Oscar Mayer, Sara Lee Wage Legal Battle Over Commercial Claims
MILWAUKEE, May 23, 2009
(AP) Hot dog sales are set to sizzle as people look for ways to eat on the cheap and the summer grilling season starts. But the scramble to be top dog in the $2.1 billion market has sent the makers of Ball Park franks and Oscar Mayer wieners to court.
The lawsuit focused on advertising and product claims filed this week by Sara Lee Corp., the maker of Ball Park Franks, against Oscar Mayer-making rival Kraft Foods Inc. is the latest turn in the summer wiener wars.
The stakes are big as the peak season for franks begins this weekend. Hot dog sales are expected to rise as consumers keep turning to the cheaper meat, said Janet Riley, president of the National Hot Dog & Sausage Council. But the competition is getting particularly tough as shoppers, looking to save even more money, are trading down to store brands.
"Sales do go up in the summer, always. And in a tight economy I do expect that we're going to see even better performance," said Riley, known as the "Queen of Wien." She said Americans gravitate to hot dogs in tough times. And in summer particularly, with 38 percent of hot dog sales each year occurring between Memorial Day and Labor Day.
Todd Hale, senior vice president for consumer and shopper insights at Nielsen, predicts a good summer for hot dogs, especially as people stick around home on "staycations."
Sales had been fairly stagnant in the past few years. But revenue in the category rose 5.3 percent to $2.1 billion in the 52 weeks ended April 18, according to Nielsen. Part of that was due to higher prices.
"We're seeing comfort foods, back-to-the-basics foods do real well in this economy and that's speaking to some of the success we're seeing with hot dogs," Hale said.
Smithfield Foods Inc., the nation's largest pork producer, has seen hot dog sales down the past 10 years but now they are up "substantially," Chief Executive Larry Pope told analysts at a conference this month.
Sara Lee and Kraft are continually battling to be top dog, and Riley said store brands are now gaining market share. Private label dogs used to be in the top 10 as far as hot dog sales but now she figures they're in the top five.
That means less wiggle room for Sara Lee and Kraft, who are battling for market share. In the four-week period ending April 19, Ball Park was the top dog, with nearly a 21 percent share and sales volume up 22 percent at supermarkets, drugstores and mass market retailers, according to Information Resources Inc. Oscar Mayer had a nearly 18 percent share with a 5.4 percent slump in volume. The data does not include sales at Wal-Mart.
And now the two are embroiled in a lawsuit. Sara Lee alleges that Oscar Mayer's claims that its Jumbo Beef Franks are "100 percent pure beef" are false and hurting sales of Ball Park franks and the brand's reputation, according to the suit filed in the U.S. District Court for the Northern District of Illinois.
Downers Grove, Ill.-based Sara Lee said Oscar Mayer makes the claims "despite its being well aware of the chemical and other non-beef contents of this product."
Sara Lee also questions ads claiming that Oscar Mayer wieners outperform Ball Park and Hebrew National hot dogs, made by ConAgra Foods Inc., in taste tests.
The company is asking for corrective advertisements and damages.
Oscar Mayer says this is all just sauerkraut.
"Clearly, Ball Park does wish it was an Oscar Mayer wiener, since we are America's favorite hot dog brand," said Syd Lindner, spokeswoman for the Madison, Wis.-based company. "We stand by our reputation for accurate advertising to our consumers."
Oscar Mayer is pushing its brand this summer and just this week held a promotion to give away $1 million worth of hot dogs. Lindner said the promotion was motivated by the slumping economy.
Sara Lee, meanwhile, is putting a heavy emphasis on its new low-fat angus franks. The company is doing national in-store promotions this weekend offering a free package of buns with the purchase of two packages of Ball Park franks.
Hebrew National, not wanting to be outdone, is giving away 45,000 hot dogs on Monday in Times Square in New York. ConAgra spokeswoman Stephanie Moritz said the Omaha, Neb.-based company is also handing out 30,000 coupons for $3 off a pack of Hebrew Nationals.