WHAT'S IN A NAME? 1997

RALPH RAIOLA

Will the name game of branding change the face of the produce department? Probably not anytime soon, and maybe never, according to industry sources questioned by SN about the influence of brands on what is currently -- and some retailers would add defiantly -- one of the most unbranded parts of the supermarket.

But retailers, suppliers and industry watchers alike agreed that prevailing trends -- most notably the value-added boom -- are steering produce retailing down a course where branding will exert more influence on how the department markets fruits and vegetables.

Besides the seemingly natural concurrent growth of name-branding and the packaged fresh-cut salad business that has been building for years, there are other trends likely to help brands make a deeper mark in produce, the sources said.

Those trends include the continued spread of store brands into fresh sections like produce; the advent of cross branding with names traditionally known and loved in other parts of the store; and the evolution of product differentiation in the department, from proprietary and geographically based varieties to new, genetically engineered items.

Still, despite these and other forces in favor of produce brands, there is the countervailing force of many retailers clinging to produce as a safe harbor for a unique competitive edge, precisely because it is not heavily branded.

The theory, held for years and apparently still going strong, is that at the produce aisle, quality is delivered in the product, not the name. And the absence of a name, many retailers add, translates into store loyalty rather than brand loyalty, unless the name is the store's own.

Currently, branding's influence on the department is far from overwhelming, said retailers and other industry experts. Brands exert their strength in certain categories, but there is a limit to how far that can go, they said.

"I don't think branded items make up more than 20% of our produce department," said Ken Lanhardt, produce and floral director and buyer at Cub Foods' Atlanta division.

Harry's Farmers Market, Roswell, Ga., an operator with produce as its core, does not rely on brands even to the moderate extent some other retailers do, said Amrish Patel, head buyer for the operator.

"A customer is looking for a quality product, not a name." With the exception of Dole bananas and an occasional few others, Patel said his stores do not carry "any consistent brands," and that is not a problem.

"This week, we might have one brand, and the next week we might have another."

Patel said he does believe that, at times, brand consistency can come in handy for some stores. But for Harry's, which operates three markets, the consistency of the quality of products has got to be the first priority, or he will lose customers.

"We have to be more picky in our selection," he said.

Scott Streeper, produce buyer for Scolari's Food & Drug, Sparks, Nev., echoed those sentiments.

"The most imperative part is quality," he said. "If you've got the quality, I really don't think the consumer gives much care as to whose name is on it.

"I don't get any complaints," he added.

Bruce Axtman, vice president of Willard Bishop Consulting, Barrington, Ill., said that branding so far has proven to be an influence only in select pockets of the produce business.

While overall the department is largely unbranded, "If you looked at it category by category, you'd get a different view," he said.

Lanhardt of Cub Foods pointed out that, when applied with a fine brush rather than a broad one, brands can actually help a retailer's edge. He said he stocks Green Giant celery, lettuce and potatoes in his stores, for example, while other retailers in the area do not.

"We are enthusiastic about the branding of certain products. We're using some items to separate us from our competition," he said. "A brand name with universal recognition can be good. That type of branding is worth it."

Most industry sources agreed that brand loyalty will only become a more broadly influential factor in the department's performance once more consumers find and return to branded products they are consistently satisfied with.

"Branding is important, but provided you have quality at a reasonable price," Scolari's Streeper said.

Lanhardt agreed. "Once the consumer buys it, and the report card is good, you can get brand loyalty."

As Greg Flood, senior vice president of sales and marketing at Grimmway Farms, Lamont, Calif., sees it, branding will continue to have a disproportionate effect on the value-added categories, as opposed to making waves in the categories dominated by bulk commodities.

"On the commodity side, it is mainly a shipper-branded category still," he said. "I don't see that changing any time soon."

Flood said he sees value-added branding in three different scenarios at the same time. "You have the brands of the grower-shipper, private-label brands and national brands," he said. "They're all trying to get a foothold, and you're starting to see customer loyalty."

He added that another twist is national brands of packaged food that are trying to use their obvious name recognition from other departments to spark interest in the produce departments.

"These national brands are trying to break in," he said. "Retailers and consumers are definitely smart enough to know it's not a product being packaged in their facilities.

"Whether there'll be carryover is the question, and I think it is too early to tell."

And it is that scenario that may worry some retailers the most, said Brian Sharoff, president of the Private Label Manufacturers Association, New York.

Supermarkets may feel threatened by outside brands wedging into produce because it takes away what retailers believe makes them unique. In light of this fear, private labeling by the retailer is rapidly gaining ground in produce, he said.

"A lot of customers I've spoken to say, 'I shop at this store because of their produce.' " With the presence of the same brands in different stores, however, retailers lose that drawing power. "If you brand [produce], it causes a problem for the retailer," Sharoff said. "The retailers are not about to give up their distinct images, so the balancing act is to use a store brand."

Axtman of Willard Bishop agreed, commenting that "some retailers want to build brand loyalty around something they develop."

For that and other reasons, Sharoff said a brand's success in produce could remain limited to only certain categories.

"There's such a wide variety of products, I doubt that they all will have brands," he said. "Maybe it lends itself to high-volume items."

However, most produce industry sources agreed that high-volume commodities, such as apples or soft fruit, do not lend themselves to branding as well as other segments of the business.

"Apples have a long way to go," Cub's Lanhardt said. "On the other hand, some of the larger companies are getting involved with citrus fruit."

Scolari's Streeper said that he does not expect brands to come into play in a significant way in lettuce, grapes or soft fruit.

Axtman said value-added fruit is most likely the next candidate for branding, as well as "another class of products" that he classified as environmentally friendly. He also mentioned genetically engineered produce as holding out the promise of a mooring for brands.

"I believe biotechnology will probably take off, and in the beginning, the companies are going to want to put a name on it," Axtman explained.

The segmentation of produce categories is another one of the likely catalysts for the future ascendancy of branding, said Axtman.

In the case of tomatoes, for example, he noted how the emergence of varieties such as vine-ripened, on-the-vine, Israeli, Holland and greenhouse have the potential to support the specific brand of the processor or the supplier.

Subsequently, as consumers demand convenience and retailers strive to offer it, consumers could develop brand loyalty through product identification.

While most of those interviewed would not completely rule out the prospect of branding eventually gaining enough popularity to challenge the traditional generic nature of the department, they insisted they do not see that as possible in the near future.

Axtman, for one, said he could envision retailers using a full brand rollout as a marketing strategy for a commodity, "but it's really going to be a choice for each retailer to make. I could also see retailers saying, 'I am going to stick to my sourcing program.' "

Said Cub's Lanhardt, "Down the line, we're going to see more of it." Even in the near-term, he said he expects companies like Green Giant to continue to venture into new commodities with branding; it recently got into branding onions, for example.