Produce Business ‘Companion Products’

Feature Writing

Companion Products

Tie-Ins to Push Produce Sales

Ever since the first grocer discovered customers were more likely to buy corn flakes and strawberries if they saw them displayed side by side, companion products have been merchandised alongside produce.

Today, produce departments routinely display dozens of related products among their fresh goods—some brought in from other store departments and others conceived and marketed exclusively as produce department brands. Many companion products, like dressings, croutons, dips and glazes, have found permanent homes in produce. Others, like whipped toppings, pie shells and cake cups—even cookware, canning jars and small appliances, tend to come and go with promotional themes and seasons.

“Other than dressings and croutons, there are not too many non-produce items in Wal-Mart that are actually rung and managed by produce, but we do a lot of tie-in promotions with other departments because long-term, it creates more demand for produce,” said Ron McCormick, vice president and divisional merchandise manager for produce and floral for Wal-Mart.

“When we send home things like woks, juicers and smoothie machines with customers from a tie-in promotion in produce, we see a continuing lift in demand for the associated produce. The other department gets the ring for the cookware or the appliance, but produce gets the repeat business.”

“Using companion products to suggest ways to use produce is profit-maker, not only because non-produce items carry high, non-perishable margins, but also because they move more produce,” said Anthony Sanna, vice president and co-founder of Saco Foods, Inc. Saco sells its Dolci Frutta hard-shell chocolate fruit dip exclusively in produce.

Interstate Bakeries Corporation, the largest wholesale baker and distributor of bakery products in the U.S., sells Hostess and Dolly Madison brand cake cups in grocery as well as in produce departments, right next to the berries. “Strawberries and shortcakes have gone hand-in-hand for generations, said Kevin Kaul, marketing manager for Hostess. “Strawberries help sell the shortcakes and shortcakes help sell strawberries.”

The Companion Product Balancing Act

With their front-of-store locations and their fresh, attractive displays, produce departments are routinely courted by other departments hoping to secure shelf space for their non-produce products.

“For some retailers, there’s a temptation to put all kinds of non-produce items in produce, even when there’s little or no relationship,” noted Sanna. “They offer a great way to improve margins, but purely opportunistic placements are intrusive.”

“Sometimes you’ll see a produce manager who’s more concerned about improving his shrink numbers than selling produce, so he’ll let lots of non-produce items work their way into his department,” McCormick said. “But a good produce man or woman loves to sell produce. The tie-ins are fine for catching the consumer’s interest, but space is always a consideration, and you don’t want to get carried away with stocking lots of things with a huge shelf life.”

“I do work with the other departments and let them merchandise their product in produce, but only as long as it complements produce,” said Mike O’Brien, vice president of produce for Schnuck Markets, a 102-store chain based in St. Louis. “If a produce item triggers a non-produce sale, that’s good, but if a tie-in triggers a produce sale, that’s better. But it becomes too much when you no longer appear to be a fresh department.”

Produce buyers who worry about too many tie-ins are often reluctant to give up space. “Some produce buyers are just interested in produce sales and don’t want to give up space,” noted Cheryl Dabrow of Chelten House Products, Inc., marketer of organic Chelten House brand dressings in produce.

The key to reaching those buyers, according to Carla Laylin, senior marketing manager for T. Marzetti Company, is to offer companion products that effectively promote incremental produce sales. Laylin’s company reserves its T. Marzetti’s brand for the dressings, croutons, dips and fruit glazes it sells in produce departments. “Space is always an issue, but in everything we do with our produce brand, our goal is to help our retailers sell more produce,” she said.

The effort is paying off. Laylin cited a recent ACNielsen Homescan report showing when consumers purchase refrigerated dressings, they put $7.80’s worth of fresh produce in the cart, too, compared with $4.77’s worth of produce purchased by customers who don’t use refrigerated dressings. Even when dressing isn’t on their shopping lists, consumers who use refrigerated dressings spend $.85 more on fresh produce per shopping trip than their non-using counterparts.

Responding to Trends with Tie-Ins

Well-conceived companion products that relate to emerging market trends are especially profitable strategic additions to produce departments. For T. Marzetti, product introductions have for years matched consumer preferences, trend for trend.

“In the 70s, when people were getting interested in fresher, more natural foods, we were one of the first to introduce a line of refrigerated dressings,” Laylin said. “In 1989, we introduced the veggie dips because we saw consumers were dipping fresh vegetables as well as chips. At the same time, produce managers were just starting to respond with precut vegetables.

“We introduced some low-carbohydrate products in the midst of the low-carb craze, as well as several organic products and reduced-calorie and no-fat line extensions. In December, we introduced Salad Accents to give people new and different things to put on salads. We’re just now introducing seven new T. Marzetti’s dressing varieties with very distinctive, innovative flavor profiles, based on consumer taste trends.”

“Even though it’s only been talked about industry-wide fairly recently, our SASS brand—which stands for ‘season all stuff sauce’—has always been meant to provide meal solutions,” said Lauri Raymond, who with her twin sister founded Sisters & Company in 1987. After buying Martin Brothers Fresh Dressings in 2001, the company became Sisters & Brothers, Inc., makers of SASS and Martin Brothers brand fresh dressings and dips.

“When we were first starting, we said, ‘We’re working women. What do we want?’ Our answer—we wanted a product that was fresh, healthy, really good and really different, and one that could instantly turn us into gourmet cooks. So that’s what we created, and that’s what we still offer.

“These days,” Raymond continued, “the biggest areas of growth in the grocery industry are natural foods, gourmet foods and ethnic foods—plus convenience. The smart retailers and suppliers are all responding to those trends. Fortunately, our product lines offer all those attributes in a single bottle.”

Citing bagged salad as an example of an effective, timely response to consumer demand, Brandon Steele, vice president of marketing for Fresh Gourmet brand croutons, said, “The consumer trend toward convenience and time-saving products has really been good for the produce department and products like our croutons. Packaged lettuce is a little more expensive, but that’s what consumers want.”

Steele said such symbiotic relationships as croutons with bagged salad greens represent a “win-win deal” for manufacturers and produce retailers. Raymond agreed, saying “The best thing that ever happened to refrigerated dressings is bagged salads. These fresh, pre-cut, pre-washed greens in unique blends are so easy for consumers. Shoppers grab their gourmet salad blend at the same time they grab their gourmet dressing. Together with produce, we’ve made salad a convenience food!”

“The whole convenience trend drives a lot of the tie-ins we offer in our stores,” said O’Brien. “Customers have come to expect complementary products to be displayed together, and we’re all about serving customers.”

While some manufacturers like Fresh Gourmet and Saco Foods focus on a single produce department product category, others provide one-stop shopping for a full complement of produce tie-ins. For example, after starting more than 40 years ago as a restaurant-brand salad dressing, Litehouse Foods has expanded to its current offering of hundreds of produce tie-ins, including vegetable and fruit dips, fruit glazes and sauces. Likewise, after starting with dressing produced in the kitchen of a family restaurant, T. Marzetti has developed dips, fruit glazes, croutons—even a bananas foster sauce—to add to the produce department mix.

A distinctive brand with a strong following can help differentiate one produce department and its retailer from another, making it the store of choice for brand enthusiasts. Brand loyalty is so strong for SASS dressings, Raymond’s mother occasionally fields calls from friends who want her daughter to see that retailers replenish their stocks. “My mother’s friends in San Antonio call and tell her, ‘The Central Market on Broadway is out of Sesame Garlic,’ so she’ll call me and I’ll contact our broker. We’re very fortunate to have such loyal customers—people who go to extraordinary lengths to find our products and scream if we’re not available where they usually find us.”

In with the New

Although the variety and availability of fresh produce continue to grow, companion products offer many more opportunities to keep new and different product offerings flowing steadily into produce departments.

“The last new vegetable we introduced was broccoflower, and that’s been out for ten years,” said Jim Weber, produce supervisor for Econo Foods. The Iron Mountain, MI, chain has six stores in Michigan and Wisconsin. “We always want something new, and these companion products are a great way to accomplish that.” For Weber, the most recent “something new” is a line of fresh-squeezed, refrigerated pomegranate juices.

“You have to keep reinventing yourself,” said O’Brien. “People want to try different things, so we try and keep our department exciting by offering new items.”

“New products are the lifeblood of a grocery store,” observed Steele, “and we’ve responded to consumer demand by continuously expanding the Fresh Gourmet line. On the flip side, you have to weigh all those new varieties against the practical issue of space. You want to expand your brand, but there are only so many facings you can get. You always expect to cull products that don’t have the movement.”

At a time when a growing number of produce items are available year-round, tie-in products play a particularly useful role in seasonal promotions. “It’s wonderful so many produce items are available at good prices and quality year-round,” noted McCormick, “but the customer has lost some of the sense of anticipation that used to come with different seasons. We can bring back the spirit of the seasons with displays and demonstrations that tell the customer what time of year it is and what’s important.”

Useful as they are as promotional programs, produce people sometimes worry their departments are being overtaken by tie-ins. “Sometimes the proliferation of non-produce in produce goes too far,” said Sanna. “Then you hear cries of, ‘If it doesn’t grow, it’s got to go!’ or ‘If it ain’t green, it can’t be seen!’ But in time, things come around and the natural order of produce-related products returns.”