Brave New Consumer


Demand for specialty produce grows as shoppers' taste for bold flavors, colors and nutrition takes hold.

Is ugli fruit too ugly? Are certain chili peppers just too hot? Are loquats too fuzzy? All are fair questions as grocers look to expand their specialty produce offerings without intimidating shoppers who are more comfortable with cucumbers than kumquats.

Do supermarkets risk spooking customers with specialty produce?

"Consumers are never scared!" exclaims Karen Caplan, president and CEO of Friedas Inc., the Los Alamitos, Calif-based business credited with introducing some 200 specialty produce items to the American market since the company's inception in 1962.

To prove her point, Caplan recalls when Frieda's introduced habanero peppers. One hundred times hotter than a jalapeño, which at that time was the hottest pepper in the U.S. market, habaner-os were uncharted territory for American taste buds. Even Frieda's feared they might be too hot to handle.

"It turns out that habaneros were just the tip of the iceberg in terms of the chili movement," enthuses Caplan. Today, Frieda's sources a veritable heat wave of chil-ies, including the Ghost chili or Bhut Jolokia, considered the hottest naturally grown pepper in the world. "And we cannot get enough of them," she says of the perpetually sold-out Ghost chili. "That's a huge shift in consumer demand!"

Ethnic Explosion

The first to market alfalfa sprouts, shallots, sun-chokes and much more, Frieda's knows a thing or two about selling specialty produce. "Before my mom [Frieda] introduced kiwi to America in 1962, the previous 'new fruit' was the banana in the 1920s," notes Caplan, who joined the family business in 1977.

For Caplan, true specialty produce is that which is cutting- and even bleeding-edge. Items like ra-dicchio and sun-dried tomatoes are specialty commodity, but the presence of more and less esoteric ingredients in a supermarket produce department serves to successfully promote fresh food.

Much has changed in the produce business in the 35 years since Caplan began her career, and much of that change has been recent. Not long ago, bitter melon was one of her most challenging items to sell. Unusual in appearance, the Asian melon is also bitter and sour to the taste. "Now people are fascinated by it," she notes. "Young people especially love it. They don't know what it is, but now that gives something more cachet."

Today, Friedas finds that unique ethnic items, particularly those with Asian and Hispanic heritage, are selling like never before. "Korean produce that's pickled or sour, like kim-chee, is doing very well," says Caplan. "Chinese, Central and South American produce, French, Italian, Russian — you name it. Every country has a type of cuisine and has its own ingredients, and all of them are very much in demand."

The popularity of Asian restaurants in this country, including Thai, Korean, Japanese, Vietnamese and Chinese, is also fueling home-cooking and produce trends, notes Dick Spezzano of Spezzano Consulting Service Inc. in Monrovia, Calif.

"Consumers love eating in ethnic restaurants, and they aren't afraid to ask the waiter what was in the dish they liked so much. Then they go to Google and find out how to use it, and the interest level goes higher and higher," says Spezzano, who before starting his perishables consulting business 15 years ago was the VP of floral and produce at Vons for 17 years.

These days, much of the fresh produce used in Asian and Hispanic cooking has become must-haves for green grocers. "You don't want to not carry an item like cilantro, for example, because it's used in both Asian and Hispanic cooking," explains Spezzano. "If a consumer doesn't see bamboo shoot or cilantro in your supermarket, they're going to shop the competition."

Melissa's World Variety Produce Inc. also finds that America's appetite for Asian and Latin produce is on the rise. The Los Angeles-based supplier of specialty produce recently added Spicy Edamame to its line of regular and shelled edamame (soybean) products. "Japanese restaurants have influenced the line extension, and we expect it to be very popular," says Robert Schueller, director of public relations.

After selling fresh garbanzo beans in bulk to Latin markets for more than eight years, Melissa's introduced Fresh Garbanzo Beans in 6-ounce packages to the non-Hispanic market last year. With the beans' healthful snacking appeal and kinship with wildly popular hummus, Melissa's anticipates that the product will gain traction with a broad consumer base.

As more traditionally ethnic produce items make their way into mainstream supermarkets, Schueller is optimistic about continued growth in specialty produce. "Since the holiday season (pre-Thanksgiving 2012), we have seen double-digit growth in many of the categories of specialty produce, including tropical fruits, Latin items, Asian items, specialty vegetables and the fresh herbs category," he notes.

Color Craze

At a time when consumers increasingly understand that many of the health benefits derived from fruits and vegetables are associated with color, the vibrant and sometimes unexpected hues of specialty produce are strong selling points. This, in combination with hunger for the new and dif-ferent, is driving demand.

Frieda's proclaimed 2013 "the year of purple" and has been selling everything from sweet potatoes to artichokes to kohlrabi to bell peppers and cauliflower in eye-catching shades of plum ever since. "People love color, and consumers immediately embraced purple sweet potatoes for their health benefits, taste and visual appeal," notes Caplan, adding that Frieda's purple campaign is "taking the country by storm."

Mastronardi Produce/Sunset in Kingsville, Ontario, the largest greenhouse company in North America, is a pioneer in the gourmet greenhouse industry. While the family-owned company prides itself on produce that's "inspired by flavor," it also understands the impact of color. Sunset, which markets the visually striking brown Kumato tomato, also recently introduced the Campari Yellow Tomato.

Specialty produce in nontraditional hues is also in favor with chefs at white-tablecloth restaurants, observes Spezzano. "Green pepper doesn't cut it anymore. Restaurants want red, orange and yellow. Garlic is good, but if you have black garlic on a plate, it's better," he says. When consumers experience this rainbow of colors in restaurants, they're inspired to recreate that palette at home.

Selling Specialty

While pioneers of specialty produce report that sales are on the rise, the fact remains there's room for growth. "Specialty produce still represents less than 1 percent of a typical grocer's produce business, and that's perplexing to supermarket buyers," notes Caplan.

Education for both consumers and produce department staff is critical to building sales. Few understand this better than Frieda's, which has been labeling its products with pertinent information since the 1970s.

"Labels help the consumer understand what to do with a jicama, for example. It's crunchy like an apple. Keep it on the counter," says Caplan. "The secondary benefit is that it educates the produce department."

Frieda's often places inside its produce boxes educational materials headed: "Attention produce manager." These hot sheets provide a self-tutorial for the entire department.

"It's extremely important to include product information either on packaging or signage at retail, because the average consumer doesn't have a lot of knowledge, and the staff may not either," Spezzano concurs. Where and how to store the item, a description of flavor, and recommended uses are all key, as is a website address for additional product information and recipes, he adds. "That's critical; otherwise, it's all a mystery to the consumer."

It's equally important to consider the demo-graphics of your store, notes Caplan. Stocking the specialties of the most prevalent ethnic communities in the area makes sense, as does following the recommendations of influential personalities such as celebrity chefs and health proponents.

"If Dr. Oz mentions purple potatoes or lemon-grass, there's a huge surge in demand. So trends are celebrity driven, too," observes Caplan.

Marketing to Millennials

When asked about the future of specialty produce, Capian says her company is "extremely optimistic." Frieda's positive outlook is due in part to the next generation of produce shoppers, those 18- to 35-year-old millennials.

"Millennials are fascinated with food, but they don't know how to cook," Caplan explains. "They're obsessed with the Food Network and shows like 'Chopped.' They love chefs, celebrity or not. And they're ready to go to the store for ingredients to try making the dishes themselves. That's the sandbox we're playing in."

Ready Pac Foods Inc. has had its eye on millennials for some time now. The Irwindale, Calif.-based company aims to win over the fickle but financially compelling generation with products like its Ready Pac Bistro and Bistro Organic Bowls. Ready Pac recently expanded the line to include Fruit Bistro Bowls. Each fruit salad has fewer than 300 calories and contains a tempting drizzle such as vanilla yogurt.

By 2016, millennials will have the highest discretionary income in the United States., and by 2020, there will be 64.1 million millennials over age 25 up from just 17.1 million in 2010, notes Mintel. Ready Pac cited these stats in a recent release, adding that Mintel's Fresh Fruit and Vegetables 2012 report found that millennials are the most likely group to purchase organic and value-addedvproduce, wherein packaged salad mixes ranked No. 1 in purchase frequency.

"Millennnials have the most cash to spend, and they're the most savvy with the Internet," offers Spezzano. "And I think they don't get enough credit [for] being good shoppers. They've lived through a recession — and a rather long one at that. They are holding back on credit card use and paying cash for things. They're savvy not only about where to find stuff, but also where you can find it for less."

Shrink Rap

While consumers may be increasingly fearless when it comes to chili peppers and purple kohlrabi, some retailers have lingering concerns about the shrink in specialty produce.

"Produce managers have to let store personnel know that shrink isn't a bad word in specialty produce," urges Caplan. "A produce business based on avoiding shrink is a sales killer, and there's a good chance that department is leaving a lot of money on the table."

In her experience, supermarkets that have a healthy variety of more unusual produce encourage the consumer to stay in the store longer. What's more, consumers who buy specialty produce tend to have bigger basket rings and are more loyal shoppers of that store.

Spezzano's clients often express concerns about shrink. His advice: "You're better off spending more per pound to get a small pack of a specialty item than spending less money for a bigger box. It costs you more per pound, but you will have less shrink.

"When you look at the net, you'll net more dollars, and often a greater sales percentage, because you keep shrink down," he continues. "Take shrink down from 20 percent to 10 percent, and you generally win."

When it comes to specialty produce, progressive grocers ultimately need to decide whether they're going to be a destination. If they want to go for it, then they need variety, not just selection, says Spezzano.

"The retailer who offers specialty produce gets a lot of credit with the consumer, even if they don't buy those items," he notes. "They think, 'Wow, this store has everything! This is the store I want to shop at.'"

If a consumer doesn't see bamboo shoot or cilantro in your supermarket, they're going to shop the competition."

—Dick Spezzano, Spezzano Consulting Service Inc.

"Labels help the consumer understand what to do with a jicama, for example. The secondary benefit is that it educates the produce department."

—Karen Caplan, Frieda's Inc.

Cherry Crop Update

There's good news and bad news about this year's Northwest cherry crop. On a positive note, the average cherry size should be larger and harvest on the early curve. But the Associated Press reports that cool, windy weather during pollination has led to a diminished crop overall.

Northwest cherry growers expect a crop size of 18 million boxes this year, a good bit shy of last year's record 23 million boxes. The lion's share of production comes from Washington state, the largest producer of fresh cherries, with an expected crop of 14 million boxes.

In the warmest areas, growers predict supplies of all Northwest cherries to be in full swing by the Fourth of July.

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