Supermarket FRESH FOOD Business: Gourmet growth

As specialty foods continue to be a solid part of the mix across all the major categories, supermarket perishables departments have become particularly fertile ground for several breakout product groups that are helping retailers gain an edge with unique assortments and higher margins.

Now that most major supermarkets carry parsley, sage, rosemary, and thyme, as well as several other varieties, consumers no longer need encounter these increasingly popular fresh herbs only in the lyrics of the song "Scarborough Fair."

Kirk Schmidt, co-president of Quail Mountain Herbs, LLC in Watsonville, Calif., says fresh herbs—generally sold in packages weighing between three-fourths of an ounce to one ounce each—have become more popular "because dried herbs can't come close to duplicating their great flavors." Further, he adds, since many cooking shows, magazines, and newspapers now instruct consumers to use fresh herbs in recipes, people are consuming far more of them than they did just a few short years ago.

Quail Mountain, which grows, packs, and ships fresh herbs, edible flowers, baby lettuce, and specialty produce, as well as dried mushrooms, dried chili peppers, and sun-dried tomatoes, sends daily to chains around the country roughly 20 fresh herb varieties, which it markets with recipes, back-room handling instructions, and eye-catching posters to stimulate interest.

Despite the fact that nearly every major retailer now carries fresh herbs, Schmidt struggles against the shortsighted way many retailers "add them to play catch-up with the guy down the street. And while that's good for me, it's not a good business reason to carry any product."

Schmidt explains: "Too many retailers are filling the category with products they think must be included in a fresh herb section. But they're not making a dime on it and are instead losing money. The interesting thing is, if retailers would better focus on getting rid of the things people aren't buying, they would be able to make far more money on a category that's growing dramatically."

Maturing category

Acknowledging that the strategy is Food Retailing 101, Schmidt says, "It's a much more important issue when it comes to herbs, since to do it otherwise is self-defeating because what they end up with is product that looks poor, which thus discourages use of the whole category."

Schmidt suggests retailers alter their thinking on fresh herb procurement, "based on what people want to buy, be it at different times of year or in diverse store locations where demographics dictate differently." With the exceptions of basil—easily the top fresh herb seller—chives, mint, and rosemary, Schmidt says retailers need to approach herbs more judiciously.

"I can sell dill year-round in L.A.," he notes, "but in Philadelphia hardly anyone buys dill in January, which is not to say it should be altogether eliminated, but it certainly should be toned down instead of throwing most of it away at the end of the week."

As it matures, Schmidt says, the category needs to be "cleaned up by offering only those herbs that it makes sense to sell. We have found year-to-year sales growth for chains that have done so for more than a year experiencing over 20 percent growth."

The best place to merchandise fresh herbs, he adds, is near other specialty produce items like shiitake mushrooms and yellow bell peppers, which typically cost significantly more than garden varieties of the same veggies.

"People who are buying high-end produce are not price-conscious, but rather are more concerned with their meal and are thus more spontaneous in their purchasing if they can visualize their meal," Schmidt explains.

The essence of merchandising a good produce department, he adds, "is a classic no-brainer: Group together a whole section of high-end cooking items, and your sales will go up."

As for other "hot" specialty produce items, Robert Schueller, assistant marketing director for Melissa's/World Variety Produce, a Los Angeles-based specialty foods and produce distributor, says each year at least one or two new items hit it big in terms of consumer interest and demand.

Last year, he says, edamame, a green soybean from a fuzzy pod, gained much attention due to the rise of sushi bars and Japanese restaurants, where it's served as a snack and an appetizer, as well as to consumers' heightened awareness of the health benefits of soy.

Years ago, Schueller continues, the once obscure vegetable was only available in frozen form. "It wasn't until three and a half years ago, when we introduced our refrigerated version, that consumers were able to find it the refrigerated section in the produce department."

Exotic is in

While still emerging and far from reaching its potential, Schueller says edamame is most successfully merchandised with other small-pack Asian items like sugar snap peas, snow peas, bok choy, baby bok choy, napa, and daikon.

Additionally, many well-stocked produce departments across the country are now enjoying great success with some of the baby potato varieties, such as the Russian banana fingerling, a popular chef's favorite, according to Schueller, and baby Dutch yellow potatoes, "which are really becoming one of our most popular items. Shallots are also gaining in popularity within the onion category, along with boiler and pearl onions, which have made a nice showing of late," he notes.

Within the fruit category, "red and plantain bananas are really making inroads, not only because of the growing Hispanic population, but also because of the rise in Mexican and Southwestern cuisine," Schueller says. In the same vein, chilies and tomatillos—Mexican green tomatoes—have become great additions to the produce department, he adds.

Across the board, Schueller says, mini-sized items are becoming a huge trend in fresh produce because of smaller household sizes and more on-the-go eating.

With Mediterranean foods gaining in popularity these days, hummus sales are really humming. One brand that's successfully spread from ethnic groceries into mainstream American markets is Sabra, which, according to the company's v.p. of marketing, Gil Oren, makes "the paté de foie gras of hummus."

"Whether it's the attraction to more exotic foods or the lifestyle of the Mediterranean, dips and spreads are flying off store shelves wherever they're sold," Oren notes. "The idea that you don't have to travel overseas to experience the same celebration of the senses as those enjoying the Mediterranean lifestyle is attractive to consumers."

As it continues to expand its product line with eggplant and vegetable spreads, pickles, frozen pastries, and frozen hors d'oeuvres, Oren says the Astoria, N.Y.-based company's calling card is its hummus products. "Our hummus has more garlic and is ground smoother, with a thicker texture, unlike the Greek or Lebanese versions, which are either too grainy or liquidy and far less spreadable," he says. "Those are qualities that attract the entire family—young and old—to this brand."

Sabra is seeking to double its $10 million annual sales by spreading out into Middle America. "Now's a better time than ever," Oren says, since many supermarkets are looking to broaden their Mediterranean selections.

For retailers looking to add charm, beauty, and elegance to their in-store bakery lineup, two new items from the first name in cheesecake—Eli's Cheesecake Co.—will likely fit the bill. One of the new lines that debuted at this year's FMI show, Eli's Glamour Cakes are five-inch cheesecakes all dressed up with somewhere to go: in your customers' shopping carts.

Dessert for two

Wrapped in individual Italian papers and decorated accordingly, "these pretty little cakes are perfect to be served as an individual dessert or as a shared dessert for two," says Eli's president, Marc Schulman. Demonstrating that "great things come in small packages," Glamour Cakes are custom-packaged in a window box designed to showcase the product and be displayed in the in-store bakeshop.

The company is especially fired up about its new-size products because of the U.S. IDDBA report finding that portion-sized cakes (four inches to six inches) were growing in popularity because of the perceived cuteness of their miniature sizes, and the impulse-nature selling points.

Glamour Cakes are baked with either a graham cracker or chocolate crust, and are available in Eli's Original Plain, White Chocolate Raspberry, and Chocolate varieties. A heart-shaped white chocolate raspberry cheesecake (perfect for Valentine's Day or Mother's Day) and a pumpkin cheesecake will be available seasonally.

"We are especially excited to introduce our new no-sugar-added version of Eli's Original cheesecake made with Equal-brand sweetener because there is so much interest in this type of product," Schulman says. "From diabetics to low-carb dieters to health enthusiasts desiring to reduce sugar in their diets, our no-sugar-added cheesecake offers them a delicious new dessert alternative."

Eli's no-sugar-added cheesecake is currently available at Jewel Food Stores in the Chicagoland area and in the Los Angeles, San Francisco, Philadelphia, New York, and New Jersey markets. With a suggested retail price of $8.99, each seven-inch cheesecake is 20 ounces and serves up to eight people.
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