SPUDS WITH SPUNK

BOB BAUER

Things are shaping up in the frozen potato category. No longer can retailers simply stock shoestrings and steak fries. Today there are shredded potatoes, waffle fries, even alphabet-shaped frozen varieties. On top of that, most shapes have a spicy variety as well.

Retailers contacted by SN report the category is one of the steadiest in the store, constantly providing a good level of income with or without promotion.

New varieties are keeping the category fresh, while old staples continue to sell well. Dollar volume for the year ended Dec. 11, 1993, was up 4% to nearly $825 million, according to Nielsen Marketing Research, Northbrook, Ill. Ore Ida, Boise, Idaho, is the dominant player in the category, with a 56.4% dollar volume share, which is up 8.5% percentage points in the last year.

Private label continues to do well in frozen potatoes, jumping nearly three percentage points to post a 19.7% share of the category's

dollar volume.

An executive for a leading wholesaler said value-added products and those with seasonings are the category's best movers today.

Grant Jones, manager of public relations for Ore Ida, agreed. He said his company's Hot Tots, a spicy version of its Tater Tots, has been a hot seller since being introduced March 21. He said the success of Ore Ida's Zesties fries paved the way for the Hot Tots. He added that larger packages of all varieties are among his company's best-selling items.

"I think the spiciness in general is a very popular thing right now and I think that's evident by our remarkable success with Zesties," he said.

"This is one of the steadiest categories going," said a buyer with a Mid-Atlantic chain. "You can always count on sales. All you have to do is look down any frozen food aisle and see how much space these products get. That shows you how important they are to the category.

"We're noticing the fancier types of fries, curly ones for example, are doing well," the buyer added. "It seems they became popular in restaurants and then it spilled over into supermarkets. Our private-label products do real well, especially basic items like shoestrings."

He said he thinks frozen potato products are popular because they're easy to make. "Even someone without much experience in the kitchen can heat up french fries. And they go with so many things. With all the different types of potato products, the category appeals to people of all ages."

Pete Martin, manager and merchandiser of frozen foods at Safeway's Seattle division, Bellevue, Wash., said overall, the frozen potato category is somewhat flat.

"Traditional french fries are down a little bit for us, whereas the growth is in the hash brown and Tater Tot area," he said. "We're probably the leading market in tater treats. We continually show strong growth and movement in that area.

"The new coated potatoes were showing a nice growth for a while, but that's also kind of tapered off," he added. "But then promotions, promotion allowances and that have tapered off, too. So pricing isn't as hot as it was a year ago to 18 months ago. So I'm not quite sure if some of that has to do with why there seems to be a little bit of a slowdown in some of the potato sales."

Louis Scaduto Jr., frozen food buyer for Food Circus Supermarkets, Middletown, N.J., said private-label potato products are popular in his stores.

"The basics -- the steak fries, the crinkle cuts, that type of stuff -- are strong, especially where you have a lower-income trade vs. the higher-income trade," he said.

He said McCain's is gaining strength in the category. "I think McCain's has taken some of its thrust from Ore Ida," he said. "I'm actually surprised we're doing as well as we are with the McCain's. I didn't think that would take off quite that well. But they have a nice package out there and it's a big pack, so it looks good to the consumer. It doesn't really seem to have hurt private label that much at all."

A Midwest retailer said his store's brand of frozen potatoes is also a strong seller.

"Private label always does well in potatoes," he said. "It just seems to be one of those categories where people have always been comfortable buying private label."

Scaduto said a new merchandising strategy is helping to increase his potato sales. "What we're trying in a couple of stores are vertical sets where we were basically all horizontal," he said. "We're seeing some increased movement on that. Of course, it's a little more labor-intensive to maintain it, but it's proven that we're selling a little bit more, maybe by about 10% or 15% more than what we were selling the other way.

"I can't do that in every one of my stores because I don't have the flexibility of doing it," he added. "I've done it in three of my stores so far. When it's maintained properly, it looks real good. Unfortunately, it gets beat up a lot quicker, but we do seem to be selling a little bit more product. It's vertical in the doors and it entails about five doors up and down. On the top shelf you just run the boxed items and on the other four shelves on the base you run polybags."

Merchandising tactics bring up the question of shelf space, a concern to all retailers. Product introductions have put a premium on that shelf space.

"One trend in the category is in the diversity of products," Ore Ida's Jones said. "We have everything from a mashed to spicy to a fast food-type of fry. There's a lot of variety within the category."

That variety has retailers wanting to bump slow-moving products from their shelves.

"A big complaint from the membership back to Twin County [Grocers], our wholesaler, was a concern over what we were going to get rid of," Scaduto said. "They're telling us they can't justify getting rid of anything that's selling like 80 cases a week of product. So I asked if they thought it was going to cannibalize what's there and they said they really didn't think so. It was a big argument I had with them. They've proven to be right because it doesn't seem to be hurting a lot."

Scaduto's space concerns are echoed by others.

"We're basically in a mode that when we add one, we delete one," said Jim Lefebvre, purchasing director at Stanley Stores, Bay City, Texas. "We try to stay within the category, not necessarily within the brand. It's a good way to purge out the slow movers."

Randall West, vice president and chief operating officer at Food Giant 2, Seattle, has had to add space to his potato sections and expects to see even more new products. "Finding room for them is the biggest problem and making the management willing to stock them is hard, too."

Jones of Ore Ida confirmed West's suspicions. "We have several products in test market," he said. "Some are innovative new products. Others are new twists on old products," he added, declining to be specific on the types of products being tested.

While all the retailers agreed that frozen potatoes need some promotion, most said the category needs less than other areas of the department.

"When you can sell something at everyday retail and you can sell it in quantity, you may see less advertising on it because you really don't need to push that category or those items in particular," said Scaduto of Food Circus. "We do advertising on it, but nothing to any great extent. You see a lot of 30-cents- and 40-cents-off deals."

The Mid-Atlantic retailer agreed. "We don't go to great lengths to do any special merchandising on potatoes," he said. "Since it's a product people often buy, they know where it is and they go right to it. "Naturally, we put some potato items on sale at times and we'll put them in display cases at the ends of the aisle sometimes, but it doesn't pay off as much with other categories. It's just not that much of an impulse item."

Lefebvre of Stanley Stores said the category is "still very price-oriented." He said customers seem to be gravitating to the bulk packs.

"We do run ads frequently in that category. It seems to be things people are looking at price on." Most of the sales are on the basic items. The new, fancier items "tend to hold their own," he said.

Safeway's Martin said the need for promotions varies, depending on the item. He also said the number of sales has dropped.

"You get good, everyday movement in the category," he said. "But when they were really dealing at the $3 or $5 level about a year ago, volume was really skyrocketing. Potatoes were selling really well because you could sell them really cheap. So price plays a pretty important part in potatoes. When you've got them hot, the people are buying them.

"Like I said, we're such a big market on Tater Tots and hash browns that they don't have to be promoted as hot and we still get really good movement," he added. "I notice on the french fries and stuff like that, though, that movement drops off a little bit unless you can get a really good price point out there."

"The category responds well to sales, the new varieties in particular," said the Midwest retailer. "I think that gets people to try something new. They don't want to pay full price and find out they don't like it." He said about 15% of his frozen food space is devoted to potatoes. "They account for about the same percentage of department sales," he added. Pete Marino, frozen food buyer for Genuardi Super Markets, Norristown, Pa., said frozen potatoes aren't selling well in his area.

"It's kind of a flat category. However, everybody's promoting pretty heavily. I guess they're spending toward it to increase some volume," he said.

In spite of flat sales, some products are selling well.

"The old standards are still doing well, like the tiny taters, the 2-pound packages of regular fries, and crinkle cuts; they're still the best movers in the category," he said. "The curly Q's are doing well," he added. "That's a relatively new cut or style. It does pretty decent."

Marino's stores don't carry a private label, but do have a controlled brand of frozen potatoes. "We don't have a private-label potato at this point and time. I'm not saying that in a year or so from now we won't have some."