Hormel Foods Corp. noted that sales of its microwavable meals, including the Compleats brand, were weak in the quarter. Consumers are limiting their spending on expensive items amid the recession, and that's hurting products like microwavable meals. CEO Jeffrey Ettinger said the category is seeing competition on pricing as companies seek to keep wooing shoppers. He discussed the issue in the company's third-quarter earnings conference call with analysts on Thursday.

QUESTION: Talk about your microwave business, which improved in the second quarter but was weak in the third. Is it competition or is it still the value proposition, or it's just the economic environment? What's your outlook there?

RESPONSE: Your characterization is correct in terms of we clearly had improved during second quarter and we are hoping to continue that momentum and we were unable to do that in the third quarter.

I think there is an element of the value proposition in play for the category itself. When you are dealing with only 12-week numbers it's sometimes hard to get a full read on what's going on in the competitive marketplace.

We know anecdotally that the frozen food segment was down significantly when the recession hit and that some of the players in that segment have responded with very aggressive pricing features.

... So when the frozen food industry starts putting out very hot feature prices that we believe could well be having an impact on our category, there also has been a significant entrant of a new solid player into the category with a slightly different selling proposition than ours.

In the long run we think that's probably going to be good for the category to have that kind of attention placed on it. But there clearly have been situations on a retailer by retailer basis where we may have lost out on features as an entity has chosen to push feature prices to support their new item.

A service of YellowBrix, Inc.