Packaging helps Reser's move from deli counter to shelf: the leading supplier of deli salads is...

Reser's Fine Foods is making a big leap over the supermarket deli counter.

And packaging is helping it get there.

For 53 years, Reser's has combined domination of its market niche with a relatively low consumer profile. The Beaverton. Ore.-based company is the No. 1 supplier

But there's no opportunity for branding behind the deli counter. Indeed, most supermarkets tacitly encourage consumers to believe that the potato salad in the big tray behind the glass was made on site. That translates to less consumer recognition than might be expected for a nationwide food company whose gross sales will come close to $350 million in 2003.

Nonetheless, Reser's has been steadily building its brand name, through both prepackaged portions of its signature salads and other products: Mexican foods, sausage, pasta, refrigerated potatoes and more. This process has intensified in recent years. Bold new products, combined with innovative packaging for both new and mainstay products, are helping put Reser's directly before consumers.

"We've worked very hard to build value into the Reser's brand," says Don Graff, director of marketing. "Within categories, we've gone one step further, to create sub-brands that are very competitive and tell a story."

These sub-brands include Main Street Bistro refrigerated meals, introduced last October; Baja Cafe, last year's repositioning and revamping of its line of Mexican foods; and Potato Express, a refrigerated line of peeled, blanched, precut potatoes. From a purely packaging standpoint, perhaps the biggest success has been Salad Ovals, which use premium packaging for Reser's flagship salads (see "Ovals add value to mainstay salads" on page 38).

These new branded products are building on the success of a company that has gone from the family kitchen of company patriarch Al Reser to a leadership position in refrigerated foods. Reser's currently employs more than 1,800 people and puts out more than 1,500 products. Its 11 production facilities, in seven states, take up a collective total of nearly 1 million square feet. The company vaulted from $100 million in sales in 1990 to nearly $350 million in 2003, with double-digit growth most years.

Deli mainstay

Reser's main territory is the supermarket deli case. The prepared salads sold there--potato salad, macaroni salad, pasta salads, coleslaw, gelatins and more--are the products with which Reser's established its reputation, and on which it continues to make much of its money. In summer, the peak salad season, Reser's produces more than 35 million pounds of deli salad a month.

The company started literally in the kitchen of Mildred Reser, Al's mother, in 1950, when she started selling potato and macaroni salad to local stores. Al Reser joined the business after studying accounting, business and food technology at Oregon State University (where the football arena is now called Reser Stadium, thanks to a family donation).

Reser took the company public in 1960, using the money from the IPO for its first large plant (which still operates today) in Beaverton, Ore., the company's headquarters. Reser's expanded gradually, into Washington state, California, Texas and beyond.

Trouble came in the early 1980s when a financier started buying all the Reser's stock he could, with an eye toward acquiring the company and merging it with his others. He eventually got control of 47% of the stock, forcing the Reser family to spend and borrow every dollar it could to buy up the remaining stock. The family managed, just barely, to hang on to the company, which it proceeded to take private in 1987.

After Reser's was family-owned once more, the company went on an ambitious expansion program. Its first acquisition was a California salad processor in 1989. Other companies followed in rapid succession: two in 1992, three in 1993, one in 1996, two in 1999, one in 2000 and two more in 2002. The latest purchases were Made-Rite, a processor of specialty salads based in North Carolina, and Lynn Wilson Foods, a producer of Mexican foods based in Salt Lake City.

Fragmented business

One reason for all the acquisitions has been the regional nature of the refrigerated salad business. This fragmentation is due partly to the narrow distribution window for refrigerated food and partly to regional preferences. For instance, Texas consumers prefer mustard-based salads; in the Northeast, white salads with little or no mustard are preferred; Westerners like mayonnaise-based salads, while Southeastern and Midwestern consumers prefer sweeter products made with salad dressing.

Another big motivation behind many of Reser's acquisitions has been the desire to reduce the cyclical nature of the company's sales. The salads that provide the bulk of Reser's revenue are top sellers only from mid-May to Labor Day. Reser's made individual acquisitions and developed certain product lines with an eye toward evening out the sales cycle. It has worked: Sales fluctuations throughout the year have been reduced to less than 10%.

Diversity is important for another reason: Refrigerated salads, while still a mainstay for Reser's, are not a major growth item. Consumption tends to be flat, and Reser's executives want to emphasize items with more growth potential.

That has led to major new product introductions and revampings over the last few years. Packaging has played a major role in these new products.

South of the border

One such product is Baja Cafe, the line of tortillas, salsa, burritos, taquitos and other Mexican foods. The company created the Baja Cafe line, folded the existing Reser's line into it and enhanced it with new offerings.

"Reser's has been in Mexican foods for over 30 years, and in the West, we have a strong presence in the Mexican category with our brand," says Peter Sirgy, vice president of sales and marketing. "What we did with the introduction of the new taquitos and the quesadillas and the tamales in the frozen category is both upgrade the product line, by adding new items, and really overhaul the packaging." The Baja Cafe logo now dominates the packaging, with vibrant purple-and-gold graphics establishing a brand identity.

Reser's newest product line is Main Street Bistro, which marks Reser's boldest move yet into total meal solutions. These refrigerated meals combine meat loaf, Swedish meatballs or other meats with cooked starch sides.

"The idea behind Main Street Bistro is, we're primarily a diversified refrigerated food manufacturer that's capable of competing in all refrigerated areas of the store," Sirgy says. "One of our strengths is producing side dishes. As we look at the meat category, that purchase by the consumer is being complemented by a side dish.... There's no reason that purchase can't be made in the meat section."

Main Street Bistro meat and potatoes are packaged in separate film pouches, for easy microwaving, and nested in an over-wrapped polypropylene tub. Reser's facility in Pasco, Wash., which has produced mashed and other cooked potatoes for foodservice and retail since coming on line in 1999, provides the sides for Main Street Bistro. The meat comes from one of two Reser's plants in Beaverton, Ore.

The Main Street Bistro entr6es required in-pouch pasteurization, which was something of a novelty, says general manager Michael Conners. "It's a new process to us for this type of product," Conners says.

These little differences will add up to a big difference for the consumer, Reser's hopes.

"The unique thing about our current entrees is that we're supplying the protein and the sides," says Mark Reser, chief operating officer. "We're selling the complete meal." That's unusual in refrigerated foods in the U.S., Reser's executives point out.

Reser's intends to maintain its primacy among supermarket deli salads. But the company plans to use its experience and assets to move into the branded parts of the supermarket, too.

"Branding is going to be a big priority for us in the years to come," Reser says.