Deli Business ‘The Old World in a New Light’

Feature Article

The Old World in a New Light

Today’s German deli food promoters broaden — and lighten — their appeal.

German food manufacturers have long enjoyed an enviable reputation for the superior quality and distinctive regional flavors of their products. These days, while continuing to emphasize quality and taste, champions of German foods are working hard to counter consumers’ perceptions of German cuisine as heavy with messages touting the superior nutritional properties of German breads, meats and cheeses.

Leading worldwide promotional efforts for German agriculture is the German Agricultural Marketing Board, or CMA — the acronym for Central Marketing-Gesellschaft der deutschen Agrarwirtschaft mbH (Central Marketing Organization of the German Agricultural Industries). The CMA’s 30-year-old North American branch, headed by managing director Arnim von Friedeburg, is based in Alexandria, Va.

The CMA builds consumer awareness of German products through publicity and advertising campaigns and the in-store promotions it sponsors with suppliers and grocers. In 2003, the number of stores taking part in CMA-sponsored promotions grew from 998 to 1,891. This year, because of increased budgets and growing interest among manufacturers and retailers, communications manager Amanda Bond-Thorley expects CMA-supported promotions to be held in more than 2,000 stores in 20 to 30 chains.

Among the deli executives planning CMA-sponsored promotions this year is Jennifer Panchenko, director of food service for eight Lunds and 12 Byerly’s stores in Minneapolis-St. Paul and surrounding areas. “We’ve done Oktoberfests every year, but never in conjunction with CMA,” Panchenko says. “This year, we’re looking to get out there and take advantage of the partnerships and relationships with CMA and the companies they represent.”

Challenges

Exporting foods from any foreign country into the United States is not without its challenges. In addition to its marketing and merchandising support, the CMA helps facilitate successful market entry for German exporters to North America, guiding them through the many restrictions and requirements imposed by agencies including the United States Customs Service, the United States Department of Agriculture, the Food and Drug Administration and the Canadian Food Inspection Agency.

Difficult as the legal issues are, von Friedeburg cites the exchange rate — more than $1.21 U.S. and $1.63 Canadian per Euro as of late June — as the greatest challenge importers of German products now face. Shipping costs are also on the rise, primarily because of increases in security measures.

“Exchange rates are always a factor,” agrees Susanne Witte, president of Fairfield, CT-based Carl Brandt Inc., but she emphasizes exchange rates have favored importers of European products in the past and, most likely, will do so again. “Sometimes you win and sometimes you lose,” she says. “That gets factored into your business.” Brandt’s pasteurized Mestemacher breads are the 15-year-old German specialty foods importer’s primary deli department product. Most other Brandt imports, including cookies and candies, can be found in the international aisles.

“One of the biggest challenges to our business is the exchange rate,” adds Stephan Schenk, president of PEMA Breads’ Miami-based North American import operations. “The euro has been quite strong, and right now that added expense goes all the way down to the consumer. Of course, three years ago, it was the other way around and the euro was weaker than the dollar.” PEMA Breads, which started in 1905 as a German cake shop and café, imports several varieties of all-natural wholegrain breads from its factory in Weissenstadt, including pumpernickel, classic rye, eight-grain and sunflower seed, flaxseed and an oat-based “fitness” bread for health-conscious consumers. PEMA employs about 120 workers and produces 11 varieties of bread. In addition to selling their products throughout Germany, PEMA exports about 20 percent of its output to more than 70 countries worldwide.

Beyond legal issues, exchange rates and shipping costs, perhaps the greatest obstacle to German food exporters is in the mind of the American consumer, who tends to think of German foods as heavy. “The most powerful perception is that German cuisine is basically heavy dumplings in brown sauce,” notes von Friedeburg. “That is no longer the case in modern-day Germany.”

While the CMA does not release research results concerning consumers’ perceptions of German foods, the organization has been directly addressing the “heaviness” issue in its communications programs for the past several years. Through CMA’s “old world in a new light” consumer advertising campaign, von Friedeburg hopes to position contemporary German cuisine as high quality, varied and healthful. “We have so much more to offer — organic and all-natural foods, lighter ingredients — and all very tasty,” he says.

CMA launched the campaign in Spring 2003 in four major markets — Milwaukee, New York, Toronto, and the Washington-Baltimore area. The print ads featured a man in a bathtub crashing through a ceiling over the headline, “We had our reasons to make German food light and less filling.”

“No longer heavy and fattening, today’s German cuisine is lean, wholesome and easily prepared,” reads the body copy. “Try Abendbrot, or evening bread, for a tasty, light dinner. It’s a growing trend in Germany, which is one of the most nutritionally minded populations in Europe.”

In Milwaukee, the ad generated 3,000 entries in a “Taste of Germany” sweepstakes offering a trip to Germany. For the metropolitan New York campaign, CMA advertised in Bon Appétit and participated in the magazine’s “Entertaining with Style” event at Grand Central Station where, during four days, more than 4,000 consumers visited the CMA booth.

Say Cheese

Among the German imports found in deli departments, cheeses seem to be most readily accepted among American retailers and their customers.

A leading German cheese supplier to the United States and Canada, Käserei Champignon, has been producing soft-ripened cheese in the Bavarian Alps for nearly 100 years. The company exports about a dozen varieties of soft-ripened cheeses, Bavarian Swiss and processed cheeses to the United States through Champignon North America, a sales office the company established in New Jersey in 1982. General manager Birgit Bernhard says about 95 percent of her product is sold through deli departments.

Bernhard, a native German who worked her way through college at Champignon and held a fulltime job with the company for three years before relocating to the United States, has been charged with promoting the company’s products in the United States and Canada for 14 years.

Angelo Sgobbo, category manager for deli and bakery for A&P’s 36-store Food Emporium division, based in Westchester County’s Dobbs Ferry, NY, says when customers in his chain’s New York, Connecticut and New Jersey locations think of German deli imports, they most often think of cheeses. “We carry pretty much the whole Champignon line,” Sgobbo adds. “The Cambozola is the most popular one.”

Champignon’s best-selling product in the United States, Cambozola is a mild, brie-style blue cheese. “It’s the very first one we imported in 1982,” says Bernhard. “At the time we invented it, most Americans found blue cheese too overpowering. Based on that, we made it a brie with just a hint of blue cheese. Since then, Americans’ taste buds have adapted to stronger blues, but Cambozola is still our most popular product here.”

Paul Solomon, meat, deli, seafood and bakery buyer for Heinen’s Fine Foods, a family-owned supermarket chain based in Cleveland with 15 stores in northeastern Ohio, says the only German imports he carries in Heinen’s deli departments are five cheeses. “The best-moving German cheeses are the Champignon soft cheese with mushrooms and Champignon’s Cambozola,” says Solomon. Both products are among the 100 best selling of the 450 cheeses Heinen’s carries.

For Champignon’s Bernhard, the USDA’s cheese import quotas represent the greatest challenge and potential obstacle to continuing growth. “The USDA has quotas which allow only specific license holders to import specific cheeses from specific countries,” explains Bernhard. “I’d say it’s our number one challenge.”

Another challenge for cheese-makers is keeping product in stock. “Our cheeses ripen naturally over time, and to have always edible stock available, I have to give our headquarters a lead time of eight to ten weeks,” says Bernhard.

Champignon ships once weekly to the United States “Every Monday, a refrigerated container comes into my warehouse,” says Bernhard. “We could say, ‘Let’s do it every three weeks,’ but I cannot have consistent top quality without the additional work of weekly shipments.”

Meaty Issues

German-style meats have a place in most American deli cases, but meats imported from Germany are less common, primarily because of restrictions placed on meat imports into the United States.

Despite the difficulties, Abraham of North America Inc. brings a half-dozen varieties of air-dried prosciutto and cold-smoked Black Forest and Westphalian hams into the United States. With more than 400 employees worldwide, Abraham is Germany’s leading domestic producer of dry-cured ham. The parent company currently owns 25 percent of the cured ham market in Germany.

Claas Abraham, whose father and uncle founded the company in 1971, is president and CEO of the company’s North American operation, established in 1988. Three of its four European production plants are USDA-approved. North American sales are growing steadily, with annual totals approaching $5 million.

“The USDA is quite picky,” says Abraham. “Inspectors come twice a year and look behind every desk and every ham. Anybody who has been to our plants knows they’re so clean, you could eat off the floors. But if somebody drops a napkin on the floor, the inspectors write it up in the report. Especially in the past two or three years, they have been checking us in a way that’s not funny anymore. If they used the same measures in the United States, they would probably have to close 90 percent of the American plants.”

“In Germany, we are known for exporting to the United States,” says Abraham. “A lot of manufacturers ask us about the opportunity here, but once we tell them [all the work exporting meats to the United States entails], they say they’ll just skip that for now.”

More common than imports in the deli meat case are domestically-produced German-style sausages, salamis and patés from companies like Freybe Gourmet Foods Ltd., a 160-year-old company based in Langley, British Columbia, that manufactures more than 120 varieties of sausage, ham and specialty meats.

“Our deli meats are ‘European-style,’ and it is usually not an issue with deli buyers that we’re based in Canada,” says Michelle Dickens, marketing manager for Freybe Gourmet Foods. “Freybe Gourmet Foods is still run by the Freybe family and still uses recipes and methods that have been passed down from the original Freybe generation who started the business in Germany many years ago.”

German Bread: The Hearty New Health Food

While German cheeses and meats, once sampled, are generally well accepted by American consumers, German breads can be a somewhat harder sell.

“German bread is not something everybody is going to like,” admits Witte of Carl Brandt. “It’s very different from what an American palate is used to.” Brandt’s pasteurized Mestemacher breads are the 15-year-old German specialty-foods importer’s primary deli department product.

Solomon of Heinen’s agrees. “We carry some domestic German-style breads, but most of our customers go for more of a lighter, airier bread. German breads have not been big sellers for us.”

The popularity of German breads appears to be on the rise, though, as consumers’ interests in health and nutrition grow, and makers of German breads are already seeing a positive shift in sales. “With the trend in the last few years toward healthy living and eating, the popularity of these kinds of bread has skyrocketed,” says Witte, who describes the Mestemacher breads customer base as “predominantly the health-conscious consumer.”

“The health values of our product are very significant,” says Schenk of his breads. “Our carbohydrate content is about a third of the content in fresh breads. They’re low in fat — some are even fat-free — and also have high fiber value. And they taste great. You can put anything on this bread, and it’ll taste great.”

Another advantage German breads enjoy is an exceptionally long shelf life. Both PEMA and Mestemacher breads are shelf-stable for at least 12 months. “We achieve this long shelf life by a special baking process at very low temperatures for very long times,” explains Schenk. “There’s a lot of effort and skill required in making this type of bread product. There are many different steps involved. It takes time to make and bake, time to cool down slowly.”

Abendbrot and Other Opportunities

Among CMA’s current marketing initiatives, one featuring Germany’s traditional Abendbrot, or “evening bread,” is tailor-made for deli departments. Abendbrot is a light family dinner served buffet-style, usually consisting of a selection of deli meats and a variety of cheeses, spreads and relishes with hearty breads and fresh vegetables.

“The concept of Abendbrot fits in the whole wave of healthy eating,” says von Friedeburg. “Our hope is that deli managers will put these products together and promote this idea of a light evening meal with an open-faced sandwich.

“We have point-of-sale materials ready,” he adds.

Abraham is a bit skeptical about promoters’ ability, with limited resources, to inspire fundamental changes in the way Americans eat. “Sure, it’s nice to give it a try, but I don’t want to sell my product based on how it’s used in Germany. I’d rather say, ‘It’s a healthy alternative for your sandwich,’ or try to promote it as an ingredient by telling a consumer to wrap a slice of prosciutto around a chicken breast and bake it or to use some diced prosciutto on a pizza.”

Abraham sidesteps the heavy-foods stereotype by promoting his product as international. “Nine out of ten Americans associate heavy foods with Germany,” he says. “That’s how it is, and there’s not much we can do about it unless we have a few ten millions to spend. But my product is light. It took me three and a half years to figure out I needed to promote my product as a light, healthy international product instead of a German product and to find the applications where Americans would use it.”

Whatever ways deli managers and suppliers promote German cheeses, breads and meats, all agree the key to turning them into favorites lies in sampling, universally considered the best way to create a customer.

“I very much like to do a proper product demonstration,” says Champignon’s Bernhard. “Once consumers try our cheeses, they are ooh-ing and ahh-ing. Once they try them, it’s an easy sell.”

“You have to get it in front of people,” agrees Witte, referring to Carl Brandt’s Mestemacher bread.

“The big thing about specialty food and imported food — you have to get it in people’s mouths,” maintains Jennifer Panchenko, director of food service for eight Lunds and 12 Byerly’s stores in Minneapolis-St. Paul and surrounding areas. “Imports are expensive. There’s a hesitancy for customers to pick them up unless you’ve given them the opportunity to sample. But with the products we demonstrate and promote, we usually see well over 100 percent increases. That’s the power of getting that product into customers’ mouths.”

“In most of the cases, if people try the product they buy it,” says Abraham of his hams. His company-sponsored demos typically increase sales by 100 percent during the promotion, with sustained increases of 10 to 25 percent afterwards.

“We encourage our deli departments to demo as much as possible,” says The Food Emporium’s Sgobbo.

“The opportunities for deli departments are in selling German cheeses and hams, which are of exceptional taste when eaten with the right bread,” says Schenk. “Distributors and manufacturers should make an effort to educate the American consumer about the benefits of these products — that they’re not only delicious but healthy, that you don’t have to cook something for dinner when it’s so easy to prepare German cold cuts, cheeses and breads for an evening meal.”

“German and European-style deli meats have great opportunity for growth as they are the perfect solution for today’s extremely busy consumer,” says Freybe’s Dickens. “Most deli meats are ready to eat and in Europe, are consumed simply with salad and perhaps some bread and condiments. European deli meats are a quick, tasty, and healthy way (they are naturally low in carbs) to have a meal. If deli managers are able to educate their consumers about the German way to eat deli meat, they will see their sales increase!”

Sidebar:

Target Markets for German Foods

The CMA identifies the core customer for German imports as “Germanfans,” a market segment comprised of America’s approximately one million German-speaking foreign nationals, six million current and former members of the U.S. military who have been stationed in Germany and 45 million German immigrants and their descendants. Appeals to Germanfans are based on nostalgia and tradition.

CMA’s second-tier target market, “Foodies/Travelers,” includes about 4.2 million Americans who have traveled to Germany, 33 million specialty food consumers and 60 million chef-hobbyists. Promotions to this segment emphasize authenticity and the creative use of German ingredients in fusion cooking.

A third target is comprised of America’s 72 million baby-boomers and Generation Y—60 million up-and-coming consumers born between 1979 and 1994. The CMA wants these consumers to view German foods as hip and healthful.

Sidebar:

Cheese Import Quotas

Since 1951, the U.S. Department of Agriculture has overseen a complex system of quotas and licensing of cheese imports to the United States. Introduced under the Defense Production Act of 1950, the restrictions were originally intended to protect American farmers from foreign competition at a time when U.S. cheese prices had sharply increased. Although the market conditions have long since changed, the system remains in place.

Since the most recent revision to the law in 1995, dairy imports have been subject to a tariff rate quota system in which one tariff rate applies to a specified volume of imports, and another higher rate applies to imports in excess of the first-tier volume maximums. The volume amounts and tariff rates vary from product to product.

Foreign cheese exporters subject to the tariff rate quota system must have an import license from the Foreign Agricultural Service of the U.S. Department of Agriculture. There are several license types — “historical,” “non-historical” and “designated” — and the quotas apply to specific products, countries and volume of imports.

Historical licenses are granted to exporters who were already importing cheeses into the United States at the time the quotas went into effect and can be renewed each year as long as the importer continues to meet specified volume requirements.

Non-historical licenses are awarded yearly to applicants based on a lottery system, with no guarantees of continuing from year to year.

Designated licenses are issued to cheese exporters by foreign governments participating in the American program.

Sidebar:

Importing Into the United States

While most food imports are regulated by the Food and Drug Administration (FDA), the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) regulates meat, poultry and egg products.

The FDA relies on inspections at the point of entry into the United States. The FDA’s inspection requirements are specific to companies, which must register with the agency before importing their food products. The FDA also requires importers of foods and beverages to give prior notice of shipments before their arrival in U.S. ports.

Instead of dealing with individual foreign meat, poultry and egg producers, the FSIS works with the manufacturer’s government to verify the foreign regulatory systems are equivalent to American regulations. The FSIS does not conduct food inspections in other countries. Foreign companies that want to import meat, poultry or eggs apply to their own governments. Only establishments approved and listed as certified by their country’s chief inspection official may bring their products into the United States.

All food imports must be labeled according to applicable specific FDA guidelines covering nutrition facts, ingredients, volume declarations and product information for consumers.