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Vol.3 ISSUE 3 MAY/JUNE 2009 |
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Q1 2009 CATEGORY PERFORMANCE Q1 2009 saw slight improvements in category performance. With prices stabilizing, only a slight decline was seen when comparing Q1 2009 volume per store per week to last year. Potato contribution of produce continued to increase, growing nearly a full 1% compared to Q1 last year. CLICK ON ANY GRAPH FOR LARGER IMAGE
Across the regions, the East region saw the most significant increase in dollar growth, as well as the most severe declines in volume. All other regions remained relatively flat, seeing volume per store per week declines of 1%.
Quarter over quarter, dollar price gains were not as significant in Q1 2009 as in Q3 and Q4 of 2008. Due to stabilizing prices overall, average volume declines improved from nearly 3% in Q4 2008 to 1.6% in Q1 2009
Average retail prices stabilized across the quarters, with the non-promotional average retail price dropping from $0.81/pound in Q4 2008 to $0.76/pound in Q1 2009. The promotional average retail price decreased only one cent from Q4 2008, from $0.50/pound to $0.49/pound. Promotional activity was relatively aggressive in Q1, with nearly 33% of potato volume sold on promotion. This was only a 7 percentage point decline from Q4 2008, which saw 40% of volume sold on promotion.
The potato category is segmented using the United States Potato Board’s (USPB’s) “Potato Pyramid,” which is comprised of the following:
As in 2008, the mainstream potato segment continued to hold the bulk of national potato sales in Q1 2009. Evaluating weekly potato dollars and volume, bargain products were the only products to grow in volume and dollars compared to Q1 2008. While bargain products have seen renewed volume growth during this economic time, analysis of top performing retailers in the potato category also indicates the importance of the other key segments of the category. In the next article “Best in Class—How to Utilize Best in Class In the Current Economic Conditions”, additional insights are provided into the state of the potato category during this current economy, and how the Best Practices (BPs) can be utilized to maximize sales during this time.
Best in Class—How to Uitlize Best in Class In the Current Economic Conditions The current economic environment has impacted consumer shopping behaviors and grocery sales, including both center of store and perimeter, and across a multitude of categories. Based on these constraints, USPB and the Perishables Group (PG) recently conducted a study on the impact of the economy on the specific category best practices. As a result of the study, the top performing retailers in the category were evaluated to understand their strategies and tactics across three key best practice areas: assortment, pricing (pertaining to strategy creation) and promotion. Perishables Group evaluated nearly 100 retailers in their data universe to identify those who had seen growth in dollars and volume during Q2, Q3, and Q4 of 2008. Top five retailers focused on the following:
The best practices continue to work during the new economic times, but an understanding of how to use them is important. REFRESH YOUR POTATO KNOWLEDGE! The USPB is excited to announce SIX new training sessions, created to fit your schedule, with topics relevant to doing business today! This year, the USPB will be offering several web-based training sessions that will provide knowledge and insights into industry trends, category research, program results, and how to tap into the bevy of tools provided by USPB. Training topics include:
Contact Carroll Graham (carrollg@uspotatoes.com) or 303-369-7783 with questions and scheduling details! Potatoes—An Established Home in the Deli
Potatoes comprise the largest dollar share of all deli sides, at nearly 30%. In addition, potato deli sales have the highest distribution of all side dishes; sold at 98% of stores. In Q1 2009, the potato category was one of two deli side subcategories to grow in both volume and dollars versus last year. Overall, average retail prices in Q1 for deli sides were relatively flat; while potato prices increased only 1%.
While wedges and mashed potatoes comprise nearly 50% of all potato deli sides sold, French fries saw the largest dollar and volume gains in Q1 2009. Roasted potatoes, potato pancakes, and scalloped potatoes contributed to the overall volume growth in potato side dishes. With 45% of Americans eating out less, the deli provides an opportunity to meet the needs of customers with busy lifestyles. Potatoes, with their versatility and affordability, can fulfill these needs.
Potato Innovation
The new potato product concept, developed through the innovation efforts of the USPB Domestic Marketing Committee, was designed to bring a higher level of convenience to the fresh potato category. The product is a potato masher bowl, made up of a plastic container, red potatoes and seasoning packet. With 10 minutes in the microwave, followed by the addition of the seasoning packet and milk, simply smash the potatoes and serve.
The product innovation test began in early February, and ended in April. The full analysis should be completed by the end of June, and results will be delivered at the USPB Summer Meeting in August. An enhanced version of this test is in the works and will be offered at a new retailer in the early fall. Please contact Carroll Graham (carrollg@uspotatoes.com) or 303-369-7783 for more information on this test or if you are interested in supplying this product
Best-in-Class (BIC) Fast Track Update
The Price Chopper Fast Track test completed the end of April. Strong program success is evident comparing the test stores to control stores. Test stores outperformed control stores in terms of both dollar and volume sales through the test period, wideningthe gap by $5,000 and 3,000 pounds per week across the 12 test stores!
The ability to execute category plans at store level is a real dilemma and the potential Achilles heel of category management. Most retailers are spending an inordinate amount of time preparing category plans, but not enough time on actual store execution. Consequently, new item speed to market plans, planograms, promotions and other initiatives are executed poorly, and sometimes not at all (source: WINSTON WEBER & ASSOCIATES, INC). We’re excited to work with Stater Bros., Hannaford, and Price Chopper this year to again prove the success of our best practices. Complete results for all tests will be available in August. In addition to participating in BIC Fast Track tests, Hannaford and Stater Bros are conducting tests to measure the effectiveness of the USPB campaign message, “Potatoes…Goodness Unearthed®” in merchandising signage. In a recent in-store intercept conducted at Meijer stores, nearly 40% of consumer interviewees said they were more likely to purchase potatoes after seeing the “Peel Back the Truth” messaging. The Hannaford merchandising set was enhanced with an 11x7 foot sign with a recipe brochure. The test began the week of May 11, 2009, and will end in June. Stater Bros. signage introduced a large two-sided stanchion sign, with variety information and a recipe brochure. The signage test began the end of April and ended June 2009. Signage test results for both retailers will be available by the end of September. If you would like to enhance your retailer’s potato displays with campaign signature signage, please contact Carroll Graham (carrollg@uspotatoes.com) or 303-369-7783 for more information!
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©2009 United States Potato Board |
The USPB used this opportunity to test potato innovation at a select group of mainstream and upscale stores across an eight-week test period. In-store demonstrations were conducted three times during the eight-week test period; the demos allowed consumers the opportunity to sample the product and experience the ease of preparation. The in-store demonstrations lead to increased trial as we saw the new product sales spike during these weeks. Signage was used to help draw attention to the new product and to educate consumers on the produce attributes.
As with other new product launches, consumers were more willing to purchase the product after sampling it during the weeks of in-store intercepts. Sales tapered off during non-intercept weeks; however, at the finish of the test, 219 masher bowls sold, reaching dollar sales of $882. During demo weeks, sales peaked at 60 bowls sold across the five stores. The product received positive feedback from both consumers and the industry, with Fresh Cut Magazine featuring the product and test in the April issue. 
The USPB has been busy executing three 2009 Best in Class (BIC) Fast Track programs. BIC Fast Track proves the known category best practices in a subset of the retailers’ stores (~15 stores) for a 12-week period. Implementation includes recommendations for each facet of the category: assortment, pricing (pertaining to strategy creation), promotion, communication and merchandising recommendations.
Stater Bros. kicked off its test with excellent store level support. “Store-level execution is essential to the success of our Best in Class programs and in-store tests”, says Carroll Graham, USPB Director of Retail Programs. “Roger Schroeder, Stater Bros. Produce and Floral Vice President, worked with all of the stores prior to the test’s inception on resetting the stores themselves to ensure ownership and understanding of the test details. The USPB team visited each store after the resets to guarantee compliance, and that the auditors will continue to montior performance.”