life. Both products are in high-density polyethylene bottles with special barrier layers.

FDA approval came in 2002. Despite their heavyweight brands, Hershey’s milks and Folgers Jakada are in pitched battles with entrenched category leaders (NesQuik in milk and Frappuccino in coffee drinks). But their aseptic packaging is providing a leg up.

The Dean equipment reportedly is from Stork Food & Dairy Systems, the American subsidiary of a German company. Similar systems are available from Serac, Sidel, Tetra Pak and Krones.

A few other dairies have similar filling and packaging technology and also are moving toward officially stated 180-day shelf lives, and perhaps shelf-stability, as well as unusual flavors. The day may come soon when you can buy at Sam’s Club a 24-bottle case of single-serve milk bottles in a rainbow of flavors and keep them in the garage unrefrigerated until just before use.

(Dean Foods declined to be interviewed for this story.)

STAN D-UP POUCHES’ SHOTGUN APPROACH Aseptic boxes have a dead bead on cans, and shelf-stable milk bottles are taking aim at gabletop milk cartons and simple plastic bottles. But no new packaging technology is cutting such a wide swath as stand-up pouches. Cans, cardboard boxes, even other pouches are falling victim to this packaging juggernaut.

Stand-up pouches (SUPs) have come a long way since their U.S. debut in 1981 as the innovative package for Kraft’s Capri Sun juice drink. Even with that history, they remain a relatively novel package with consumers while becoming an increasingly familiar one with food and beverage processors, who appreciate this high-profile container with excellent versatility. They boast unique, consumer-appeal- ing appearance, ability to incorporate eye-catching, billboard-type graphics, recloseability and easy portability.

SUPs are capable of holding a full range of wet and dry products - from snacks, candies and cereals to rice/pasta/vegetable meal kits and cake/cookie mixes to cheeses, meats and pet foods to beverages, soups and sauces.

Based on their customized construction, they are adaptable to a range of temperature tolerances, including retort processing.

SUPs also can offer excellent barrier properties for gas-flushing and other modified atmosphere packaging applications to extend prod- uct shelf life. And they can be produced in both clear and opaque formats, sometimes with customized handles and pouring spouts, in a range of specialized shapes, depending on user requirements.

For clear SUP applications, Kapak Corp., Minneapolis, offers the FlexiBowl, adaptable for both retort and non-retort products. Flexi- Bowl can be custom-produced in a range of laminations and barrier structures to satisfy specific product needs and can be printed in up to eight colors. Sizes range from single-serve to 2-lb. foodservice packs. Precise laser scoring enables easy removal of the peel-strip without use of knives, scissors or other utensils to create a stable-standing “bowl” ready for microwave heating.

In terms of packaging speeds, packaging equipment technology advances also are making the SUP more attractive. And more contract packagers are offering SUP packaging services for processors who prefer not to invest in their own stand-up pouch packaging machinery.

While stand-up pouches provide a lighter-weight, freight cost-saving, disposability space-saving alternative to some other packaging types, one drawback has been their inability to be stacked during shipment, storage and in-store shelf display. UK-based Amcor Flexibles, working with German packaging machinery manufacturer Rovema, responded to that problem with the introduction of FlexCans - easy- open, recloseable stand-up pouches with flat-top nestable/stackable panels. Their stiff structure comes from a three-ply laminate of orient- ed polypropylene, metallized polyethylene terephthalate and lapseal polyethylene. The British sun-dried fruits and nuts company Sundora already is using the Amcor FlexCan to package dried fruits.

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THEENDOFTHEAGEOFCANS? Cans have reigned as a premier food package since the early 1800s. But Hormel and Stagg chili cans already are heading for the museum, and others may be on the endangered species list, ousted by a little cube of foil and paper with a tear-off top.

The new Recart retortable carton from Tetra Pak (www.tetrapakusa.com), Vernon Hills, Ill., is poised to challenge retort pouches, rigid retortable plastics and conventional metal cans and glass jars. This six-layer, cardboard laminate structure, incorporating polyester and foil, essentially is a cross between the retort pouch and Tetra Pak’s groundbreaking aseptic box of more than a decade ago.

The Institute of Food Technologists (IFT) recently honored the Tetra Recart retortable carton packaging system with the Industrial Achievement Award. IFT views the Recart as an outstanding development that represents a significant advance in the application of food science and technology to food production.

It also has won a host of other packaging awards in the past several months since it was unveiled.

The Tetra Recart allows for ambient distribution and merchandising and is lighter and easier to stack than cans or glass jars, the compa- ny claims. The unique shelf impact and graphics capabilities of the Recart give marketers a practical package for product updates and new product launches. The production capacity of Tetra Recart is similar to that of modern canning lines, running at speeds up to 24,000 pack- ages per hour.

The Tetra Recart couldn’t have found a better mentor for its launch. Hormel Foods Corp., long a supporter and co-pioneer of retort packaging, helped introduce shelf-stable, single-serving retorted plastic cupped/bowled products to American consumers a few decades ago. The Austin Minn., processor just finished test marketing of its Stagg and Hormel brands of chili in the Tetra Recart and now is rolling national, converting all its chili products from metal cans to retortable cartons under the name “Smart Pak.”

The 14.3-oz chili cartons are laser-perforated for easy opening - needless to say, they don’t require a can opener. Their cube shape is easily handled, stackable and space-efficient. They are batch retort-sterilized at rates of about 24,000 packages per hour, rendering them shelf-stable for 24 months.

Because of the foil layer (also present in most retort pouches), the retorted carton is not microwaveable. Microwaves cannot penetrate foil or metal. This presents a consumer-convenience disadvantage over retortable plastic cups and bowls. However, consumers can easily transfer the chili to a microwaveable bowl or stove-top heating pan and then reclose the carton to refrigerate unused portions.

In addition, the lightweight, rectangular cartons offer logistical advantages for shipping weight/space efficiencies, as well as for in-home and in-store storage. “One truckload of these blanks equals 19 truckloads of empty cans,” says Steve Hellenschmidt, Tetra’s general man- ager of the Recart line. “About 985,000 of these blanks can fit in a tractor-trailer. They weigh 18 g empty versus 56 g for a can. And for the retailer and the consumer, three of these fit in the same space as two cans, with a much better billboard effect.”

The cartons are recyclable in existing milk carton/juice box recycling streams.

“Our consumer research showed a clear preference for this new packaging concept,” says Larry Vorpahl, vice president and general manager of grocery products for Hormel. “The Smart Pak carton offers consumers a variety of advantages, including portability, easy opening and pouring, and convenient, space-saving stackability in kitchen cupboards. We are pleased to be the first to offer such innova- tion in the category.”

BUT THE CAN FIGHTS BACK This little beauty already made our cover in May when we wrote about innovative food products from small companies, so we felt bad about featuring North America’s first reclosable can twice. But it is the first significant development in cans in many years, and it addresses two of their shortcomings.

The Dot Top can actually was discovered in Brazil by Silgan Containers (www.silgancontainers.com), Woodland Hills, Calif., now the U.S. supplier. The can was created by Metalgrafica Rojek. The key to the three-piece can is the lid. Similar to a jar lid, it’s held on by a vacuum. A plastisol membrane about the size of a dime covers a 1/16-in. hole. When the “dot-top” membrane is peeled back, the vacuum is broken and the can is easily opened. It requires no can opener to open it. If only part of the contents is used, the lid can be snapped back on with a little downward pressure.

Hirzel Canning, Toledo, Ohio, is the first company to use it: for its Dei Fratelli Presto brand of pizza sauce and Italian dip.

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THINGS EVERYBODY WANTS There’s probably no more critical or far-reaching issue right now than healthier foods. BY DAVE FUSARO, EDITOR IN CHIEF

I gave a presentation in September to the annual meeting of the Food Processing Machinery Assn. on trends in the fruit and vegetable category. While both the subject and the audience are pretty narrow niches and may not apply to many of our readers, the four trends I came up with are universal.

Food safety. For the past three years, we’ve conducted a manufacturing trends survey, and all three years food safety came in at No. 1. This past year it was named the top concern by 63 percent of respondents, nearly triple the next closest subject: labor.

I don’t think it keeps food people up at night. It’s not on their to-do list when they show up for work on Monday morning. But when it does come up in the course of doing business, it usually comes up for the wrong reason. And at the time it comes up, it’s probably already at least a near-crisis situation. A lot of little things may slowly drive food processors out of business, but having a food safety problem could drive you out of business overnight.

Convenience. This has always been an issue in food, but I think it’s becoming bigger all the time as our lives get more hectic. Address- ing this issue is essential to your survival, but it also has the potential to be hugely lucrative. Think of the bagged salad category, I told the audience. It came out of nowhere to become a $3.2 billion category, as of 2003.

Variety. For the FPMA attendees I talked of “bundling” different types of fruits or vegetables with each other. As the American palate gets more adventuresome and more traveled, people want new and different. There will always be staples, and people will always have favorites. But I think I’m noticing more and more people like me who are eager to try something they haven’t had before, who are going to order that oddball item off the menu, even at the risk of being disappointed.

Healthier foods. This is a huge trend for the snacking categories and also for school vending machines. But with the tinkering going on with the Dietary Guidelines pyramid and the lingering success of low-carb diets, healthier eating is impacting every food category. Some- times it seems the entire country is obese, so there’s probably no more critical or far-reaching issue right now.

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ECONOMIC AND POLITICAL TRENDS IMPACT FOOD Terrorism, economy, energy costs weigh on processors.

“Understand the major macroeconomic and political trends, listen to your customers and make strategic changes to the way you do busi- ness,” Philip Kuehl, senior staff consultant for Westat, told food industry suppliers at September’s annual conference of the Food Process- ing Machinery Assn.

Kuehl said macro trends impacting the food industry include terrorism, an uncertain economy, the high cost of energy, industry consoli- dation, product liability issues and escalating health care and insurance costs. Food industry suppliers should look for ways to help their customers deal with these issues.

Consumer trends that are impacting the customers of FPMA members, Kuehl said, include demands for safer and healthier products, growth of away from home consumption, demands for convenience, popularity of “fresh” and the growth of ethnic foods.

Kuehl concluded by discussing a major trend that impacts all industry sectors: workforce recruitment challenges. The strategic implica- tions for suppliers are: • Operators employed in customer plants may not have the technical skills and education for proper machinery operation. • Many customers have purged their engineering talent and look to their machinery suppliers to fill the void. • Available pools of workforce talent will be increasingly diverse.

Our own Editor in Chief Dave Fusaro also spoke, telling the attendees “Four consumer trends you can help your fruit and vegetable suppliers capitalize on.” They were food safety, convenience, variety and healthier snacking, especially for children in school.

GROWING DIVERSITY Minority segments of the population are growing faster than whites.

The nation’s population will rise 49 percent to 420 million by 2050, and Americans who are white but not Hispanic will make up only half the total, according to new projections by the Census Bureau.

The projections suggest that whites who are not Hispanic - the dominant population group since the nation was founded in 1776 - will see their share of the population drop from 69 percent in 2000 to 50 percent in 2050. In 1950, the share for whites was 90 percent. Americans will get grayer by 2050, too. Nearly 21 percent of residents will be age 65 or older, compared with 12 percent now.

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LOOK FOR BASE HITS, TOO “Swinging for the fences” shouldn’t come at the expense of hitting singles. BY JOHN L. STANTON, CONTRIBUTING EDITOR

A friend of mine did a consumer research study on grocery store customer service. He asked customers what was really most important to them in terms of what would make them shop at that particular store more often. He expected them to say things like a smiling staff, cour- teous personnel and the things that make a store friendlier. He was surprised by the results. Consumers seemed to want only the most basic things. They wanted the store to open when it said it would open; have products on the shelves and not out of stock; scan prices cor- rectly; make sure sale items are available; and, most importantly, not to have to wait in line to pay. It wasn’t the sophisticated things the consumers wanted; it was the simple things.

A large wholesaler had a meeting with its sales force to explain a new strategy. It was well-thought out and even interesting to the sales force. But during Q&A, one sales person said, “Before we try this new approach, could we just try to get the orders correct and on time?”

Management guru-author Tom Peters once said marketing is just finding out what people want and giving it to them and doing it right the first time. Not only does failing to perform the basics hurt a company’s reputation, it also hurts the bottom line. The costs of following up, sending special deliveries, losing sales and correcting out-of-stock backlogs are huge in our business.

There are other examples of how we make our businesses more complicated than they need to be. Not the least of which is the high new product failure rate, which speaks to the manufacturers’ inability to know what consumers want. Have we tried to show how smart we are with these fancy plans and strategies? How can we be so far off?

Why do we try so hard to do the fantastic things and yet fail to deliver the basics? I believe the reason is we all want to hit home runs. We want to “go for the fences,” as they say in baseball. There is nothing wrong with developing the next blockbuster product, but there is something wrong with a process of doing business that tries to get the big hits at the expense of the singles.

I once worked on a project for a food retailer that wanted to improve store sales and profits. The company created an elaborate internal incentive program that involved store managers improving on 18 different performance measures, most of them very complicated. Store managers just rolled their eyes when the program was introduced. “Here we go again,” you could imagine them saying. You might have guessed there were no measures for cutting checkout time.

There is a reason why sports teams continue to practice the basics, including bunting and base-running, every week during the season. Even the perennial league leaders. They realize any team can become so engrossed with the excitement of the game that they fail to per- form the basics correctly. We need to follow the same plan. We need to improve basic execution and work on getting the small things right. There is so much excitement and involvement in looking for the next big ideas - be they new products or new distribution channels - that we can be distracted from the small things that make our businesses work.

Even when we hit home runs, we can’t stop practicing. I recall a company that co-marketed a “big idea” food product, a product so good it was voted new product of the year by some group. The product exceeded both profit and sales projections. However, by the time year three came around, its sales and profits became “expected” while the management team was off looking for the next growth vehicle. Did consumers stop desiring the product they had once loved? I don’t think so. It was the management that lost its passion for the old star. Rather than cut off the relationship, managers simply failed to keep up the maintenance on it.

This was not bad in and of itself, but that earlier success was no longer receiving the attention it needed. Soon this former “new product of the year” had sagging sales. Then its advertising budget was cut a little to accommodate the next star. Eventually, it became a has-been.

An astute scholar once said, “It is more important to do 100 things 1 percent better than to do one thing 100 percent better.” Basic exe- cution of the simple things makes it possible to do the great things.

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DIABETIC DILEMMA Reading food labels for carbs and net carbs, and why there needs to be a difference. BY DIANE TOOPS, NEWS & TRENDS EDITOR

Whether low-carb is a fad or a trend is debatable. But an estimated 27 million people on the Atkins and South Beach diets and 70 million who informally limit carb intake keep a watchful eye on the number listed on the Nutrition Facts Panel.

A friend recently lamented that he was confused by the difference between carbs and net carbs and the definitions of low impact, glycemic and non-glycemic carbs. His is not a trivial concern, because he’s one of 18.2 million Americans (or 6.3 percent of the popula- tion) with type-2 diabetes.

Since carbs are not alike, National Starch & Chemical Co., Bridgewater, N.J., has petitioned the FDA to separate dietary fiber from the total carbohydrate declaration on the Nutrition Facts label. It wants to differentiate glycemic/non-glycemic carbs so consumers can make better-educated food choices.

“In general, carbs can be divided into two categories: those digested in the small intestine (sugars and starches) and those which are not (fiber),” explains Rhonda Witwer, business development manager of nutrition. “Sugars and most starches are rapidly digested to glucose and absorbed, and subsequently used for short-term energy needs or stored. They are considered available, digestible and glycemic carbo- hydrates.”

Fiber passes through the small intestine and provides no short-term energy, says Witwer, “but it has a variety of physiological effects in and emanating from the large bowel. Fiber is a non-glycemic carbohydrate. Separating dietary fiber from total carbs would differentiate glycemic (‘available’ carbs that contribute to blood sugar) from non-glycemic carbs, a distinction especially important for diabetics, as it can significantly change how much insulin they utilize,” she emphasizes.

“There’s not a standardized or regulatory definition for ‘net’ carbs, but this term is being used on food labels to indicate the amount of glycemic or ‘available’ carbs,” continues Witwer. “Other phrases describe the same value - impact carbs, sugar carbs, net digestible carbs, glycemic carbs, etc. I prefer ‘glycemic’ carbohydrate; it’s scientifically based and may be more understood within industry and health care professionals.”

Current recommendations for diabetics from the American Diabetes Assn. are: “If a food has 5 g or more fiber in a serving, subtract the fiber grams from the total grams of carbohydrates for a more accurate estimate of the carbohydrate content.”

“ADA is in the process of updating their position statement on carbs (due to be published this fall) and will acknowledge that the type, as well as the quantity of carbs, should be taken into account when considering carb content,” says Witwer.

“Low-carb diets focus on reducing glycemic carbs as a way to help dieters control their appetite and limit their feelings of hunger,” says Witwer. “It’s much easier to limit food when you aren’t hungry. Rapid rises and declines of blood sugar contribute to increased food con- sumption and increased hunger.”

But the benefits of glycemic moderation extend well beyond weight control. “Consumers feel dramatic swings in energy when they eat high-glycemic as compared to low-glycemic foods,” says Witwer. “Consuming moderate or low glycemic foods can help maintain more consistent levels of energy throughout the day. Studies show eating reduced glycemic foods may reduce the risk of diabetes, cardiovascular disease, cancer, as well as obesity. Thus, consumer-driven as well as health-related concerns support distinguishing between glycemic and non-glycemic carbs.”

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A MESSAGE FROM YOUR INGREDIENT VENDORS Ingredient suppliers want to be called into your product development process as early as possible. BY DAVE FUSARO, EDITOR IN CHIEF

The Institute of Food Technologists’ annual meeting and expo is a great place for the product development folks in our readership, partic- ularly the food chemists, to meet and learn the latest from their ingredient suppliers.

Despite the obvious interaction between food processors and suppliers, I provoked the ingredient vendors a little further to ask them what points they’d most like to drive home - with the attendees at IFT and with those in our readership who didn’t make it to IFT. Here are their top four suggestions.

1. Call us into your product development process as early as possible. “Ingredient suppliers have technical expertise not only on their own ingredients but often on many food applications,” says Rudi van Mol, group VP-marketing & strategy at SunOpta Ingredients. “The more [food processors] are willing to share objectives for new applications with ingredient suppliers, the more they could be surprised with how much ingredient suppliers can help them.”

Don’t forget, some of these ingredient suppliers are bigger than you are. “At ADM we have an enormous portfolio of ingredients at our disposal, so we have a great understanding of the interaction and functionality of different ingredients within a food system,” adds Graham Keen, vice president-corporate marketing for ADM.

2. Consider ingredients that offer multiple benefits and functionality. “The best food ingredients not only provide brand-enhancing ben- efits like an appealing look, taste and real nutritional value, but also help to ensure ease-of-processing, good taste and food stability,” says Wendy McCall, food and beverage global marketing manager at Eastman Chemical Co. “These ingredients can really help food processors and brand owners to build and maintain consumer loyalty.”

3. Don’t be afraid to bring other disciplines into the ingredient-specifying process. A number of exhibitors said they would welcome the chance to talk not just to the R&D folks but also to finance, plant operations and other departments. “Marketing shouldn’t be afraid to interact with ingredients suppliers,” suggests Joe Lombardi, marketing programs manager for food ingredients at National Starch. “Bring- ing marketing into the discussions with ingredients suppliers would allow for the development of far more innovative ingredients solutions, enabling you to create greater consumer differentiation and value in your new products.”

4. This final one is solely from Lombardi again, and it’s a gem: “You can’t win by matching the other guys!” he says. “Allow ingredients suppliers to help you define your target consumers’ preferred products.”

These firms have built up a lot of internal smarts and they’re dying not just to make the sale but to impress you with all they know. Put them to use.

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DIFFICULT YEAR FOR PRODUCT ROLLOUTS Survey finds processors unhappy with 2004 results.

Food and beverage industry executives are less optimistic about the sale of their products in 2004, despite successful rollouts in 2003, reports the first Grant Thornton Survey of U.S. Food and Beverage Companies.

According to the survey, taken between March and May of this year and released in August, 53 percent of respondents foresee difficulty in the rollout of their products over the next 12 months. However, when asked if their company had difficulty in their 2003 rollouts, 48 percent of respondents attest they had not, while only 29 percent say that they had.

“Consumer loyalty is much lower than in previous years. This lack of loyalty is motivating food and beverage companies to introduce products faster and sometimes with shorter lifecycles,” says Dexter Manning, Grant Thornton consumer and industrial products industry partner. “New product introductions are targeting various consumer groups, such as Boomers, Gen X, Gen Y and ethnic groups, instead of the general public as a whole.”

A factor contributing to doubts is the unstable commodities market. Over the past five years, commodity prices have soared thanks to foreign demand, droughts and unusual crop situations.

A total of 152 companies responded to this survey of U.S. food and beverage companies commissioned by Grant Thornton LLP, a world- wide but Chicago-based accounting and business advisory firm.

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DEATH OF THE MASS MARKET There are no more masses, just many smaller markets that demand to be delighted. BY JOHN L. STANTON, CONTRIBUTING EDITOR

In the July 12 issue of Business Week the cover screams, “The Vanishing Mass Market.” While I have a lot of respect for Business Week, the mass market was gone years ago. Marketing cannot be about providing products for the masses because there are no more masses, just many smaller markets that demand to be delighted.

The concept is really quite simple. Consumers are more demanding. They have much more varied tastes and desires and want products that are perfect for them. They won’t compromise and will spend more to get what they want. At the same time, our manufacturing capa- bilities make possible shorter production runs at lower costs. And we have more targeted media to get the message efficiently and effec- tively to the right consumers.

The clarion call for target marketing has been around for years, and each year the din gets more difficult to ignore as sales fail to keep pace. My book titled Making Niche Marketing Work: How to Grow Bigger by Acting Smaller came out in 1994. Today in just about every business sector you hear executives talking about target marketing. Some call it precision target marketing, niche marketing or micro mar- keting, but in every case the objective is the same. The executive tries to define the consumer very carefully so the company can create a product that meets that consumer’s needs better than any other product in the market.

Food processors are about in the middle of the group of those who have embraced target marketing. Unfortunately, their retail cus- tomers are way behind the ball. The target market for most supermarkets is a consumer with a pulse and a penny. Many supermarkets have made little progress in defining the consumer they wish to pursue. Some food processors have hitched their wagon to Wal-Mart and retailers that have targeted the large lower middle class, but there is more to America.

Look at Procter & Gamble. One might think Tide is a mass-marketed brand. However Tide now comes in 14 different varieties such as Clean Rinse, Deep Clean, liquid laundry, etc. While introducing more varieties, P&G also has cut its network TV advertising by 75 percent while doubling the expenditures on niche markets such as Hispanics. My favorite niche marketer is Marriott, which created many different hotel chains with each targeted to a different consumer: from the long-term guest at Residence Inns to the family on a budget at Fairfield Inns to the upscale Ritz Carlton. Goya made a fortune targeting just to Hispanics, while Robert Johnson became one of America’s richest people delighting the African-American consumer.

Food processors must take some drastic steps to correct this waste of resources. Rather than just giving money to retailers each time they ask for it, manufacturers must “suck it up” and try to help supermarkets enter the 21st century by sharing their knowledge of targeting. I know it won’t be easy. Even though supermarkets are slowly sinking into oblivion, along with department stores and corner drug stores, they think they know it all.

You must make an effort to offer joint marketing programs, education and training programs and not just more money. We all can see the disastrous future for the traditional retailer, while for many food companies this is still the major channel of distribution for their products.

Just look at the quality of the “marketing” done by most supermarket chains. It is generally a full-page ad once a week in the newspa- per listing brands and prices plus an in-store flyer listing brands and prices. Where do we see any development of a store’s differential advantage, or reasons why someone should drive past competition and go to this store (besides price)? Look at how the basic tenets of marketing are applied, such as market segmentation and store positioning.

There are riches in niches for everyone, but to get rich everyone must be on the same page. The market battles between worthy com- petitors are fierce already; why make matters worse by wasting scarce resources? Let’s save our battles for the consumer and her loyalty, and let’s stop the battles within the marketing channel. Or we all will lose.

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TASTY PROTOTYPES Suppliers create some wonderful foods for the IFT show, just to sell ingredients. BY DIANE TOOPS, NEWS & TRENDS EDITOR

Exhibitors at this year’s Institute of Food Technologist’ annual meeting in Las Vegas should consider putting their prototype products directly on the retail shelf or on a foodservice menu.

Although IFT exhibitors are the ingredient suppliers to food processors, some of their creations, often made expressly for the show, taste like they could be hits with consumers.

Low-carb solutions were in abundance. Flavors du jour included cinnamon, lime, mango, chipotle, pomegranate, orange, coffee, tea, coconut and cajeta (AKA dulce de leche or caramel). Asian and Hispanic flavors were everywhere.

Always a trendsetter, Kerry Americas, Beloit, Wis., changed its booth every day to highlight what it called the top three food ingredient trends: impact flavors, managed carbs and simply good. On day one, spicy Moroccan Chicken Croustade with an apricot yogurt sauce made an impact on my taste buds. Santa Fe Omelet Bites in a low-net carb coating (75 percent fewer carbs than traditional coatings) man- aged to inspire my imagination on day two. And it was back for dessert on day three in the form of organic Banana Brulee. There’s no doubt that organic and natural is on the shopping list of growing numbers of consumers.

Wild and wonderful describes the offerings at Wild Flavors, Erlanger, Ky. Organic Thai Sweet Chili on Chips, Pink Grapefruit Orange Wellness Beverage, Citrus Green Tea Vinaigrette, Blood Orange Seafood Ceviche - a bevy of unique foods. I confess I tried to steal a life- time supply of Blood Orange Crème Filled Chocolates but was caught.

Lettuce Tacos Filled with Santa Fe-style Chargrilled Beef and Ham and Cheese Croquettes with Swiss-American Cheese were just two of the delicious options at the Chef’s Table within the booth of Kraft Food Ingredients, Memphis, Tenn. When I die and go to heaven, I’m taking Caramelized Coconut Crème Brulee, made with Baker’s Coconut Concentrates, with me.

Kikkoman’s Glazed Chicken Wings prepared with low-carb (less than 3 grams) teriyaki sauce made my palate take flight. The company’s New Asian Series - consisting of Hoisin Sauce, Thai Style Chili Sauce, Plum Sauce and Black Bean Sauce with Garlic - is available in the supermarket. Incidentally, we learned there is no uniform Tamari Sauce in Japan - it varies by region.

Carrot cake is normally too dull for my taste - I’d rather have double chocolate fudge - but Bugs Bunny and I would pay top dollar for Tabasco Carrot Cake from McIlhenny Co., Avery Island, La.

We loved Blazin’ Lemonade, an unexpected contrast of hot and cold notes in a refreshing beverage. “It’s like combining light and dark,” says James Duffy, Comax Flavors, Melville, N.Y.

The University of Wisconsin product development team won the Almond Board of California’s second annual Almond Innovations Con- test with Almond Cravers. These almond snack chips, made from almond meal, contain no saturated or trans fats and they are yummy. “We wanted to create a nutritious snack; using almonds as a key ingredient made that simple,” explain research assistants, Chinthu Uda- yarajan and Mateo Budinich. “With almond meal as a base, we created a crunchy, healthy chip that was very easy to flavor as a sweet or savory item.”

Speaking of savory, Chef Walter Zuromski at Tic Gums, Belcamp, Md., developed a spectacular tasting Low Carb Broccoli & Cheddar Cheese Soup thickened with gum instead of starch or rue. In fact, this version of the recipe contains 9 grams of net carbs (compared to 23 grams of net carbs in the regular recipe).

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MARKAGING: YOUR IN-STORE SALESMAN The marriage of marketing and packaging creates a powerful tool.

What’s on the outside counts. While your food product inside the package is your pride and joy, the outside of the package goes a long way toward selling the food to consumers. It’s your front-line salesman, the only one you have in the grocery store aisle.

Today’s packaging must do more than merely protect products and enable efficient and effective distribution to customers and end users. With 70 percent of consumer buying decisions made at the retail shelf, according to the Packaging Machinery Manufacturers Insti- tute (PMMI), packaging also serves as critical point-of-sale advertising, helping to increase brand awareness and grab consumer attention.

PMMI has coined the term “markaging” to describe this combination of creative package design with advanced packaging technology. The association calls it “the critical closer at the retail shelf.”

Some recent, highly successful “markaging” approaches could serve as inspiration for a range of different product categories. Sometimes spin-offs of great ideas evolve into products that stand on their own in the marketplace. Consider the marketing impact of the following packaging approaches that have dared to be different.

DARE TO BE DIFFERENT Sherwin-Williams had great success with its revolutionary Dutch Boy paints in the square footprint, high-density polyethylene (HDPE) Twist & Pour container. Cincinnati-based Procter & Gamble adapted the idea for its 2003 introduction of Folgers Coffee in reclosable Aro- maSeal HDPE extrusion blow-molded canisters with molded-in hand grips.

Supplied by Plaxicon/Liquid Container, West Chicago, Ill., the canisters feature injection-molded snap-on lids supplied by Erie Plastics, Corry, Pa., and easy-peel metallized polyester membrane under-cap seals supplied by Amcor Flexibles, Gloucester, U.K., which incorporate one-way degassing valves. Consumer reception to the new coffee packaging has been positive, and P&G’s long-term plan is to phase out all its conventional three-piece steel coffee cans and replace them with HDPE containers.

Alcoa Flexible Packaging, Richmond, Va., is working on ways to help beverage companies who use PET bottles gain greater distinction on crowded store shelves. The company has developed a prototype 50-micron PETG (polyethylene terephthalate glycol) reverse-printed shrink sleeve label using interference “flip” ink that changes color as the label is tilted. The label also features pearlescent white surface printing to add graphic depth.

These specialized printing techniques can be supplied for PETG, oriented polystyrene and polyvinyl chloride substrates. Custom services can meet specific labeling requirements and concepts. The company also offers closure expertise, including translucent blue linerless clo- sures from Alcoa Closure Systems International that eliminate the need for closure liners and operate well on high-speed capping lines, plus under-the-cap laser marking for special promotions.

Seal-It Inc., Farmingdale, N.Y., also offers color-changing printing technologies for shrink sleeve labels. The company has developed thermochromatic ink printing, which enables label inks to change colors when exposed to hot or cold temperatures. This option provides a range of marketing/promotion ideas, such as game-winning secret codes that are only revealed when containers are placed in a freezer or heated environments.

FIRST IN THEIR CATEGORIES When Hershey Foods Corp., Hershey, Pa., formulated its new Swoops potato chip-shaped chocolate slices, the company wanted equally innovative packaging to launch the new product. Hershey chose thermoformed oval polypropylene cups supplied by Rampart Packaging Div., Williamsburg, Va., of Printpack Inc. of Atlanta. Three cups are contained in each contoured, one-side-coated paperboard carton sup- plied by the Custom Packaging Group of Caraustar Industries Inc., Austell, Ga.

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Each 1 5/8-in.-high cup is logo-embossed, filled with six stacked candy slices and sealed with printed foil laminate lidstock supplied by Alcoa Flexible Packaging. Hershey uses customized, robotic carton erecting/loading equipment from Gerhard Schubert GmbH, Addison, Texas, to perform the combo packing.

The Hershey Swoops application combines an interesting new product with unique, high-profile packaging and has resulted in a consid- erable amount of attention on store shelves. That’s exactly what marketers want and need to entice initial purchases by consumers.

Another first-in-its-category package holds Church & Dwight Co.’s Arm & Hammer Baking Soda. While still marketing the long-estab- lished and highly recognizable small cartons, Church & Dwight decided to add a 12-lb. zipper-pack stand-up pouch to meet demand from club stores and foodservice users for more convenient, resealable packaging.

Made of durable, high-gauge polyethylene film, the new pouch features a zipper from Zip-Pak, Manteno, Ill. The Powder-Proof zipper includes perforations along the zipper tracks, which provide channels through which powdery residue can fall back into the pouch, pre- venting zipper jams.

Zip-Pak worked with Robert’s Packaging Inc., Battle Creek, Mich., to adapt its C-1500 vertical form-fill-seal machine to the Arm & Hammer application. The machine now runs the rotogravure-printed, laminated polyethylene roll stock film to produce the large-format, resealable bags.

The same solution worked for Arctic Glacier Inc. The West Point, Pa., ice packer worked with Zip-Pak and form-fill-seal machinery manufacturer Hamer LLC, Plymouth, Minn., to incorporate customized zippers into 5-lb and 7-lb ice bags. Hamer adapted its Model 535 horizontal form-fill-seal bagging machine and engineered a zipper application system to automatically apply the Ultraseal zippers during the form-fill-seal process.

“Adding zipper resealability has given us the competitive advantage over other ice brands packaged in traditional non-resealable bags,” explains Deina Merschbrock, Arctic Glacier’s director of sales and marketing. “We gained increased market share because consumers pre- fer the convenience of easy storage. And managers of supermarkets, convenience and grocery stores quickly recognized the greater sales impact afforded by incorporating functionality into our packaging because entire bags of ice are seldom consumed in one sitting.”

HEED THE ENVIRONMENT According to a study recently conducted by marketing research firm Grapentine Co., 59 percent of European consumers and 41 percent of U.S. consumers surveyed ranked the concept of purchasing fresh food in nature-based packaging as very desirable. Cargill Dow LLC, Min- netonka, Minn., responds with its NatureWorks PLA (polylactide resin) packaging material.

The material is 100%-derived from annually renewable resources such as corn, is compostable and adaptable to a range of packaging applications, including both thermoformed rigid structures and flexible wrapping films. The finished containers are crystal clear, non-fog- ging, high-strength, highly printable and cost-competitive with more traditional packaging.

“Packaging can be one of the most important branding tools produce suppliers can use to differentiate their products and gain advan- tage in today’s ultra-competitive fresh food industry,” says Lisa Owen, Cargill Dow global business leader. “Consumers believe clear pack- aging derived from a natural source makes fruits and vegetables appear more fresh, wholesome and convenient.”

NatureWorks PLA also has potential for salads, deli items, baked goods, dairy products, pastas and candies. JoEL Inc., Elizabethtown, Pa., has adopted twist-wrap film made from NatureWorks to package its College Farm brand organic hard candies. Notes JoEL President David Deck, “Nature-based packaging is an easy and satisfying way to do something good for our customers and the environment.”

Wilkinson Manufacturing Co., Fort Calhoun, Neb., also adapted NatureWorks PLA to thermoform compostable food containers from sheet. Called NaturesPLAstic, the line includes various sizes and shapes of clear containers with matching lids.

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FEAR AND OPPORTUNITY IN VENDING MACHINES Who is better suited to solve the obesity epidemic than the food industry? BY DAVE FUSARO, EDITOR IN CHIEF

There’s been a string of news stories over the past few months about vending machines in schools; more to the point, what’s in them.

Some states are passing legislation that bans carbonated soft drinks, candy and other foods that (they allege) contribute to childhood obesity. More states are considering it. Some schools or school districts have their own efforts under way.

It’s another battle in the war on childhood obesity. I talked with some people in the food industry about it and, while they were careful not to contradict federal regulations or take the wrong side in the obesity debate, they weren’t happy.

I see their point. But if obesity, especially among children, is as serious as it’s made out to be, then it’s difficult to argue against anything that appears to be a solution. Besides, there’s enormous opportunity in this issue. Who is better suited to help Americans, especially chil- dren, solve the obesity epidemic than the food industry?

A nationwide survey of vending machines in middle schools and high schools found 75 percent of the drinks and 85 percent of the snacks sold are of poor nutritional value. Admittedly, the study was by the Center for Science in the Public Interest, not the food industry’s best friend. But it looks substantial. The study examined 1,420 vending machines in 251 schools. CSPI used it to push for efforts that all foods sold out of vending machines, school stores, and other venues outside of the official school lunch program should make positive con- tributions to children’s diets and health. Not a bad idea.

There already are efforts under way. Nestle quickly jumped on this opportunity with promotions that its lowfat milks would make great replacements for sodas. We’re no longer talking room-temperature milk in square paper cartons. Nestle’s offering five flavors: chocolate, very vanilla, strawberry, double chocolate and white milk, as well as fat-free chocolate. And in plastic, resealable 14-oz. containers.

As some Massachusetts and Rhode Island school districts were considering vending machine controls, Stonyfield Farm, a Londonderry, N.H., maker of organic yogurts, subsidized the installation of vending machines stocked with wholesome foods, including the company’s yogurt. The machines also carried such things as string cheese, pita chips, soy nuts, dried fruit, and carrots and dip.

Coca-Cola and Pepsico arguably have the most to lose when carbonated soft drinks are banned. But these companies also make bottled waters, fruit drinks and energy beverages, and often other snacks, so they also have a lot to gain with just a few alterations in the machines’ menus.

I’ve seen no suggestions that school vending machines go away entirely. As anyone who is raising a kid knows, they get hungry a lot, so vending machines are essential for schools and other locales. But being a part of a solution, rather than a problem, has certain advan- tages, outside of the pure merit of it. And somebody has to manufacture those juices and waters, granola bars, trail mixes and tuna pouches. Who better than the greatest product development minds of the food industry can make these choices both healthy and deli- cious? Maybe even hip.

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LAY A LITTLE LOW-SUGAR ON ME, HONEY Barry Sears, author of the “The Zone” low-carb diet book, was the keynote speaker, and his session was packed. BY DIANE TOOPS, NEWS & TRENDS EDITOR

Covering the National Confectioners Assn.’s 2004 All Candy Expo is a tough job, but someone has to do it! Taking my job seriously, I was first to arrive at the door, followed by 17,000 other eager attendees. I think I was the last to leave, save the janitorial staff.

Not surprisingly, most of this year’s nearly 500 exhibitors showcased new products echoing those at the supermarket and restaurant shows - low-carb and low/no-sugar. Although it seems a contradiction that candy manufacturers are "putting the carb before the horse," according to one observer, the strategy worked well last year. Included in that group is Russell Stover Candies, Kansas City, Mo. Its diet candy sales skyrocketed 87 percent to $5.3 million for the 52 weeks ending Dec. 19, 2003, according to Information Resources Inc.

Consumer concern over obesity has driven sales of diet candy. Low-carb and sugar-free candy sales are up more than 90 percent over the past 12 months, and sugar-free gum chewed up the charts, ending 2003 with a 13 percent sales gain.

Since candy and gum ranked third among food in terms of dollar sales in 2003, and since 99 percent of U.S. households purchase candy during the year - the highest penetration of any food - the sweet success of the candy/gum category is crucial to the overall health of the food industry.

Barry Sears, president of Zone Labs and author of the "The Zone" diet book, was the keynote speaker, and his session on U.S. nutrition- al trends was packed. He predicts the next big trend will be Glycemic Load, based on the Glycemic Index.

In the not too distant past, it was believed foods containing sugar (simple carbohydrates) were "bad" because they caused blood sugar levels to rapidly escalate, whereas carbohydrates (complex carbohydrates) were "good" because their effect was more delayed. Recently, it’s been discovered that some foods release their sugar slowly, and other carb-containing foods have a "flash" effect on blood sugar levels, raise insulin and store fat.

So researchers set a standard measure: how quickly 50 grams of the particular food’s carbs turn to sugar. That is the Glycemic Index (GI). The only problem is that GI doesn’t tell you how many carbs are in a serving of food. That’s where Glycemic Load (GL) comes in: It takes into consideration a food’s Glycemic Index as well as the amount of carbs per serving.

According to Sears, insulin control (and ultimately weight con- trol) depends on the protein-to-carb ratio balance per serving (or GL). Protein contains no carbs; a serving of vegetables contains one to five, cereal 10 to 20, pasta 15 to 20, candy 15 to 25 and grains 15 to 30. He says you can have your candy and eat it too by eating candy along with a protein source like turkey to balance the GL.

What a load off my mind. I ate a turkey sandwich, and hit the candy floor ready to check out kids novelty candy first.

Kandy Castle, San Diego, says Brain Drain Liquid Candy, which comes in a pocket-sized brain-shaped container, feels like "brains rolling around in your mouth" when eaten. It’s always good to speak to an authority. Kids will love Cap Candy’s (Napa, Calif.) Bug Factor Lollipops, gross green lollipops with a creepy, crawly candy bug trapped inside. More useful is Ear Wax, candy Q tips, by Kid’s Brands Inc., East Syracuse, N.Y. And a stop at Jelly Belly Candy Co., Fairfield, Calif., unearthed Earthworm, Soap and Spaghetti-flavored jelly-beans in honor of the new Harry Potter film, "Harry Potter and the Prisoner of Azkaban."

In the booth of Concord Confections Inc., Concord, Ontario, where I went for my fix of Dubble Bubble, a tradition begun in 1960 was upheld. President Bush and Senator John Kerry LookaLikes offered different-colored Bubble Gum cigars; each counted as a vote. Con- cord claims its Dubble Bubble presidential polls have mirrored the outcome of elections. This year’s gum poll predicts President Bush will win the election by two to one. Remember, you read it here first.

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CONSUMER PERSPECTIVES ON OBESITY Current messages on weight management are not working.

Being overweight is not a physical health problem - at least that’s the belief of the majority of U.S. consumers, according to the latest research from Bellevue, Wash.-based The Hartman Group. The study is the result of hundreds of hours of one-on-one consumer inter- views and a nationally representative survey of 5,000 U.S. consumers.

“I’m overweight, but I’m healthy,” or “I’m just big-boned,” or “I’m curvy” were frequently stated euphemisms respondents used to describe their overweight body type. Not surprisingly, the majority regard themselves as “normal.” Other findings include: • While consumers demonstrate their awareness of the connection between excess weight and health risks, most do not perceive themselves at risk. • Consumers place a premium on having choices. They want healthy food options, but they also want indulgent options. • The vast majority of consumers do not blame food manufacturers or food advertising for their weight problems, though some consumers do recognize the severe temptations created by both entities.

“Consumers are not resonating with current initiatives regarding weight management,” explains CEO Harvey Hartman. “The vast majority are comfortable with their weight and are not seeking solutions. Anyone looking to reach overweight consumers needs to use new language, new methods, and new channels of communication in order to be effective.”

PORTABLE FOODS MOVE SHORT DISTANCES Most on-the-run meals are eaten in the home.

Contrary to conventional wisdom, the popularity of on-the-go foods is more about convenience than portability, as most consumers (72 percent) say they consume “on-the-run meals” in the home, according to a survey of 500 shoppers, conducted online by InsightExpress, Stamford, Conn.

Nine of 10 consumers purchase portable convenience foods, defined as ready-to-eat/easy-to-prepare and portable. Americans eat them at nearly every meal, with nearly three of 10 reporting that they are purchasing more convenient food products this year than last. Lunchtime is the most popular time for portable foods, as more than half of consumers (55 percent) eat to-go products as part of their mid-day meal, followed by breakfast (40 percent), mid-afternoon snack (38 percent) and dinner (37 percent).

Foods packaged for portability are being moved room to room instead of town to town. The most common locations to eat on-the-go foods include: at home (72 percent), in the car (44 percent), at the office (39 percent), at a recreational activity (17 percent), at school (14 percent).

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PRODUCTS THAT CREATE BUZZ IRI identifies pacesetters and transformational new products. BY DIANE TOOPS, NEWS & TRENDS EDITOR

A record-setting 33,678 new consumer packaged goods SKUs were introduced in 2003, up 6 percent from 2002, according to Valerie Skala, vice president, analytic product management, at Chicago-based Information Resources Inc.

While that number could fill a store, only 223 products were identified by IRI as “pacesetters” - achieving more than $7.5 million in year-one sales in all U.S. food, drug and mass merchandisers, excluding Wal-Mart. Skala, who spoke at the recent Food Marketing Insti- tute’s 2004 Supermarket Industry Convention in Chicago, said 22 of those products were mega hits, with $50 million or more in first- year sales.

One of Skala’s favorite pursuits is identifying and tracking what she calls “transformational” new products. “Transformational products reinvent or create a new category of products to address an important consumer need,” she says. “Sales are large, incremental, sustainable, and consumers recommend them to others, creating buzz.”

Figure 1 shows the stars of 2003. But, as Skala says, sustainability is the key to new product success. So also check out Figure 2, how the Top 10 of 2002 did last year.

In hindsight, transformational categories that were created by consumer need in the past few years include those that hit consumer hot buttons - convenience, wellness, anti-aging and mass luxury. Some products changed the way we live - packaged salads grew from $1.2 billion to $3.3 billion in sales from 1998 to 2003, soymilk sales poured from $29 million in 1999 to $308 million in 2003, and restaurant- to-retail foods (Starbucks and Krispy Kreme Doughnuts) delivered $126 million in 1999 and $634 million in 2003.

“Several food and beverage trends entered the mainstream, penetrating more than 10 percent of U.S. households, in 2003,” says Skala. “They include low-carb, soy as an ingredient (particularly in women’s health), natural/organic and ‘new’ nutrients, or those beyond basic vitamins and minerals, such as lutein, Omega-3, glucosamine, calcium, lycopene,” she says. “Older trends that continue to build include: more convenience, Hispanic/global influences in foods, more healthful, and collateral dining - products that we consume on the go.”

Driven by consumer demand, low-carb is definitely the new product category du jour. Low-carb products started proliferating last year, and it’s likely that some of those will show up on next year’s IRI Pacesetters table.

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TEENS SEEK HEALTHIER FOOD OPTIONS Teens may say they are giving up junk food, but they rarely mention substitute snacks. BY DIANE TOOPS, NEWS & TRENDS EDITOR

Most teens say they are changing their diets to eat more healthily, according to a recent Internet survey of 500 U.S. teens (13-18 years old) by New York City-based BuzzBack Market Research.

In general, boys eat more than girls and are more likely to eat “whatever is available.” They eat an average of 2.3 full meals per day, while girls eat only an average of two. In fact, 62 percent of girls are more likely to skip meals when they are not hungry vs. 53 percent of boys. Boys also snack more often (3.3 snacks a day) vs. 3.1 snacks for girls.

Teens say they focus on freshness, convenience and health benefits in deciding what to eat. Most want to stay healthy, though many also see a change in diet as a means to losing weight and gaining more energy.

It’s notable that the most profound change was the shift away from soda to bottled water (65 percent) or other low-calorie alternatives; the sugar and other carbs in regular soda are a particular turn-off to teens. After soda, candy, “junk food” and chips are all high on the list of foods teens are trying to eat less of.

“Given that 66 percent of teen girls vs. 33 percent of males are very worried about weight gain, the implications are that to attract teen girls manufacturers will have to continue offering and developing low-calorie, low-fat, low-carb products that do not make one feel ‘guilty,’ ” says BuzzBack President Carol Fitzgerald.

Some teens - particularly females - say they are trying to eat more fresh fruits and vegetables instead of junk food. Repeatedly they say they want snack and meal options that are fresh, fast, low-calorie and nutritious.

Teen males say they are trying to eat more protein to put on muscle. They are likely to respond to packaging or ads that imply a product will give them extra energy and nutrition without sacrificing taste. Teen boys’ love of Mountain Dew is a good example of their thirst for energy (caffeine), while the girls prefer cereal bars, yogurt and fresh fruit.

On the snack front, males prefer salty snacks while females are more likely to chew gum. Teens may say they are giving up junk food, but they rarely mention substitute snacks. In fact, the 24 percent who say they are turning away from junk food have found no real consis- tent, replacement snack worth mentioning.

“In targeting teens, there seems to be an opportunity for new product options in this area - healthy, alternative snacks,” says Fitzgerald.

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