Deli Wars

By Michael Sasso, Tampa Tribune, Fla.

Mar. 27–TAMPA — Call it the battle of the designer deli meats.

For 12 years, Lakeland-based Publix Super Markets Inc. has been stocking its Florida delicatessen cases with the high-end Boar’s Head line of meats and cheeses. Almost anyone who has stood in line at Publix’s deli counter has heard a deli clerk ask, “Publix brand or Boar’s Head?”

Not to be outdone, other major grocery chains operating in the Tampa Bay area, including Albertsons, Winn-Dixie, Kash n’ Karry and its sister chain Sweetbay Supermarket, have adopted another pricey deli brand, the Philadelphia-based Dietz & Watson line.

Erik Gordon, a marketing professor at the University of Florida, said supermarkets are co-branding their delis. Brand names like Boar’s Head give a supermarket deli an image of quality, similar to the way name brands imply quality in designer shirts and sunglasses, Gordon said.

On the downside, there may be less variety in the grocery deli case these days, as mainstream brands such as Butterball and Land O’Lakes cheese are pushed aside. Gordon isn’t sure customers were that loyal to these middlebrow brands, though.

“Certainly in the Florida market, that co-branding of having a Publix-Boar’s Head deli has worked better than everything else,” Gordon said.

Brands such as Boar’s Head and Dietz & Watson have an exalted place in the world of cold cuts: the so-called “premium tier.” Premium meats tend to be “whole muscle” products, meaning they are taken from one muscle of an animal.

That’s different from meat that comes from several muscles that are bound together to form one block of deli meat, said Alan Hiebert, an education specialist with the International Dairy-Deli Bakery Association, an industry trade group.

Whole muscle meat tastes better because it doesn’t have the binding materials found in lower-grade meats, Hiebert said. The bottom tier is called “reformed” ham, a meat and water product made in a mold, Hiebert said.

Boar’s Head Provisions Co. and Dietz & Watson both boast that they have no “fillers” — something other than meat intended to give it extra weight. Independent studies on sales of premium deli foods are difficult to find, but Rich Wright, vice president of sales and marketing for Dietz & Watson, said the niche has experienced double-digit growth during the past few years.

Boar’s Head and Dietz & Watson have been dueling it out for decades in the Northeast.

Boar’s Head was founded by Frank Brunckhorst in Brooklyn, N.Y., in 1905, while Gottlieb Dietz founded Dietz & Watson in Philadelphia in 1939. Both brands started distributing their products beyond the Northeast in the 1970s.

“I came from Maine, and up there Boar’s Head is everywhere,” said Greg Gibson, who was waiting in line one recent weekday for a Boar’s Head sub at Joe’s New York Deli & Catering in east Tampa. “I’m a big health nut, and there’s no fillers, no phosphates, no things to make you feel full.”

Boar’s Head, in particular, has a reputation for obsessing over who gets to carry its products and how they are displayed.

Andrew Wolf, a supermarket industry analyst for BB&T Capital Markets in Richmond, Va., said Boar’s Head often insists on being the only high-end deli meat in a grocer’s deli case. For example, Wolf said the company made news in 2001 when it yanked its products out of 210 supermarkets owned by grocery giant Safeway Inc. Many of the stores were in Texas.

The Fort Worth Star-Telegram reported that Boar’s Head was miffed because Safeway began promoting its own line of premium deli products, Primo Taglio.

Dietz & Watson is somewhat less restrictive and is willing to share deli space, Wright said.

“We are the friendlier, the nicer guys as far as that is concerned,” said Wright, the Dietz & Watson executive.

Despite its contract restrictions, some Florida grocery chains for years have tried to lure Boar’s Head — unsuccessfully.

“They’ve said they’re going to service Publix and Publix only,” said Craig Geer, vice president of merchandising for Kash n’ Karry, which has tried to sign Boar’s Head in the past.

The Publix-Boar’s Head relationship took off in 1994, when Publix signed an exclusive deal to carry Boar’s Head in Florida, said Publix spokeswoman Maria Brous. Under the deal, Boar’s Head agreed that it would only sell products to Publix among major Florida grocery chains. Publix also sells Boar’s Head in other Southern states, including Georgia, but it doesn’t have an exclusive contract there, Brous said.

How much Boar’s Head meat and cheese Publix sells is unclear. Publix wouldn’t disclose annual sales of the brand. Boar’s Head did not return a reporter’s calls.

However, a check of two Bay area Publix stores last week hints at how heavily Publix pushes Boar’s Head products — even above its own Publix-brand of cold cuts. At a Publix store on Gandy Boulevard in south Tampa, a reporter found more than 70 varieties, of Boar’s Head meats and cheeses, compared with 13 of Publix-brand meats and cheeses, and five of other brands. The split was nearly the same at a Publix on Martin Luther King Jr. Boulevard in Seffner.

Brous wouldn’t say how much of a premium people pay for Boar’s Head above Publix’s brand. She said prices vary because of daily specials.

Wright, the Dietz & Watson official, said Boar’s Head and Dietz & Watson typically charge $1 to $2 more per pound than medium-grade cold cuts.

The Publix-Boar’s Head relationship appears to have been a gold mine for Boar’s Head, which moved its headquarters to Sarasota from Brooklyn in 2001.

By signing a deal with Publix it has attached itself to Florida’s dominant grocery chain. Publix holds an estimated 41 percent of Florida’s grocery market, according to The Shelby Report, a grocery industry trade journal. Its biggest competitor is Wal-Mart Stores, which has a 20-percent market share in Florida.

While Boar’s Head does not disclose its finances, a 2005 lawsuit involving heirs of the Boar’s Head empire revealed that the company had sales of more than $850 million in 2004 and pre-tax profits of more than $80 million.

Shut out of Publix, Dietz & Watson is betting its future on Florida’s other grocery chains.

One positive development: Winn-Dixie, which has been trying to develop a more upscale image, recently rolled out the Dietz & Watson deli line statewide a year ago, said Nancy Gaddy, Winn-Dixie’s vice president of deli/bakery.

The rub: Winn-Dixie is under bankruptcy protection and Wall Street analysts warn that Jacksonville-based Winn-Dixie may not survive much longer.

Another plus is the way Kash n’ Karry is morphing its stores into the more upscale Sweetbay Supermarket, Wright said. Sales of Dietz & Watson products at newly remodeled Sweetbay stores have doubled, Wright said.

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