Liquid Assets

ROSEANNE HARPER

More variety, more space and better distribution have kept supermarket produce departments' sales of refrigerated, functional juices healthy, retailers and other sources told SN.

The Perishables Group, Chicago, a research and consulting firm, shows sales of functional juices up 14.4% in dollar sales, and 10.5% in unit sales, year-to-date.

“New SKUs, larger packs, as well as more brands and varieties coming on the market” play major roles in the increase, said Bruce Axtman, president and chief executive officer, The Perishables Group. So does wider and more consistent distribution, he pointed out.

“Two years ago, these weren't in every store; now they are in just about all,” Axtman said.

He added that most also have a dedicated section for the juices, and that there's an average of 130 facings per store. That's an average taken from the 15,000 supermarkets across the country that The Perishables Group tracks.

SN talked with one supermarket produce director whose dollar sales in the category just about mirror the 14.4% year-to-date increase The Perishable Group's figures show.

“We carry four brands — Bolthouse Farms, Odwalla, Naked and Pom Wonderful — and they're all up significantly,” said Joe Watson, produce director at 34-unit Rouses Supermarkets, Thibodeaux, La.

“Overall, they've had a 15% increase in dollar sales in the last 12 months.”

The addition of new varieties such as Bolthouse's smoothies, and a relatively new 48-ounce size from Pom Wonderful, breathed new life into the category, Watson said.

“That $11-plus ring [for Pom Wonderful's 48-ouncer] is great for produce. We position the 16-ounce and 24-ounce bottles horizontally above the large ones, with good signage showing prices, so customers see a clear value in the 48-ounce size.”

The family-owned chain for a long time devoted only a four-foot section to the juices, but now has 12-foot sections in most stores and 8-foot sections in others. The company is in the process of realigning space to make more room in other stores, Watson said.

He gave much credit to critical mass in pushing the category's sales up at Rouses.

“At first we had just Pom and Bolthouse, which did very well, but from the time we went beyond those two and brought Naked and others in, sales went up dramatically,” Watson said.

The amount of refrigerated space dedicated to the category is a major factor in sales success, retailers agreed.

Indeed, most told SN the only negative is the difficulty of managing the category in the finite refrigerated space.

One produce director said he could push his sales up nicely if he had the space to display all the varieties and brands he'd like to.

“This category had its biggest jump a couple of years ago, but now sales have slowed,” said Dean Balzum, produce director at nine-unit Kowalski's Markets, St. Paul, Minn. He said his sales are limited by the amount of space he has.

“The economy may have something to do with the slowdown, but I think it's mostly because we don't have enough refrigerated space. We have a 4- to 6-foot set in most of our stores, and I know if I could add feet to that I could raise sales by double digits. Sunkist has just come out with some items in this category that I'd love to add.”

He pointed out that all the SKUs in the four major brands he carries are earning their keep on the shelf, and he doesn't want to ruin a good thing.

The consumer media hype about “super juices,” squeezed from exotic-sounding rain forest fruits such as mangosteen, goji and acai berries, has undoubtedly shined a spotlight on the category.

When entrepreneurs and even chiropractors are selling branded concoctions containing acai berry juice and other juices touted as health-giving for $25 to $35 a quart, a blue juice in produce that contains acai berry can certainly be seen as a value at $3 or $4 for 10 to 16 ounces.

In fact, Tony Mirack, produce buyer at McCaffrey's Markets, a three-unit independent based in Langhorne, Pa., gives credit to a new addition to the category, Purple, for giving his sales a lift.

Purple is the name of the juice developed and distributed by Purple Beverage Co., Ft. Lauderdale, Fla.

McCaffrey's dollar sales in the category, now at 5% above last year, had leveled off until Mirack brought in fresh-squeezed orange juice, a local cider and, more recently, Purple.

“The cider and orange juice added another dimension, and then Purple appeared on the scene,” Mirack said.

“I gave Purple [10-ounce bottles, retailing for $2.99] four facings, and it definitely holds its place.”

That's in an eight-foot set that includes eight brands and whose sales are driven by Odwalla and Bolthouse Farms, Mirack said.

“It's difficult to manage this category when you have so many SKUs thrown at you, but Purple is unique to anything we had had,” Mirack said.

Significantly, it contains acai berry juice as well as black cherry, pomegranate, black currant, purple plum, cranberry and blueberry juices, all of which are touted for their antioxidant content.

“Our [produce] departments are exploding with value-added products, and juice makes up 10% of value-added,” Mirack said.

Even those retailers who said their refrigerated juice sales in produce are flat said they're projecting increases.

They base such projections on the advent of new flavors, and on their own merchandising tweaks.

For example, Rudy's Newport Avenue Market, Bend, Ore., took its produce juices out of a “beautiful” stand-up, refrigerated case provided by a supplier, spread them out horizontally above rows of packaged cut fruit and melons, and increased sales significantly.

“We're actually devoting 30% to 40% less space to those juices, and yet our sales have gone up noticeably since we made the change,” said Brian Moothart, produce manager at the single-unit, upscale market.

“I'm selling more, and I've cut shrink, because I don't have to carry so much,” Moothart said, explaining that he just has to keep a close eye on the smaller display to keep it fully stocked.

The stand-up, reach-in case, which he returned to the supplier, had been placed in a high-traffic area, but “it just didn't seem as shoppable,” Moothart explained.

“These things do much better spread out horizontally, very visible.”

Perhaps being displayed above cut fruit, the juices send a “fresh” message. Another retailer said pomegranate juice sold best when positioned next to his fresh pomegranate display.

One produce consultant emphasized that the functional juices represent a growing category, one that is not even near maturity.

“It's still increasing. Sales are up, and will continue, even if the percentage of increase goes down a little,” said Richard Spezzano, owner, Spezzano Consulting Service, Monrovia, Calif.

“As I look around, I see more retailers dedicating additional refrigerated space to the category.”

Indeed, The Perishables Group indicates that — based on the stores it tracks — retailers have increased space for the category by 25% to 50% in the last year or two.

Spezzano pointed out that the category gives the produce department incremental sales.

“Produce managers also like the high-ticket ring. It's good for total department sales.”

But Spezzano, like other industry sources, said managing the category is a delicate business.

“Produce has not been schematic-driven like the grocery section,” Spezzano said. “So they have to be really careful managing the category to make sure they don't create out-of-stocks. How much space to give the category and what SKUs to carry are major challenges.”

Retailers who want to try some of the new varieties confirm that they often face a dilemma.

“I have some retirees that come in here all the time to buy Bolthouse carrot juice. They're hooked on it, and they tell me I better keep it stocked for them,” said Moothart at Rudy's Newport Avenue Market.

If he makes any trade-offs, that carrot juice won't be one of them, he said.

Trend trackers showed little growth in the overall refrigerated juice category, which includes the paper-carton brands and varieties in dairy. In fact, some high-volume category drivers, such as conventional orange juice, were flat or slightly down.

The Nielsen Co., Schaumburg, Ill., shows dollar sales, in supermarkets only, of the entire category up 2.5% in the 52-week period ending Sept. 6. Unit sales for the same period were down 0.8%, according to Nielsen figures.

Likewise, Information Resources Inc., a Chicago-based market research firm, reports dollar sales in supermarkets for the entire category up 2.45% year-to-date, and unit sales up just 0.02%.

Neither Nielsen nor IRI breaks out separate figures for refrigerated, functional juices in produce.

Some sources said the functional juices add life to the entire category.

With PepsiCo's acquisition of Naked Juice, distribution of that product has become more consistent, sources told SN. And further innovation, both in varieties and packaging, are expected from the major brands.

Regional brands are popping up as well. None of the retailers SN talked to, however, had a private-label line. Though sales may have slowed, for a variety of reasons nobody showed any doubt about the future of the category.

“It's a pretty dynamic category. We may not see much more space devoted to it, but there will be trading-off, with new flavors and package designs still coming,” said The Perishables Group's Axtman.

“There will be new products and more promotional activity.”

Retailers concurred that the category is healthy.

“It's a good product, a worthwhile category that's going to be here forever. People have come to trust it,” said Balzum at Kowalski's.

Mirack at McCaffrey's, too, stressed that the category has gained well-earned recognition.

“It's not going away. It's a necessity. You can't not have it.”