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Supermarket FRESH FOOD Business: Taking their lumps

With as many as one out of every 15 Americans reportedly on some form of low-carbohydrate diet, conspicuously pared-down potato sales are now the norm.

The inescapable influence of high-protein/low-carb diets has drastically curbed the demand for spuds, as has a growing consumer avoidance of trans fats in French fries. With per capita consumption -- and prices -- both on the decline, the potato industry says it can pinpoint when the slide began: July 2002, when The American Journal of Medicine released a study validating the Atkins approach to weight loss.

According to John Pope, v.p. of Houston-based Mountain King Potatoes, Atkins and its related low-carb spinoffs "have had a huge impact." Pope, whose employer ranks among the nation's largest growers of specialty potatoes, estimates that fresh-potato sales were off by more than 5 percent during the last quarter of 2003. The timing of the sharp decline adds insult to injury for potato producers, which count on the final three months of the year -- traditionally peak potato-selling season -- to buttress annual volume, Pope notes.

Recent focus group research conducted by the U.S. Potato Board (USPB) adds additional gloom to the picture. From their reports it's clear U.S. consumers seem to have little understanding of the true nutritional value of various types of potatoes -- and how they can play an important role in even low-carbohydrate weight-loss programs.

Image problem

Citing ACNielsen's 2003 fourth-quarter numbers for fresh-potato sales in supermarkets, Mac Johnson, USPB's v.p. of marketing, says that on the bright side "overall pound sales for 2003 were up 5.6 percent for bagged potatoes. The bad news, however, is that dollars are down. There was a lot of price cutting out there as suppliers and retailers reacted to what's taking place with the low-carb diets, to ensure they maintain volume."

Until recently potatoes were a stalwart of the American eating experience and regarded as one of the most flavorful, versatile, and nutritionally sound foods around. As such, retailers have long viewed the venerable tuber as an integral part of the produce department mix and, depending on the season, have traditionally promoted them primarily as a profit generator and traffic builder.

But over the past 12 months, amid the massive anti-carb revolt, a number of the nation's supermarket retailers have reined in their potato promotions and have instead opted to feature potatoes as loss leaders at rock-bottom prices, according to several industry experts.

Mike O'Brien, v.p. of produce for St. Louis-based Schnucks Markets, confirms that potatoes have indeed been one of the hardest-hit items in the wake of the low-carb craze. "Potatoes are a big staple of the department, so it's an issue that's very important to us," he says, noting that the produce department's mix has changed accordingly. "While potato sales are down, we're selling a lot more Atkins-friendly-type vegetables, like bagged salads, celery, spinach, and squash, which are all doing very well."

Monrovia, Calif.-based retail produce consultant Dick Spezzano says several retailers are experiencing declining potato sales down "anywhere from 10 percent to 14 percent in units vs. 2002." Relying on information from his foodservice associates, he adds, "I'm told fries are down in sales 8 percent to 10 percent. Many restaurants are now replacing fries with broccoli and are adding two to six low-carb items to their menus."

With an estimated 50 million Americans on some kind of carb-cutting regimen, Spezzano says the industry certainly has its work cut out for it. "Most diets seem to fade away over time, but the low-carb movement may be more of a long-term trend rather than a short-term fad," he says, adding that the Atkins, South Beach, and Zone diets "are death on potatoes. Retailers tell me that their pear and grape sales" are also hurting because of those fruits' carb counts.

While it's had an image problem of late, there are still plenty of good things to say about the potato. As one of the best forms of complex carbohydrates, the fat- and cholesterol-free vegetable is naturally high in vitamins, minerals, fiber, and potassium.

The sliding perception of potatoes occurred fairly quickly, says the USPB's Johnson, adding that the timing of the development has been particularly lamentable in view of all the industry has done lately to boost potato consumption.

Getting the word out

Among the key findings of recent research studies conducted by the USPB, Johnson says one of the most telling aspects "found consumers really don't know very much about the potato and, in fact, don't know very much about produce in general. One message we're trying to get to retailers is, what we're doing can help their potato sales and also a lot of other products, because consumers really don't know about the great nutritional benefits of many items in the produce department."

In early January the USPB's full grower administrative committee authorized $4.4 million to be spent over the next 12 months on a nutritional campaign communicating the "Healthy Potato" message to consumers, retailers, foodservice operators, processors, growers, and shippers.

In addition to a national media campaign that positions the potato nutrition message in places like USA Today and Better Homes and Gardens, the integrated campaign will also use trade advertising, trade show participation, and a direct-mail campaign, which will begin with the distribution of a brochure. Through its partnerships with foodservice establishments, the USPB will provide potato menu suggestions and consumer POS materials.

The USPB has also lined up registered dietitians to discuss potatoes with influential audiences across the country, which will help create a strong scientific basis for potato nutrition claims, according to Johnson. At the retail level, advertising in targeted trade publications will tell retailers about the programs and tools the USPB has available to help them communicate the nutritional message to their customers. The USPB also has incorporated nutritional elements in its current retailer category management and development work. Point-of-purchase, packaging, and ad circular artwork are being distributed to retailers, shippers, and suppliers.

"To really take this program to the consumer, we need the industry's wholehearted commitment," Johnson emphasizes. In some instances, he says, "it will be more about trying to correct some misconceptions, such as the fact that some consumers see potatoes as 100 percent starch and/or 100 percent carbohydrates."

To that end Johnson says bagged potatoes provide the ideal venue to promote nutritional benefits. "We're telling our suppliers to really blow up that nutritional label and to make sure the consumer can't miss it on the front of the package."

Johnson says the USPB further encourages retailers to take advantage of its informational point-of-purchase materials, "not as it relates to a brand, but to give customers information they don't have. Most retailers we talk to say they have nutritional information in the department, but it would seem it's often overlooked because it's so small or hidden by displays. Get the information up big and in their faces, because we maintain that by informing your customers about the nutritional benefits of potatoes -- or berries or bananas or beans -- you will in fact improve your overall department sales, because consumers just don't know about the many benefits those produce items have to offer."

'An ideal diet food'

The Idaho Potato Commission is also launching a national campaign to boost consumption of the state's famous commodity. "We're not going to take a back seat on this issue anymore," says Frank Muir, director of the commission, which has enlisted Denise Austin, host of the popular "Denise Austin's Daily Workout" on the Lifetime network, to explain the critical role that complex carbohydrates such as potatoes play in keeping the body fit.

The $230,000 campaign, which includes sponsorship of the Austin program and a 30-second television commercial now airing in major markets, responds to a significant decline in demand for frozen potatoes -- a foundation market for the industry.

United by the goal of setting the record straight on produce, the U.S. Potato Board and Weight Watchers have formed a partnership under Weight Watchers' "Pick of the Season" promotion. Last month Schnucks Markets, the official retail sponsor of the program, promoted potatoes as the "Pick of the Season" on its Web site, through an in-store display contest, and in its store circular. Schnucks' O'Brien feels the message is especially important now, given the popularity of low-carb diets that restrict dieters from eating several types of fruits and vegetables.

"We want to provide as much information about consumers' choices as possible," he says.

The USPB and Weight Watchers provided Schnucks with nutrition information, point-of-sale signage, and other materials to enhance the promotion.

For its part, Mountain King has been working in close association with several supermarket chains to develop a unique consumer-education program that's recapturing lost potato sales revenues, Pope says. "Our six-week 'Low in Calories, High in Flavor' promotion is a plan using in-store banners, on-bag diet information, and fact-based advertising to place special emphasis on the role potatoes can play in a highly effective weight-loss effort."

The program focuses on the fact that many potato dishes fall within the recommended carbohydrate levels of several low-carb diets, says Pope, who adds: "Potatoes are an ideal diet food, even for the low-carb plans. We've created an action plan that we think is very important for customers, and thus far it's been very successful and seen very substantial sales increases."

Through these and other efforts, USPB's Johnson says the industry is essentially working to "give consumers permission to eat something they like. We haven't lost consumers as much as we've lost frequency, and potatoes can and should be part of a balanced diet."

Pope says: "I think that as an industry, we have to do a lot of educating while reminding people that potatoes have been around a lot longer than low-carb diets. I see this as being a minor setback and believe we should use it as an opportunity as opposed to a threat."
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