Retail Memo - Specialty Foods: Balducci's Creates Some Value On the High-End With 'Balducci's Own' Specialty Store Brand, Now Including Caviar

Pictured above: The Balducci's store in Manhattan's Chelsea neighborhood, one of the 10 upscale specialty and epicurean foods markets operated by the gourmet grocer. The Chelsea Balducci's is an urban store. The specialty foods retailer's store's in other places like Maryland and Virginia has a more suburban look to them however.

Upscale Food Retailing in the Recession: Let Them Eat (Balducci's Own Store Brand) Caviar

Bethesda, Maryland USA-based specialty and epicurean foods retailer Balducci's is sticking a gold-plated fork in the eye of the current economic recession as well as adapting in its own unique way by creating a value proposition around its Balducci's Own store brand specialty and gourmet products, which now includes caviar.

The storied specialty foods retailer, which has survived many an economic recession, has introduced a line of caviar under its own store brand -- the "Balducci's Own Brand."

"In this economy, Americans everywhere are scaling back on their holiday menus," says John Coleman, Balducci's wine, cheese and coffee merchant. "However, many party planners, food connoisseurs and epicureans alike are still looking for ways to enjoy their annual holiday luxuries."

There you go. Balducci's is a perfect example of what we've been saying -- that regardless of format or income-level consumer catered to, retailers must create their own unique value propositions in this serious economic recession.

Granted, this is an interesting and rather high-end value proposition in general. But that's Balducci's niche, and always has been. But even the wealthy can use a little relief, even when it comes to caviar prices.

The most value-priced Balducci's Own brand caviar is Farmed California White Sturgeon. It retails for $55 to $299 per ounce through New Year's Day. The caviar regularly goes for $80-$475 per ounce, according to John Coleman.

The caviar comes in three different types: Wild Caspian, which comprises the Sevruga ($199-$1,175 per ounce) and Royal Osetra ($249-$1,500 per ounce) varieties; Farmed International, which consists of the Farmed California White Sturgeon and the first true Russian Sturgeon to be successfully cultivated in Germany for the production of genuine Osetra caviar ($120-$725 per ounce); and Domestic, which consists of salmon caviar from Alaska and paddlefish caviar from the Tennessee and Mississippi rivers (($9.99-$29.99 per ounce and $35-$199 per ounce, respectively).

"With the new line of Balducci's Own caviar, you can still indulge, and very often under $100," says Coleman. "And with the Balducci's brand, you can rest assured that you are getting -- or giving -- the highest in quality."

The 10-store specialty and epicurean foods retailer has been beefing up its Balducci's Own store brand over the last year. The line includes numerous varieties of products in the cracker, cookie, oil, vinegars, condiment, coffee, sauces and others categories. All are priced below comparable domestic and imported manufacturers' specialty and gourmet brands.

Balducci's also offers a second store brand line -- Balducci's Premium -- which offers numerous epicurean food and grocery items across numerous categories. It's priced higher than its Balducci's Own brand.

In addition to operating 10 specialty-gourmet foods markets on the east coast, Balducci's has a significant online shopping and mail order delivery business via its Web site here.

The Balducci's stores are smaller-sized markets but are packed full of fresh and shelf-stable specialty food and grocery products across all categories, including fresh produce, meats, deli-prepared foods, dairy and grocery. The are best described as neighborhood-sized stores packed to the ceiling with specialty foods of all types, in an upscale setting.

Retail Memo: Upscale 'Food Emporium' Expanding 'Food to Go' Into More Stores; Plans Standalone, Small-Format Version of the Prepared Foods Concept

The once great but lately struggling Atlantic & Pacific Tea Company (A&P) seems to have found a success story in its 29 store Food Emporium upscale gourmet and prepared foods supermarket format, which it's in the process of taking even more upscale and gourmet.

Most specifically, a key ingredient of the format's success is coming in the in-store fresh, prepared foods category, with a concept and store section called "Food to Go," which the food retailer launched in its busy Food Emporium location in the Trump Palace building in Manhattan's Upper East Side.

A&P operates 16 of its 29 upscale Food Emporium stores in Manhattan; nine of the gourmet-oriented supermarkets are located in New York State, and four are in nearby Connecticut.

The "Food to Go" in-store fresh, prepared foods section has been doing so well in the Trump Palace store that A&P plans to roll the concept and department out to as many of its other 15 Food Emporium stores in Manhattan as is feasible, according to Hans Heer, who's the general manager for Food Emporium as well as a senior vice president for A&P.

Heer says the rollout of the "Food to Go" departments will be slow, and that they might not go into all of Food Emporium's New York City gourmet supermarkets because of space limitations. The fresh, prepared foods departments are decent-sized. Therefore, most of the stores will need some expansion in order to accommodate the departments.

Space is at a premium in Manhattan. Therefore, it's not clear if there will be additional space to expand in all 15 of the stores so the in-store fresh, prepared foods sections can be added. However, Food Emporium plans to put the gourmet prepared foods sections in as many of those Manhattan stores as it can.

According to Heer, Food Emporium has thus far earmarked two Manhattan locations (yet to be named) where the retailer plans on adding the "Food to Go" departments later this year. More should be on the way early next year.

Additionally, A&P is looking at a second strategy for the Food Emporium "Food to Go" concept. That strategy is to open standalone small-format "Foods to Go"-style prepared and specialty foods stores in the city. The stores would feature fresh, prepared foods made in-store, along with selling a limited assortment of other specialty and gourmet grocery items, cheeses and various other upscale products. Prepared foods are the centerpiece of the concept though.

When we say small-format, we really mean small. After all, 15,000 square feet is considered a good-size supermarket in dense Manhattan (Whole Foods Market's huge food emporium in the city aside). It's likely the stand-alone "Food to Go"-style stores would be in the 1,500 -to- 3,000 square foot range.

We call the standalone fresh, prepared foods stores "Food to Go"-type stores because Heer says the retailer won't use the "Food to Go" brand on those stores like it does in its Food Emporium stores. ("Food to Go" inside Food Emporium is sort of a store-within-a-store department.) Instead, the new, small-format fresh, prepared and specialty foods markets will operate under a separate name and have a separate and distinctive logo, according to Heer.

Food Emporium is targeting the opening of two or three of the stand-alone "Food to Go"-type stores in Manhattan for this year, according to Heer. Additionally, the goal is to open up to five of the stores in 2009 in Manhattan.

The "Food to Go" shop inside the Trump Palace Food Emporium store offers a myriad of gourmet, ethnic, specialty, natural and organic prepared foods items. The ready-to-eat and ready-to-heat prepared foods' selection ranges from New York Deli-style sandwiches and gourmet soups, to sushi, ethnic cuisine entrees and side dishes, healthy gourmet foods, and complete gourmet dinners to go, along with much more.

A&P recently decided to take its current 29-store Food Emporium "gourmet 2.0," from what was already a fairly upscale format. This added upscaling and further gourmet emphasis includes new design packages in and outside the stores, a more upscale and eclectic specialty, gourmet, ethnic and natural foods product offering (including its own gourmet private label), the "Food to Go" store-within-a-store fresh, prepared foods sections, and other higher-end touches and merchandising options.

Additionally, the Food emporium stores feature old fashion butchers shops which carry prime cuts of beef and the highest quality poultry and pork available. The Food Emporium stores also offer shoppers a gourmet prepared foods catering service.

The upscale markets also sell specialty and high-end wines, craft beers, artisanal cheeses, fancy deli meats, gorgeous floral arrangements, it's own line of specialty and gourmet grocery products and other specialty offerings.

According to Heer, the Trump Palace Food Emporium, which contains the first of the "Food to Go" fresh, prepared foods sections, is the first of its 29 stores to get the retailers "gourmet package" makeover, which it's in the progress of giving all the other stores, starting with the remaining 15 Manhattan units.

The Trump Palace Food Emporium also is the 29-store gourmet banner's highest sales-performing store as well currently, according to Heer.

The Trump Palace Food Emporium, which opened in 2004, is 25,000 square feet on two levels. There's an escalator to get to the second floor as well as an elevator.

Food Emporium also recently gave its website an upscaling . The site looks very gourmet and lists all the upscale features the stores offer in a very attractive presentation.

Food Emporium also offers online gourmet grocery shopping on the website. Shoppers can order online and either pick up their purchases at a store location they designate or have the order delivered to their home or office. Food Emporium offers free delivery for orders of $50 or more, which doesn't take much when one is buying gourmet groceries and prepared foods.

The new A&P/Food Emporium stand-alone small-format fresh, prepared and specialty foods stores will be interesting to observe when the two units open sometime this year. After all, as we write about often on Natural~Specialty Foods Memo, there's a small-format food and grocery retailing revolution going on internationally and in the United States.

This small-format food and grocery store revolution is happening across all formats in the U.S. for example--Save-A-Lot and Aldi as no frills, discount grocers, Trader Joe's as small-format specialty and natural foods grocer, Tesco's Fresh & Easy as hybrid basic grocery and fresh foods retailer, Safeway's new "The Market" format as hybrid upscale basic grocery, fresh and specialty foods grocer--and many more.

A&P's Food Emporium small-format fresh, prepared foods spin-off will fit in at the upper-end of this small-format food retailing revolution: gourmet prepared foods as the store's centerpiece with a limited assortment of specialty, gourmet and natural food and grocery products along side.

The Friday Fishwrap: Week-ending news, analysis and insight

India's largest publicly-owned retailer says the country is ready for a gourmet retail format and international specialty foods product revolution

India's largest publicly-owned retailer, Pantaloon Retail (India) Ltd., this week opened its very first upscale, gourmet food store or bazaar in Select Citywalk mall, a new upscale shopping mall in south Delhi.

The new market is called Gourmet Food Bazaar. It's 4,500 square feet and is packed with gourmet, specialty and natural foods and groceries from all over the world. the format is targeting consumers' who've developed a global palate, and who can afford to indulge that palate because they have relatively high-paying jobs.

India has the second-fastest growing economy in the world after China. However, it has a far-higher percentage of college educated professionals than China, including millions of professionals who work in the country's high-tech industries. India has the fastest growing high-tech sector in the world. High education level is a key consumer variable in specialty foods purchasing and consumption.

With its first Gourmet Food Bazaar store (other new stores in the format are planned for Bangalore and Mumbai, plus more stores in New Delhi), Pantaloon Retail (India) Ltd. is betting the fast developing country is ready for a chain of upscale, high-end gourmet/specialty foods stores.

"We believe in food. And there is a customer (in India) that is ready for more lifestyle shopping, more branded items and more international cuisine," says Damodar Mall, the retailer's director of new business ventures, in explaining the creation of the company's gourmet food store format.

Pantaloon Retail (India) Ltd. is a huge, multi-format retailer. The company operates more than 1,000 stores in 51 cities in India. The company's retail formats include Food Bazaar, a supermarket chain (and now Gourmet Food Bazaar, the upscale division), Big Bazaar, a chain of hypermarkets, Pantaloons, a fashion outlet chain, and many more formats, including the home store and electronics categories. (You can read more about the company and its many retail formats here.)

Mall said the company doesn't presently now know the total number of Gourmet Food Bazaar stores it will open. However, he says there will be numerous gourmet stores opened over time, based on when and where the retailer feels they will do well. In other words, the gourmet stores are a venture, rather than a mere experiment.

Gourmet Food Bazaar is a division of Food Bazaar, which is a chain of supermarkets that offer a wide selection of products at discount prices. The Food Bazaar supermarkets are a unique blend of India's retail bazaar tradition and the modern western supermarket.

The gourmet and specialty foods' format stores will be a bit more western in their design and merchandising than the supermarkets. But the stores' will still retain such Indian food traditions as displaying assortments of bulk food products out in the open in a "touch-and-feel," "bazaar-like" manner. This tradition will be offered side-by-side with numerous packaged goods and other foods from all over the globe.

In addition to its numerous retail formats, Pantaloon Retail (India) Ltd. also operates a number of food-service type formats. These include: Brew Bar, a bar/pub with a neighborhood feel, Cafe Bollywood, which offers Indian street food with an upscale twist, Chamosa, a restaurant chain that specializes in the Indian snack combinations of tea and samosas, and Sports Bar, a sports-themed bistro. These retail operations are part of the company's foods group, along with the Food Bazaar supermarket chain and now Gourmet Food Bazaar.

India and its fast-growing economy, prospering upper class, and growing middle class, is ripe for new food retailing innovations and formats, ranging from the the upscale, small format-style of Gourmet Food Bazaar, to the hypermarkets of France's Carrefour and the supercenters Wal-Mart is building with an Indian partner.

A recent report released by consulting firm Ernst & Young says food and grocery products account for around 54%, or about $152 billion (U.S.) of India's total retail sales. However, modern style supermarkets, hypermarkets, supercenters, gourmet stores, natural-specialty stores and other western-style formats, account for only a tiny 1% of that total, according to the report.

Obviously, Pantaloon Retail (India) Ltd, along with dozens of other retailers based in India and throughout the world (like Wal-Mart and Carrefour) see this huge market and are moving on the opportunity.

In fact, Pantaloon Retail (India) Ltd. won't be all by itself for long in terms of building a chain of upscale, gourmet food stores in India. Another Indian retailer, Mumbai-based HyperCity Retail Pvt. (India) Ltd., which operates a chain of hypermarkets, is planning to launch its own gourmet and specialty foods format food store in 2008.

Hypercity's format, called GourmetCity, is based on the success the retailer has had with a gourmet kiosk it runs in one of its hypermarkets in Mumbai's western suburb of Malad. The gourmet kiosk or counter offers imported cheeses, handmade chocolates, upscale deli goods, fresh baked breads and sweets, marinated meats, and stocks gourmet and natural groceries from upscale British grocer Waitrose's store branded line specialty, gourmet and natural products.

The popularity and success of the gourmet kiosk encouraged HyperCity to create the GourmetCity format, and launch the first store in the chain next year. it plans to merchandise an extensive line of imported groceries in the gourmet markets, along with fresh foods, meats, fresh bakery and other upscale features. The stores' also will stock natural and organic foods from throughout the world.

India offers a huge opportunity for European and U.S. specialty and natural foods manufacturers and marketers. It's especially the case since those brands that get in on the ground floor of this "quiet gourmet food store revolution" will reap the dividends of brand loyalty as the format booms in India, which it will.

Along with its fast growing economy, superlative higher-education attainment levels, prospering upper class and growing middle class, India also is a democracy. And unlike China, it has a much longer history of doing business deals with western democracies, based on its years as part of the British Empire.

The peoples of India also are traveling more and more. In fact, there's a large international class in India. It includes numerous business people and academics who spend lots of time in the west. It also includes many residents who have family living in Europe or the U.S., attending school or working. These people are well-exposed to the west, and bring back ideas about different foods and products they've tried in their travels, and want to be able to buy regularly in India.

India is positioned perfectly for both retailers to launch their respective upscale, international gourmet food store formats--Gourmet Food Bazaar and CityGourmet. Blending the new--international gourmet, specialty and natural foods and groceries--with the old--India's "retail bazaar" merchandising tradition--will allow these retailers to appeal to India's consumers with a local as well as global approach as they grow these formats into regional and perhaps even national chains over time.