Gourmet no more: Food staples are in ad limelight
Apr. 21, 2009 01:27 PM
NEW YORK - The frill is gone.
Companies are moving their ad dollars from gourmet or frivolous items to pantry staples and traditionally ho-hum household goods. Hamburger Helper, Kool-Aid drink mix and that golden oldie butter are advertising stars these days.
The new advertising is aimed not only at cashing in on the new frugality of recession-wary consumers but also fending off a flight to cheaper store brands. It also can maintain their share of a shrinking consumer-spending pie.
In some cases, the ads are paying off with higher sales.
"In this 'Great Recession,' economy, companies are not simply changing the messages they place in their ads, they are doing something much more substantial," said Marc Fleishhacker, senior partner and managing director of OgilvyConsulting's North America practice. "They are fundamentally changing the products they promote."
Land O'Lakes Inc., the maker of deli cheese, eggs and butter, launched its first TV campaign for its basic butter product in 10 years. Hormel Foods Corp., which increased its spending on ads for Spam last year, began its first national ad campaign for Dinty Moore stew last fall. Sales for Spam and Dinty Moore stew rose by double-digit percentage increases in the quarter that ended Jan. 25.
Home Depot, the nation's largest home improvement retailer, is pushing items like potting soil and hand tools under a new tag line: "More saving. More doing." Last spring, in contrast, Home Depot focused on how to create dream kitchens.
Many ads now also have a soothing feel to allay consumer anxiety. Allstate Insurance Co.'s "Back to Basics" commercial looks back to the Great Depression and other tough periods when people learned to enjoy small things like a home-cooked meal. A General Motors Corp. ad, which has a patriotic theme, promises to make payments if customers lose their jobs.
Shoppers who have noticed the new ads applaud marketers for understanding their changed psyche.
"I like the messages out there. It's less focused on consumerism and buying the best," said Andrea Beck, a 39-year-old stay-at-home mother of two from South Orange, N.J. who has slashed her spending on food and lawn care.
The shift to highlight more everyday products follows more than a decade of companies pushing $30,000 kitchen renovations, $15 per pound cheeses and flashy jewelry as rising home values and growing stock portfolios made consumers feel flush.
No more. The recession has brought on an abrupt change in shoppers' mindsets. Home prices have fallen 29 percent from their summer 2006 peak, according to Standard & Poor's. Major stock indexes are off more than 40 percent from their October 2007 levels. Unemployment hit 8.5 percent last month, the highest rate in a quarter-century, and is expected to reach 10 percent by the end of the year. That's translated to a spending malaise, even trickling into food purchases. Consumer spending not adjusted for inflation grew at the slowest rate since 1961 last year and is expected to remain sluggish for the rest of the year. In the fourth quarter of 2008, spending on food and nonalcoholic beverages fell 3.2 percent, according to Scott Hoyt, senior director of consumer economics at Moody's Economy.com.
In the last big recession, in the early 1980s, consumer product companies simply shrunk their ad budgets, said John Greening, a 28-year advertising industry veteran and now an associate professor at Northwestern University's Medill School of Journalism.
But they can't afford to do that this time, as shoppers are shifting to lower-priced store brands, spending more at discounters, scraping the last dollop of face cream and buying more cheap canned goods and pasta.
Sales of store-label consumer products rose 9.1 percent to $84.8 billion in the 52 weeks that ended March 21, while the sale of brand-name goods gained just 1.7 percent to $421 billion, according to data from Nielsen Co.
"People are willing to settle for value-oriented products," Greening said. "It doesn't have to be the best; it just has to be the best for the value of the money."
Sharlene Guerrier, for instance, is buying more store-brand cereal and household products like toilet paper. She's drinking water instead of soda as she worries about mounting bills and her job as a babysitter.
"If they get laid off, I get laid off," said the 39-year-old mother of a 10-year-old boy from Newark, N.J.
Marketers are focusing on "needs as opposed to wants," said Fleishhacker, who heads up the company's new recession marketing practice. He noted that companies are making strategic choices about where to spend their ad dollars in an effort to "increase market share even as the size of the overall market contracts."
While margarine is generally cheaper than butter, O'Lakes' butter commercial taps into the shoppers' new sensibility of staying at home, emphasizing that baking doesn't take a lot of fancy ingredients.
Kraft Foods Inc. is advertising Kool-Aid year-round instead of just during the summer and spring to try to scoop up sales from consumers who've cut back on soft drinks. Gregory Nesmith, Kool-Aid's senior brand manager, said more money for the "more smiles per gallon" campaign is helping boost the beverage's sales. He says that for the cost of two liters of pop, shoppers can make four pitchers of Kool-Aid.
Several companies, including Kraft, declined to specify which products they've shifted ad money away from as they focus on the basics - but the changing buying habits of consumers are clearly affecting their decisions.
Unilever U.S., which has been closely monitoring the buying changes since late 2007, is investing more money marketing its less-expensive Suave shampoo, but is also increasing ad spending on higher-end Bertolli frozen meals as it pursues shoppers who want to eat at home, said Lisa Klauser, vice president of consumer and customer solutions.
Sales of Hamburger Helper - launched in the early 70s, when families were struggling with soaring food inflation - and other dry meals have risen 9 percent so far this fiscal year, said Beth Brady, vice president of marketing at General Mills Inc.
One TV vignette for Hamburger Helper shows a group of workers in an elevator, wondering what they're going to serve their families for dinner. The brand's helping hand pops up with a solution: one of its dry pasta and sauce mix packets that sells for $2 a box.
The Golden Valley, Minn.-based company plans to boost ad spending on these foods by double-digit percentages in the next fiscal year, which begins in June, Brady said.
General Mills is counting on those shoppers to be loyal even when the economy recovers.
"People are looking for ways to uncomplicate their lives," Brady said.