Originally printed in the December 2019 issue of Produce Business.
These venerable vegetables are a changing.
Potatoes and onions are two of the most consumed vegetables in the country, according to the Agricultural Marketing Resource Center, a research arm of the USDA based in Iowa State University, IA, but it is still easy to leave money on the table by neglecting to merchandise them to the fullest.
Maybe it is a question of familiarity: By the time Thomas Jefferson ate the first French fry served in the White House, the natives of the Peruvian Andes had been eating potatoes for at least two millennia.
These ancient vegetables are constantly evolving as consumers look for onions that are sweeter than ever, or potatoes that are smaller and more colorful, but as they change, potatoes and onions continue to be mainstays in produce and beyond.
“Potatoes and onions are not just staples, they are staples for the produce departments’ overall business,” says Maria Brous, director of media and community relations at Publix, Lakeland, FL. “This is why you will almost always find potatoes and onions advertised in weekly promotions and are often merchandised in secondary locations within the department and sometimes outside the department.”
Here are 11 suggestions on optimizing sales of onions and potatoes gleaned from experts in the categories.
1. Follow The Data
Potatoes and onions may be fully mature, but consumer tastes on which potatoes and onions they prefer are shifting, and time invested in following the data is time well spent.
“We promote potatoes and onions with regularity as they still represent 5% of the total produce business,” says Brandon Bentley, category business manager for vegetables at Tops Friendly Markets, Amherst, NY. “We have found the growth in the category is coming from the gourmet-style offerings. Creamer, side dish kits and convenience items are seeing double digit growth weekly. That said, the conventional 5-pound lineup still is the horse, making up 40% of the category.”
Total per capita potato consumption peaked at a chip or two less than 145 pounds in 1996, according to U.S. Department of Agriculture statistics, and declined to a little less than 114 pounds in 2018, but consumption of just fresh potatoes dropped during those years from nearly 50 pounds to a little more than 30 pounds per person.
In the quarter century starting in 1970, consumption of frozen potatoes more than doubled, from 28.5 pounds per capita to 60.3 pounds, but has declined steadily, if slowly, since then. “I think those who really understand the markets and the industry data, and then use that to go after the weak areas in their program seem to get it,” says Kevin Stanger, president of Wada Farms Marketing Group, Idaho Falls, ID. “They need to be aware of their customers and the opportunities they can bring to the table. Just the ‘that’s the way we’ve always done it mentality,’ isn’t going to work anymore.”
The latest figures show potato dollar sales are increasing because enough consumers are choosing higher priced specialty varieties.
“Potato sales for fiscal year 2019 showed a 1.3% increase in dollar sales for the fresh potato category while volume sales fell 3.3%,” says Kayla Dome, global marketing manager for the retail programs at Potatoes USA, Denver. “Everyday pricing did see a 4.8% increase per pound on fresh potatoes in fiscal year 2019. The increase allowed retailers to increase their dollar sales.”
While the volume of fresh potatoes sold has stagnated, total fresh onion consumption has steadily increased since 1970, according to U.S. Department of Agriculture statistics, from barely more than 10 pounds per capita to more than 20 pounds.
2. Keep Them Fresh
They may not wilt like leafy greens left too long, but potatoes and onions have shorter shelf lives than might be assumed.
“The display should be rotated a minimum of once a day,” advises Ted Kreis, marketing and communications director at the Northern Plains Potato Growers, East Grand Forks, MN. “The product that moves the quickest should be in the front.”
Some potato varieties need to be moved faster than others, or they will succumb to greening.
“Yellow and white potatoes green faster,” cautions Kreis. “They can begin to green within two days.”
With onions, the ability to keep the merchandise fresh should be considered in deciding how large to make the display.
“Build your display so you can blow through them in a day or two. This is especially important with sweet onions, which don’t last as long.” advises Michael Blume, director of sales and marketing at Keystone Fruit Marketing, Greencastle, PA. “Have big displays and keep them fresh.”
3. Fresh-Cut Onions Are Trending
Fresh-cut onions are trending because they meet the demand for ever more convenient produce.
“The value-added section in produce continues to expand, and that includes onions,” says Megan Jacobsen, vice president for sales and marketing at Gill’s Onions, Oxnard, CA. “The demand for fresh-cut onions is strongest in foodservice, but the demand is strong in retail, too,” she adds. Gill’s Onion’s specializes in fresh-cut products exclusively, and it is one of the largest producers of fresh-cut onions in the country.
“With Millennials making up more of the market, my guess is pre-cut onions are going to be bigger,” says Renee Hardwick, director of public and industry relations at the National Onion Association, Greeley, CO.
“Millennials like to save time, and cutting onions takes time. The Millennials love fresh and nutritious food, and pre-cut onions allow them to save time.”
There is a particular group among the Millennial demographic that finds fresh-cut onions attractive, and that group is increasing.
“Millennials do eat out a lot, but 50% of Millennial women are now mothers, and they are cooking at home,” says Jacobsen. “Red onions are historically used on salads, but yellow onions are the largest part of our business, and they are used for cooking.”
The best spot to merchandise these trending products is in the refrigerated section of produce near the dry onions.
“You look toward the sides in the refrigerated section of the produce department and the fresh-cut onions are usually in the same general area as the bulk onions, a few feet away,” says Jacobsen.
4. Red And White Are Trending
Whites and Russets are still the mainstays among potatoes, according to Bentley from Tops Friendly Markets, but other varieties are steadily becoming more important.
“Consumption trends on potatoes are flat for Russets, and up on the colored and the value-added items of potatoes,” says Stanger. “Pricing does have some effect, but the studies that I’ve seen show potatoes are somewhat inelastic. The Idaho Potato Commission and Idaho Falls, ID-based Category Partners, a strategic insights company, have some great insights on this.”
The growing importance of red and white potatoes invites the use of more colorful potato displays.
“The three or four colors of potatoes can be displayed next to each other,” says Kreis. “Red and yellow potatoes should be displayed as prominently as Russets, which make up about two-thirds of the category, but reds and yellows have both been increasing over the last decade.”
Even the Russet category is more complex than assumed, and retailers might do well to explain the differences more clearly.
“We as an industry haven’t been very good at educating the consumer about potato varieties,” says Mike Carter, chief executive of Bushman’s Inc., Mukwonago, WI. “There are many varieties of Russets, and they are not all used for the same things.”
5. Include The Specialties
There are numerous specialty onion and potato varieties that continue to increase in retail value.
“I think today’s retailers are finding value in stratifying their offerings of spuds and onions,” says Dick Okray, president of Okray Family Farms, Plover, WI. “Although there may not be high volumes in some SKU’s, there is high ring. This trend will no doubt continue and will be pulled through at the request of younger, time-conscious customers.”
Sales figures of both onions and potatoes show dollar sales are rising faster than volume, presumably in part because of these higher priced products.
“In the 52 weeks ending Sept. 8, total potatoes are up 1.7% in dollars but down 2% in volume compared to a year ago,” says Rachel Atkinson-Leach, category and brand manager at RPE, Bancroft, WI. “Bag, micro tray and fresh prep/cut potatoes are showing positive growth trends. Yellow, white, blend/medley and fingerling potato types are driving dollar and volume growth. In the 52 weeks ending Sept. 8, total onions are up 7% in dollars, and 1.2% in volume. All package types are showing positive dollar growth trends. Specialty onion dollar growth was 8%.”
Tasteful Selections, in partnership with RPE, is targeting this specialty market with the newest and smallest item to the potato category, a gourmet treat in the shape of the world’s smallest potatoes — Nibbles.
“We take great pride in being one of the largest grower/producers of bite-sized potatoes,” says Tim Huffcutt, marketing director at RPE, Bancroft, WI. “We are dedicated to innovation, we strive to perfect our bite-size varieties, and we maintain our consistent-sizing protocols. Through all the work, sometimes we miss the treasure at our own feet. Today, we have found that treasure, and we are sharing it with our consumers.”
There are also particular onion varieties increasing more quickly than the category as a whole.
“Onion consumption is remaining flat, but cooking and pickled onions are trending,” says Hardwick of the National Onion Association. “They are showing up at fine dining restaurants down to casual and fast food.”
6. Sweet Onions Lead The Way
Sweet onions have grown to become a major source of increasing sales in the entire potato and onion category.
“Russet potatoes and sweet onions continue to be the main drivers for the category,” says Brous from Publix.
The leader in increasing onion category sales, sweet onions, has become available and popular 12 months of the year and may even overcome periods of higher than usual prices.
“Last year’s market on onions drove retail prices up, which typically results in unit losses,” says Bentley from Tops Friendly Markets. “However that was not the case last year. We see nice gains in units in bulk and bagged sweet onions.”
As they have become available year-round these sweeter onions have come to drive growth in the category.
“Sweet onions drive the category,” says Blume of Keystone Fruit Marketing. “There’s more demand every year, and we see sales go up. A few years ago sweet onions were only available during the Vidalia season; now they are available year-round. We go from Vidalia, to Peru, to Mexico, and we even have Walla Walla onions on the West Coast after that.”
7. Location May Matter
The one location with value as a quality brand is the Vidalia, GA home of the sweet onions.
“Vidalia is well known in the 48 states and Canada, maybe Hawaii and Alaska, too,” says Delbert Bland, owner of Bland Farms, Vidalia, GA. “The key is to let the customer know what you’ve got. It’s a mild onion; you can bite into them like an apple. They only make you cry when they’re gone.”
In order to fill the month- to six-week gap when the Vidalia and Peru sweet onions are not available, Bland also grows in Mexico and Texas.
“We can grow them 11 months of the year,” says Bland. “When they are from Peru our label looks similar, but it says ‘Premium Sweet Onions’ rather than ‘Vidalia Sweet Onions’.”
Wisconsin consumers also have a particular affinity for potatoes from their farmers down the road.
“Shoppers recognize Wisconsin locally grown potatoes at retail, and it is a benefit that supports local farmers, communities and economies,” says Heidi Alsum-Randall, chief operating officer of production and sales of Alsum Farms & Produce, Friesland, WI. “Wisconsin potatoes are typically marketed heavily in the Midwest and East of the Mississippi to the East Coast.”
In the right areas, these potatoes can be co-merchandised with onions that are also from Wisconsin.
“Wisconsin potatoes and onions are a natural pairing when it comes to merchandising the two categories together to elevate the produce department,” says Alsum-Randall. “Well lit, eye-catching market-like displays with bushel-type baskets are visually attractive to consumers. We eat with our eyes, and attractive displays will help maximize onion-category profit margins. An advantage to cross-promoting potatoes and onions is lifting volume and dollar profits for both categories.”
“Secondary location recommendations did reveal that potatoes perform best if they are set up on an end cap and promoted with onions in this location.”— Kayla Dome, Potatoes USA
8. Smaller Is Better
As our households have grown smaller so, too, have the typical size bags of potatoes.
“Over the past 10- to 15-years, we’ve seen a trend toward smaller pack sizes,” says Bushman’s Carter. “People don’t want to buy a large bag of potatoes and end up throwing some out. It’s the same thing on onions; it’s smaller packs.”
A related trend is toward small potatoes that are quicker or easier to prepare.
“The Speedy Spud is individually wrapped and ready to microwave; it answers the need for convenience,” says Carter. “We also have a grill pack.”
National sales trends reflect this relative shift in favor of smaller potatoes.
“Small potatoes are now 14 percent of total category dollars while organic potatoes continue to show gains,” says Atkinson-Leach. “Small organic potatoes are up 17% in dollars and 16% in volume.”
9. Choose Locations Carefully
Potatoes and onions are such high volume items that the display location can impact sales in the entire produce department.
“Everybody likes to see their product at the front of the aisle, but sometimes you put high volume items at the back so you walk through the department to get to them,” says Kreis of Northern Plains Potato Growers. “Ideally we would like to see the potatoes at a high visibility location. They are high volume and high margin.”
There can also be opportunities to effectively merchandise either onions or potatoes next to companion foods.
“We market them mostly together as they are great companion items,” says Brous from Publix. “But there are some occasions when we merchandise or cross-merchandise separately or with other products, like onions and avocados or steak and potatoes.”
Although potatoes and onions should usually be close to each other in the department, they should not be touching.
“The flavor of the onions will transfer to the potatoes,” says Kreis. “Maybe you can put them back-to-back, but not side-to-side on the same table.”
There are locations outside the produce department worth considering for secondary displays.
“Another tactic is cross-merchandising potatoes in the meat case as it can lift sales outside of the produce department,” says Alsum-Randall.
“Consumers will look to meat and potatoes as a natural meal solution, and are more likely to purchase potatoes if they see ready to bake or grill potatoes paired next to steaks, pork chops or chicken in the meat aisle. It’s a win-win for the retailer.”
Careful attention paid to potatoes and onions can result in small, but still significant, sales increases.
“Signage in this capacity has the potential to increase potato sales by 2.9%,” says Dome of Potatoes USA. “Other recommendations such as how to lay out the potatoes on the shelf regarding type and pack size can also lead to growth if done properly. Secondary location recommendations did reveal that potatoes perform best if they are set up on an end cap and promoted with onions in this location. A lift potential of 3.1% can be seen if the secondary location follows these two guidelines.”
In terms of merchandising, potatoes and onions are almost always placed on the same core fixtures, but they sell best everyday when merchandised as separate categories, says Atkinson-Leach. “The exception is when potatoes and onions are merchandised on end caps together. Potatoes can see as much as a 4.1% lift when located on an end cap with onions.”
10. Get Help From Your Friends
There are suppliers and trade groups able and ready to offer invaluable help in putting together a merchandising program for potatoes and onions.
“We work with registered dietitian Sarah Agena, Stevens Point, WI, on social media avenues as well as television opportunities in showing creative and unique ways of making Wisconsin potatoes,” says Dana Rady, director of promotion, communication and consumer education at the Wisconsin Potato & Vegetable Growers Association, Antigo, WI. “Sarah has been on networks in Lacrosse, Wausau and Madison to name a few. She also offers a lot of credibility to the natural nutrition potatoes offer and the ability to have them be a part of a healthy and active lifestyle.”
This association uses a unique traveling road show to spread the word about the state’s potatoes.
“The Wisconsin Spudmobile is our traveling billboard that is focused on visiting events across the state and Midwest, all in an effort to educate consumers about Wisconsin potatoes, where potatoes come from and how they get from the field to families’ plates,” says Rady. “There are eight exhibits on the inside that showcase different aspects of the industry such as farmers being stewards of the environment, Wisconsin potato variety and recipe kiosk, nutrition and fun facts, history wall and an interactive touch table that has industry-related games.”
Shippers can be particularly helpful in letting retailers know in advance when particular varieties will be available, and in what quantities.
“From working with retailers, the associations do market potatoes and onions as part of their produce ad calendar,” says Alsum-Randall of Alsum Farms & Produce. “We provide the retailer recommendations based on potato supply and availability to provide the best value to the consumer. We are currently promoting ad volume for b-size red and gold potatoes. This size potato can help retailers bring a fresh offering to the category at a great value.”
11. Be A Proactive Merchandiser
Few items in the produce department rival potatoes and onions when it comes to household penetration rate.
“Potatoes have an 83 percent household purchase rate, according to a product affinity study we conducted with IRI for our Fiscal Year 2019, which ran July 2018-June 2019,” says Dome. “Since potatoes tend to sell on their own, retailers focus on other commodities in regards to self-promotion unless they are organized with specific brands packing their products.”
Familiarity with products does not mean there are no opportunities to increasing sales.
“Within potatoes and onions, having the right assortment, pricing and promotional programs in place are key to capturing growth,” says Atkinson-Leach. “Within assortment, retailers need to have a core mix of commodity types, but they also need to capture the robust growth in the small/specialty markets. Currently we are seeing successful retailers lean heavily on the small/specialty potato and onion programs to drive category growth as well as increase their average price point, which is helping drive more dollars to the category.”
Regular promotions are an essential sales driver of these two produce leaders.
“Promotional activity is still key to helping retailers grow their categories,” says Atkinson-Leach. “Within potatoes, we typically see nine or 10 potato items on promotion per quarter with commodity promotions taking place during the holiday timeframes driving the best growth. Onions are generally promoted as a traffic driver, as onions tend to be less price sensitive than other items.”
The best time to promote potatoes may, ironically, be after the holidays when consumers revert to healthier eating.
“We are really encouraging retailers to promote potatoes in January, as consumers focus on their resolutions. Potatoes are a nutrient-dense commodity,” says Dome of Potatoes USA. “Other marketing times are typically organized through individual growers packing the potatoes for each specific retailer. This king of root vegetables is nutritionally sound enough to play a role in fulfilling New Year’s resolutions.
“Potatoes provide the carbohydrates, potassium and energy consumers need to perform at their best,” says Dome. “A medium, 5.3 ounce, skin-on potato contains 26 grams of complex carbohydrates.
“Potatoes contain more potassium than a medium-size banana. There are a range of preparation methods and the multiple types available make them a versatile commodity for consumers and retailers,” notes Dome.