SAVING CITRUS

ROBERT VOSBURGH

The evolution of global supply links and year-round sourcing has brought new challenges to the citrus category, the traditional ray of sunshine in the eyes of produce managers throughout the winter months.

What was once an easy merchandising call has become a bit more complicated as consumer expectations have grown and retailers have been compelled to stock apples, grapes and stone fruit well beyond their natural domestic growing seasons.

The threats to citrus' dominance of the cold-weather season has spurred the industry to re-examine merchandising mix and presentation to broaden and rejuvenate the category, SN was told.

"There's a lot of excitement on the retail level when citrus comes in because people have always associated the winter with a good sweet half of grapefruit or an orange," said former retailer and consultant Ed Odron, noting the industry has done a great job of associating citrus with vitamin C and the cold-and-flu season.

"Navel oranges are the foundation of the category. As soon as the first shipments come in, retailers set up 50-case displays that say winter's here," he added.

There's little doubt citrus is a produce department necessity, and is one of its foundations. Yet, there is a growing consensus that traditional citrus -- oranges, grapefruit, lemons and limes -- is a maturing segment, and in need of a significant overhaul. Matthew Caito, director of marketing, Caito Foods, Indianapolis, is one supplier who is assisting retail customers by offering options like packaged citrus or specialty items like blood oranges, pummelos and Meyer lemons, to name a few. The strategy is to develop merchandising plans that complement mainstream stockkeeping units without disrupting prices.

"[Traditional citrus] is mature, so price is extremely sensitive all through the value chain," Caito said. "Price point is important especially for the mainstay items like navel oranges."

Fresh, winter citrus is a holiday favorite and its documented health properties make it popular as a cold-weather supplement. These benefits have helped keep demand relatively strong, but the changing dynamics of the produce department have impinged on the fruit's most popular selling time.

"Apples and all the summer fruits are almost becoming a year-round crop," noted Odron, retired as vice president of produce/floral and deli/bakery from Lucky Stores. "Citrus almost needs a new angle each season."

New sets for showcasing citrus have attracted increased attention from retailers. At Caito, which handles roughly 35 SKUs of mainstream and specialty items, there is a constant search for new selling platforms.

"There's a great interest in specialty citrus, but there's also great interest in marketing mainstream citrus in a different way. For example, a lot of retailers and wholesalers are moving it in bins or half bins," said Caito. "You see more special packs with items in five-pound packages. It all helps to keep that price point low and adds floor excitement for consumers because it's a destination within the aisle instead of on a regular rack.

Using farm stand-style bins or similar setups that look like they came directly from the field helps to reinforce the image of freshness, especially when the container presentation is combined with a pallet. Caito said this technique is smart because "it adds value without adding cost, or even decreases the cost, because you're able to sell more citrus at a lower wholesale."

At Bag-n-Save, Dover, Ohio, produce manager Sue Sandy bulks up her department with at least six sections of traditional citrus during winter. The single-store banner not only goes heavy on oranges and grapefruit, but promotes lemons and limes for holiday entertaining. Customers haven't expressed much interest yet in particular specialty fruits, but there is a presence of some more well-known items.

"We put in extra sections just for tangelos and tangerines," she said. "We also increase the amount of bagged product by about 25% in winter. We usually have loose bulk up front, but in the winter we put all the bagged items up there, which includes apples and citrus. Our customers like the value of them, and with the holidays, they like to grab and go."

Bulk displays are still preferred in the citrus category, according to SN sources. But bagged oranges or grapefruit play an important role in many value-oriented formats, as well as for consumers who want convenience, and don't want to deal with digging through a bulk display picking out one piece at a time.

One recent development that suppliers and retailers are picking up on moves beyond simple bags. Many point to the arrival of clementines -- cleverly arranged in their mesh-covered, wooden crates -- as a key turning point and inspiration behind some of the new presentations in the citrus segment.

"Those 5-pound wood boxes covered with mesh are the cover that sells the book. You don't buy six, or even a bag -- you're getting a 5-pound box at a premium price point. It's become a great marketing tool," said Odron, the consultant. "Maybe there's something to be done like that for other citrus, or at least some sort of colorful packaging that promotes single-item sales."

Wholesaler Caito agreed, noting the clementine was a real oddity five years ago, when his company moved a small allotment every week. Now it's a mainstream item with wholesalers and retailers moving boatloads.

"Part of it is the packaging. You're trading the customer up from a 4- or 8-pound bag of fruit to a 5-pound, premium container of produce," he said. "It either looks better or fresher, or the container looks better, and the consumer is willing to pay more for it."

The clementine success story is the reason why Caito believes the industry is seeing so much tinkering with citrus packaging. "It tells me suppliers are looking for new ways to drive sales within a mature category."

Among the current initiatives he's seen are the use of smaller premium packs, mixed packs and packs that include juicers. All of them leverage the perception of value in the consumer's mind, or increase the perception of freshness.

For some retailers, simple bulk is the only way to display citrus. Donnie Jackson, produce director for the Virginia Beach unit of Foods of All Nations, said his displays are designed to entice lingering as customers touch and select individual pieces of fruit. The retailer, which offers foods from 80 countries, operates another store in Charlottesville, Va. The unit Jackson manages, at 21,000 square feet, is the larger of the two.

"Part of our appeal is the displays," he said. "We absolutely, positively do not carry anything bagged or wrapped. It has to be loose so customers can pick it up, feel it and smell it."

While suppliers are focusing on developing new ways to present winter fruits, many retailers say they prefer to use new items to "bookend" the traditional segment. This strategy is centered on specialty citrus that consumers might have tasted in restaurants, encountered during foreign travels or seen used on television cooking shows.

"We get every ethnic group coming in here," said Jackson. "Customers come through produce first, and you can hear them get excited when they see an item they recognize. We're also in a military area, with people who've done a lot of traveling abroad, and who've eaten these products in the countries they're grown in. They love it."

Jackson's produce department at the Virginia Beach Food of All Nations store is something of an anomaly to the typical retail supermarket formula: Only 40% of the citrus is mainstream; the other 60% is considered specialty.

"Besides the regular goods, we carry the cherimoyas, sapote melons, lychee nuts, pineapple quinces and the like on a regular basis. Our name is Food of All Nations, and we have to have it," he said. "Specialty citrus is pretty much mainstream for me."

Standard merchandising strategies centered on abundance don't necessarily work with specialty citrus, since higher prices may prevent movement, and therefore, increase shrink. One way Jackson combats this is to rework pricing formulas.

"You have to price accordingly. I've found it's a lot better selling by the piece, rather than by the pound, or in two or threes," he said.

"So, if it's a 36-count case, I'll figure the price out based on 30, to give myself a six-count cushion. It makes the price a few cents more, but that's why I also make sure I order the biggest sizes I can."

Elsewhere in the playbook, Jackson puts everyday items in the back of the department, and all his specialty goods right up in the front.

"My philosophy is, if I can get one or two of those things in your basket before you get to the back, I've done my job. I've increased my sales," he said. "Beyond that, this scheme also beautifies the department and really serves as a way to represent our store name."

Additionally, the industry veteran strives to stock at least one item that competitors in his market area do not have.

"I'll go out and check stores in a 10-mile radius, make sure they don't have it, order the hell out of it, and get it out on our tables and sell it at a great price," he said, adding that his department is the site of aggressive sampling programs and staffed by associates trained to upsell customers on the more unique offerings available. To that end, regular department-wide meetings, co-hosted by Jackson and suppliers, are his way of keeping staffers up to speed on what's coming into the store, what their attributes are and how those items can be used at home.

There is a fast-growing list of products to choose from. For example, Melissa's/World Variety Produce, Los Angeles, is just one of a number of suppliers offering up to 30 varieties of specialty citrus. According to company officials, Melissa's in the past year has recorded more than 500% growth in sales of pummelos, Buddha's hands and Sicily-grown volcano oranges; and 151% growth in the sale of Meyer lemons.

"Specialty items represent some real opportunities, especially since we're becoming such an international nation," said Odron. "And what's considered specialty by some may be an everyday food for others from another country."

From his vantage point looking in from the outside, Odron believes just about any specialty item can be promoted and brought to the consumer as the next big thing. What's needed is retail commitment and sell-through at store level.

"Basic items drive the citrus category, but specialty items support -- and build on -- those sales by showcasing variety and category coverage," he said.

In the past, strategy was usually a one-way affair, from the commodity boards or major grower, to the retailer, the consultant noted. Now, with consolidation shifting the balance of power to favor operators, retailers can take the initiative and request the marketing tools that allow supermarkets to promote a product. Independents in particular can benefit, since specialty produce is a niche that attracts consumers. On all levels of operation, however, the idea can take some convincing.

"Before I came to Foods of All Nations, I was with a traditional retailer," recalled Jackson. "I used to fight my district manager when he told me I needed to carry these items. I'm trying to pull a gross, and he's telling me I need this and this and that. So, I would fight them on this all the time."

Soon, retailers may have to contend with still more developments on the citrus front. Large suppliers, including Sunkist Growers, Sherman Oaks, Calif., are pursuing the creation of value-added products in an effort to capture the mushrooming convenience category.