Marketing Potatoes And Onions Effectively

With produce department merchandising, it’s typically the value-added, new and more unique items that are the focus.

Yet, staples such as potatoes and onions deserve attention, too, and can even see a boost in sales with the right displays, location and attention. Priceville Foodland, a single store operation in Decatur, AL, has found merchandising potatoes and onions together is the most effective method to moving both items.

“If these are on sale, we merchandise in bins, but always have potatoes and onions situated back to back, since consumers typically purchase both,” says Tye Newburger, Priceville’s produce manager. “We’ll market both together during the winter months, as consumers are buying these items for stews and soups.”

Most retailers understand commodity potatoes and onions drive fresh vegetable volume in the produce department. “Potatoes are the No.1 vegetable in volume sales, with a 10 percent share of total produce, so ample shelf space is provided, but often not in prime locations,” says Randy Shell, vice president of marketing at Russet Potato Exchange (RPE), based in Bancroft, WI. “Retailers are facing more competition from traditional and non-traditional channels, which are changing the way consumers buy produce.”

Due to the potential, potatoes and onions are not taken for granted by product departments, despite the commodity status. “Fresh potatoes are the second-largest vegetable category in dollar sales and at the top of the list for volume sales, while onions are fifth in dollar sales and second in volume sales,” says Kathleen Triou, president and chief executive of Fresh Solutions Network LLC, based in Buxton, ND. “Despite being bought by 87 percent of all households, the most of all produce items, total fresh potato volume is on a slight decline at supermarkets — 2 percent annual volume decline in 2015 versus 2014.”

Yet, she adds convenience and organic potato segments are growing. “To meet the demands of the escalating one- to two-people households that require smaller servings, value-added potato sales, which still account for just 5 percent of total potato sales, have increased 18 percent in 2015 compared with 2014,” says Triou.

Potato Positioning

The potato and onion associations have been credited with much of the marketing push for these items and increasing the sales momentum in produce departments. For example, the Denver-based Potatoes USA (formally the U.S. Potato Board), which represents all U.S. potato growers, recently completed a big segmentation study that looked into what Americans are eating, categorizing consumers in terms of food and shopping opinions.

The study identified a broad group of food enthusiasts who are considered thought leaders and those who utilize recipes, recommend restaurants and are adventurous.

“When we did an attitude and usage study last February, we found the usage, or number of servings, of potatoes by our food enthusiast target market went up by one serving per week compared to the year before, which was surprising,” says John Toaspern, chief marketing officer for Potatoes USA.

Potatoes USA also regularly commissions branding ads and initiates media coverage on different potato uses in publications and through social media. In 2015, it worked with Kroger’s and Whole Foods’ in-store magazines to develop potato articles.

The organization recently revamped its consumer website, potatoesgoodness.com, with its Ninth Wonder branding concept, adding a recipe section inspired by Pinterest. It also rebranded its name as Potatoes USA, along with a new logo.

The Idaho Potato Commission in Boise has embraced programs that incorporate onion merchandising, although the two items haven’t been marketed together in Idaho since 1937. “With onion organizations, we constantly bounce ideas off of each other and mimic programs,” says Frank Muir, the Commission’s president and chief executive.

The Commission has been holding the largest Idaho potato display contest for the last 25 years, which the onion industry has also incorporated. “We don’t see this as competition, since it reinforces the Idaho ag image,” says Muir. “We’re building on what we do well and improving things we think we can do better.”

On the Commission’s 75^th anniversary, iconic postcards that were a century old were used for inspiration. Slogans like “We Grow Them Big Here” were reincarnated and used in the promotional campaign.

“Our goal was to bring the post cards to life, traveling around the country to big events, like the Kentucky Derby, as well as local events like proms and birthday parties,” says Muir.

In a philanthropic effort, the Commission partnered with Meals on Wheels to donate more than $100,000 and raise awareness for the program.

Its Tater Team, including its Potato Ambassadors, travels the country in a branded truck promoting Idaho potatoes while raising awareness and funds for various causes.

One of the Commission’s recent events was placing the truck on a barge in New York City’s Hudson River. “We also arranged to donate 12,000 pounds of Idaho potatoes to a city soup kitchen,” says Muir.

Although local potato organizations, such as the Northern Plains Potato Growers Association in Grand Forks, MN, have more limited budgets and resources, trade shows and print ads have proven to be effective promotional tools. These associations also work closely with Potatoes USA to help promote its programs, as well as assist retailers with category management.

Not Seasonal

“Potatoes are more often promoted in the fall, since this is when the product tastes and stores best,” says Ted Kreis, marketing and communications director for Northern Plains Potato Growers Association. “The biggest shift we’re seeing is in organic and natural product, but taste and affordability are big factors.”

The Association is currently creating a new website, redrivervalleypotatoes.com, which will include about 300 recipes. Depending on the store type, potatoes continue to be advertised and marketed in-store by most retailers.

“Fresh potatoes are promoted about six to nine times per quarter,” says RPE’s Shell. “Retailers understand sales success can be driven by promotional dollar, volume lift and frequency.”

The potato data revealed shoppers purchasing potatoes also are buying onions, and these tend to be perimeter shoppers that scratch cook.  Potato promotion best practices show that frequent or nine to 10 times promotions per quarter with discounts less than 25 percent are key to optimized performance.

“All of the retailers I’ve worked with frequently promote potatoes, as they know the category drives performance for the department and increases traffic to the store,” says Triou at Fresh Solutions. “Keeping the price discounts moderate or less than 25 percent during the holiday periods can be a bit tricky.”

St. Patrick’s Day is a prime marketing opportunity for red potatoes, while most other types are promoted more heavily during the holiday season. Associated Potato Growers Inc. in Grand Forks, ND, provides recipes on its website, along with links to other resources. “The key is to have good displays, but not too large, and promote the healthy side of potatoes,” says Paul Dolan, Associated’s manager. “What’s not well promoted is the fact different types of potatoes have varying flavors. It’s also good to promote these products with meat in ads and fliers.”

Potandon Produce LLC in Idaho Falls, ID, markets its Green Giant brand using web-based marketing and advertising. The company also offers retailers customized merchandising tools, POS materials and free-standing store displays. “What works best is dependent on the market or region,” says Ralph J. Schwartz, vice president of marketing, sales and innovation for Potandon. “Overall, we’re seeing a change in terms of consumer demand to more baby potatoes, and Russets are the largest by far, although this is changing with new varieties.”

With potatoes, retailers rely on the profit and tonnage due to the high rate of household penetration and the fact this product is a Top 10 revenue producer for the produce category.

“In our experience, retailers sell potatoes in two primary ways — the traditional potato table that ranges from 8 to 12 feet with the standard assortment items, such as traditional bag Russets, reds, golds, whites and bulk; and secondary displays to attract impulse purchases with items such as 4-count Steakhouse Bakers, 1.5-pound roasters, 3-pound Seafood B Reds and 3-pound Buttery Bites,” says John Pope, vice president of sales and marketing at MountainKing Potatoes, based in Houston.

The Onion Push

Often, potatoes and onions are in close proximity in the produce set because these items have a natural basket affinity. While many buyers manage both potatoes and onions, they are treated as separate categories in most cases, say experts. “Together both segments contribute as much as 15 percent of total produce volume, consequently a dedicated category manager is frequently assigned to help drive and monitor overall success,” says RPE’s Shell.

Although onion promotions go in phases, depending on the retailer, it’s not common to see this segment mentioned in an advertisement. Many say this is an overlooked opportunity to sell more onions.

“Onions can be on ad more often, whether at a special buy or regular price, since this is a staple and retailers have the opportunity to educate consumers,” says Kimberly Reddin, director of public and industry relations for the Greeley, CO-based National Onion Association.

For the holidays, where consumers are more apt to scratch cook, convenience items like pre-cut onions can expand the category.

“Although onions are typically a planned purchase and rarely bought on impulse, these items are also actively promoted as part of a complete category strategy that includes pricing, promotion, placement and product mix,” says Susan Waters, executive director of the Vidalia, GA-based Vidalia Onion Committee.

The National Onion Association has worked with Potatoes USA on a joint project to institute unique marketing ideas.

“Unfortunately, it was not something the industry gravitated toward,” says Reddin. “Still, consumers purchasing onions and potatoes are often in the store at the same time and are the same buyer.”

With sweet onions, the key is displaying in bulk in more than just a basket, since large displays with selling aids, such as point of sale material and educational signage, are most effective.

“This is not the most glamorous category, so in some cases retailers take it for granted,” says Mark Breimeister, director of sales at OSO Sweet Onion, headquartered in Savannah, GA. “We recommend demos with fresh salad dressing and sweet onions and have seen positive results with split bins to cross-promote onions and potatoes.”

Consumption and Pricing

Consumption patterns and pricing with these products vary. For example, the average U.S. supermarket sells about 3,000 pounds of fresh potatoes per store per week, says MountainKing’s Pope, with American consumers eating on average between 15 and 20 pounds per person per year.

Onions are a Top Five vegetable category item in both dollar and volume sales, according to the Vidalia Onion Committee. Sweet onions lead total category sales at 35 percent, with the Vidalia variety leading at 62 percent of sales during its season.

The National Onion Association reports consumption of onions is up approximately 70 percent in the last two decades, with the average consumer eating about 20 pounds of onions per year.

“I do know nine out of 10 potato purchases are planned, and research shows the No. 1 way to motivate shoppers to buy more is to provide new ways to prepare these items,” says Triou. “Recipes should suggest new preparation methods, different tastes and textures to be most motivating.”

In terms of popularity, Russets perform best with the largest volume and dollar sales and red potatoes are second. Yet, some are seeing Russets’ share declining due to increases in red, yellow and bite-sized/specialty potato sales. Medleys and blends are also on the rise.

Because this is fresh produce, how long a potato or onion lasts will depend more on how it is stored. Fresh potatoes generally last about 21 days or more on the shelf, depending on how the potatoes are handled and stored prior to purchase, according to Shell.

A shelf life of two weeks is about average, but this varies based on many factors, such as the potato variety, temperature, storage and handling, lighting at the store, time of year and whether potatoes are fresh dig or from storage.

Vidalia onions are a fresh onion, which results in a shorter shelf life than a white or yellow onion. Most sweet onions are purchased and used within a few weeks, but with proper storage, they can be stored for several months in a cool, dry and dark area, or in the refrigerator.

Because potatoes and onions are staple products, the margins do not fluctuate as with other produce. “Potato Best Practices indicate retailers should maintain a consistent, segmented pricing strategy that communicates the value proposition of each package size, creating reasonable price gaps between the different sizes stocked within each potato type and focusing more on internal consistency versus responding to competition,” says Triou of Fresh Solutions Network. “We suggest retailers evaluate promotional pricing every day to ensure this is in line with their own overall pricing strategy and adjust as necessary. Consumers respond to quality produce first before price as long as the price is fair and communicates the value they are buying.”

Both potatoes and onions benefit from year-round marketing, despite the fact September through April are the main shipping months for fall crops. “Between 80 and 90 percent of potatoes are grown and stored for the winter from Washington State to Maine, Idaho, Minnesota and New York,” says Kreis of the Northern Plains Potato Growers Association. “When that season runs out, there’s a smattering of potatoes through the rest of the country, with the spring crop coming out of Arizona, California and Texas.”