Produce Business ‘Packaged Nuts Build Produce Department Profits’

Feature Writing

Packaged Nuts Build Produce Department Profits

With substantially higher price points and longer shelf life than most produce department items, packaged nuts can generate increased sales volume and healthier profit margins for savvy retailers who merchandise them effectively.

“Nuts can sell for $2.99, 3.99 or 4.99 a package,” says Craig Steiner, general manager of produce, gifts baskets and the floral shop for Jungle Jim’s Market, a 300,000-square-foot specialty store in Fairfield, OH. “We don’t have that many rings of that size in the produce department, so packaged nuts are a big-time volume-generator for us.”

“Nuts have no shrink,” adds Matt Denucci, northeast sales manager for North Carolina-based Hampton Farms Peanut Company. “With lettuce, you might throw away 15 percent, but with peanuts, you don’t have to worry about turning the merchandise so often. That means relatively low maintenance and consistently high margins.”

The Display’s the Thing

Historically, the peak season for nut sales has been the Thanksgiving and Christmas holidays. “Packaged nuts sell all year, but they do 40 percent better for us between September and the end of January,” says Steiner. “Nuts are a planned purchase around the holidays because people are doing a lot of baking and cooking. The rest of the year, they’re more of an impulse purchase, so you have to keep them out in front of people.”

Within Jungle Jim’s acre-plus produce department is a 20-foot permanent display of packaged nuts directly across the aisle from the bulk nuts. “We have an automatic electric nut cracker for the bulk nuts that makes a lot of noise and draws attention to the nut area,” says Steiner, who supplements the permanent fixtures with additional themed displays throughout the year. “We make massive, high-profile displays—eight to ten feet long and six to eight feet in the air. The lighting is very good, and the signage is very effective. It really makes a difference in sales beyond the holiday season.”

“If nuts aren’t visible and readily available, customers are not necessarily going to seek them out,” notes Tim Cannon, director of marketing for Diamond of California, a co-operative of walnut growers founded in 1912. Besides walnuts, the company markets other nut varieties for cooking and baking under the Diamond brand. In summer 2004, the company completed national rollout of Emerald of California, a line of premium-quality snack nuts. Diamond also markets premium-quality walnut halves, whole almonds and pecan halves under the Harvest Reserve brand, described by Cannon as “a higher end brand specifically developed for produce departments.”

“Retailers sell more pistachios if they merchandise them prominently with a display,” maintains Teresa Keenan, marketing manager for California-based Keenan Farms, Inc. The company markets pistachios and almonds under the Keenan Farms brand and provides private label packing services for a few large retailers, mass merchandisers and drug store chains. “Few customers will have pistachios on their shipping lists, and while they won’t search the store for them, if a retailer places an attention-getting display in a high-frequency area, pistachios will sell.”

“Peanuts are an impulse item,” echoes Terry Williams, vice president of sales and marketing for Jimbo’s Jumbos Peanut Company in Edenton, NC. “People don’t go into the store with peanuts on their grocery list, but if they see peanuts, they’ll buy them. The main thing is to get them off the potato and onion aisle and put them at eye level.”

Appealing to Sports Nuts

Aside from holiday-themed displays, displays featuring major sporting events are especially effective in promoting packaged nuts.

“There are times of year around major sporting events—the Super Bowl, the World Series, the NCAA finals, the Kentucky Derby—when we concentrate on sports-related displays,” says Williams.

“Promotions tied to sports and sports-related events are always successful and can be done all year,” agrees Keenan. “Whether you promote taking nuts along to the big game or eating them while sitting in front of the TV, nuts and sports are a really good combination.”

Hampton Farms stimulates spring and summer roasted peanut sales to sports fans through an exclusive licensing agreement with Major League Baseball. “We have a bag featuring the logo for every single team,” says Denucci. “They come in stackable display shippers designed to drive impulse purchases.”

Appealing to Health Nuts

As of July 2003, the U.S. Food and Drug Administration has permitted a qualified health claim for nuts, stating, “Scientific evidence suggests but does not prove that eating 1.5 ounces per day of most nuts as part of a diet low in saturated fat and cholesterol may reduce the risk of heart disease. See nutrition information for fat content.”

Also prominent on the FDA’s heart-healthy list are fruits and vegetables containing fiber, making in-store promotions based on the heart-health benefits of fruits, vegetables and nuts a natural for produce departments.

“We have a health campaign currently running in trade publications as well as several consumer publications,” notes Angela McEntee, marketing manager for produce for Illinois-based John B. Sanfilippo & Son, Inc. The company markets both shelled and in-shell nuts under brand names including Fisher, Evon’s and Sunshine Country. “Our message promotes the FDA’s qualified health claims for nuts.”

“A lot of our point-of-purchase displays carry a healthy-lifestyle message, especially in and around salads,” says Cannon. “So many studies have shown that nuts are good for you, and they’ve enjoyed such great press that health-conscious people have really picked up on the health benefits of nuts. A lot of those same people shop in the produce department.”

“We like the positive nutrition message of having pistachios in produce,” adds Keenan. “Consumers are searching for healthy food alternatives, and nuts fit nicely with produce as a heart-healthy ingredient or snack.”

Although health is a year-round concern for many consumers, health-related promotions during February—American Heart Month—offer an especially good opportunity for grocers to leverage the increased consumer awareness of heart-health messages while extending the holiday momentum for nut sales.

Promoting Product Tie-Ins

Packaged nuts lend themselves particularly well to product tie-ins and cross-merchandising, both within and beyond the produce department.

“When consumers think about a salad, they think about lettuce and other produce,” says Cannon. “If nuts are right there, people remember nuts are a nice addition to a salad, too.

“Consumers also know nuts make a great topping or garnish on a variety of dishes and can add texture and taste to vegetable dishes, casseroles and other items they prepare,” Cannon adds. “A produce department might reinforce that message by putting sliced almonds next to the green beans or walnuts next to the fruits people use in fruit salads.”

Sanfilippo recently introduced Fisher Salad Buddies, a four-variety line of raw, unflavored nuts packaged in 3.5 and six-ounce cans with shaker tops. “We did our test-marketing in the salad dressing aisle, but Salad Buddies would also be ideal for merchandising alongside packaged salads,” says McEntee.

“Many stores maximize results when they cross-merchandise us in other departments,” notes Williams, who says packaged peanuts move well in beer and soft drink aisles. “We have also seen sales peaks with tie-ins to apple cider,” he adds.

“The more progressive retailers routinely cross department lines and put complementary products together,” notes Cannon. “Just as you can market nuts in the beverage aisle, you can market wine and cheese with grapes and nuts in the produce department.”

Choices, Choices

Within produce departments, Williams has found retailers who offer consumers more choices enjoy the best results. “We see an increase in sales when retailers offer both a packer’s label and their own private label, and bulk as well as packaged peanuts,” he says. “Private label alone doesn’t drive nut sales, and a packer’s label alone doesn’t drive sales, but when you have both, we’ve seen sales increase from 18 to 22 percent. Consumers like to have options, and the more options a grocer offers, the more sales they’re going to make.”

With private label, Williams says, “Price points are key. If they take a ten-ounce store-brand bag and retail it at 99 cents instead of $1.19, that gives the consumer a mental green light to purchase.”

Cannon says while many grocers avoid stocking duplicate items in multiple departments, produce managers reluctant to stock nuts also available on the snack aisle may be missing an opportunity for increased sales.

“We started our line of Diamond brand glazed nuts in the produce aisle, but we found they did much better under the Emerald brand in the snack aisle. Because of the way many retail systems are set up, many stores no longer stock glazed nuts in produce because they don’t like to stock the same or similar items in multiple departments.

“But instead of dropping glazed nuts in produce, we’d like to encourage retailers to offer consumers the opportunity to buy them in both departments because the health-conscious consumer who buys nuts in the produce department may avoid the snack aisle, and the snack-aisle shopper may skip the produce department.”