Five Strategies To Profitably Sell More Chilean Citrus
Sunny-colored citrus isn’t just a winter-time seller in the produce department.

By Carol M. Bareuther, RD

Leigh Vaughn, director of produce and floral for Associated Food Stores Inc., a Salt Lake City, UT-based cooperative that supplies nearly 600 independently owned retail supermarkets, admits, “Summer citrus was a novelty until a decade ago. However, today’s consumers expect to find good citrus, especially Navels. In some markets, citrus has become a summer staple.”

This is good news for Chile. In 2009-2010, this South American country exported 61 percent of its total citrus production to the United States, making Chile the largest exporter of fresh citrus to the United States during the summer and early fall. By variety, 90 percent of Chile’s Clementines and Mandarins are exported to the United States, along with 62 percent of oranges and 37 percent of lemons.

Mark Hanks, vice president of sales and marketing, North America, for DNE World Fruit Sales, based in Fort Pierce, FL, says, “There was concern at the start of this season about how much fruit was really going to come into the United States from Chile. Reasons were the weak U.S. dollar, strong currencies in South American and other competing countries and all-time high oil prices that skyrocketed freight rates. As it turns out, this should be a good season. I think the Chilean citrus growers are looking at the future and to a strong long-term U.S. market.”

1. Know What’s In Season

Chilean citrus stars in the produce departments at Rice Epicurean Markets in the summer. “We’ll carry everything from Navel oranges to Clementines and Mineola tangerines,” says Mark Luchak, director of produce and floral for the 5-store chain based in Houston, TX.

This season, an estimated 142,266 tons of citrus is forecast to be imported from Chile, according to the Chilean Exporters Association (ASOEX), in Las Condes, Chile. This breaks down to a projected 60,775 tons of oranges, up 15 percent from last year; 43,020 tons of Mandarins and Clementines, an increase of only 5 percent over 2010; and 36,962 tons of lemons, down nearly 19 percent from the season prior.

James Milne, director of business development and avocado and citrus category director for The Oppenheimer Group, based in Coquitlam, BC, says, “A drought in the northern Chilean citrus growing regions means volume will most likely be down, but I expect that will change once the Chilean deal moves south. That’s when we will possibly see a growth in Navels and the late season W. Murcott program.”

“In terms of overall quality,” adds David Mixon, senior vice president and chief marketing officer for Seald-Sweet International, in Vero Beach, FL, “the season as a whole looks outstanding. I’d say marketing opportunities are above average.”

Navels sourced from Chile are a relatively new deal for Associated Food Stores, says Vaughn. “Typically, we received them from Australia. Chile has fantastic quality and it’s nice to see Australia getting some competition.”

This is the third season that Chile has been allowed to export its Navels into the United States, says Mixon. “The category grew over 40 percent between the first and second season. We’ll see only minimum growth this year. There isn’t enough product to fill demand, but there are more young plantings in the ground that are starting to produce. What’s driving demand is that Chilean Navels are a premium product.”

Mark Greenberg, senior vice president of procurement and chief operating officer for Fisher Capespan Canada Inc. Distribution, in Montreal, Quebec, Canada, says, “The Fukumoto is the first Navel variety to harvest in Chile. The maturity, or sugar/acid radio must be 9:1, or it won’t be shipped. This helps assure a premium quality.”

The season for Chilean oranges begins in early June and ends in October. Exports peak during the month of August. Ports of entry are on both the East and West coasts. After Fukumoto, varieties include Late Lane and Washington.    

“Sizing of Navels this season will be a little smaller, peaking on 72s, 88s, 64s and 56s, in this order,” reports Mixon. “There won’t be any real volume in sizes larger than 56s.”

The U.S. market is ripe to handle a diverse array of sizes. John Janker, director of category management for Charlie’s Produce, a Seattle, WA-based wholesale supplier of produce to independent retailers in the Pacific Northwest, says, “We have a diverse customer base. Some high end retailers want large Navels to merchandise in bulk. Others want smaller fruit to sell at a value either in bulk or bagged.”

“Chile’s clementine season starts mid-June”, says Oppenheimer’s Milne, “and it will run until the end of August. Seedless W. Murcotts will be available from the beginning of September until the end of October.”

Fernando Balart, marketing liaison for ASOEX (Asociacion de Exportadores de Chile), says, “In recent years, Mandarin acreage planted has increased significantly. We expect a consistent increase in the category for coming seasons.”

The volume of early season Clementines was down almost 20 percent due to drought conditions in the northern growing regions.

Greenberg contends, “Later season fruit is expected to be up in both volume and size. Quality is good in terms of external appearance, sugar and flavor.”

“Clementines are a key SKU and one of the better movers,” says Janker. “Because of this, we’ll sell them in 5-lb. boxes, 3-lb. bags and bulk.”

“Tangelos are something we brought in on a limited introduction last season,” says Associated Food Store’s Vaughn.

“The volume of Mineola Tangelos imported from Chile each season depends on a specific window of opportunity,” explains Seald Sweet’s Mixon. “If Peru is finished by the end of August or first of September, then there’s a window to bring the fruit in from Chile. Otherwise, Peru traditionally has this market. Mineola Tangelos from Peru and Chile both have good exterior color and eat well, but neither are as bell-shaped as North American fruit.”

“Chilean lemons are also an item many of our retailers will sell,” adds Charlie’s Produce’s Janker.

Lemons start shipping in July and finish in October. Exports peak in volume in July and August.

Information on projected arrivals, peak volumes, probable end dates, and overall quality and size mix is available throughout the season on the Chilean Fresh Fruit Association’s Web site. Retailers can sign up for e-mail alerts on the latest seasonal updates.

2. Offer Different Pack Styles

Chile’s orange exports ship to the United States in 15-kg boxes, lemons in 17-kg boxes and Clementines and Mandarins in 15-kg boxes. Fruit is either sold bulk or re-packed on arrival.

Fisher Capespan’s Greenberg says, “Packaging innovations are not originating in Chile, but driven by U.S. chain stores.”

DNE’s Hanks agrees. “It’s more cost effective to re-pack the fruit in the U.S. because retailers all want something different. For example, it might be 2- or 3-lb. bags or 5-lb. boxes, depending on a retailer’s desired merchandising strategy or price point.”

“For example,” says Oppenheimer’s Milne, “$8.99 for a box of clementines is simply too high for many, so a smaller bag at $3.99 or $4.99 is a more appealing price point. The economy is doing much better than it was three years ago, but consumers are still being very cautious and are price-sensitive.”

Bagged product is trending more popular than boxed for two reasons. “Environmental impact is one of the main concerns for packaging,” says Craig Uchizono, vice president of the Southern Hemisphere for The Giumarra Companies, based in Los Angeles, CA. “Bagged citrus is generally more popular than boxed.”

“Secondly,” says Milne, “consumers are concerned with spoilage, and we’re starting to see increased popularity with the smaller consumer packs, normally a two- or three-lb. bag. Clementines, which were once typically in boxes, are being packaged in bags as well because they’re easier to carry and store, and customers are not forced to buy more volume than they need. We’re also seeing a trend towards more high-graphic bags and strong presentation.

3. Merchandise With A Winter Mentality

The abundance of domestic fruit such as peaches, berries and cherries means that display space is at a premium in the produce department during the summer.

Mike Minaglia, citrus buyer for Charlie’s Produce, says, “It’s important not to relegate summer citrus to only one or two cases at the back of the department. Displays need to be more prominent like they are in the winter.”

Associated Food Store’s Vaughn agrees. “Citrus is a destination staple in the winter and an impulse buy in the summer. That means in the summer it has to be displayed visibly such as on end-caps or merchandised with berries. We particularly like strawberries for the color contrast and eye appeal.”

“Display and promote stone fruit and citrus together,” suggests Uchizono. “Citrus provides a splash of color on an end-cap display. High vitamin C is one of citrus’ best nutritional attributes and should be promoted through signage.”

“Citrus displays remain stationary year-round at Rice Epicurean Markets,” details Luchak. “We offer so-called ‘summer fruit’ such as stone fruit, grapes and berries in the winter, too, so we tend to keep citrus on its normal table. Occasionally, we will build secondary displays when citrus is on ad.”

“A secondary display near the exit of the produce department as people are heading to checkout, could also be effective,” maintains Oppenheimer’s Milne.

Uchizono adds, “For specialty citrus, sampling and demos help consumers learn more about the fruit as they taste the different flavor profiles.”

ASOEX’s Balart says, “Adjacent displays of zesters, peelers and graters also increase the total ring. Also, slice an orange and place it on the display to show the fresh interior.”

4. Price By The Pound

Costs associated with importing citrus to the U.S. makes it higher-priced then its domestic counterpart.

This difference, says Associated Food Store’s Vaughn, “can be fairly large. However, once consumers get past the initial sticker shock, they buy because of the fantastic quality.”

To lessen sticker shock, Seald-Sweet’s Mixon recommends pricing fruit by the pound. “We had a battle years ago when the first imports arrived and retailers in the East priced the fruit by the each. A good retail partner of ours switched to a per pound price and immediately grew their category as a result.”

DNE’s Hanks agrees. “Consider that many summer fruits, for example, are priced by the pound in the neighbourhood of $1.49 to $1.69. It’s advantageous to price citrus the same way. We feel it drives more volume.”

Per pound pricing has long been a tradition on the West Coast.

Charlie’s Produce’s Janker says, “Typically, all of our retailers sell their produce by the pound. It gives customers the best perception of value. For example, you expect to pay more for more or a larger piece of fruit.”

Beyond method, says Giumarra’s Uchizono, “Competitive pricing will entice consumers to buy Chilean citrus. Citrus is a produce staple item and it’s important to offer consumers value.”

5. Take Advantage Of Summer Themes For Promotion

Citrus can be a profitable part of summer produce sales if properly promoted. Just consider the opportunity: While citrus contributed 7.5 percent of total produce sales from December 4, 2010, to February 26, 2011, according to the Perishables Group, a West Dundee, IL-based market research firm, this figure was only 3.5 percent from June 5 to August 28, 2010. Clearly, there is room to grow citrus consumption in the summer. 

“Contrary to what retailers may think,” says Seald-Sweet’s Mixon, “research shows there is a loyal shopper for summer citrus and that primary summer citrus shoppers buy citrus all year long. Purchase frequency is directly aligned with in-store availability, display and promotion.”

“It is a challenge for the produce manager to merchandise and promote citrus in the summer when the SKU count goes through the roof,” notes Associated Food Store’s Vaughn. “Even so, there’s a place for it. For example, one of our target markets are soccer moms. It seems that almost every child over the age of 7 plays soccer. There’s always been Valencias, but Navels makes a fantastic snack at half-time. It’s a theme some of our individual retailers have promoted around.”

Charlie’s Produce’s Janker adds, “It’s important to let customers know where the fruit comes from and that it is ‘just in,’ ‘fresh’ and ‘just harvested.’”

Oppenheimer’s Milne maintains, “Chilean citrus is a solid product in the late season, which is perfect for back-to-school promotions.”

“Price point is usually the primary promotional tactic,” recognizes Vaughn.” We feature four different ads featuring Chilean citrus over two months. Beyond this, there is a lot of opportunity to grow marketing and promotion.”