Nearly A Billion Pounds And Still Mushrooming Nationwide

Originally printed in the August 2018 issue of Produce Business.

Versatility, blendability and healthful attributes help spur sales, popularity.

The already vigorous mushroom category figures to grow even healthier as the leading national producer group rolls out its blending campaign, and as some consumers are drawn to an increasing array of intriguing specialty varieties.

The volume of U.S. mushroom sales already rose steadily from 800 million pounds a decade ago to 900 million last year, according to the U.S. Department of Agriculture report on the commodity released on August 21, 2017, as this familiar food has become a rising star.

“Mushrooms are outperforming the rest of the produce department by quite a bit,” says Kevin Donovan, national sales manager at Phillips Mushroom Farms, Kennett Square, PA. “They’ve been up the past few years. Mushrooms are healthy, nutritious, always available, and they are in interesting recipes that people want to try.”

Phillips is one of many operations in an area west of Philadelphia that produces a majority of all the mushrooms grown in the United States.

The Mushroom Council in Redwood Shores, CA, says mushrooms are a strong growth item at retail that require attention to the category in order to maximize sales, which should be on pace or outpacing the categories in their markets. According to the Council, sales of mushrooms at retail experienced significant growth in every quarter last year over the prior year.

Most of the commercial mushrooms in the country that are not from Pennsylvania come from Northern California farms, which have sprouted up as interest in specialty mushrooms has increased.

“The selection you need depends on the demographic of the area,” says Justin Reyes, director of sales and marketing at Gourmet Mushrooms, Sebastopol, CA. “Mushrooms are in the top 15 items in the produce department, and there is a category expansion like there has been in citrus or kale. It started at Whole Foods a few years back. Now a lot of people are interested in the diversification of the produce department.”

Setting Up The Display

When it comes to the mushroom display, size matters because too much shelf space leads to throwing out spoiled product, but too little leaves a retailer unable to carry the variety some customers expect.

“To minimize shrink and maximize sales, it’s important to know your consumer and offer the variety that matches the store demographics,” says Mike O’Brien, vice president of sales and marketing at Monterey Mushrooms, Watsonville, CA. “Use proper ordering to turn product. Use your history and current trends. Stay in stock. Out-of-stocks lead to loss sales, disappointed customers and really plays havoc with your scan data. Mushroom shrink will run as high as 10 percent or more due to the perishability of the category.”

Because mushrooms appeal most to people with a few extra dollars, deciding on the size of the display, and the number of varieties and SKUs, begins with knowing the demographics of the store.

“An affluent demographic with discretionary income is where we see the highest penetration in mushroom sales,” says Scott Tyo, category business manager for vegetables at Tops Markets, Amherst, NY. “Mushrooms tend to be polarizing and only appeal to a select group, rather than the mass public, so they often tend to be left out of major features or front page activity.”

Some shippers will help their retailer customers sort through the demographics to make informed decisions on the display.

“Knowing your customers, retailers can experiment with their consumer’s needs and potential impulse purchases,” says Mark Leone, vice president of sales in the East for Giorgio Fresh Co., Temple, PA. “Staying on top of trends, cooking shows and other industry intel is critical to having the optimum mix.”

The mushroom supplier has to be a reliable source of information on how much space, and how many SKUs are optimal.

“Each retailer has its own unique needs when it comes to space and mix – all depending on store size, shopper demographics, foot traffic and other metrics,” according to the Mushroom Council. “With that in mind, the Mushroom Council has tools to help retailers understand how to better manage mushroom shrink, if not also determine their ideal space/mix. However, the best sources of such information and support are mushroom suppliers – they have an excellent handle on retail consumers’ needs and can assist each retailer in achieving its desired goals.”

While mushrooms already washed, sliced, and packaged are popular, some bulk also adds something to the display.

“Using bulk displays also conveys a message of freshness to the consumer, allowing them to essentially pick their own product. Introducing specialty packs on a seasonal basis, like Portabella sliders in the summer or larger club-size packages around the holidays is a great way to show added value to a consumer,” says Wilder. “The opportunity to use a secondary display to feature items is also a great approach to increase exposure and lift sales while running a promotion.”

Although there is no one-size-fits-all solution, a mushroom display in the range of 4 to 6 feet of shelf space seems to be average.

“You have to have whites, browns, and some of the specialties, like Shiitake and oyster,” says Donovan. “If you have whites in 8 ounces, 16 ounces, and even 24 ounces you’re probably looking at six feet of shelf space.”

Tops Markets sometimes goes a little smaller, but not a lot, in its mushroom displays in most stores.

“The sales allocation is based on daily movements at each store,” says Tyo. “Typically, we devote 4 feet to mushrooms, consisting of a vertical shelf with four to six shelves depending on the case style. We have approximately 60 mushroom SKUs total, and about 25 move high volume. Promotional strategy plays a large role into that, as do uses, trends and popular demand.”

These displays must be watched more carefully than most in the produce department to make sure it always looks fresh and inviting.

“Mushrooms are one of the most perishable categories in the produce department,” notes O’Brien of Monterey Mushrooms. “Your first loss is your best loss. Cull and pitch those mushrooms that have seen better days, and stock those fresh mushrooms from the cooler. You will grow your sales and in the long term cut your shrink percentage.

Once the program is established, it is worth paying attention to whether the planogram needs adjustment to reflect greater consumer interest.

“Maintaining proper cold chain and rotation of product is key to reducing shrink,” says Peter Wilder, marketing director at To-Jo Mushrooms, Avondale, PA. “Products should be merchandised in the store’s best reefer units and stored between 34 and 38 degrees at all times. To-Jo works with produce clerks and managers to educate them on inventory management and product rotation to ensure they don’t carry an oversupply in the cooler, ensuring the freshest product is out on the shelf for the customer.”

A Special Opportunity

Although mushroom sales in total are slowly climbing, in some markets specialty and organic mushroom sales are exploding.

“The value of Shiitake, oyster, and all other exotics commercially grown specialty mushrooms sales in 2016-2017 totaled $96.2 million, up four percent from the 2015-2016 season,” according to the USDA report. “Growers produced 109 million pounds of mushrooms that were certified organic during the 2016-2017 growing season, 20 percent above 2015-2016,” according to the USDA report. “The total certified organic sales of all mushrooms represent eight percent of the 2016-2017 total mushroom sales.”

Sales of specialty mushrooms in general are increasing far faster than the category as a whole.

“Last year, at retail, value-added mushrooms sales, which include stuffed mushrooms, grew 19 percent year-over-year,” according to the Mushroom Council. “Pounds were up 17 percent.”

Gourmet Mushrooms has found sales in the more recent past to be growing at an even greater pace.

“Organic mushrooms are growing at 18 percent compared to last year, and specialty mushrooms, which is what we have, are growing at 30 percent,” says Reyes.

Gourmet Mushrooms offers specialty varieties Alba and Brown Clamshells, Forest Nameko, Trumpet Royale, Velvet Pioppini, Nebrodini Bianco, Maitake Frondosa, and hopes to add a new crown jewel.

“We are growing cultivated Morel mushrooms, which is pretty exciting,” says Reyes. “We hope to have them available for the holiday season.”

As another specialty SKU available during the grilling season, some shippers offer mushroom SKUs specifically tailored for kabobs.

“Kabobs are hot right now as summer grilling season is in full swing. Many retailers are creating their own value-added produce items and kabobs filled with whole Baby Bellas and other fresh-cut vegetables fit right into that platform,” says Wilder. “When talking stuffed, things have evolved; Portabella pizzas are a perennial consumer favorite in the summer, making produce seem a little indulgent.”

Background sources of information are helping to bring to the store more customers who are open to persuasion on specialty mushrooms.

“Promotions and recipes get customers’ attention,” says Donovan of Phillips Mushroom Farms. “Recipes are becoming more important to customers; it started four or five years ago and keeps growing. They are getting them from online, circulars and from dietitians in the store.”

If specialty mushrooms are to be on the menu, it makes sense to have an appealing, eye-catching display.

“Some diversity of offerings makes a good display,” says Gourmet Mushroom’s Reyes. “Our labels have different colors that stand out on the shelf.”

Retailers can get help sorting through a mountain of information to decide if a specialty mushroom program would be profitable.

“The utilization of scan sales, purchases and shrink data and matching demographics to your planograms [should be helpful],” says O’Brien. “Access to IRI or Nielsen data is also an important component of category management. We believe in partnering with our retail customers in collaborative category management. We offer a dedicated in-house team to work with our retail customers to help customizable planograms.”

As the category grows more complex, it is helpful to have staff that knows about the specialties.

Because of mushrooms’ versatility, the Mushroom Council encourages retailers to educate produce department team members on mushrooms.

If a complex program is put in place, it is preferable to have at least one person on the floor who can satisfy consumer appetite for information about mushrooms.

“Information is important, so hopefully you have one person on the team who is passionate about mushrooms,” says Reyes.

A Healthy Option

Even consumers who have no desire to join the connoisseurs can be attracted to the health and convenience of mushrooms.

“People are changing their diets for health reasons,” says O’Brien. “That’s where mushrooms come in. Flavor. Mushrooms happen to be one of those lucky foods that take on a broth-like or meaty flavor. The taste also comes in handy for preparing healthy dishes. If you’re looking to keep off the pounds, adding mushrooms to your diet could help. Since mushrooms are considered a low-energy-density food, you’ll get fewer calories in larger food portions.”

One way to promote mushroom sales is to offer recipes, either in the store or on the website. “Featuring recipes on the retailer’s website is an easy way to support shoppers thinking about application and usage of fresh mushrooms,” says Leone. “Giorgio’s website provides new ideas, with plenty of mushroom recipes.”

Mushrooms fit well with the growing megatrend of wanting to eat more nutritious food as part of a healthy lifestyle.

“Increased awareness of the health benefits is really driving increased sales,” says Reyes. “The concept of food as medicine is really spreading across the country.”

There is room to increase merchandising mushrooms as a healthy alternative, especially to younger consumers.

“Many retailers are already promoting the health attributes of fresh mushrooms while seeking more opportunities in reinforcing the message,” says Leone. “Consumers have been focusing on healthy alternatives for several years, and Millennials are becoming more prominent in emerging trends. They’ve become diligent in healthy food choices and meal solutions, leveraging health benefits and nutritionals. Grower-shippers and retailers need to bolster efforts in emphasizing the message of ‘good health’ within the category.”

It is also convenient to add mushrooms as an interesting ingredient in many popular dishes.

“Along with health, convenience is critical when shopping for mushrooms,” says Leone. “Value-added varieties offer the perfect accent with ease of preparation. Recipes and application ideas online and on social media definitely enhance the program.”

There are many opportunities to merchandise mushrooms as ingredients in dishes that are both convenient and nutritious.

“We all know the consumer is pressed for time and is looking for solutions to save time,” says O’Brien. “That’s why prepared kabobs and stuffed mushrooms have become very popular. People love mushrooms and they love to save time. This is a great opportunity for both the retailer and the supplier. Our produce store teammates are our salespeople, and not just labor dollars. They can grow your sales by educating their valuable customers.”

The Blend Is The Answer

If the question is what can be done to take consumer interest in mushrooms to even higher levels, The Blend is the answer.

“The National Mushroom Council is doing a good job of letting people know the benefits of mushrooms,” says Kevin Donovan, national sales manager at Phillips Mushroom Farms, Kennett Square, PA. “The Blend project they are on is definitely going to increase sales for the future.”

This campaign aims to build on interest in mushrooms as a healthy ingredient by showing consumers new ways to use them as a partial alternative to animal-based foods.

“The Blend makes burgers better, and it’s a concept, like riced cauliflower, that is transforming plant-forward inclusion in all meals,” the Mushroom Council of Redwood Shores, CA., told this magazine. “We’re seeing this trend take hold in schools and universities, hundreds of restaurants in partnership with New York City-based James Beard Foundation and in an LTO this past spring at Sonic Drive-In with its slinger blended burgers. We’re now seeing it take hold at retail. It’s an on-trend usage idea retailers can share with customers, whether in-store, online, on social media or even via geo-targeted, search-engine marketing.”

Of particular interest to many consumers are recipes that include mushrooms blended with meat in order to produce healthier alternatives.

“The Blend initiative is keeping mushrooms top of mind,” says Mike O’Brien, vice president of sales and marketing at Monterey Mushrooms, Watsonville, CA. “This effort communicates to consumers about how blending fresh mushrooms with ground meat (beef, pork, or poultry) can enhance flavor, and substantially reduce fat, sodium and calories. It has a fast growing following across the country in school lunch programs and in colleges. Blendability is one of the trends being offered at restaurants. That is the blending of finely chopped mushrooms into recipes that call for ground meat to reduce calorie/sodium/fat content and add an extra serving of vegetables to the plate.”

This campaign aims to capitalize on consumer interest in foods with less fat and cholesterol that still offer delicious flavor.

“We think consumers already are thinking about mushrooms,” according to the Mushroom Council. “One of the main reasons: The Blend, the culinary concept featuring chefs and home cooks blending finely chopped mushrooms with ground meat. Consumers are looking to eat ‘better,’ and indeed that might be more plant forward, lower calorie applications. Still, they want to eat what they love. The Blend is the answer.”