Best Practices In Potato And Onion Category Management

Bump up potato and onion sales with some focus, variety and promotional support.

Originally printed in the December 2022 issue of Produce Business.

Webster’s dictionary de­fi­nes a staple as a commodity for which the demand is constant or something having widespread and constant use. The potato and onion category fits this definition for the retail produce department — especially in the current economic environment.

“Potatoes and onions are not flamboyant items in produce, but they bring a lot of sales dollars,” says Mark Cotê, regional produce supervisor at Redner’s Markets in Reading, PA, with 44 stores. “It’s a big tonnage category in the wintertime. We may see some shoppers going back to more of these staples as the economy and inflation stays tough.”

With the economy barreling toward a recession, consumers are already showing their preference for potatoes, adds Ross Johnson, vice president of retail and international for the Idaho Potato Commission (IPC) in Eagle, ID. “The data is showing consumers are switching to larger pack-size purchases, and russets and yellow potatoes are leading the way in terms of sales growth in the category.”

Potatoes continue to be a staple item in most households, agrees April Myers, assistant sales manager at Top Brass in Bakersfield, CA. “In times of rising inflation, consumers tend to rely more heavily on staple items for their pantries,” she says.

A little attention to potatoes and onions will bring greater returns to the department. “Many retailers are realizing, even with increased costs, that potatoes still offer the best pound-for-pound value in the entire produce department,” says Johnson. “Shoppers have an average basket size of over $95 when fresh potatoes are purchased.”

KEEP THE BASICS TOGETHER

Potato and onions continue to post strong consumer demand. For sales from July 1, 2021, to June 30, 2022, fresh potatoes are the second largest volume driving category, making up 28% of total store sales, according to Kayla Vogel, global marketing manager for Potatoes USA in Denver, CO.

“Looking more closely at fresh potatoes, russet potatoes make up 59% of the sales volume,” she says. “Yellow potatoes have consistently grown in both dollars and volume for the last five years. While volume sales were down for petite and medley potatoes for the 12-month period, both have seen consistent growth over the last five years.”

According to U.S. Department of Agriculture (USDA) statistics, as of 2020, per capita consumption of onions was 20.44 pounds. “That is up 5.4% from the year before,” says René Hardwick, director of public and industry relations for the National Onion Association in Eaton, CO.

Merchandising potatoes and onions together is a good tactic, according to Cotê. “The products marry up well and shoppers have come to expect to find them together.”

The complementary nature of storage and usage make potatoes and onions a good pairing. “They’re usually combined because of their storage aspects,” says Ted Kreis, marketing consultant for Northland Potato Growers Association in Grand Forks, ND. “They both don’t require refrigeration and have long shelf life. They complement each other on the shelf, so are almost always merchandised together.”

USE THE CATEGORY AS A DRIVER

As a staple, potatoes and onions pull shoppers into the store and through the department, especially if stores highlight value. “Retailers use potatoes to drive people through the department to the back,” says Kreis. “Cost per pound and nutritional value per pound of potatoes still far exceeds most other produce items.”

Within the category, stores are urged to keep the basics while still adding other products. “Although sweet onions continue to grow in popularity, nothing beats the humble yellow onion due to its versatility and availability,” says Teri Gibson, director of marketing and customer relations at Peri & Sons Farms in Yerington, NV.

“American cuisine has become a fusion cuisine influenced by many regional and ethnic heritages. All these cuisines share one key ingredient — the yellow onion. It’s the must-have item in the onion aisle.”

The key is to have both commonly known potatoes as well as newer ones to the category, recommends Vogel. “Consumers buy more five-pound bags than any other size, but the smaller pack sizes, which are less than two pounds, have seen consistent growth in dollars and volume for the last five years,” she says. “Consumers who are buying what they traditionally buy are adding variety to their menus with the smaller pack sizes in their baskets.”

Cassie Krebs, marketing and food safety coordinator for Gumz Farms in Endeavor, WI, explains some retailers they work with are running ads on onions and potatoes with the hopes of increasing sales on other items in the store. “An ad example would be 99-cent onions and potatoes,” she says. “The retailer might lose money at this price point, but will make up that difference with other sales once the consumer is in the door.”

ADD MORE THAN BASICS

The tremendous broadening of the potato and onion assortment adds opportunity for retail. “Petite, medley, fingerling, and purple potatoes are newer types found in the produce department,” says Vogel. “These types are seeing increased sales from consumers in stores carrying both the commonly known and newer types.”

The potato category has been one of the most exciting when it comes to new product lines and preparation methods, explains Johnson. “Idaho potatoes have multiple items in the set now, so consumers can find everything from a russet to a gourmet fingerling or baby potato,” he says. “The important thing to remember when merchandising the category is that these new items do not cannibalize sales.”

Consumption of small potatoes and potatoes with yellow flesh is increasing. “There is trending demand for flavors such as Butter Cream Potatoes, Butter Red Potatoes and Butter Gold Potatoes and smalls, including baby golds, baby reds, baby medley and baby roasters,” says Andreas Trettin, director of marketing at Mountain King Potatoes in Houston, TX.

Basic produce building blocks, such as onions, are being used in more diverse ways, relates Gibson of Peri & Sons. “We’ve seen a spike in consumers accessing the recipes on our website, where we highlight every type of onion, including cipollinis, garlic and shallots in all types of combinations and genres,” she says.

Redner’s sells a lot of pearl onions, and offers them in red, white and purple, says Cotê. “We promote them for use in entertaining and holiday occasions. Red and white onions have also really increased over the last two years. We run an ad for them every other week. The ad really creates movement for those onions and pushes product through.”

Offering different package sizes provides opportunity to reach additional shoppers. “Smaller consumer packages are becoming more the norm,” says Krebs. “Millennials grocery shop multiple times per week, so demand is shifting to smaller pack sizes.”

And don’t overlook the addition of organic options. “Our 2022 season saw an increase in sales in the organic potato category as compared to 2021,” says Myers of Top Brass.

PAY ATTENTION TO SPACE

Space in the potato and onion category relates directly to sales. “The amount of space varies by retailer, but research completed by IRI found that top-performing retailers in the potato category are dedicating 15 feet of space to potatoes,” says Vogel of Potatoes USA. “Retailers who dedicate less than that to potatoes are seeing lower sales for their top-performing volume commodity.”

Stores must have the proper display size for the movement, agrees Northland’s Kreis. “The more potatoes are out of the heavy traffic flow areas, the more display size must be increased,” he says.

Adding flexibility to the displaying yields results. “Most chain stores allocate between 12 to 20 feet of display space, often located in the back of the department as a destination item,” says Trettin. “We see good results when the varietals are promoted on end-caps and secondary displays.”

Maintaining the quality of what’s in the space is crucial. “It’s important to keep the display fresh,” says Kreis. “Make sure employees are trained to be sure everything is rotated. This category may not be as perishable as other produce items, but it doesn’t mean it should be ignored. Handling in the backroom is fundamental. Don’t stack onion bags on top of potato bags because the flavor will transfer. Keep potatoes in the dark or they will green quicker.”

INFORM AT POINT OF SALE

Stores have a great advantage to communicate in-store with shoppers. “Creative and informative signage adds to the customer’s grocery shopping experience,” says Gibson. “When you consider the primary reason consumers cite for choosing in-store over online grocery shopping is to see and select fresh produce, then it makes sense to include engaging and informative signage.”

Mountain King Potatoes offers signage cards for retail use. “We see great results with our Wow Signage that points out the unique aspects about each variety,” says Trettin. “And, we suggest combination promotions that feature multiples to maximize lift.”

Peri & Sons Farms provides free POS materials to help promote sales. “Signage can and should be engaging,” says Gibson.

Highlighting nutrition and recipes through in-store and other promotional material will draw shoppers. “It’s important for nutritionists and dietitians on store staff to recognize the nutritional value of potatoes,” says Kreis. “Potatoes have gotten a bad rap over the years, but they have a lot of nutrition and are a versatile recipe ingredient.”

Retailers can highlight how to use potatoes every month of the year, suggests Vogel.

“It is important for consumers to find what they are looking for and how to use it more quickly. Whether that’s through signage in-store or online, consumers don’t need a reason to buy potatoes as much as some inspiration on how to use them in easy and tasty ways.”

Keeping lines of communication open between growers and buyers aids planning through better understanding of what will be available during the promotion period.

“When the promotion planning process includes a discussion with the grower beforehand, everyone wins,” says Gibson. “A promotion is more likely to succeed when flexibility is built into the planning process, so growers can move what’s fresh on hand and buyers don’t have to spend time shopping around for a specific product and getting frustrated when it’s not available.”

GET SUPPORT FROM ORGANIZATIONS

Retail backing from the potato and onion commodity boards helps stores sell more. “Commodity boards are great resources for retailers, because they are focused on overall growth for the category,” says Vogel of Potatoes USA.

Potatoes USA offers a host of resources on its website, including a Potato Retail Tool Kit, nutrition information and signage, and a year-round promotions guide. “All our resources are available for retailers to use and anything can be branded or remade in any way a retailer wants to use it,” says Vogel. “Our information is research based, so they can be confident in communicating accurate messages.”

The National Onion Association has a vibrant promotions program to help increase the visibility and consumption of onions, including its Nature’s Ninja marketing program.

The IPC’s main focus this year is to help retailers understand the increased costs farmers are seeing. “Some of them are paying over 50% more just to get that same potato into a bag compared to a year ago,” says Johnson. “The opportunity for retailers is to work their promotions more strategically. We’ve seen retailers having success with promotions with a 3 for $10 flair incorporating russets, reds and yellows.”

Retail promotion directors represent another unique asset from the IPC, says Johnson. “The IPC can use data to help retailers understand where the trends in the market are heading. It’s always easy to see how your numbers are trending, but when our promotion directors come in to do a market deep dive, to look at the sales data for the entire geography the retailer covers, the discussions around opportunities take off.”

The IPC’s Potato Lover’s Month, entering its 32nd year, helps keep holiday momentum going for potato sales, and retailers can take advantage of over $150,000 in prizes awarded to stores all across the country, says Johnson.