STUDY: PRICING KEY TO DRIVING PISTACHIO SALES

LYNNE MILLER

FRESNO, Calif. -- Retail prices that are above average tend to hurt pistachio sales, a group of researchers found in a national study on promotional and pricing practices conducted for the the California Pistachio Commission.

The study, "Documenting Retail Performance Drivers for Pistachios" analyzed the relationship between retail practices and the performance of pistachios. After observing activity at stores across the country, researchers from the Perishables Group, an East Wenatchee, Wash., consulting firm, concluded moderate everyday pricing is the key to increasing sales of pistachios. Retailers with a higher-than-average everyday price hurt their category volume and dollar sales, the study found.

"This study confirms our position that the pistachio category is greatly impacted by everyday retail price," said Karen Reinecke, CPC's president. "An attractive everyday price tends to draw a much larger number of consumers to the category and generate stronger sales."

Participating chains included Albertsons in the San Francisco Bay and Los Angeles areas; Save Mart Supermarkets, Modesto, Calif; Kroger in the Houston and Cincinnati markets; Jewel-Osco stores in the Chicago area; Acme Markets, Malvern, Pa.; Giant, Landover, Md.; Bi-Lo, Mauldin, S.C.; and Stop & Shop, Quincy, Mass.

According to a model developed by the researchers, pricing bulk pistachios in the $1.99- to $2.49-a-pound range could boost dollars and volume more than two times the current average. Researchers found actual retail prices that ranged from $3.15 to $4.58 per pound.

"Intuitively, we know that purchases of pistachios are impulse-driven," Reinecke said. "This data confirms there is a price ceiling and that a high percentage of consumers will no longer purchase from the category when retailers reach that ceiling."

Retailers can also go too far in dropping prices, the study warned, noting too much volume sold on sale can hurt category performance.

While price plays a part in the category's success, it's not the only factor contributing to overall performance, the researchers found. According to the CPC, pistachio sales go up in response to prominent displays -- even during nontraditional nut-selling months like April. The CPC encourages retailers to set up eye-catching displays in their produce departments, preferably on endcap or island displays.

Researchers with the Perishables Group found vast disparities not only in pricing but in promotional practices, with some stores conducting numerous campaigns, and others only a few. The study determined that 10 promotions a year can yield the best results.