POST-WAR BUST AND BLOSSOMING OF THE BRANDS

The frozen food industry rode into the post-war period on a high tide of enthusiasm.

Nor was this line of reasoning entirely without foundation. After all, the frozen food industry had increased its productive capacity many times over during the war and was still able to sell everything it could produce.

Furthermore, although there were still some major holdouts, most food chains had begun to stock frozen foods.

Millions of eager new consumers, who had formerly looked on frozen foods as novelties, were now buying not only fruits and vegetables, which had been the bulwarks of pre-war frozen food lines, but also previously unheard-of items. Among these were beef stew, corned beef hash, chop suey and even frozen baked beans.

Indicative of the rose-colored horizons foreseen for the industry were the frozen food stores being opened by returning veterans.

Stocking nothing but frozens, two such ill-fated outlets were started in New York by Hy Epstein and Mac Levine who only a few years later were to found Milady Foods Company to freeze blintzes, and eventually to sell the business to Pet Inc., St. Louis.

A similar outlet was opened in San Francisco's Crystal Palace Market by Alien Ayres and Howard Roberts, who had served together in the Merchant Marine during the war. At about the same time as they opened their store, they also launched the brokerage firm of Ayres & Roberts.

Unfortunately, while those who predicted spectacular growth for frozen foods proved to be prophetic over the long range, they overlooked the short-term obstacles which rapidly began to loom.

Built on Quicksand

For it soon turned out that much of the wartime expansion had been built on quicksand.

The first blow came soon after V-J Day when military contracts for frozen foods were cancelled and carloads of spinach, peas, green beans and corn that had been packed in the closing days of the war began to pile up at processor plants.

Nonetheless, production continued to expand. Frozen fruit and vegetable output for 1946 was up more than 33% over the previous year, setting a new record of 969 million pounds. The pack was not to reach this height again until four years later in 1950.

Production continued to climb-at first-in the prepared area, too. Twenty-five million pounds of baked beans were packed in 1946, and even Birds Eye had the item in its line. The beans, as well as many other prepared foods, rapidly proved to be lacking in consumer appeal. As inventories piled up, prices inevitably dropped. Banks, which had formerly loaned packers money on as much as 90% of their inventories, now were hesitant to accept frozen food stocks as collateral.

The bottom of the pit was reached in December 1946, when The Wall Street Journal ran an article headlined "Frozen Food Drop-A Glut on the Market."

The story pointed out that warehouse holdings of fruits and vegetables alone had climbed to 860 million pounds. This was more than 85% of the entire 1946 pack.

What had happened to transform 1945's glamour products into "gluts" on the 1946 market?

Looking back, the answer is not hard to find. Basically the 1946-47 disaster stemmed from the fact that wartime conditions, under which virtually anything could be sold, had attracted scores of new processors, many of whom departed from the principles which had nurtured the industry during the trying days of the 1930s.

Their many problems notwithstanding, the processors who pioneered the frozen food industry had been guided by the conviction that if they were to overcome the old stigma of "cold storage foods," there could be no place in frozen foods for product that was not better or at least as good as its canned counterpart. As a corollary, only product of top quality went into the freezer.

These axioms were forgotten by a sizable segment of the industry during the war. Further, a number of early post-war producers had extremely limited capital and only a deep-freeze unit in the backroom for processing.

Then in 1946, canned goods came home from war, and it soon became apparent that many of the new consumers the industry had supposedly "captured" were instead using frozen foods only as a substitute for hot pack. The industry was unable to maintain its fragile consumer franchise in the face of poor quality.

There was a rash of distress selling and low-grade, 10-cent-a-package merchandise became commonplace in store cases. Frozen foods dropped still further in public esteem.

The period of the big shakeout, when producers were struggling to rid themselves of excess inventories, also witnessed the first significant shift in what had become the industry's traditional marketing pattern.

Until the end of the war, the leading processors had marketed their products either through company-owned branches or through exclusive regional wholesale distributors.

Rarely Direct

Chain stores and voluntary and cooperative buying headquarters were sold through these distributors.

They were almost never sold on a direct basis by the manufacturer. The wholesaler's margin of profit was wide enough to support a store delivery system as well as in-store merchandising service.

This pattern had been set up by Birds Eye in the early 1930s and was emulated by competing producers as they introduced their lines.

Thus, it is not without irony that the individual who broke the carefully constructed system was an ex-Birds Eye marketing man.

He was John I. Moone-dynamic, canny, daring-who resigned his post as manager of special marketing assignments for Birds Eye in 1945 to found a new company known as Snow Crop Marketers. Associated with him in the new enterprise, headquartered in New York, were Martin Mathews, Birds Eye southeast regional manager, and Nathaniel B. Barclay, who during the war had represented General Foods on Office of Price Administration matters.

At first, Snow Crop followed the established marketing pattern. It worked through exclusive wholesale distributors, utilizing their sales forces for in-store merchandising efforts.

The main difference was that Snow Crop Marketers owned no plants-at least at first. Instead, it secured merchandise from a group of non-competitive processors, many of which had emerged from the wartime expansion. Procurement was financed by securing loans based on bankable orders placed by Snow Crop distributors.

Building Brand Acceptance

Brand acceptance was to be built through a strong national advertising drive on television and in mass-circulation magazines.

This, in brief, was the Snow Crop marketing plan as it was originally conceived. However, it rapidly began to go through a series of mutations. And as Snow Crop evolved, Moone was to put a lasting stamp on frozen food marketing.

Among the firsts chalked up by Snow Crop Marketers were:

* Introduction on a commercial basis of frozen concentrated orange juice. (The first juice for Snow Crop was packed by Vacuum Foods Corp., which within a few months would change its name to Minute Maid Corporation.)

* Introduction of direct selling to chains and cooperatives.

* Establishment of the distributor override.

* Reduction of package sizes including 12-ounce fruits. Fruit packages had traditionally been 16 ounces.

At the outset, Snow Crop, to all practical purposes, was a broker or, to put it another way, national sales agent for the 21 contract packers freezing for its label. Snow Crop took 6% of sales as its commission.

1% for Advertising

Pointing up the heavy role assigned to advertising in the Snow Crop marketing program was a provision that called on participating processors to reserve 1% of the value of their shipments for an advertising fund to which distributors would contribute 1% of sales under the label.

Meanwhile, Snow Crop allocated 1% of its 6% commission-or 16 2/3% of its gross revenues-to the advertising pool.

Frozen concentrated orange juice was the bellwether of the Snow Crop line which also included an extensive array of fruits and vegetables and, later, other juices, waffles, fish and poultry.

Snow Crop introduced the first orange concentrate in New York and Philadelphia in 1946. In a short time the revolutionary new product was ringing up 50% of Snow Crop sales.

Distribution of the concentrate was expedited by the placement of 8,000 six-cubic-foot spot display units in retail outlets. Manufactured by Amana Refrigeration, Inc., Amana, Iowa, the spot merchandisers were in reality chest-type home freezers with their lids removed.

Each unit held eight to nine cases of concentrate which Snow Crop calculated would be an average three- or four-day supply. Prominently featuring the Snow Crop name, the equipment cost the retailer nothing. He had to agree only to confine its use to Snow Crop products.

The free equipment offer, together with fast-rising consumer demand for orange concentrate, was attractive enough to interest many food store operators, who had hitherto regarded frozen foods as novelties.

Another dramatic Snow Crop innovation was a juice dispenser program. Starting in 1949, the firm placed 15,000 orange juice dispensers at lunch counters, soda fountains and other foodservice outlets.

$125 Included Installation

The units, which were designed to keep the juice agitated and chilled and dispense it at the push of a button, cost $125 installed. Operators paid for them through a $1 a case surcharge on the concentrate. Similar dispenser programs were soon inaugurated by other concentrate packers.

But it was in the area of distribution that Snow Crop was destined most strongly to influence the frozen food industry. For Snow Crop was the originator of direct selling, although several manufacturers had been supplying Jewel Food Stores in Chicago with controlled labels on a direct basis since 1942, when the chain leased space in Chicago's Produce Terminal warehouse and began operating its own refrigerated trucks.

The advent of the direct deal signaled a turning point in the fortunes of the frozen food industry. For the rising interest of food chains in taking over their own distribution offered evidence that a mass market for frozen foods was in the making.

However, the arrival of the direct deal represented catastrophe to wholesale distributors who had pioneered frozen foods at retail during the 1930s and '40s. The distributor was the pivot of the retail frozen food marketing network and, in many instances, actually ran the frozen food department. Distributors purchased product from processors, priced it to reflect an adequate profit margin, and then went out and found retail customers for it.

Most chains at that time still took a dim view of the potential of frozen foods. Few had frozen food buyers or merchandisers. Few saw frozen food volume justifying the investment required in warehouse and delivery facilities. If retailers stocked frozen foods at all, it was the distributor who made product presentations on behalf of producers and provided a wide variety of in-store services.

Business Slipped Away

But distributors now saw this market in which they had invested so heavily slipping away as their prime customers went direct. At first, the frozen food distributor continued to serve independent food stores, but even this market eroded as voluntary and cooperative groups began entering frozen" food distribution in the late 1950s and onward.

The is probably not another grocery department so steeped in Americana as the frozen food aisle. From frozen W dinners to French fried potatoes to fish sticks to pot pies to pizza, the freezer case is firmly rooted in the boundless optimism of late 1940s/early 1950s America.

The first frozen pizzas would appear just two years after the war, introduced by a now-defunct Hackensack company, Roman Products. In 1949, the aptly-named Anthony J. Pizza would found the Anthony J. Pizza Food Products Corp., and introduce the John's Original brand (eventually purchased by Jeno's). Marvin Schwan, as John Beadle notes at left, started delivering frozen pizza just a few years later-about the same time that Rose Totino, later to become Pillsbury's first female vice president, was opening a Minneapolis restaurant with her husband James that would serve as the foundation of the Totino's brand.

Many, many others would follow, most notably Kraft, which got into the frozen pizza business in the early 1970s. Naturally, with so many competitors, marketing descended to the lowest common denominator, price. The 198Os were notorious for lowballing. According to old SAMl tracking data, between 1984 and 1990, the frozen pizza category's annual sales increased from $792 million in '84 to just $837 million in '9O. Now, just 12 years later, category sales have surpassed $2.7 billion, and continue to grow at high single-digit rates.

What happened? The broad acceptance of the microwave provided the first boost. Beginning in 1984 with the introduction of Pillsbury Microwave Pizza, frozen pizza makers recast their products for microwave preparation. This was accompanied by product improvements, including increased amounts of toppings, and convenience products such as Red Baron's Deep Dish singles.

Still, the microwave didn't prove a particularly good pizza oven. As already noted, annual sales in 1990 were not that much greater than those six years previously. The big boom came in the mid-1990s with the introduction of rising-crust style pizzas. After 50 years, frozen pizza makers had finally solved the product's biggest drawback, the infamous "cardboard crusts."

The first rising crust, DiGiorno, was launched regionally by Kraft Foods in 1995. Kraft was initially reluctant to make the major capital investment required to produce the revolutionary crust, which was based on bread and dough work done by General Foods (which Kraft bought in 1989) in the mid-1980s. Even after soaring sales results came in, Kraft still moved slowly, afraid of investing in a flash-in-the(pizza)-pan. DiGiorno finally went national in 1996, but was still filling in markets in 1997. Eventually, it would surpass sister brand Tombstone as the No. 1 frozen pizza brand.

Other brands, including Tombstone, hurried aboard the rising crust bandwagon. Suddenly, frozen pizzas were selling for heretofore unheard-of prices, $5, $6, $7 a pie. National advertising from brands like DiGiorno and Freschetta drove consumer trial. As the 199Os drew to a close, pizza manufacturers were enjoying a billion-dollar-plus category with double-digit growth rates.

Today, the category is dominated by the rising crusts-and by two companies, Kraft, owner of the top two brands DiGiorno and Tombstone, and Schwan's, marketer of the next three, Red Baron, Tony's, and Freschetta. But the category remains open to competition and new entries, with the top five brands accounting for only about half of category sales. The category itself is still chugging along-at a healthy 7% in the most recent IRI 52 weeks (ended 10/6/02)-and has become a star in grocers' efforts to win back sales lost to fast food outlets in the past two decades.

Distributors remained strong in a few areas, including New York, Chicago and California. But even there, they now functioned as warehousers and drayers operating on a cost-plus basis, rather than as conventional wholesalers.

Other distributors survived by turning their attention to the fast-developing foodsetvice market.

Different Arrangement

In later years, such major chains as A&P, Kroger, Grand Union and First National Stores among others turned again to distributors. But the arrangement was on a far different basis than in the past. In a number of instances, distributors supplied only specialty items with the chains doing their own warehousing and store delivery of volume items, including private label. In this way, they were able to offer a broad variety of frozen products. In other cases, chains continued to maintain their own warehousing and delivery facilities in some divisions while going back to distributors for stores in other markets.

But in all but a few exceptional circumstances, when a chain gave some or all products to a distributor, it retained Rill buying and merchandising authority.

One of Snow Crop's most potent weapons in the battle for scarce display space was price. It had opted to go the direct route to insure a lower price structure and had tested the theory in late 1946 with First National Stores in Boston and with AfkP in Chicago, where the chain reported tripling sales within 90 days on price reductions of 16 to 17%.

Another Departure

In going direct, Snow Crop made the first departure from its original concept. Another was soon to follow. By 1947, Moone decided the firm should operate its own processing plants.

Such a move became virtually inescapable when Vacuum Foods Corp., which by now had changed its name to Minute Maid Corporation, was marketing concentrate under its own brand and declined to pack for the Snow Crop label.

Another factor which caused Snow Crop management to view its own production in a more favorable light was the high degree of brand acceptance it had obtained. In view of the label's rapid growth, Moone and his associates felt they could realize a higher dollar return on their own product than they could on the 6% brokerage arrangement.

But financing was needed. Snow Crop had tied up an excessive share of its capital in its spot merchandiser deal. It had over-extended itself, too, with extremely heavy advertising expenditures in national magazines and other media.

The needed funds for its own production facilities were obtained in Easter week, 1947, when control was sold to Clinton Industries, Clinton, Iowa, the world's third largest corn refining company. Clinton purchased a 67% stock interest in the company and set up Snow Crop Marketers as a division with Moone as president.

Served as Chairman

President of Clinton Industries at the time of the acquisition was Charles W. Metcalf, a former executive vice president of General Foods, who had resigned the post during the war when a series of articles by columnist Drew Pearson accused him of trying to corner the rye market. After the acquisition by Clinton, Metcalf became chairman of the Snow Crop board.

By the end of 1947, Snow Crop was processing orange concentrate in its own plant in Dunedin, Fla. Subsequently, Snow Crop acquired four additional Florida plants as well as a pea freezing facility in Lewiston, Idaho.

With his showman's flair, Moone continued to make frozen food history. Snow Crop put frozen foods on national television for the first time in the spring of 1949 when it began to sponsor the first half-hour of Sid Caesar's weekly Show of Shows. The brand was Caesar's first sponsor, paying $55,000 for six half-hour segments, a spectacular bargain even in those days.

Sponsorship of the widely viewed program helped make Snow Crop a household name in the late 1940s and early 1950s.

Another TV program Snow Crop sponsored in the late '40s was the Faye Emerson Show on which it promoted a product that was to prove a dud-frozen coffee concentrate.

A principal problem was the failure of the concentrate to freeze solid. It was packaged in glass jars with wraparound labels and there were many leakers. Also, when reconstituted and heated, the coffee had little aroma. Consequently, Snow Crop promoted it mainly for iced coffee.

Second Chance

More than 20 years were to pass before frozen coffee got a second chance-this time as a foodservice item. The Coca-Cola Company Foods Division, which had bought the Snow Crop label, revived the product in 1970, introducing it under the Minute Maid brand and marketing it as part of a total system with distributors supplying the dispenser.

Unexpectedly, Moone and Mathews resigned from Snow Crop in 1951 to set up Concentrates Marketers in New York to serve as national sales agent for Sunkist Growers' orange juice and lemonade concentrates. At the time of their resignation, Snow Crop annual sales were put at $60 million.

But Moone and Mathews soon found that California orange concentrate could not compete with the Florida product. Eastern consumers were not accustomed to the tart flavor of California orange juice. Even with sugar added, the concentrate failed to sell in volume. When Sunkist opted to channel additional supplies of oranges into the industrial market, Concentrates Marketers went out of business in 1953.

It was Moone's last association with the frozen food industry. In 1956, he founded Jack Moone Enterprises to market golf equipment under the PGA brand. Moone died in 1959 at the age of 46.

The meteoric rise of Snow Crop touched off a battle of brands that was to grow ever more furious during the 1950s. The original contenders were Snow Crop and Birds Eye. In terms of personalities, the combatants were Moone and Birds Eye's marketing manager, George L. Mentley.

Although Moone was providing Birds Eye with its stiffest competition to date, Mentley had the professional's admiration for the expertise of the younger man, a former proteg at Birds Eye.

New Challengers

As the 1940s drew to a close, however, new challengers joined the battle. One was Libby, McNeill &. Libby, Chicago. The 80-year-old canner in 1942 began to experiment first with dehydrated and subsequently with frozen foods in its Blue Island, 111., plant. The work on dehydration was terminated, but by 1946 the company was ready to move on frozens.

In that year, Libby opened up its first four frozen food test markets in Milwaukee, Green Bay and Madison, Wis., and New York to consumers long familiar with Libby canned foods and tomato juice. Initial frozen products to bear the Libby brand name were cherries and boysenberrieswhich were soon dropped-and strawberries and peas. The items, packed in Libby's Walla WaIIa, Wash., plant, were put into national distribution in 1948.

The Libby product roster was steadily broadened. Orange concentrate was added in 1948 and in 1950 Libby purchased a concentrate facility in Ocala, Fla. Lemonade joined the line shortly thereafter.

Guiding the destinies of Libby's new frozen food division was softspoken and tough-minded William C. Mitchell. Mitchell, who had joined Libby as a salesman in 1921 and had headed its eastern and western divisions, as well as its Chicago sales branch, had been a professional boxer in his youth. He carried a rugged combativeness into the frozen food marketing arena. With an intuitive feel for the food business and a marked talent for improvisation, Mitchell parlayed a modest initial investment in frozen foods into an annual sales volume approximating $40 million.

From the beginning, Libby merchandised its frozen food products mainly through brokers. It did a large share of its frozen food business with one customer-A&P. And when the chain went to its own label on frozen fruits and vegetables in late 1955, Mitchell suffered a drastic decline in sales. Libby later reclaimed this volume-and more-under the successive stewardships of Harry Mathis and David V. Whitley.

Industry Innovator

Under Mitchell, and later under Mathis and Whitley, Libby was responsible for a number of industry innovations. Among them were:

* Cooperative advertising for frozen foods. Mitchell had been among the first to offer co-op advertising in the canned foods field and, drawing upon this experience, introduced this promotional practice to frozen foods.

* Floor stock protection to customers.

* Use of liquid nitrogen as a transportation refrigerant to protect shipments moving from the company's Sunnyvale, Calif., plant to the Chicago market.

* Bringing the lemon tree back to Florida. The state's lemon plantings had been almost destroyed by a freeze early in the century. In 1958, Libby planted 1,000 lemon trees in Florida to supply fruit for lemonade concentrate. The acreage was later increased.

* An essence recovery process for orange concentrate-a system that captures volatile flavor components ordinarily lost during concentration, condenses them and restores them to the concentrated juice.

* Change in pricing policy on its own label from a delivered-in to an f.o.b. structure. Libby was the first brand manufacturer to adopt this program.

Composite Can for OJ.

Libby was also the first brand name concentrator to employ a composite can for orange concentrate and by the 1963-64 pack had converted to 100% usage of this container, which became the industry standard.

As Libby was expanding out of the Midwest, new frozen food labels made their debut on the West Coast.

In Portland, Ore., North Pacific Canners &. Packers, sales agent for a group of northwestern fruit and vegetable growers, introduced a line of frozen foods under its Flav-R-Pac label.

From the beginning, North Pacific Canners &. Packers divided its frozen output fairly evenly between Flav-RPac and customer labels. It scored one of its first successes in 1948 when it got the private label business of Safeway Stores, then just moving into frozen foods.

Flav-R-Pac grew to become a leading brand in the western states. It set an industry first in late 1958 when it packed IQF fruits and vegetables in polyethylene bags.

This packaging innovation was developed in Canada in late 1957. Flav-R-Pac was the first brand to appear in the U.S. on a poly bag, although Patterson Frozen Foods, Patterson, Calif., was packing poly bag for private label.

Changing Times

An interesting phenomenon of the early 1950s and a sign of changing times was the emergence of the 194 Brand. Started by the San Francisco brokerage firm of Ayres &. Roberts, the line consisted of 20 vegetables, orange concentrate, strawberries and peaches. The two fruits were labeled 29 Brand rather then 194 Brand.

When processors were struggling to unload their inventories in the immediate post-war years, sales of distress merchandise at 10 cents per package, regardless of item, had been a common sight in the nation's food stores. However, once conditions had partially stabilized, pricing levels graduated to 19 cents, particularly when a higher degree of quality was offered.

All the vegetables in the 194 Brand line were Grade A, except for asparagus, brussels sprouts and fordhook lima beans which, because of pricing considerations, were Grade B.

Rise and Fall

The label was introduced in late 1950 and took off fast. Value of shipments was $5 million in 1951. But then volume slid. It was under $4 million in 1952 and by 1953 had fallen to just a little over $1 million. Soon thereafter, the label was dropped.

Part of the problem encountered by 194 Brand was its inability to maintain a network of wholesale frozen food distributors. A number of exclusive Birds Eye distributors had taken on the line, but wound up losing their Birds Eye franchises. Sales of the 19 Brand alone were not enough to keep them in business and many folded.

More important, brussels sprouts and a number of other items in the line were never made to sell at 19 cents. This became particularly apparent with the normal inflation of raw materials and higher labor costs prevalent by 1952.

What finally killed the 19 Brand, though, was the inauguration of a radical new pricing policy by another label that had been moving out from its Northwest home base since the end of the war. This was PictSweet, packed by PictSweet Foods, Mt. Vernon, Wash., whose pricing structure similarly featured 19-cent vegetables.

This company had been founded in 1917 in Bozeman, Mont., by L.L. Brotherton and Cassius L. Kirk as a private label processor of peas and corn. It was known originally as Bozeman Canning Company. In 1928, the firm purchased a processing plant in Mt. Vernon in the heart of Washington's Skagit Valley and subsequently transferred its headquarters there.

In 1932, Bozeman Canning had begun to freeze peas on a co-pack basis and in 1935 it put its own Frigifood label on them. The company introduced its PictSweet label in 1938 on hot pack and by 1943 was using it on frozen items as well. Bozeman changed its corporate name to PictSweet Foods in 1946.

Revolutionary Solution

Under the direction of its general manager, E.J. Watson, later to become president, PictSweet production facilities were whipped into a high degree of efficiency. The company's operational costs were reported to be among the lowest in the industry. And drawing on his accounting background, Watson applied simple arithmetic to a complex marketing problem and came up with a revolutionary solution-group pricing.

This innovation led to Pict- Sweet's big breakthrough in March 1952, when the new pricing policy was announced. It was responsible for boosting the company's unit sales by 200% within six months.

The announcement of the PictSweet program dropped like a bombshell in the industry, accompanied as it was by a 131/2% slash in prices of the entire 30-item frozen line.

The plan consisted of grouping all items into four price classifications. As noted, most vegetables were priced to retail at 19 cents. However, higher-cost items in the PictSweet line were priced to retail at 23, 27 and 39 cents.

Group pricing had a number of appealing features:

* It made Grade A frozen foods available at prices competitive with those of advertised brands of canned foods.

* It made prices easy to remember since there were only three or four to keep in mind.

* It allowed retail operators to feature mix-or-match specials.

Utilized to the Fullest

Meanwhile, group pricing offered PictSweet a substantial advantage which it was to utilize to the fullest degree. Most retailers then-and to a large extent now-displayed by item rather than by brand. All peas, for example, were displayed together no matter what label they bore.

The history of natural and organically produced frozen foods is largely yet to be written. It is only this year that the government has taken steps to codify exactly what terms like "organic" mean. Even so, naturals and organics are already playing a vital role in the frozen food case, and even mainstream supermarkets have added dedicated space in the frozen aisle-and often added extra frozen space in departments like produce-to market organic and natural products.

Most foods, of course, would have fit natural and organic definitions at the start of the last century, but by the 1970s concerns over chemical pesticides began to highlight how food production and processing had changed en route to creating the great variety and low prices enjoyed by American consumers. Things would come to a head in the early 1990s, led by the Alar scare and followed by revelations about the overuse of antibiotics in meat production.

By that time, the foundation for a modern natural/organic food business was in place. Companies like Amy's Kitchen, founded in 1988, had a few years of experience under their belts. On the retail side, small stores founded in the 197Os for consumers interested in natural and organic products had begun to turn into natural foods-oriented supermarket chains. Wild Oats, which had begun as a single small vegetarian natural food store in 1987, opened its first supermarket in 1991 in Sante Fe. Today, the chain operates some 99 stores under the leadership of exBen &v Jerry's exec Perry Odak.

Whole Foods, founded in 1980, began seriously expanding at the same time, acquiring strong regional chains such as Bread &. Circuses, at the time the Northeast's largest natural retailer, in 1992, California's Mrs. Gooch's in 1993, and Fresh Fields' 22 stores in 1995.

Likewise, the products available moved to the mainstream as well. Suddenly, natural and organic wasn't just about vegetables and tofu, but beef, chicken, frozen pizza and burritos, dry macaroni and cheese, snack foods-everything-as both stores and suppliers chased an affluent consumer interested in health and food safety and willing to pay for both.

Initial results were mixed, mostly due to wide variations in product quality. Consumers weren't willing to make taste tradeoffs for organics any more than they were willing to accept healthy or "light" items that didn't perform. But steady improvements in product quality have brought steady improvements in sales. Through April of 2002, for example, sales of natural-positioned frozen pizza, entrees and convenience foods in mainstream supermarkets topped $88 million, up 16.3% versus year-ago, according to ACNielsen and Spins. Six brandsAmy's, Cedarlane, Cascadian Farm, Ethnic Gourmet, Health is Wealth, and Deep Foods-all boast more than $ 1 million in category sales.

Price Barrier

According to a survey conducted recently by Whole Foods, most consumers who use organics regularly87%-rate them of higher quality than their conventional counterparts. Even among occasional users, more than a third, 38%, say they are of higher quality. The primary barrier to wider acceptance is price, with more than two-thirds of frequent organic users and more than half of infrequent users agreeing that organic products are "too expensive." This is likely to change as larger companies, such as Mars' seeds of Change, which can distribute directly instead of through distributors, eliminates costs from the traditional natural/organic supply chain.

Retailers are responding to the price issue as well. Whole Foods, for example, has launched the 365 Organic Everyday Value program offering value-priced everyday staples. And some 80 independent natural foods co-ops have banded together across 23 states as part of the "Co-op Advantage Program" to offer 30% to 40% savings on about Group pricing, on the other hand, encouraged retail operators to arrange their facings by price group rather than by product. And many a supermarket display case was dominated by a ribbon of PictSweet labels which helped build brand awareness.

PictSweet's spectacular rise was also accelerated by extensive use of cooperative advertising. Snow Crop, too, was known for its generous coop ad allowances as were other combatants in the brand battle. As one observer put it: "At times it seems that they're selling advertising rather than frozen foods."

PictSweet continued to use the group pricing system into the mid1950s. By then, however, it had become much less effective. Other processors had lowered their prices to meet the challenge. For better or worse, 19-cent frozen peas were no longer a novelty.

Group pricing survives to some extent, though, particularly in the prepared foods area where processors average out ingredient costs within a reasonable spread to offer the same price on several items in the same category. This was the PictSweet approach.

By 1952, the tide of battle was rising. It was to reach its peak in the middle of the decade, but it was never completely to die.

It began with fruits and vegetables where the major contenders were Birds Eye, PictSweet, Snow Crop, Stokely's Honor Brand, Seabrook Farms and Libby. But as the struggle mounted, it spilled out from the fruit and vegetable area into every emerging product group in which consumer interest and sales volume made the stakes worthwhile.

Quality, sacrificed to gain price advantage, was the frequent victim. And promising new products, such as fish sticks, were almost destroyed before they had a chance to show what they could achieve.

Every weapon was pressed into service as deal followed deal. Package sizes were among the earliest fatalities. By 1952 and 1953, the lack of uniformity in size, particularly among fruits and berries, was causing concern.

Shave And A Weight Cut

In the early days of the industry, fruits and berries for retail had generally been packaged in 16-ounce cartons, while vegetables were 12ounce. A typical fish package weighed five pounds. During the war years, on the other hand, products were put into any size package available and weights ranged all over the map.

As brand warfare got underway during the early 1950s, manufacturers began to shave weights an ounce or two at a time as they vied to develop the lowest possible retail prices.

Responsible marketers sought to stem the tide, but package weights continued to decline until the bottom was reached at eight-ounce vegetables. At this point, weights could go no lower and were, in fact, raised to the slightly higher levels prevalent today-nine and 10 ounces on vegetables, for example.

At the same time, the way was paved for a reverse trend toward substantially higher weights, such as 16 ounces, ironically the original starting point.

At one time, in the early 1950s, Snow Crop even introduced a fourounce orange concentrate which made a pint of juice. The rationale for the small can was Moone's contention that the standard six-ounce concentrate, which reconstitutes to a pint-and-a-half of juice, was "a bastard size." He pointed out that it stemmed from the post-war shortage of tinplate at the time concentrates emerged.

A more compelling reason, though, was the high price of oranges that year. At any rate, the four-ounce containers, dwarfed by larger sizes in display cases, were soon withdrawn.

But as so often has been the case in the frozen food industry, history was to repeat itself. Twenty-two years later-in January 1972-the Florida Department of Citrus made known its plans to test market four-can multipacks of four-ounce orange concentrate aimed at the 23% of households with one or two members. Meantime, Minute Maid conducted but later abandoned tests of three-ounce orange juice, which reconstituted to two six-ounce servings.

In 1957, Topco Associates, Skokie, Ill., retailer buying group, tried to introduce a ??-ounce can of frozen orange juice to supplement sixounce. However, it couldn't compete with the 12-ounce size under other labels.

Shifting weight patterns did little to improve the frozen food image among retailers or confidence among consumers. In 1953, for example, A. "Scotty" Wilson, then assistant to the merchandising manager, Jewel Food Stores, Chicago, asked: "Why should packages be changed every year? In the early days of the industry, a unit was brought out to feed four people-for instance a 12-ounce package of peas. Now look at the changes! Some fruits have gone from a pound to 12 ounces to 10 1/2 and now there is talk of a 10-ounce unit. What will they do next to confuse the consumer?"

Lacking Foresight

Meanwhile, Wilson pointed out, the industry was cutting consumption per family. A woman who had formerly bought a one-pound package was now buying 10 or 12 ounces. Unfortunately, brand warriors did not always take a long-range view.

It was with the rapid rise of orange concentrate that the battle was to reach the first of a series of crescendos.

There were many reasons why orange concentrate so rapidly became one of the most important pawns in the brand struggle. It was, to all practical purposes, the first item with really high-volume potential that the frozen food industry had produced. It was what lured shoppers back to the frozen food department after the post-war debacle. Frozen juice gave a new look to the whole frozen food industry.

As has been noted, thefirst retail concentrate had been packed under the Snow Crop label by Vacuum Food Corp. in 1946. The following year Minute Maid Corporation, headed by its 33-year-old president, John M. Fox, was offering orange concentrate under its own label. Other labels, mainly unadvertised, were on the scene by 1950.

Concentrate sales were sluggish at first. But they jumped from 2.1 million gallons in 1947-48 to 18.1 million gallons in 1949-50 and then to 43.1 million in 1951-52. By the middle of 1952, consumer purchases of concentrate for the first time surpassed those of fresh oranges.

As concentrate sales forged ahead, food chain operators sat up and took notice. Most chain buyers still considered frozen foods a low-volume product group. It was orange concentrate that ushered in the first significant shift in chain thinking about the frozen food department.

Getting the Message Out

Giving impetus to the rapid rise in concentrate volume was massive advertising. Minute Maid, Snow Crop and the Florida Citrus Commission spent millions to get the new "wonder product" off the ground.

Snow Crop had Sid Caesar and lmogene Coca, but Minute Maid had Kate Smith and Bing Crosby. Starting in 1948, the great crooner was to be identified with Minute Maid for more than a decade and then reidentified with it in 1968 when the company engaged him for its television commercials which he continued to do until his death in October 1977.

Crosby's association with Minute Maid began when New York financier Jock Whitney, who had invested in the company, induced the singer to go on radio 15 minutes a day, five times a week to promote Minute Maid concentrate. In return, Crosby got 20,000 shares of Minute Maid stock at 10 cents a share. In 1950, he put up $50,000 for an exclusive sales franchise in eight western states. Bing Crosby Minute Maid Company was organized to handle the deal. At about that time, he sold his Minute Maid stock for $ 12 a share.

The brokerage organization added non-competitive lines. When Crosby disposed of his interest in 1958, Bing Crosby Minute Maid was doing $20 million a year.

The organization was taken over by Hamilton Stone, who had been Minute Maid vice president of sales and advertising, and its name was changed to Hamilton Stone IL Associates.

Wagon Jobbers

Many changes in the established system of frozen food distribution followed in the wake of the rise of orange concentrate. One that was short-lived, but widely discussed at the time, was the wagon jobber distribution system that Minute Maid organized in New York in 1949.

It was set up by Howard C. Boerner, Minute Maid sales manager, as a means of widening distribution in both chain and independent outlets. Boerner, who later was to found the New York brokerage firm which bore his name, organized Minute Maid wholesale distributors as wagon jobbers who made daily calls on the retail trade, filling orders out of their refrigerated trucks.

The system got Minute Maid concentrate into 9,000 New York food stores, but it was discontinued in 1952. Many chains had gone direct by then and wholesale frozen food distributors were serving the independents.

Facilitated Direct Buying

As a result of their increasing frozen food volume, some chains were investing for the first time in their own zero-degree storage facilities and refrigerated truck delivery systems, making direct buying feasible. However, even chains without their own refrigerated facilities could now buy direct. This was through drayage arrangements.

One of the first strictly frozen food drayers in the country was Howell Trucking Company, founded in 1950 with three refrigerated trucks by Arthur Greason who had been head of Maxson Foods in New York's Hudson Terminal Market. In the late 1940s Maxson was Libby's largest wholesale frozen food distributor.

Greason folded the distributing organization in 1950 and founded Food Enterprises, a brokerage firm, to represent Libby in New York. The same week he opened the doors of Food Enterprises, the first brokerage to bear that name, Greason also founded Howell Trucking Company.

Howell operated storage and breakup facilities at Union Cold Storage Company, Jersey City, N.J., and subsequently at Merchants Refrigerating Company, New York, delivering product to stores on a cost-plus basis.

Howell's first customer was King Kullen Grocery Co. on Long Island and by the end of 1950 it was also servicing A&P stores. In June 1955, Greason sold Howell to Merchants, which operated it as a subsidiary at its Secaucus, N.J., distribution center until the service was discontinued in 1977.

The exclusive wholesale frozen food distributor, which had been the kingpin of the retail distribution chain through the war and beyond, was increasingly pushed to the side as the price battle raged.

Birds Eye, still the leader, held to the exclusive distributor against the trend as long as it could. In June 1951, General Foods announced that ) Birds Eye would no longer make exclusive selling agreements with distributors, but would continue to use its existing exclusive distributors as long as Birds Eye objectives were met.

However, when a single distributor could no longer achieve Birds Eye's distribution objectives, the company would sell other qualified direct buyers.

By 1953, Birds Eye defined New York as "a multiple market" and was selling to all comers, although it retained single distributors in some areas for a few more years. The exclusive wholesale distributor was well on his way to passing into history.

As processors fought tooth and nail to get their products into store cases, some found themselves looking wistfully but apprehensively at a new development that had moved to center stage. This was the freezer-food plan.

Such plans, which offered consumers a home freezer and periodic deliveries of meat and frozen foods and were promoted as providing substantial savings and easy payments, cropped up around the country in the early 1950s.

The appeal of the plans can be judged from claims that they could save consumers as much as 30% of their annual food bills and that the freezer would cost as little as a dollar a day.

On the whole, the freezer-food plans left the industry relatively untouched. Most were poorly financed, had difficulty obtaining product and couldn't produce the promised savings.

But there was a time when many a processor was torn between his desire to sell this seemingly burgeoning market and fear of how his retailer customers would react if he did.

Vigorous Counter-Attacks

Food store operators launched vigorous counterattacks on the food plans. Many of them attracted freezer owners by offering discounts to quantity meat and frozen food purchasers.

As food plans grew and then waned, the struggle for display space in retail outlets intensified. Occasionally a voice of sanity was raised calling for a halt to the frantic wheeling, dealing and price selling, but more often than not it turned out to be just a cry in the wilderness.

During the days of the postwar inventory crisis, responsible producers had moaned about the rash of 10-cent merchandise in store cases. But nearly 10 years later, when consumer demand was again on the upswing, a California supermarket ran an ad featuring Libby frozen vegetables at five cents a package. At that time the f.o.b. plant prices were $1.25-$ 1.35 a dozen.

At each successive stage in the price war, manufacturer profits were further thinned, inevitably drawing from funds that might have been used for promotion.

At the 1953 National Frozen Food Convention in Chicago, Warren Dills, sales manager for Stokely's Honor Brand, lashed out at irresponsible pricing practices by both processors and retailers.

Suggesting an alternative way of doing things, Dills called on fruit and vegetable producers and distributors to tax themselves a cent a dozen for an industry advertising fund to teach shoppers the true value of frozen foods.

"Standing in front of a store cabinet today, the customer doesn't know whether they're worth five cents or 35 cents," Dills maintained.

Calls Went Unheeded

Such calls for joint promotion were frequently sounded during the brand war, but they went unheeded. This was all the more unfortunate since it was already becoming apparent that no one would win. A 15-city market survey released by Scripps-Howard newspapers in 1954 revealed that, despite the costly battle for distribution, few, if any, frozen food brands had established clear supremacy in any market.

And as the brands battled, they left the door open for private label, which would transform frozen fruits and vegetables into commodities.

A few retail operators had introduced their own labels soon after the war. Safeway Stores, then the nation's second largest food chain, launched its own labels in 1948 only a few months after it began to stock frozen foods. American Stores (Acme Markets), Philadelphia, began to private label fruits and vegetables in 1949. And, as has been noted, Penn Fruit Company, Philadelphia; Jewel Food Stores, Melrose Park, Ill.; and First National Stores, Somerville, Mass., were among the earliest private labelers.

But they were exceptions. Until the advent of concentrate, few chains were interested enough in frozen foods to think in terms of putting house brands on a line.

But as retailer interest in the frozen food department started to grow, the private label tide-which later was nearly to inundate the brands-began to swell. The development that really opened the floodgates, though, was A&P's decision to come out with its own line.

By March 1957, every one of the nation's top 10 chains, as well as many smaller ones, were marketing frozen foods under their own labels. At the same time, voluntary groups and retailer-owned cooperatives across the country started moving in the same direction.

The frozen food industry was hit with the full impact of the private label surge at the 23rd annual meeting of the National Association of Food Chains in Chicago in October 1956.

The convention heard results of an NAFC membership survey which revealed that chains did 79.1% of their frozen pea volume and 60.3% of their orange concentrate volume under their own labels in the first half of 1956.

Chain brands on frozen peas accounted for a larger percentage of total dollar volume than NAFC members did on any of the other 17 products-frozen or non-frozen-surveyed.

The chains listed a number of reasons why they had inaugurated their own labels:

* To give better uniformity and control of quality.

* To offer better value.

* To build consumer loyalty.

* To meet competition.

* To have label uniformity and continuity.

* To provide better margins.

However, the chains neglected to give what was perhaps one of the most important reasons-the socalled advertised brands had failed to win a consumer franchise.

To add to brand woes, food retailing groups were not the only ones putting their own labels on frozen foods. An increasing number of wholesale distributors were doing the same.

By the mid-1950s the wholesalers had, to all intents, lost their chain business except for drayage deals and were now restricted to selling to independent food stores and institutional outlets. The distributor label Weis designed to offer independent operators price lines to compete with the chains.

Formed in '54

One of the most widely marketed distributor labels was Frosty Acres, owned by the Frozen Food Forum, which was organized by seven distributors in Atlanta, Ga., in May 1954, as a means of combating direct packer selling to the chains.

Other distributors who sought refuge under the Frosty Acres umbrella later in the '50s credited the buying group with saving the independent frozen food distributor from extinction when cooperatives emerged as a second major direct buying force.

Finding that more and more customers were becoming their competitors, brand fruit and vegetable processors decided to join the trend rather than fight it.

Birds Eye was the last holdout. But in 1956 the producer of the first advertised line of frozen foods went into the private label business. It came in with an aggressive program offering the chain buyer any type label he desired-advertised, controlled or his own. The program was terminated in 1982.

As private labeling moved into new areas, some of the brand combatants were beginning to join forces.

The first of the big mergers took place in July 1954 when Stokely-Van Camp acquired PictSweet Foods for $5.6 million. Largely because of its low operating costs, PictSweet had weathered the brand battle better than most. Its profits on sales before taxes were reported to be 5.4% in its last fiscal year. Stokely's Honor Brand, on the other hand, was operating slightly in the red.

Another merger which was to have a profound effect on the industry took place at the end of 1954 when Minute Maid Corporation became the nation's second largest producer of frozen foods through its acquisition of Snow Crop. Minute Maid paid Clinton Foods $39.8 million, $22.5 million in cash and $17.3 million in 4 percent subordinated debenture notes, for its Snow Crop division.

At the time of the acquisition, Snow Crop annual sales were estimated at $70 million while Minute Maid was doing about $37 million. Thus, Minute Maid now stood second only to Birds Eye whose 1954 sales were put at $125 million.

Of greater significance was the fact that the acquisition put Minute Maid into frozen fruits, vegetables, poultry, meats, seafoods and prepared foods. The Snow Crop acquisition eventually led Minute Maid into an ill-fated attempt to market a full line of frozen foods, including vegetables, fruits and beefsteaks under its own label.

The juice processor had first been associated with frozen beef steaks in 1953 when its New York franchised driver-salesmen had taken on distribution of the Grand Duchess steak line in New York.

In early 1956, Minute Maid introduced not only its own beef steaks but also french fried potatoes and potato patties into test markets. That autumn the line was expanded to 30 fruits and vegetables, introduced in upstate New York to the accompaniment of a heavy advertising and promotional drive.

Minute Maid waged a strong battle to get distribution. It dropped prices on its vegetables to the floor to win space at the expense of its two wellentrenched competitors, Birds Eye and Seabrook Farms. Vegetable prices were slashed by 60 cents a dozen and retailers were offered 1Ocent vegetable sellers and coupon giveaways.

Birds Eye and Seabrook fought back with the same weapon-price. Seabrook, which then had orange concentrate in its line, offered it for five cents a can if purchased with a Seabrook vegetable.

But fundamentally, the battle was lost before it began. Minute Maid had entered the field too late.

Minute Maid dropped the line in 1958. The previous year it had sold the rights to its Snow Crop brand on fruits and vegetables to Seabrook in all areas except the 11 western states and Canada. Since that abortive venture, Minute Maid has restricted its frozen food marketing activities to concentrates.

With the advent of the '60s, the battle of the brands dwindled in significance as mergers and acquisitions thinned the ranks of the combatants. Indeed, in fruits, vegetables and concentrates, there were few brands left.

But an evolution was shaping up in the way retail buyers and merchandisers viewed their frozen food departments. More and more of frozens' sales increases were being generated by prepared foods.