As consumers seek value and versatility in the produce aisle, they are relying on the potato to stretch their budgets while filling their plates with wholesome staples.
With more potato varieties becoming available, offering the right assortment and adjusting it to changing economic conditions will be key strategies in 2009, note experts.
Seth Pemsler, vice president-retail/international for the Idaho Potato Commission based in Eagle, Idaho, is optimistic that given the current momentum the recession will prove to be a positive influence on the potato category. “People are eating out less and that’s something likely to continue through much of 2009,” says Pemsler. “There are many ways retailers can optimize profitability during a recession and capture additional food dollars but it all begins with driving awareness in our category.”
Rachel Leach, marketing manager for the Russet Potato Exchange based in Bancroft, Wis., also believes the down swing of the economy will ultimately be good for agriculture at large in 2009. “Potatoes have always been viewed as a staple and historically consumption tends to rise during times of economic uncertainty,” says Leach.
“The difference today, however, is the addition of choices that the consumer has both with new potato varieties as well as other produce options. Given that potatoes are often underrated, what we’d like retailers to remember and stress this year is the value of potatoes from a financial, nutritional and versatile standpoint,” says Leach.
Mac Johnson, president of Aurora, Colo.-based Category Partners, the strategic marketing services arm for Wada Farms and Farm Fresh Direct, is also hopeful traffic counts being down in restaurants will translate into plus sales for potatoes in 2009. And like Leach, Johnson notes that compared to other types of produce, potatoes are still one of the best values in the department on a per pound basis but says the challenge this year will be convincing consumers they can prepare a healthy dinner quickly and easily.
Johnson is quick to add that just because people are eating more at home doesn’t necessarily mean they are cooking more. “There are many inexperienced cooks now trying to assemble dinner at home. This group is more likely to turn to frozen pizza and similar types of food for dinner. To combat this, retailers need to show them some simple ways to cook with potatoes as well as carry a selection of value-added products that cook up quickly,” he says. “Focus on helping people who can’t cook as well as those who are pressed for time by offering creative ways they can incorporate potatoes in a home cooked meal. Given this, convenience will be a resonating theme we’ll see with potatoes this year.”
As the potato market continues to show signs of strong growth, potato growers are investing in new equipment, technology and processing plants. “My guess is this will translate into a slew of new products hitting the market in the second and third quarter of 2009, including more convenience and value-added items,” says Leach.
The economy may be in a state of flux but the fact that the potato industry has become more profitable has been translating into increased innovation, notes Robert Weis, director of marketing for Nonpareil Corp. based in Blackfoot, Idaho, makers of Teton Valley Ranch potato products. “As a result of increased profits potato companies are able to do more new things and be more innovative in creating new products that address consumer needs.”
He says people may be eating out less at more expensive restaurants but are still attracted to places offering fast food options based on the convenience it offers. Retailers that use value-added and convenience products to attract fast food consumers will be in a better position,” Weis says. “Among consumers’ chief complaints about potatoes is that they take too long to cook or that they never come out the way restaurants make them. Retailers can reverse the impression that fresh potatoes are not very convenient by offering more value-added items.”
KEEPING PACE WITH CONSUMERS
Kent Romrell, senior vice president of sales for Potandon Produce based in Idaho Falls, Idaho, believes new varieties as well as traditional potatoes will experience growth. “Times are difficult and historically when this happens people return to addressing their basic needs though comfort foods such as potatoes,” he says. “I don’t think that’s the long-term future, but it will be for the immediate months.”
Along with interest in traditional potato varieties, Romrell is expecting Potandon’s specialty varieties to perform well. “In the short time they have been around, our Klondike Rose and Klondike Goldust have carved out a strong niche, in part due to their unique appearance and flavor. The wave of the future is new varieties, smaller potatoes and packages, and convenience based products,” says Romrell. According to Potandon officials, the company has plans to test new value-add, convenience-based items in early 2009.
While most agree the opportunity before retailers is clear, they say more can be done at the store level to call attention to potatoes, their benefits and ways to prepare them that are creative and different from the norm. “People may not be able to afford a vacation this year, but they can afford to treat themselves to small indulgences such as Haagen-Dazs ice cream and fingerling potatoes,” says Pemsler.
However there are some challenges. “Overall food prices, including the cost for produce, have risen dramatically. It now costs a lot more to feed that family of four than it did in the past,” he says, noting people are looking for value at retail and seeking out ways in which they can stretch their dollar. “Increasingly, shoppers are rediscovering that not only does a bag of potatoes cost less to feed their families compared to other commodities, it goes further and lasts longer too. There are also hundreds of ways to prepare potatoes.”
Pemsler believes retailers have a great opportunity to direct customers and provide information on the many ways consumers can make potatoes.
To assist with this, the IPC’s website, idahopotato.com, includes hundreds of recipes. “The key is leveraging the variety of potatoes, particularly the types consumers are used to finding in restaurants. People might have to change many of the things they do but can easily rationalize buying a nicer bag of potatoes,” he notes. Retailers also need to make sure to stock many of the new convenience-oriented products available today so that consumers have choices. “In other words, they need to readjust where they focus their energy and how they help consumers meet their needs. Helping consumers solve their challenges gives them a reason to shop your store.”
The bottom line, says Pemsler, is consumers look at their food purchases differently today than they did in the past. “People are worried about money and how they are going to feed their family and retailers who help them figure out how to do all this will gain their loyalty. For example, retailers have a great opportunity before them to do more with product tie-ins that suggest to shoppers what to serve for dinner by promoting meal suggestions shoppers can make using potatoes and not breaking the bank,” he notes. “Retailers have an chance to take this to the next level by promoting potatoes as part of a menu solution and making the ‘what’s for dinner?’ decision easy.”
Equally important, Leach would like to see retailers promote the health aspects of potatoes as well as clearly define the differences between one potato and another. “Potatoes are taken for granted but are one of the most functional foods available. Eaten in moderation potatoes can be part of a healthy regime. They have more potassium than a banana and many of the fingerling varieties such as the dark purple potatoes are high in antioxidants. Potatoes also rank high on the satiety index, which means you feel full longer unlike some other carbs,” she notes.
“However, research also shows us many consumers do not understand what makes one red potato different from another similarly looking one nor do they know how to best use it. This is an opening for retailers to get creative with signage and to treat the potato category like they would peppers or apples, meaning better use of descriptive signage so that shoppers fully understand their potato choices, what each varietal offers and its nutritional message,” says Leach. “Our exchange can help retailers with these signage issues. At the same time, retailers can do more to demonstrate the flexibility and versatility of potatoes by featuring them with different products to show topping ideas or different ways to preparing them,” she says. “During this time it is important that retailers talk to the value of potatoes and leverage the fact that people are eating home more.”
In addition to emphasizing low cost, Romrell agrees that more prominence should be placed at store level on the nutritional aspect of potatoes and believes there is also an opportunity to incite trial by cross-promoting with other potato varieties. “A cents-off coupon on one of our conventional Russet varieties has been effective in getting consumers to try some of our newer varieties,” he notes.
Responding to the need for convenient fresh products, Wada Farms and Farm Fresh are both actively working on new convenient fresh potato products to build on their very successful Express Bake and Easy Baker microwave wrapped potatoes, with several new items planned for 2009. “Clearly, more people would opt for fresh potatoes providing it was more convenient and they understood what to do with it. Part of our focus for this year will be exploring additional convenience-based fresh offerings and new packaging ideas, as well as how we can work with retailers to make consumers aware these products exist.”
While he points to the great job retailers such as Wegmans, Raley’s and Whole Foods are doing, like others have noted, Johnson would also like to see more grocery retailers create dinner solutions for shoppers. “Given the amount of business going to other channels like warehouse clubs, grocers need to do more today to retain customer traffic and protect their volume. Center store department heads have been very open to cross-merchandising related products, but I haven’t seen that same level of interest from produce and meat department managers. Given that a million rotisserie chickens are sold each day there is a huge opportunity to put a produce display, such as Wada’s fresh microwavable steamer potatoes, next to the chicken.”
Johnson says in the end retailers need to remember it’s all about the consumer. “Collectively, we need to go beyond simply collecting loyalty data, but using it to closely understand the consumer of today. Ultimately, it’s not about the economy or retailers. It’s about the consumer and how you are going to best react to their needs and the changing marketplace.”