Cherry Season Sweetens Bottom Line

Photo Courtesy of Domex Superfresh Growers

Seasonal excitement is the spark that ignites cherry sales in the produce department in a big way each summer. Why? Because cherries are one of the few mainstream fruits shoppers can’t buy year-round. In fact, domestic and import sources combined put these sweet fruits on supermarket shelves some seven months annually. This limited availability is why cherries might look less than impressive, accounting for only 1.3 percent of fresh produce dollars during the 52-weeks ending Jan. 28, 2017, based on data supplied by the Chicago-based Nielsen Perishables Group. However, in peak season, cherries are the Number One dollar per-square-foot-item in the produce department, according to Washington State Fruit Commission/Northwest Cherry Growers (NCG), in Yakima, WA.

“Cherries are critical for us to have successful sales in quarters two and three, as they can contribute between 4 to 6 percent of our total produce sales,” says Scot Olson, vice president of produce and floral for Grocery Outlet Inc., a 265-store chain based in Emeryville, CA. “Due to the nature of our business being a limited SKU and a discount format, we typically do not carry imported cherries, so this fruit it is one of the most seasonal items we have.”

Following are ways retailers can take advantage of the upcoming cherry season:

1. Time It Right

Timing is everything. “Consider that in the Northwest, it takes about 60 to 70 days from bloom to harvest. Then, most harvested volume falls within 63 days, although we ship for 80 days as a season. Add to this the wide swings in seasonal start dates that have ranged as much as 30 days in the past five years,” says James Michael, vice president of North America for NCG, which represents more than 2,500 growers in Washington, Oregon, Idaho, Utah and Montana.

It pays to be ready in advance with a strong merchandising program for cherries.

“Last year, we started planning aggressively four months out for summer cherries,” says Steve Williams, director of produce and floral for Fiesta Mart, a 60-store chain based in Houston. “The first step is partnering with the right supplier on specs and point-of-sale, and then to know when to break ads — at what price and how long to keep a foot on the gas with ads. Cherries, especially for produce executives, are fun and scary at the same time.”

Washington and Oregon produce some 90 percent of the U.S. fresh sweet cherry supply. The entire Northwest produces an average 20 million 20-pound box equivalents of cherries, according to data published by the USDA’s Agricultural Marketing Resource Center.

This year, Michael says the Northwest cherry crop should start harvest in early June, or what is considered “normal” following last year’s season jump-starting in May. Cherries should be plentiful for Fourth of July promotions. The crop will run through July and even later.

Photo Courtesy of Domex Superfresh Growers

“A long winter this year could potentially mean we’ll have cherries through August and into early September,” says Michael Preacher, director of marketing and customer relations for Domex Superfresh Growers, in Yakima, WA.

Retailers with the strongest cherry category performance benefit from a strategic approach to drive sales across the complete Northwest cherry season, from June through early September, according to Steve Lutz, vice president of marketing for CMI Orchards, Wenatchee, WA. “Top retailers generate nearly 40 percent of total cherry sales during the late season compared to only 30 percent for bottom-performing retailers. This is because low-performing retailers were much more likely to emphasize June and scale down in mid-July, thereby missing critical sales opportunities that emerge after July 15 and continuing through August. An analysis for loyalty card data shows that core cherry consumers buy consistently during the full cherry season and actually slightly increase purchase frequency in late season over peak season.”

California ranks third in the nation for fresh sweet cherries, producing nearly 10 percent of the domestic crop. The 2016 crop totaled 5 million cartons. However, the state’s growers say the potential is about 8 million cartons. California’s marketing cache is having the first domestic cherries of the year.

“Some of the earliest varieties with lower dormancy requirements might harvest as early as mid-April in the southern most production areas,” says Maurice Cameron, sales manager for the Flavor Tree Fruit Company in Fresno, CA. “Typically toward the latter part of April we are in big production; in 2016, we actually peaked in April. Usually we see cherries in the state until the second week of June.”

Chile begins exporting cherries to North America, the country’s second largest market for this fruit after China, in the fall. “We saw much more volume arriving earlier during the 2016/2017 season, with fruit starting to ship in Week 42, or mid-October, and finishing a week earlier than usual,” says Karen Brux, managing director of the Chilean Fresh Fruit Association (CFFA), San Carlos, CA. The final shipment of cherries to the United States departed Chile in early February. Although global demand continues to increase, total volume shipped stateside grew by 8 percent over last season, from 1.05 to 1.14 million boxes.”

2. Market Variety Strategically

Ninety-three percent of sweet cherries sold in the United States were red varieties, with the remaining yellow-skinned, according to Nielsen Perishables Group data for the 52 weeks ending Jan. 28, 2017.

Photo Courtesy of Chilean Fresh Fruit Association

“The best-selling varieties are naturally going to be those with the largest volume; nationwide, that is going to be Bing and other dark red varieties,” says Dovey Plain, marketing coordinator for Family Tree Farms, Reedley, CA. “Early season red-skinned favorites like Brooks and Tulare are being joined by a rapidly growing list of new early varieties like Coral Champagne, Royal Tioga, Royal Lynn and others.”

Some of the most popular red cherries grown in the Northwest are Bing, Lapin, Skeena and Sweetheart, say the region’s growers. In Chile, Bing, Royal Dawn, Lapin and Santina varieties dominate.

“Yellow-skinned Rainier cherries are also very popular,” says Sally Symms, a sales representative for Symms Fruit Ranch in Caldwell, ID. “Their high brix content is a winner and make the fresh fruit taste like candy.”

California’s Rainier cherry supply is available in May. Supply coming out of the northwest is available from June through early August, which encompasses National Rainier Day on July 11. The fruit is available from Chile in late November to January.

“The Rainier is a variety that our customers recognize as a premium and extra-sweet cherry. If Rainiers become available at a retail that we can offer our customers a value, we will add this to our offering. However, it is typically very limited,” says Grocery Outlet’s Olson.

Some growers, such as Chelan Fresh, are selling new cherry varieties such as the Orondo Ruby. This blushed red-skinned fruit has a golden-colored flesh and Rainier parentage, and is available in the Northwest from late June to early July. “We expect to have about 45,000 cases of the Orondo Ruby this season,” says Mac Riggan, marketing director for the Chelan, WA-based company. “In addition, we’ll have limited availability of about 50,000 cases of our pink high-brix Sonnet cherries in the last two weeks of June.”

Similarly, this is the second year Wenatchee, WA-based Stemilt Growers will sell its Skylar Rae cherries, a variety that has its own PLU and can be marketed as a third SKU at retail, in addition to red-skinned and Rainiers. The cherry boasts an orange-red blush over a yellow background, is exceptionally firm and has a brix or sugar content 10 to 15 percent higher than the Rainier.

“Availability is mid-June to late July, but as quantities start to increase with more orchards coming in, we expect to have fruit for the early, mid and late season,” says Roger Pepperl, director of marketing.

Some retailers prefer to sign cherries by varietal name. Others use terminology like “Dark Sweet Cherries” for any red-skinned type.

“The Rainier and Bing varieties are two that we do sign more predominantly when we have them available to us. Some of the other red varieties that we carry — Lambert, Lapin, Tartarian and the Chelan — are not as recognizable with our customers and therefore, we do not call out the variety specifics,” says Olson.

3. Consider Organic

Organically grown cherries represent a small portion of total cherry sales, though sales have increased substantially year-over-year, according to Nielsen Perishables Group.

“Roughly 5 percent of our sales are in organic cherries, although organic production in California is challenging due to market situations, production and pest management,” says Flavor Tree Fruit’s Cameron. “Our long-term plan is to increase acreage and offerings, but recently, the state’s total supply of organic cherries has been diminishing. We do see a glass ceiling on organic pricing; so, in a very high-priced conventional market, the premium for organic really diminishes.”

Approximately 3 percent of the Northwest cherry crop is grown organically, according to NCG. However, some 8 to 10 percent of total production at the Rainier Fruit Company in Selah, WA, is organic. “This is the first year we’ll have organic fruit from our latest districts and expect this to expand our availability into August,” says Andy Tudor, director of business development.

4. Bigger is Better

Large-sized cherries offer a greater quantity of sweet, juicy flesh per bite, say growers, because the fruit’s pit remains the same size.

“Normally, if you want to offer a hot price, you go with a smaller sized cherry. Last season, we stayed steadfast with larger fruit, 10.5 to 10 row, all through the season and were very successful,” says Fiesta Mart’s Williams.

The benchmark cherry size in the Northwest is now 10.5 row, with a peak of 10 row in June and 9.5 row in July, according to NCG’s Michael. “Seventy-five to 80 percent of the crop is more than 1 inch in diameter.”

Very few retailers carry a two-size program. “When they do, one of the sizes is typically sold by the unit, i.e., UPC clam shell, instead of by the pound,” says Chuck Sinks, president of sales and marketing for the Sage Fruit Company in Yakima, WA. “With regards to smaller sizing, the pricing is slightly less, allowing for better retail pricing. Budget-conscious retailers will generally take these smaller sizes to take advantage of lower retail prices. The upper-end retailers, though, want the bigger cherries as they look very impressive on the store shelves.”

5. Sell Attractive Packs

Photo Courtesy of Sage Fruit

Bulk cherry displays are outdated in the North American market, say growers and retailers alike, although there are a few specialty shops that do continue the tradition.

“Random weight packages of dark sweet cherries increased sales by nearly $60 million, reaching $670 million. Fixed weight cherries have become an increasingly important part of the category. Though only contributing 12 percent of category dollars, they accounted for 26 percent of incremental dollar growth,” says Domex Superfresh Grower’s Preacher.

Grocery Outlet stores, says Olson, are sold in 1- and 2-pound clamshells, depending on the cost structure of the season, since there are no scales in store.

“Clamshells are used less frequently, and when they are, it is usually driven by merchandising needs and/or the lack of ability to use a scale, as they are sold by the unit instead of per pound. Bags continue to be the trend, though the industry has migrated away from the standard Ziploc and are now packing in pouch bags. Pouch bags are still the highest percentage of packaging used by most retailers,” says Sage Fruit’s Sinks.

Some growers are experimenting with new package sizes and configurations. For example, Primavera offers 1.34-pound bags, or 12 bags in a 16-pound case rather than 8 bags, fo<h3>r a more attractive retail when FOB prices on cherries are high. This season, Chelan Fresh is test marketing an 8-ounce pack of 10.5 row premium cherries that can be merchandised in an eye-catching front facing manner on 5-deck refrigerated shelfing rather than on its side like a traditional clamshell.

“Top-performing retailers carry four or more cherry SKUs during peak season, including full distribution of both dark and yellow varieties. Incremental package types are added to drive additional sales,” says CMI’s Lutz.

6. Place Front Row Center

Olson’s main focus on merchandising cherries is to get the fruit in front of customers. “We utilize slant racks, field bins, our refrigerated spot box in the front of the store and what Kip Martin, our director of merchandising, calls ‘Bump Merchandising,’ which are side stacks at the registers for last-minute impulse sales. We also partner with Northwest Cherry Growers for display contests. This really drives excitement and added sales in our stores. We also like to utilize POS material that the Northwest Cherries Commission provides. These help educate customers on usage, nutritional information and variety information.”

Early season prominence is especially important.

“It’s critical to get the crop moving and to inform customers when cherries are available. In a consumer survey we conducted in 2016, one of the main reasons cherry buyers said they didn’t purchase in June is because they didn’t see, or couldn’t find, the fruit in the store,” says NCG’s Michael.

Size matters in terms of display. Stemilt’s Pepperl suggests 8 to 13 feet during the shoulders of the season, when dollar volume is lower and anywhere from 10 to 16 feet during the peak of the season.

“An analysis of space-to-sales performance in three supermarket chains underscored the correlation between the size of cherry displays throughout the season and overall category performance. In short, larger cherry displays, particularly in July, correlated with higher dollar and volume performance. Conventional wisdom suggests any produce category will benefit from incremental space. However, results from this study indicate this isn’t the case. Larger displays of cherries, variety berries and avocados all drove the highest sales and volume for retailers during the summer months, while larger displays of strawberries, grapes and citrus had no beneficial impact on category performance,” says CMI’s Lutz.

Growers suggest displaying cherries on a cold rack for best shelf-life. However, a prominent non-refrigerated display location is usually sufficient to ensure rapid sales.

“Secondary displays are also beneficial, especially when you are able to display product outside of the produce department. Results have shown 14 percent lift in volume and 22 percent growth in sales dollars,” says Domex Superfresh Grower’s Preacher.

Cross-merchandise cherries with other ingredients. “Cherries are delicious paired with good cheese or wine. Inspire the customer to create creative snack or dessert tray for their next dinner party. Another popular idea might inspire baking, freezing or canning of the fruit with the use of in-store promotional handouts,” says Symms Fruit Ranch’s Symms.

7. Price & Promote

The key for a successful cherry season at Grocery Outlet, says Olson, is to be fast and nimble. “Many retailers utilize cherries in loss leader ads, making it more challenging for us to provide value to our customers. Partnering up with grower/shippers when they have peak volumes helps us reduce the cost of product and offer lower retails that better match up with the conventional store format ads.”

California cherries are fresh and new when they come to market, and they tend to be less price sensitive than later-season cherries, according to Flavor Tree’s Cameron. “You can still move volumes of cherries in the California season without dropping down to the lowest price points you might see in the late summer; certainly there is a direct correlation on retail price to the amount of fruit sold.”

According to CMI’s Lutz, research shows that during the Northwest season, supermarkets with superior performance priced cherries on an everyday basis to encourage consumers to add to their shopping basket. “Top chains had lower-than-average pricing on both cherries and berries, offset by slightly higher than average grape and pear pricing. Cherry pricing at top-performing retailers averaged 50 cents per pound lower than bottom-performing chains,” he says.

Run five or more ads per season to provide maximum category volume and dollar impact, says Sage Fruit’s Sinks.

Beyond price, Domex Superfresh Growers will run its fourth annual social media contest, “Sweeten Up Your Summer,” designed to drive consumers to the supermarket to purchase cherries. “Consumers are asked to post a photo of their favorite cherry usage idea, recipe or fun activity using the hashtag #eatcherries. We have gained more than 50 million impressions over time, and this is one of our more popular social contests,” says Preacher.