A more favorable yield has potato growers and shippers, along with retailers, optimistic about sales for the coming year.
Whether sliced, diced or mashed, there were just too many potatoes in the marketplace last year. Now that the spud surplus has come and gone, potato growers, shippers and retailers are looking forward to a more manageable yield for the year ahead. The hope is to leave behind the deep discounts that became necessary to move the excess inventory.
Last year’s yield was about 7% above what was anticipated, say industry observers. Though units were up 2.2%, dollars were down about 6.0% through the 52 weeks ended July 27, according to the most recent Nielsen data.
“The decrease in dollars is a reflection on how aggressive pricing became,” says Don Ladhoff, retail programs consultant with the Denver-based U.S. Potato Board (USPB). “The new harvest is just coming in so prices are moderating and the cycle begins anew.”
Many observers are confident that it will be a good year for all involved. “We’re going to see volume levels and yields return to a more normal pattern with good quality and product available for strategic promotions throughout the year,” says Jim Richter, executive vice president, sales and marketing, for Rexburg, Idaho-based Wilcox Fresh.
“Overall, we are looking at a good balance of supply and demand for the season, but we will see some peaks and valleys in pricing during the year,” says Randy Shell, vice president of marketing and new business development for Bancroft, Wis.-based RPE. The ability of buyers to react quickly on spot buys will be crucial or else they risk losing out on the deal, he adds.
Observers say that as far volume goes, russet potatoes are still the king, but the specialty segment is driving higher value for the retailer and grower on a per pound basis. They say it does not hurt that consumers love the great flavor of specialties, too. Even Idaho, whose reputation for potatoes hinges on its bounty of russets, is starting to become more of a multi-variety state, says Seth Pemsler, vice president retail/international for the Eagle, Idaho-based Idaho Potato Commission.
Retailers and growers are taking a much more balanced approach to the category than in the past by promoting items across all segments, including russet, red, yellow and specialty potatoes, observers say. This focus will increase overall dollar volume going through the register and consumers will benefit by having more options for different uses, they add.
“Trends toward convenience and varietal development will continue to push the category to new heights,” says Chris Wada, director of marketing for Idaho Falls, Idaho-based Wada Farms Marketing Group. “This year we have really focused on improving our quality and process mapping throughout our entire supply chain. In addition to growing russets we are also increasing our production of round colored varieties including specialty ‘mini’ potatoes.”
The convenience trend has left the c-store and is now making itself at home at grocery, and potatoes have not been left behind.
“We’re seeing the importance of convenience in every aisle of the store,” say Ladhoff. “Consumers are time pressed, and we want to provide them ways to serve potatoes quickly and deliciously. There is strong growth in convenience packages, like steamable microwave packages and petites, because they cook more quickly.”
Wilcox Fresh has found great success with its Potato Jazz microwaveable potato line. “Ours is the only product in the marketplace that you can cook in the microwave in our special steam tray in just five minutes,” says Richter. “If you’ve cooked your center of the plate item on the grill or in the oven, and you’re looking to add a starch of side dish, Potato Jazz fits very nicely and conveniently as a side dish or even as a snack.”
Research by the USPB has shown that when retailers offer other varieties or microwave bags, it does not cannibalize from their standard russet business. “It’s actually additive so retailers can grow their total potato sales,” says Pemsler. “Secondarily, these items typically have higher margins so it is in their best interest to make sure they’re carrying more than two or three items.”
Retailers should make sure they have a diverse selection of potatoes and promote the category at least three weeks of the month, mixing across all varieties, say observers. The potato category continues to be a leading category in sales and margin for the produce department, so retailers should look at every avenue to increase sales including secondary displays, weekly ads, in-store specials, bin displays and point-of-sale materials. “They should also look at increasing SKUs and promotions in the specialty segment to satisfy the increased demand,” adds Shell.
“Most consumers have three or four potato recipes in their cooking arsenal that they use again and again. However, they’re open to serving potatoes and purchasing them more often if they’re given a new idea,” says Ladhoff.
Retailers can help by giving shoppers ideas on their packaging, signage at the table and store websites, including social media channels. Earlier this fall, the U.S. Potato Board announced a new partnership with “Hungry Girl” Lisa Lillien, best-selling author and TV personality. “She is helping us with a lot of consumer promotion by creating new recipes for us and authoring e-newsletters that will go out to her 1.2 million followers to tell them about new ideas for potato usage and their nutritional benefits,” adds Ladhoff.