MILWAUKEE — If you want to see how the nation’s foodmakers are weathering the recession, the proof is in the pudding.
Kraft Foods Inc., the nation’s largest food maker, will no longer sell Handi-Snacks pudding to retail customers. At the same time, it’s pushing new flavors of its more lucrative Jell-O pudding.
Food companies from Sara Lee Food Corp. to H.J. Heinz Co. are trimming their offerings to focus marketing dollars on their higher-margin, best-selling brands and retain consumers, who are trading down in the recession.
Those top brands are more likely to hold their own, and getting rid of lesser-performing brands helps companies showcase top products as retailers cut inventory. Heinz aims to remove two items for each one it introduces. Sara Lee hopes to cut its offerings 8 percent this fiscal year.
It’s all shaping up to mean fewer choices for consumers.
But will they mind?
Probably not, analysts say, noting that if these products had a big following companies would keep them around.
The nation’s grocery shelves could stand some trimming, said Mark Gottfredson, head of the global Performance Improvement practice at consulting firm Bain &Company. Much as the housing and technology industries experienced growth bubbles, grocery store shelves have been bursting with products in the past 10 years, he said. They’re straining with about 50 percent more products than 10 years ago, including new formulas, flavors and sizes of existing lines, he said.
The trend of cutting SKUs — or stock-keeping units, the unique identity each product carries — has caught on the past three or four years. It accelerated last year, Gottfredson said, as companies homed in on their most profitable brands.
Some companies are just selling lines: J.M. Smucker Co. now owns the former Procter &Gamble Co. brands of Folgers coffee, Jif peanut butter and Crisco shortening.
But Heinz, maker of sauces and its namesake ketchup, considers product cuts a key strategy to trim costs and improve performance, said Scott O’Hara, executive vice president for Europe, who oversees the company’s global supply chain. The Pittsburgh-based company hopes to cut between 15 percent and 20 percent of its SKUs within three years, on top of a 50 percent cut from 2002 to 2006.
Excess sizes, types and flavors of products increase the cost of everything from marketing and production to sales, O’Hara said. And, during the recession, it’s particularly important to conserve cash.
“The more we can simplify, while clearly meeting our customers’ needs, the better off we are and the more cost we can drive out of business,” he said.
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