Business

Velveeta Revives as Young and Poor Shop Dollar Stores for Groceries

Blocks of Velveeta are on sale in the dairy aisle of the Bi Lo grocery store in the St. Elmo area of Chattanooga, Tenn. on Wednesday, Jan. 8, 2014. (AP Photo/Chattanooga Times Free Press, Doug Strickland)
Blocks of Velveeta are on sale in the dairy aisle of the Bi Lo grocery store in the St. Elmo area of Chattanooga, Tenn. on Wednesday, Jan. 8, 2014. (AP Photo/Chattanooga Times Free Press, Doug Strickland)

(Reuters) – Anielle Troyan, a call center worker in New York, shops at discount retailers such as Family Dollar for items like soap and detergent as well as groceries like Kraft macaroni and cheese and small-sized condiments.

It’s “expensive to cook for one,” she said. “I’m 25, I’m poor, I’m usually going to buy what’s cheapest.”

Customers like Troyan are one reason why Kraft Foods Group Inc (KRFT.O) reversed course after considering stopping the sale of single-serve packages of Velveeta cheese sauce, which wasn’t moving in traditional grocery stores. After another look at the numbers, Kraft found that shoppers on tight budgets at dollar stores were gobbling up Velveeta sauce in the affordable small size, and the food got a new lease on life.

The fall and rise of Velveeta shows how companies such as Kraft, General Mills Inc (GIS.N) and Campbell Soup Co (CPB.N) are following shoppers into dollar stores, which carry a host of private label and brand name products, typically priced between $1 and $10. As an improving U.S. economy still leaves some middle class customers tumbling towards the poverty line, food companies are searching for growth where lower income consumers shop.

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