Tomatoes’ Growth Soars To New Heights

Originally printed in the February 2018 issue of Produce Business.

New and specialty varieties are helping drive a mature category.

After all these years, the tomato category is still growing and offering new merchandising opportunities and challenges.

Over the past three decades, per capita consumption increased from 15 pounds to more than 20 pounds, according to Department of Agriculture statistics, in part because entirely new mixes of varieties keep arriving.

“Specialty tomatoes are hot and growth is significant,” says Helen Aquino, director of brand marketing and communication at Village Farms, Orlando, FL. “The combined grape tomato and specialty tomato segments, both of which could be defined as ‘snacking’ have shown consistent growth in dollars and volume. Specialty tomatoes are also gleaning the highest price per pound at retail.”

At the cash register, snacking tomatoes represent 20 percent of retail volume and a robust 31 percent of dollar sales, according to Nielsen Perishables Group FreshFacts data.

To make the party even merrier, heirloom, organic and locally grown have become for some consumers an essential part of the mix that must be on the shelf.

“It has become the norm to have at least an 8-foot display of tomatoes with a multitude of varieties, pack sizes and sources available,” says Sam Maglio, president of Maglio Produce, Milwaukee. “Retailers struggle to properly fill and rotate that display.”

Opportunity knocks for retailers who can create spaces for consumers to notice and try this ever-expanding variety of tomatoes.

“There’s no substitute for giving consumers the opportunity to see, smell and taste our products,” advises Paul Mastronardi, president and chief executive of Sunset Produce, Kingsville, Ontario, Canada. “It’s always a strong vehicle for introducing new products when we need to drive trial and awareness. When it comes to fresh produce I truly believe that flavor is by far the most important attribute.”

The Taste Test

An attractive display of tomatoes of different sizes, shapes, colors and even packages catches the eye and encourages sales.

“There is nothing quite as appealing as a big display with a multitude of varieties,” says Maglio. “Consumers shop with their eyes, so that display draws them in. While the shrink and stocking costs may be high, if the overall price is reasonable, they will pick up something from that display. It is a marketing cost, almost like an in-store ad.”

The display may entice impulse or first-time purchases, but only consistent taste will earn a store the reputation as a go-to tomato destination.

“Lucky’s Real Tomatoes has built our business on year-round, flavorful tomatoes, so sampling has been an essential element in our 35-year history,” says Lucky Lee, vice president of sales at Lucky’s Real Tomatoes, Brooklyn, NY. “At Lucky’s, flavor rules.”

Lucky’s builds its brand around the taste of tomatoes marketed in visually distinctive packaging. Its specialty Tasti-Lee tomatoes are marketed in three-, four- and five-count packages.

In some cases, it may take a taste test to seal the deal with customers because tomatoes not only feature different sizes, shapes and colors, but they also offer different flavors.

“Sampling is a great tool to allow consumers the opportunity to try new varieties while minimizing the purchase risk,” says Jim DiMenna, president of Red Sun Farms, Ontario, CA. “It is also an innovative way to introduce new applications for your favorite tomatoes, peppers and cucumbers.”

Offering a free taste may be particularly important in the case of some heirloom varieties, whose unique flavor is hidden by a homely appearance that might discourage all but the most knowledgeable consumers.

“The heirlooms seem to be an item looking for a reason to exist. Yes, they do have nostalgia and uniqueness but also scare many people off who do not understand that a non-red, misformed, speckled tomato is actually delicious.”

— Sam Maglio, Maglio Produce

“The heirlooms seem to be an item looking for a reason to exist,” says Maglio. “Yes, they do have nostalgia and uniqueness but also scare many people off who do not understand that a non-red, misformed, speckled tomato is actually delicious. If the visual is rough (color, shape or condition), then sampling is the only way to convince a consumer that the product is actually good tasting. If the appearance is five-star but the price is very high, again sampling is the way to justify the cost difference.”

Foodies and cooks treasure these varieties from yesteryear and will appreciate sampling the flavors.

“Heirlooms provide the unique flavor profile sought after by eclectic consumers for their special dishes,” says Dionysios Christou, vice president for marketing at Del Monte Fresh, Coral Gables, FL.

These varieties from bygone days have found their way back into many outlets, including foodservice.

“Heirlooms have shown tremendous growth in the foodservice sector for year-round use,” says Lee. “In prior years, restaurants typically used heirlooms only in the local growing season, but Lucky’s has seen consistent sales for heirlooms throughout the winter months.”

Although still relatively small in total volume, organic tomatoes also continue to show strong growth and are an indispensable store item in many areas.

“The purchase and consumption of organics is on a continual incline with consumers, and we don’t see that trend slowing down anytime soon,” says Mastronardi.

Some shippers offer organic versions of specialty tomatoes they originally grew conventionally.

“Organics continue to experience double-digit growth and remain a key focus of the business growth plans,” says DiMenna. ”Many of our Artisan Series varieties that were launched conventionally are now offered in an organic option as well.”

The demand is strong enough that major shippers incorporate organic tomatoes into their offerings as a matter of course.

“Organic is essential to many consumers, and most organizations are focused on servicing their customer base,” says Christou.

Specialty or new items, both organic and conventional, are particularly well suited to merchandising programs that include offering a taste.

“Product demos and sampling always work well for stores when they are introducing a new item, especially ones that consumers may not be familiar with the flavor, such as tomatoes of various colors,” says Village Farms’ Aquino. “Consumers in the United States seem to prefer by far a sweet tomato, but these preferences are expanding as more varieties of specialties come to market with unique flavor profiles. Sampling in conjunction with a price promotion will add incentive while motivating to ‘seal the deal.’ ”

Because some tomatoes look beautiful but flunk the taste test, produce buyers themselves should regularly taste the fruit.

“The retailer must sample for himself to ensure that what is being sold is indeed delicious,” advises Maglio. “Chilled bananas turn gray; chilled tomatoes look perfectly fine and taste awful. Repeat sales go away if flavor isn’t perfect.”

Know Your Price Points

Just as there are many varieties in a successful display, there are also numerous price points in an effective pricing strategy.

Sales of highly specialized items, such as heirlooms and maybe organic and locally grown, can be relatively insensitive to price.

“Market dynamics don’t play a factor in specialty because they are not commoditized,” says Red Sun Farms’ DiMenna. “Our competitive pricing has been a contributing factor in the tremendous growth for the snacking category in recent years. In essence, we offer a specialty tomato for every demographic.”

Price is less important with higher-end specialty tomatoes than whether a particular store serves a demographic willing and able to spend a little more.

“With the advances in technology and data collection, retailers are able to create planograms by specific stores,” says DiMenna. “Therefore when introducing a new specialty tomato, retailers determine product mix by location. Typically new specialty items launch as listing in retailers’ ‘A’ stores and upon successful launch, it is then offered as SKU expansion out to ‘B’ and ‘C’ stores.”

Heirloom tomatoes may benefit from some of the merchandising techniques used in the deli to sell the finest meats, cheeses and artisan breads.

“The specialty tomato needs a story to go with it ­— how it came into being, where it is produced, who is the grower, how it should be used and why it is better,” says Maglio.  “Commodity tomatoes do not need that pitch. They just need to look fresh and be priced competitively.”

The core consumers of the premium specialty varieties are people who are more serious than most about their tomatoes.

“The biggest consumers for specialty tomatoes seem to be the true tomato lovers,” says Aquino. “I say this because again we get so many phone calls and emails from people telling us how much they love our tomatoes. The funny thing is these stories are all similar in that they always equate their experience to a past memory. Usually this revolves around a childhood experience in their family garden.”

Earning a reputation for unique specialty tomatoes with consistently good flavor brings customers who are likely to spend a little more in every department.

“Anyone willing to spend more than $2 per pound on a specialty tomato is probably not buying the value pack of ground beef,” says Maglio. “The store with the variety will attract the shopper with the disposable income to spend more on everything they buy. Certain geographic markets have consumers that watch every penny and clip every coupon; other markets have a disposition to spend more on good food and take better care of themselves. This becomes a regional or local differentiator.”

With premium tomato products, unique packaging that makes the product stand out is relatively common.

“Most specialty varieties are sold as packaged UPC items,” says Aquino. “This gives more of an opportunity to convey brand message and product story to consumers. This is a consumer education opportunity that packaging allows. Marketing specialty tomatoes in value-added pack sizes, meal kits and snacking containers is a huge growth segment.”

Rewarding as these premium-priced varieties may be, they are not for everybody.

“As the uniqueness of the product goes up, the volume drops,” says Maglio. “Price can also be a factor; once you get more than $1.99 per pound, the consumer says ‘I can buy boneless, skinless chicken breast for that price. Forget the tomato.’ ”

Convenience And Variety Matter

Almost all of the recent growth in tomatoes has come in the snacking varieties, which offer superior convenience.
“The growing subcategory is the small, convenient snacking tomato, which cannibalizes other tomatoes, both hothouse and field, rather than stimulating growth in total tomato sales and volume,” Roberta Cook, Emerita faculty member in the Department of Agricultural and Resource Economics at University of California, Davis, wrote in Fresh Tomato Production and Marketing Trends in the North American Market (April 2015), citing Nielsen Perishables Group data.

Many grower-shippers offer patented varieties tailored to meet this growing market for convenience.

“Consumer demand for fresh, easy, ready-to-use ingredients continues to be on the rise,” says Lori Castillo, marketing director at San Antonio-based NatureSweet. “Small tomato usage also continues to increase as consumers focus more on salads and other healthy, on-the-go products.”

Grower-shippers are competing in their selection of new and interesting bite-sized tomato varieties.

“Snacking tomatoes are still the fastest growing specialties,” says Sunset Produce’s Mastronardi. “We’re always pushing ourselves to find new ideas that make eating healthy, fresh produce more convenient, more exciting and more flavorful.”

Suppliers expect the trend toward the bite-sized tomatoes to continue and even increase.

“Snacking tomatoes continue to experience tremendous growth within the category,” says Del Monte’s Christou. “New snacking varieties have been instrumental in expanding the consumption of tomatoes, especially for consumers with busy lifestyles.” Del Monte’s Bon Bon grape tomatoes, for example, come in grab-and-go, 5.5-ounce cups as well as re-sealable snacking bowls.

“There’s a lot more variety out there lately,” says Rocky Ray, co-owner of Ray & Mascari, a longtime packer and shipper of tomatoes in Indianapolis. “You’ve got higher-end customers looking for gourmet medleys of smaller grape tomatoes. They put more color on the plate.”

Although these bite-sized varieties make a convenient eat, they also can be served in salads or sandwiches.

“The versatility of the snacking tomatoes makes them popular in many venues,” says Maglio. “I had a salmon BLT the other day with halves of grape tomatoes in lieu of round or Roma tomatoes. The sandwich was delicious, and the presentation was exceptional.”

One way to help consumers navigate the proliferation of tomatoes is to offer packs that include numerous varieties.

“Some of the latest trends we’re seeing include variety packs that offer several different varieties of tomatoes together in one package,” says Castillo. “Consumers are becoming savvier about the different tastes and flavor of tomatoes, so the ability to guarantee the freshest, tastiest product remains front and center.”

Local And Global Both Matter

Consumers want tomatoes from the farmer just up the road, but they also want them year-round, which usually requires sourcing from far away.

“Local always has been and will continue to be important for every fruit and vegetable item,” says DiMenna. “In the case of specialty tomatoes, seed selection and sunlight levels are critical in achieving sweetness and flavor profile. There are seed varieties that work incredibly well in specific regions, and because we are located in three countries, we strategically align the seeds for their optimum micro climate.”

It is important at retail to define “local” in terms that will ring true with your customers.

“The ‘local’ produce never really found a seat at the table because there are so many diverse definitions of local,” says Maglio. “In the retail space, local can be defined by the retailer and will present well. In the foodservice arena, chefs try to define local and drive their distributors crazy. To one, local means ‘my state’ while another defines it as coming from within a 200-mile area. Only very clearly defined programs with strong supply, such as out of a local greenhouse operation, withstand the test of time.”

While local is a buzzword and determining factor for many consumers on what to purchase, at the end of the day flavor and quality trump this by far. So if a consumer buys a local product that does not deliver on flavor and quality, this will most likely deter repeat purchases. This holds true for almost all tomatoes, not just specialties.”

— Helen Aquino, Village Farms

Although “local” has a market, it is also essential to source a year-round supply of many tomato varieties.

“Tomatoes remain one of the most consumed produce items in the United States, making it a necessity for retail produce departments to have an assortment of high-quality tomatoes available year round,” says Christou.

One way that growers bridge the gap between local and year-round supply is to extend the season through greenhouse production. The hothouse production leader builds its reputation on offering a reliable supply of quality tomatoes year round.

“We get a lot of phone calls and emails from consumers who thank us for supplying a consistent quality, year-round flavorful product, and these inquires come in from all over the United States and Canada,” says Aquino of Village Farms. “So my opinion is while local is a buzzword and determining factor for many consumers on what to purchase, at the end of the day flavor and quality trump this by far. So if a consumer buys a local product that does not deliver on flavor and quality, this will most likely deter repeat purchases. This holds true for almost all tomatoes, not just specialties.”

One large Canadian greenhouse operation recently purchased a tomato farm in Maine to be able to offer both year-round and local supply.

“Whether it’s specialty, commodity or organic, local is always a consideration for today’s consumer,” says Mastronardi. “We’re working hard to answer that challenge nationwide. Our 2017 acquisition of Backyard Farms, the premium local tomato brand, is a testament to that belief, and we have big things planned for 2018.”

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See also: Watching The Shifting Tomato Market Trends