Convenient product continues to be on the rise as the rest of the category faces some challenges.
It’s no secret in the potato industry that the category in general is flat. Industry insiders say the only growth the category is seeing is in colored potatoes and the value-added section.
Growers, packers and shippers are responding to the changing consumer taste and preferences by introducing value-added potato products to provide consumers with ready-to-serve healthy potato offerings to meet the growing trends for fast fresh foods. “The value-added category will continue to experience growth in the future. Consumers are looking for convenience and new ideas on how they can prepare potatoes and other produce items that they love,” says Christine Lindner, national sales manager for Alsum Farms & Produce, Friesland, WI. “In addition, consumers are looking for ways to eat healthier, and potatoes and other produce items fit this need.”
Value-added potato products usually involve the aspect of a quick, convenient potato choice, and may even offer added seasoning. It could be an individual wrapped microwave potato or a microwave bagged product — really anything that brings an added value to the consumer.
Lindner notes that the value-added potato product category involves taking a potato and enhancing it by making it easier and faster to prepare a healthy potato offering that the customer is willing to pay for. For example, Alsum Farms & Produce has created Microwave-Ready Creamer and Fingerling Potatoes that come in a pre-packaged steam tray with spice and olive oil packets that allow consumers to take these fresh potatoes from the microwave to the dinner table in 6 minutes or less. “The value-added product offerings bring excitement to the potato category,” she says. “People love the convenience.”
Seth Pemsler, retail vice president for The Idaho Potato Commission based in Eagle, ID, says value-added potatoes are typically defined as “something that makes it easier to prepare, usually in the packaging.”
“So the microwave bands, the double-washed, cut-up, individually wrapped bakers, etc.,” he says. “There are a number of them often featuring new varieties or sizes (creamers, fingerlings, flavor packet trays, etc.).”
Kevin Stanger, president of the Wada Farms Marketing Group headquartered in Idaho Falls, ID, says he expects continued growth in the value-added potato market in 2017, both on existing products and some introduction of additional items. “The consumers of today want healthy, convenient/quick options to their meals. The value-potato market fits both areas,” he says. “We receive great input and response from consumers in the marketplace with our value-added products. Many consumers are just starting to find and utilize these new items. Feedback has been very positive: that’s why we’re seeing the growth in this category compared to conventional potato products.”
Back in 2007, Wilcox Fresh, based in Rexburg, ID, was one of the first to be involved with microwave technology in the value-added potato market, coming up with the tray concept of putting steam film over the tray and into a sleeve. That product was rolled out under the name Potato Jazz.
“We kind of helped usher in the age of home microwave value-added potatoes in the fresh produce category, and we’re working on some new ideas currently that we hope will continue to innovate the category,” says Derek Peterson, vice president of sales and marketing for Wilcox Fresh. “We are rolling out our next generation of Potato Jazz this year with a new generation of packaging, which we hope will bring a little new life into the product.”
Peterson says that while he still sees the value-added potato segment trending upward, it is not at the same speed that it was a couple of years ago. “We rolled out in 2008, and the economy faltered for a little bit; I don’t think sales took off like they should have,” he says. “By 2012, I think it started to really pick up again and we started to make some traction.”
The Consumer’s Mindset
According to Potatoes USA’s market trends data, today’s consumers spend less time planning and preparing meals. The convenient value-added potato solutions provide time-starved consumers and Millennial shoppers with what they need, although the fast-paced “on the go” society also appeals to Baby Boomers in urban and rural U.S. markets.
Victor Savanello, director of produce and floral for Allegiance Retail Services LLC, headquartered in Iselin, NJ, notes that while the potato category as a whole has been a flat to declining category, the value-added potato segment has been on the rise.
“I know in my own stores we are seeing huge percentage growth in the value-added and baby potato segments, while 5-lb. and 10-lb. sales decline each year,” he says. “Higher retails and higher gross margins make the value-added potato offerings the segment that retailers will want to steer their customers into.”
“The consumers of today want healthy, convenient/quick options for their meals. The value-potato market fits both areas.”
— Kevin Stanger, Wada Farms Marketing Group
Millennials are definitely a big part of the growing consumer group gravitating toward value-added potatoes, but Savanello would not discount the dual-income households of Baby Boomers, where meal preparers are looking for quick, nutritious and tasteful options for their families.
As part of a co-op, Savanello has the opportunity to poll his membership and his own produce committee to garner interest and gauge success of a new item from a group that includes a very diverse age range and ethnic background. “One thing I really learned over the years is to try and keep an open mind when it comes to new items and ideas,” he says. “You have to give everything some degree of an opportunity, and let the consumer make the decision. That’s why we’re seeing a rise in value-added potato offerings.”
Eric Beck, director of marketing for Wada Farms Marketing Group, notes that the mindset of consumers is changing and being adaptable to the market is vital for continued growth in the industry. One way the company is doing this is in the development of its varietal, organic and sweet potato programs.
“We are excited about the evolution of the value-added scene. We are having a lot of fun in the R&D process as we develop products and varieties that cater to more of a single-serve audience,” says Beck. “Smaller, conveniently sized portions are increasing in demand as consumers are constantly on the go. Changing the preparation and cooking perception of potatoes and sweet potatoes is a constant task that our industry faces.”
Wada Farms’ Stanger says that Millennials like potato products that are organic and those items that “tell a story.”
“They also pick up the convenience of the items, but seem to gravitate with the sustainability of not wasting product and new varieties,” he says. “The Baby Boomers and those with no kids have picked these items up because of the convenience. We’ve also seen families with busy schedules and the need for a healthy, but quick meal gravitate to these value items.”
Wilcox Fresh’s Peterson feels that consumers have changed a lot in the decade since it first released its product, citing they are more interested in health benefits today and want to understand the value of convenience. “I still think there’s a huge opportunity in this category,” he says. “People are open to ideas of cooking at home again. Convenience is still a big factor. It’s all about making consumers’ lives easier.”
Alsum Farms & Produce introduced a new line of 24-oz. Gourmet Potato pouch packs to its specialty potato offerings this fall, with the pouch providing a convenient grab-and-go concept for busy shoppers, helping to extend product shelf life and preventing contamination from consumer handling.
“In addition, the high-graphic pouch will allow consumers to spot potatoes from a distance while allowing a viewing window of the product,” Lindner says. “The pouch offers better merchandising for retailers as the pouch sits upright on the shelf. The pouch pack features an on-trend prepared potato recipe on the front, and the back highlights the trust and expertise of farmer Larry Alsum in the potato field, connecting consumers to the people and places their food is grown.”
“Smaller, conveniently sized portions are increasing in demand as consumers are constantly on the go. Changing the preparation and cooking perception of potatoes and sweet potatoes is a constant task…”
— Eric Beck, Wada Farms Marketing Group
Wada Farms already offers “Easy-Bakers,” microwave-ready individual baking potatoes, “Microwave in Bag” and “Smalls Artisan,” bagged mini colored potatoes. The company just released “Quickies,” an individual-sized 5.5-oz. pack that’s ready to cook and eat. Getting them seen in the stores has sometimes been challenging.
“Over the years there have been some learning curves that have been — and still are — being overcome,” says Stanger. “Packaging, correct sizing on potatoes, correct packaging sizing, etc., are things that we’ve had to trial and error with. One of the biggest hurdles early on is to get the value-added placed and marketed in the retail correctly.”
For example, when the company started marketing microwave potato products, oftentimes the retailers didn’t know where to put them or how to market them; there were many times the product was placed in a back corner and the movement was poor. Now that the product is being recognized and the marketing is better, consumers are reacting and sales are growing.
It seems every year the industry is coming out with new packaging and new ideas on packaging. Sizing and designs are being upgraded and improved all the time, including the bags and materials.
“The smart consumer knows that the potato is a very nutritious vegetable that is high in potassium and vitamin C, has zero cholesterol and fat, and is a good source of dietary fiber.”
— Jerry Tomingaga, Southwind Farms
Jerry Tominaga, vice president of raw production for Southwind Farms, doing business in Heyburn, ID, and one of the largest growers of fingerling potatoes in the United States, says the biggest trend he has seen is the growth in specialty varieties, and the sizing where “smaller is bigger.” In his opinion, the consumer understands that potatoes are quick and easy to prepare in a variety of ways that can be used in a meal or stand alone.
“The biggest challenge in the industry is convincing the consumer that potatoes are a very delicious, flexible and affordable dish. It is also nutritious and has a long shelf life,” says Tominaga. “I think retailers and consumers are weary of hearing how different fruits and vegetables are good for you one day, and the next how bad they are for your health. I think the smart consumer knows that the potato is a very nutritious vegetable that is high in potassium and vitamin C, has zero cholesterol and fat, and is a good source of dietary fiber.”
Competing for shelf space with current potato and produce staples is the main obstacle for companies trying to get their value-added potatoes to today’s consumer. “Product shelf life, quality and cleanliness are key to specialty/value-added products,” Alsum Farms’ Lindner says. “Working with the retailer to trial a new product at a perceived value the consumer views as a ‘good value’ and their willingness to try, and repeat purchase, is the way to be a success in the area.”
The Idaho Potato Commision’s Pemsler notes that to date, value-added potatoes have been great additions to the overall potato category, as they provide a number of things to both retailers and consumers. “Variety, convenience, something new and different, and to retailers, more profit,” says Pemsler. “Typically, you find a number of them at most retailers today. Some stock many to meet consumer needs and profit goals. It is the fastest-growing part of the potato category, but equally important, it doesn’t appear to cannibalize core products. They tend to be in addition to rather than replacements for.”
By utilizing Potatoes USA market trends data, companies have unraveled an opportunity to provide today’s consumers with a nutritious side that is a perfect complement to any meal with little preparation needed. While the value-added potato category is small, niche market shipping pallet quantities, the category is growing and is expected to continue to see increases in the year ahead.