Originally printed in the July 2020 issue of Produce Business.
Bigger volume is helping retailers more effectively promote organic grapes.
More consistent volume should allow retailers to better promote organic grapes during the late summer. Suppliers believe organic grapes will continue to be in demand and find a place in shopping carts during the Coronavirus pandemic.
Retailers should be prepared to ramp up for organic grape sales. While harvesting in the Coachella Valley typically runs through mid-July, the bulk of California’s season normally starts in July in the San Joaquin Valley. The region usually harvests through December and January before the offshore deal provides winter product.
In the past, organic grape volume was more inconsistent and required going through multiple suppliers, says Rob Spinelli, sales manager of Anthony Vineyards, Inc., based in Bakersfield, CA. “We have always had good promotional volumes, but we couldn’t put multiple retailers on ad,” he says. “We can now put multiple chains on ad throughout the country in different sizes because there is volume at different times of the year that justifies us being able to promote. There is an energy and movement for the industry to handle national ad promotions,” says Spinelli. “There’s more volume in the organic grape deal.”
A big wildcard is the Coronavirus and how shutdowns of foodservice establishments and other businesses will affect consumer demand for organic grapes.
Business increased for Porterville, CA’s Homegrown Organic Farms when the virus first struck, but then retracted when retailers figured out what to do. Then, demand rebounded, says Craig Morris, category director of citrus and grapes. “We experienced incredible demand mid-COVID for all our categories,” says Craig. “If there was a call-out, the more staple items tend to have higher demand because retailers have tailored-back some of their SKUs and focused on what they know they can be successful with. With all the unknowns out there, there isn’t a lot of speculative buying going on now. There’s no playbook. The industry is in a bearish position.”
COVID concerns could hamper organic grape sales, says John Pandol, director of special projects for Pandol Bros. Inc., headquartered in Delano, CA. “I think fear of going to the store has been driving a lot of the bump,” he says. With 30 million people suddenly unemployed, a large pool of personal shoppers and delivery workers were suddenly available as well as free delivery. “If consumers paid the true cost of the service of their personal shopper and delivery boy, then I think we’ll have a lot less adoption,” says Pandol. “Part of the new normal will include the new frugality. The government created trillions of dollars. The conventional wisdom is the tsunami of inflation should be beginning to form.”
“From a pricing point of view, the organic attribute is a de-facto premium, even if the grapes themselves often have inferior quality characteristics. So retailers use organic as a premium, conventional as a value, and price each accordingly.”—John Pandol, Pandol Brothers
On the other hand, the COVID situation may not negatively affect organic grape demand, says April Myers, sales associate and organic sales manager for Top Brass Marketing, Inc., in Bakersfield. “I do not believe economic uncertainly will play a role in organic grape sales,” she says. “To the contrary, we have seen an increase in demand for organic produce during the pandemic. This unprecedented time has grasped the attention of the entire nation and has truly made people more mindful of their health and what they are consuming.”
“I do not believe economic uncertainly will play a role in organic grape sales. To the contrary, we have seen an increase in demand for organic produce during the pandemic. This unprecedented time has grasped the attention of the entire nation and has truly made people more mindful of their health and what they are consuming.”—April Myers, Top Brass Marketing, Inc.
Organic demand should remain strong, says Michael DuPuis, public relations manager for Divine Flavor LLC, Nogales, AZ. “Consumers now, if anything, are looking for more healthy products,” he says. “Consumers want more healthy, organic products in their homes this summer. Grapes do very well during the summer months. They are a healthy, refreshing, and delicious summer treat, and consumers will continue to buy them.”
Organic grapes may benefit from increased shopping following COVID, says Spinelli. “More and more people are going into the stores now, to get out of their homes,” he says. “That should drive more sales. As the season goes on, retailers will try to promote grapes at the store level, even in their online venues. As this is opening and people are going out shopping and going to the stores, there will be more impulse buys than when they were stuck at home,” he says. “The foot traffic is back. Maybe it’s not as heavy as before and maybe shoppers are going once a week instead of twice a week, but if people are in store and see the grapes and they look good, they will grab them.”
August and September are peak times for organic grape movement, says Myers. “Those months are our prime harvesting season with optimal weather in the San Joaquin Valley for the perfect flavor in our organic grapes,” she says. “Organic grapes tend to hold their own during the summer months. Berries are considered somewhat of a luxury item, but organic grapes certainly have their steady niche.”
Grapes should benefit from online offerings, says Spinelli. “Online spiked when COVID first happened. Then, we heard it dropped a little,” he says. “Now that some people are more comfortable buying online, they will continue buying online. There are so many people willing to get out of the house. As things re-open throughout the country, if we don’t have another shutdown, things should be fine. If there’s another shutdown, it will affect everyone and every business across the country.”
Grapes’ convenient properties should help with online sales, says Homegrown Organic’s Morris. “Organic grapes have a unique thing going for it,” he says. “You can eat the skin. It’s a very snackable piece of fruit that you can eat at your desk, in your car and with no mess. It’s truly a standalone item that will perform quite well in this environment. Nothing compares to the grape.”
Like with other purchases, properly pricing organic grapes remains crucial, says Pandol. “The prevailing view is that many consumers will pay more for organic because they perceive them as an added value,” he says. Pandol says one produce executive told him 50 percent of the chain’s customers would pay 30 percent more for organics. “The opportunities for that type of increase in basket ring is rare,” says Pandol. “From a pricing point of view, the organic attribute is a de-facto premium, even if the grapes themselves often have inferior quality characteristics. So retailers use organic as a premium, conventional as a value, and price each accordingly.”
Effective merchandising remains key to increasing organic grape sales. “Proper sales, rotation and culling the fruit is king,” says Pandol. Pandol says he often sees organic grapes that look old because they have been on the shelf longer and because they sell slower.
When Spinelli visits stores, he sometimes sees organic grapes merchandised together with conventional grapes. Other stores merchandise them separately. “Some retailers do organics in 2-pound clamshells compared to the variable weight conventional loose bags that they market conventional grapes in,” he says. The clamshells give the organic offering a distinction, says Spinelli, and helps avoid wrong prices at checkout.
Displaying organic grapes with conventional grapes or in separate areas depends on the store. “Some retailers that have had an organic foundation can do standalone displays just fine,” says Morris. “It’s more to the regular retailers who haven’t had very many consumers purchasing organics that are trying to buy their way into the deal. Commingling would be the best strategy because they’re going to have conventional shoppers looking at organic right next to conventional grapes.”
It is sometimes difficult for retailers to justify erecting gigantic displays of organic grapes. “Retailers want to have large, robust organic displays,” says Pandol. However, the sell-through does not justify the retail square footage, he says. Some stores have to deal with the challenge by culling and moving the older organic produce to conventional or in-store fresh-cut. Increasingly, with bar codes, a clerk cannot simply relocate organic grapes into a conventional display, says Pandol. “We have seen a few retailers go with only organic when they can get it, to limit the number of SKUs they stock,” he says. “The calculus is the cost savings and opportunities for upsell pricing vs. the loss of the purchase of customers who don’t think organic is worth the price.”
Mexico may become a bigger factor in organic grapes, notes Divine Ripe’s DuPuis. “Mexico grapes should play a slightly bigger role,” he says. “The future looks good. More flavor, more varieties, and more growing regions. Our company just expanded to Jalisco and Ensenada to give our customers bigger windows of the grapes they love.”
Taste is a driving factor for organic grape sales at New Seasons Market, a 19 store Portland, OR, chain which only merchandises organic grapes. “We are starting to see some new flavor profiles,” says Jeff Fairchild, director of produce. In the past, varieties including sugar ones, the Thompsons, Flames and Modern Royals, sold well as quick-and-easy snacks.
Today, New Seasons is seeing shoppers who love grapes and love specific kinds of grapes. “The new varieties are piquing interest in the category,” says Fairchild. “The flavors of grapes are actually changing sales. For a long time, that wasn’t the case. It’s exciting to see flavor really be a driving factor in sales.”
Increasing organic interest bodes well for sales. “Throughout the industry, there has been steady growth in the organic grape category with no signs of stopping,” says Myers. “More and more consumers are leaning toward organic in many categories, not just produce.”