Potatoes USA looks to build retail potato volume
SUN VALLEY, Idaho - Finding the right strategy to increase both sales dollars and volume of potato sales is a continuing challenge for today's potato industry, and Ross Johnson is taking on that mission.
Johnson, global marketing manager for retail at Potatoes USA, spoke Aug. 31 at the Idaho Grower Shippers Association convention in Sun Valley. Johnson reviewed retail sales and volume data which reveal higher dollar sales of potatoes but lower volume in recent quarters.
For the quarter ending July 2, Johnson said that prices for potatoes at retail (fresh, deli, frozen, dehydrated and refrigerated) rose 0.6% but volume of potatoes sold dipped 1.9%. That decrease followed respective declines of 0.8%, 1.8% and 1.7% in the previous three quarters.
"The big struggle we have from a retail standpoint is convincing retailers to put more focus and emphasis on potatoes so that we can maintain our volume," he said. "But from their standpoint, dollars are great, so we need to be able to figure out a strategy to convince them that they need to sell more potatoes in different ways instead just in the produce category," he said. Johnson said Potatoes USA is reviewing a few partnerships within the consumer packaged goods industry to better understand some possible options.
Retail statistics complied by Potatoes USA show that total fresh potato sales were up 2.2% in the quarter ending July 2, while volume of fresh potatoes sold at retail declined 2.4%.
Russet potato volume was off 2.8%, red potato volume was off 4% and white potato volume was off 15.6% for the quarter. Varieties showing increases included yellow potatoes (up 11%), other (up 38%), fingerling (15.7%) and purple/blue (2.9%).
Johnson said Potatoes USA will update many of the retail studies conducted in past years that address optimization of retail sales and finding the right assortment of potato varieties and products needed for the best sales results.
Research also is being considered to look at the path consumers take through the produce department to help retailers maximize potato sales in their department.
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Statistics compiled by Potato USA from various sources reveal that retail utilization of all potato volume in 2015 was 14.6 billion pounds in fresh weight equivalent, down 1.8% from 2014. Foodservice potato utilization totaled 19.1 billion pound fresh weight equivalent, down 0.8% from 2014. Export utilization of potatoes was rated at 6.9 billion pounds fresh weight equivalent, up 3.2% from 2014. Import utilization of potatoes was pegged at 4.7 billion pounds fresh weight equivalent, off 1.8% from 2014 levels.
Overall potato utilization for 2015 was rated at 36.019 billion pounds, off 0.3% from 2014.
Johnson said exports are a bright spot for the industry, including growing demand for dehydrated potatoes. World trade in potatoes increased 35% between 2009 and 2014 and the world price for potatoes rose 13% during that time, he said.
For the U.S. market, Johnson said that foodservice sales in 2015 accounted for 19.1 billion pounds of fresh weight equivalent, or about 57% of total utilization. Retail sales of potatoes accounted for 14.2 billion pounds, which accounts for 43% of total utilization. The retail share declined from 44% in 2014 to 43% by 2015, Johnson said.
From a foodservice perspective, he said potatoes are found in 96% of U.S. full service restaurants and 85% of limited service restaurants.. "Menu sizes have been shrinking but the potato items included in their menus aren't shrinking at the same rate," he said. For example, full service restaurants decreased their menu size by 9.6% over three years, but potato menu items in full service operations declined by 6.3%.
Potatoes USA is trying to better understand when potatoes are being consumed, Johnson said, and 2016 data shows consumers are increasing their eating occasions for potatoes in a restaurant during dinner (33%, up 4% from 2015) at the expense of eating at home (67%, down 4%).
Whether foodservice or eating at home, Johnson said Potatoes USA wants to emphasize that potatoes can be eating at any time during the day.
Fresh potato sales accounted for 22% of all potato foodservice sales in 2015, up 1.1% compared with 2014.
In fact, Johnson said fresh potato sales in foodservice operations are gaining on fresh potato sales at retail,with 2015 statistics showing a 46% share of fresh for foodservice and 54% for retail. Schools and travel and leisure destination are among the foodservice operators increasing use of fresh potatoes, Johnson said.
