Growing Taste for Ethnic Fare

Frozen Food, Hot Market; Niche Firms and Giants Capitalize on Growing Taste for Ethnic Fare

By Krissah Williams
Washington Post Staff Writer
Sunday, August 17, 2003; Page F01

A decade ago, Indian immigrants Bhagwati Amin and Ranbir S. "Paul" Jaggi were owners of two mom-and-pop food operations.

Bhagwati and her husband, Arvind, were packaging her homemade Dhaba-style meals (slang for the traditional spicy food sold by street vendors in India) and delivering them from a small kitchen in suburban New Jersey to grocery stores in Indian neighborhoods in the Northeast.

Paul and his wife, Sangeeta, were freezing the palak paneer (spinach and cubes of cheese) and vegetable korma (a spicy mix of veggies) prepared for their Boston area Oh Calcutta restaurants and selling them as packaged dinners under the brand name Taj Gourmet at a local natural-food store.

Both couples were targeting their frozen dinners at palates attuned to curry and turmeric as well as bored vegetarians looking to add new flavors to their diet.

And in so doing, they became part of one of the fastest-growing segments of the frozen-food industry, the $2.2 billion "ethnic" market. The two family companies have capitalized on the country's increased exposure to international foods, growth in the number of working couples and cooking-impaired singles, and a health-conscious pendulum that has swung from low-fat foods to natural and organic fare.

Those factors have helped drive the Amins' Deep Foods Inc., the Jaggis' Ethnic Gourmet, and other niche frozen-food companies specializing in Mexican, Chinese and Thai cuisine to unexpected success.

Deep Foods has grown into a 70,000-square-foot Indian snack, ice cream and frozen-food powerhouse. The Union, N.J., company can make 20,000 frozen entrees a day in 70 varieties, said Arvind Amin, the company's president.

"My people is saying, 'How do you make so many different kinds?' " he said, dabbing his forehead as he strolled through the steaming-hot manufacturing plant as palak paneer simmered in large metal kettles. "None is losing money."

Paul Jaggi's Framingham, Mass., operation has grown at an even faster clip. Three years ago, he and his wife sold their brand to giant food producer H.J. Heinz for an undisclosed amount. Paul, now general manager of Heinz's ethnic-food division, is planning to add Cuban and Vietnamese dinners to Ethnic Gourmet's established Indian, Thai and Chinese lines.

"People are getting bored with the same baked-potato-and-hamburger stuff," said Paul, who moved to Framingham from New Delhi in 1987.

Frozen-food sales confirm his assertion. Consumers are buying more chicken tikka masala, lasagna, cheese enchiladas, and sweet and sour chicken even as they take home fewer old standbys.

In 2001, sales for traditional "TV dinners" dropped 1.6 percent, to $1.17 billion, and pot-pie sales fell 3.4 percent, to $318 million, according to the most recent figures available from research firm ACNielsen.

During the same period, the frozen ethnic-food sector grew in double digits. Sales of Mexican entrees grew 20.6 percent, to $488 million. Figures for Asian entrees, which include Indian fare, climbed 12.3 percent, to $463 million. And sales of Italian food -- pizza, spaghetti and other pastas that most Americans consider their own -- increased 10 percent, to $1.28 billion.

"It's not 'Leave It to Beaver' America anymore," said Christopher Loretto, publisher of industry trade magazine Frozen Food Age. "The taste profile and flavor preferences are expanding."

Ethnic Expansion

In the food industry, "ethnic" is hot. A survey administered by Supermarket News last year found that 1 in 5 Americans is eating more ethnic food than two years ago. Food companies, investment firms and brokerage companies all appear to be reading the same reports. Food companies' research-and-development staffs are also following consumers' restaurant tastes. Ubiquitous Mexican and Chinese restaurants and, to a lesser extent, Japanese, Thai and Indian places have piqued their interest.

So it was changing tastes and, more important, the sales figures of the small niche firms that, perhaps predictably, captured the attention of Heinz and other big players.

The fastest-growing markets in the frozen-food sector are Mexican and Asian, according to the American Frozen Food Institute. Which is why, when the Pittsburgh-based ketchup king bought the Jaggis' Ethnic Gourmet, it also purchased Mexican frozen-food company Delimex from a private investment firm.

"We have proprietary research that shows the likelihood of a consumer tasting ethnic cuisine is rising," said Heinz spokesman Robin Teets.

Heinz has company. The Shansby Group, a San Francisco investment firm, bought Don Miguel Mexican Foods from the descendants of its founder, Alex Morales, for an undisclosed amount last November. The company makes El Charrito-brand Mexican entrees and Don Miguel burritos and chimichangas.

Big chain supermarkets may have noticed the changing customer and his shifting palate even before the big food firms, creating "international" sections in their frozen-food aisles. Smaller specialty grocers -- Whole Foods and Trader Joe's among them -- have been even more agile, often featuring much wider selections and dealing with small producers.

Frozen foods require expensive freezer cases, a substantial investment for supermarkets, which typically have low profit margins, said Loretto, the Frozen Food Age publisher. But the frozen-food aisles are the only consistently profitable area in most stores. To ensure their success, mainstream grocery stores charge manufacturers hefty placement fees -- sometimes $200,000 or more -- for the right to have their dinners in the grocer's freezer, the food manufacturers said.

For their part, the manufacturers carefully consider the potential of their products' success before agreeing to pay the fees.

Guy Lewis, owner of VIP Sales Co., primarily a frozen-fruit-and-vegetable company, took such a risk in 1996 and launched Tai Pei, a Chinese food line packaged in Chinese carryout containers. Since the company started selling sweet and sour chicken seven years ago, Lewis has continually expanded the line. This year he added cashew chicken and pepper beef.

"It can be pretty costly," Lewis said from his Tulsa office. "You don't want to have very many failures or you'll be out of business."

The risk is mitigated by the relatively high profit margins for the products. Prepared in bulk at a modest cost, they are sold for as much as $4 and $5 per dinner. The food companies -- all of which are privately held or subsidiaries of larger companies -- would not discuss their sales or income figures.

The ethnic frozen-food market appears to be poised for more growth, industry insiders said. Even Goya Foods Inc., which has traditionally marketed itself as a supplier of authentic rice and beans to the Latino community, has seen growth in the frozen-foods entrees segment, company spokesman Rafael Toro said.

"People just don't have the time anymore," Toro said.

Targeting Palates

The same need for speed helped propel the Indian frozen-food market, said Archit Amin, Bhagwati and Arvind's son and marketing and sales manager for Deep Foods. His wife, brother and sister-in-law are also company executives.

The company's growth was spurred in the 1990s by the increased number of single Indian men coming to the United States on H-1B temporary work visas granted to foreign professionals hired by tech companies, he said. In that decade, the Indian population in the United States more than doubled to 1.9 million, according to the 2000 census.

"There were bachelors coming over from India" who didn't know how to cook, Amin said. "Frozen food is convenient and not expensive. The next best to fresh is really frozen."

Food science backs him up. Entrees can be flash-frozen in minutes, with their original texture preserved and spoilage retarded.

The back of the Deep Foods chicken curry box -- sold under the brand name Curry Classics -- reads like a homemade recipe: chicken, onions, tomatoes, water, canola oil, spices, garlic, sea salt, coriander leaves, turmeric and green peppers.

"We make it just like Mom in the kitchen," Bhagwati Amin said. "Whatever she put in, we put in."

Indian food companies are helped by the existence of an audience for Indian vegetarian dishes that goes beyond émigrés. Deep Foods recently developed the Green Guru label for the mainstream vegetarian and vegan market.

To Arvind Amin, this doesn't mean watering down authenticity. "The Indian consumer, since he or she was born, comes with a special palate and has cravings of a different variety every day," he said, laughing. "It is our responsibility to provide for our patrons. . . . No need to misguide the mainstream consumer and satisfy their taste 100 percent at the cost of our cultural consumer."

The company's spicy Mirch Masala line is targeted at the Indian community. It hits smack dab at the second generation who want mom's cooking but without the hassle.

"Their earnings are higher. They are busier," Loretto said. "It's one more aspect [of American life] they are willing to try."

By contrast, Ethnic Gourmet, called Taj Gourmet until 1996, when it added Thai and Japanese offerings, tempers the spice in its dishes to appeal to a wider frozen-food audience, Jaggi said. Similarly, Don Miguel targets its Mexican food at Americans on the run who'll stop at a gas station and pick up a burrito, not traditional Mexicans who relish the taste of homemade tortillas.

Prepping the Food

The preparation and packaging is at once simple and intricate, as Arvind and Bhagwati, who both came from India's Gujarat state more than three decades ago, show, walking through the plant.

Four workers chop onions and bell peppers for pad thai, the company's only non-Indian dish. In the next room, veggies for other dishes boil in three large kettles. A man mixes spices into the pad thai rice noodles using a pitchfork. Another worker stirs gallons of palak paneer in a big tub as he prepares to put it into the $4 million packaging machine the Amins bought eight months ago. The machine squirts palak paneer into 10-ounce plastic containers, four at a time, sifting out dinners that are underweight. The conveyor belt pushes them into a flash freezer. Forty-five minutes later, the packages come out frozen solid. The machine seals the containers airtight with plastic, boxes them and applies a bright-red sticker to the outside -- $1.99.

Bhagwati eyes a bucket of spinach-rich palak paneer with pride as it is readied for the machine. It is the company's top seller.

"You have to go by the eyes and the recipe," said Bhagwati, a traditional Indian wife who is still passionate about cooking nearly three decades after starting Deep Foods. "There's nothing [technological about] my palak paneer."

Passing yellow buckets filled with yellow-brown curry powder, deep-red chili powder and bright-yellow turmeric, Arvind said the company is planning a grand expansion. The family is building executive offices, a permanent place for its regular U.S. Department of Agriculture inspector and doubling its manufacturing space.

The Amins have turned down investment firms interested in buying them out. "We are having too much fun," said Arvind, who is in charge of business strategy.

They are at another turn in the company's history, said his son Archit, who represents the company at New York's annual Fancy Food show.

"This year is the first time I really felt that no introduction was necessary," he said. "People know curry. It's sought after now. America has another food line."

© 2003 The Washington Post Company

Sunday, August 17, 2003