February, 2013 - Weeks 7 and 8 (Feb. 11 – 24) Weekly CFFA Merchandiser Report Central/Great Lakes Regions Allison Myers

General Market Overview

The past couple weeks have seen retail promotions focused around holidays, events and commodities. Valentine’s Day began the time period with strawberries as the primary produce feature along with roses, meats, shrimp and lobster. We then followed up with Lenten Specials which will keep the focus on fish, lemons and limes through the end of March. This week there are numerous retailers, including all of the banners and divisions, who are building promotions around NASCAR’s Daytona 500 race which is on Feb. 24th. However the biggest player in February continues to be the Idaho Potato Commission with its Potato Lovers Month contest. This national program gets participation from major retail organizations as well as independents across the country. It’s a “well-oiled machine” that began in 1990 and gets about 2500 display entries each year with more and more ads devoted to varietal potatoes.

As far as retail news goes the past couple weeks, there’s been discussion about the future direction of Supervalu and Albertson’s. AB Acquisition will be the new corporate name, and will have two divisions. LLC will oversee the banner stores while New Albertsons Inc. (NAI) will oversee Acme, and Shaw’s/Star. Supervalu just has commented their focus will be on “driving sales” at their 1950 stores which now includes 1300 Save-A-Lot discount stores as well as the more traditional chains of Cub, Farm Fresh, Hornbacher’s, Shoppers and Shop ‘N Save

The other news story is about considering a sale of its 200 stores based in North Carolina. Rumored to be interested include Ahold, Kroger and or it could simply be sold to a private equity firm.

We cannot ignore weather as cold and windy conditions on the west coast, in Mexico and Florida this past week caused a production slowdown for numerous vegetables as well as strawberries. Row crop vegetables (cabbage, tomatoes, cucumbers, carrots, etc.) could experience some price volatility through March and into April as will leafy vegetables.

My territory has seen a slight increase in retail ads for grapes, but it’s nothing compared to what we hope to see in March. Stone fruit ads have popped up, but not much regular attention except at and a handful of others. Off shore melons did get lots of space this past week with front page features, for the first time since last season. This week also saw quite a bit of blueberry attention as retailers are realizing they are approaching the end of the season and want to especially take advantage of pint movement as long as possible.

According to the USDA’s “Top Fruits as a Percentage of Total Fruit Ads”, apples are still getting 18%/19% of space. Oranges are about 10 ½%, strawberries were 10% for Valentine’s week and were 8% week 8, blues went from 7% to 6%, avocados stayed at 7%, pears went from 5% to 7%, cantaloupe went from 5% to 6%, grapes went from 4% to 6%, mangos went from 4% to 3%, grapefruit showed up at 3% and pineapples went from 4% to no mention at all.

Chilean Fruit Overview

The lack of aggressive promotional pricing for grapes continues to upset retailers, as they are going up against strong grape sales last February 2012. While most are aware that Mother Nature and Chile’s water problems have caused the decline in volumes as well as affected sizing of the fruit, they are simply disappointed. To exasperate the problem, retailers really had a strong California grape season and were hopeful the trend would continue. A few have commented that maybe the colorful gusset bags would have helped with more impulse sales this month. It’s the main reason they think their grape sales were so strong last summer, and there’s just not as much availability of it with the Chilean grapes. I think this will continue to be a topic of discussion until Chile makes the transition.

Stone fruit movement has been about average – reports are that eating quality has been good. Maybe a little better than last year, but that could be due to more jet fresh in my region. A couple wholesalers (Indianapolis Fruit in IN and H. Brooks in MN) are anxious to promote the non-traditional items (lemon plums or dapple dandy pluots) which are popular with some of their higher-end customers.

Grapes are finally starting to size up, especially whites, though reds are still smallish. Unfortunately, retailers have said that while the appearance is improving, taste has a ways to go. Of the numerous retailers that did have grape ads scheduled this month, many of them ended up moving them back later as the month went on and eventually cancelling them all together. Hopefully we will see lots of improvement in March as that’s the message I have been passing along.

Below: Hen House (KC) had $2.99 grapes on ad as their upper-income shoppers are more inclined to pay that price. The produce manager says he’s moving about 5/6 cases of reds a day and 3 or 4 cases of whites. Stone fruit has been even slower – maybe 4 cases a week each of peaches, plums and nectarines. On the right - last year, the local Target store did not have any stone fruit. This year, they have “limited supplies” at $1.99 on trays under their citrus display.

Retail Visits/Contact

Hy-Vee: based in Des Moines, . Have 234 throughout the Midwest in Iowa, , Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin. Talked with Bill Kelley (Asst VP – Produce Purchasing) about media tag as he had to pull his green grapes scheduled for the front page of Feb. 13th ad due to lack of supplies. This would have coincided with his TV tag in KC and Des Moines. He “hasn’t been allowed” to advertise grapes yet this season; need more aggressive pricing. Will be on ad with nectarines week of 2/20. This is the “tropical theme” ad and had planned to include as many Chilean items as possible, but just didn’t happen. Blues and plums will be in ad week of 2/27. Grapes are planned to be in 3/13 and 3/20 ads. Not sure if will have any more grape opportunities after that.

Meijer: based in Grand Rapids, Michigan. Is considered a “hypermarket” chain with many stores carrying non-food items similar to a . About half the company’s 200 stores are in Michigan, with additional locations in Illinois, Ohio, Indiana and Kentucky. Brian Coates (Sr. Buyer Produce Merchandising) will finally have his first grape ad of the year on March 3rd if all goes according to plan. Hopefully he’ll follow up with a second grape ad a week (or two) later. He has only been able to promote with in-store specials up until now. Last year he had 2 grapes ads in January, 2 in February and a 1 day sale in March.

Kroger – Central Marketing Area/Division: based in Indianapolis, Indiana with 140 stores. Had met with Mike Hodge (Produce Sales Manager) during January trip and had expressed interest in putting a contest together. Supplies haven’t allowed for promotion of grapes or stone fruit so far this season. Maybe had one grape ad. He had heard that “exorbitant costs” in January had raised fruit prices so much they couldn’t get ad lids. Can’t promote at $3.49 lb. Now he’s looking to maybe run a contest during March, or kick it off mid-March and go through mid-April to tie in with March Madness. The contest would be offered to his 8 districts, and we’d offer $1600 in winnings. As far as ads go, Mike had stone fruit scheduled for 2/21 to tie in with the TV tag the week of 2/25. But costs were too high and he had to pull it. They are featuring stone fruit in the departments, dominant on end-cap displays. Last year, produce got almost twice as much space in the Kroger ads as they do this year. Often had one front page item, a main feature on the produce page and up to 8 or 10 other items. Now he has about 5 conventional blocks and 2 organic blocks. Produce is on the page with meat, under that category.

Niemann Foods: based in Quincy, Illinois with stores in Illinois, Iowa and Missouri. Own and operate 40-plus stores, and also own some Cub Food and Save-A-Lot franchise. Working with Tom Phelps (Director) . Will be opening up their 42nd store in Springfield, Illinois early March and coordinating POS materials for the store along with some consumer giveaways (t-shirts) for the weekend Grand Opening. Also discussing timing of the Chilean Fruit contest, as he’s looking at two weeks possibly the end of March. Wanted to tie-in with the 10/$10 ad special, but unsure if he can include Chilean in it (like he did last year). Talked about maybe going the last week in March and the first week in April if supplies are more promotable. Have some of Oppy’s stone fruit bins in stores, and on ad Feb. 17 to 23 with peaches, plums and nectarines.

AWG (Associated Wholesale Grocers): based in Kansas City with divisions In Oklahoma, Missouri, Texas, Mississippi and Louisiana. Tim Grass (corporate procurement) reports in mid-February that the grape market is slowing coming off and volumes are finally picking up weekly. They were on ad at some stores for a week the first of February, and should start “punching it again” with ads that break the last day in February and/or first week in March. They will continue to promote through March as supplies become more available. Stone fruit has been staying pretty steady, and is “hit and miss” on ad, but quality has been very good. The Oklahoma City division (on a jet fresh program) expects to move about 300-400 cases during the ad week of Feb. 20 – 27. The Springfield division (not on a jet fresh program) expects to move 600-700 cases during the same week. On a separate note, the video Tim shot in Chile will helpfully be used next month in one of their Web Blasts. They were trying to use it first for a blueberry deal, but it looks like that will have to wait until next season.

The ad below on the left is Stores – operating about 50 supermarkets in Oklahoma and Kansas. The ad on the right is Harps with 70-plus stores in Arkansas, Missouri and Missouri. Peaches and Nectarines are in both ads.

Fareway Stores – based in Boone, Iowa. Have 104 stores in Iowa, Illinois, Minnesota and Nebraska. Known for their meat department, they are now also looking to emphasize produce. Pete Thomsen (buyer) says stone fruit is a “tough sale” in the winter but grapes do well. Unfortunately, they have not had supplies to promote but plans are for an ad or two in March. Generally focus on staple items that are less expensive for many of their rural customers. We talked about the health benefits, especially of grapes, and need to better coordinate efforts with nutritionist. Will follow-up with Chris Boothe (Director), and look at opportunities for rest of season.

Supervalu – Northern/Western Division (in Hopkins, Minnesota): working with Jim Sarcletti (Director) and Kathy Kantos (Sales Merchandiser). Service corporate owned Cub and Hornbachers, as well as hundreds of independents including Niemann Foods/County Market and stores that use the Supervalu name in Iowa, Indiana, Michigan, Minnesota, Montana, North Dakota, Ohio, South Dakota and Wisconsin. Very interested in developing a Chilean promotion and/or helping educate their customers (trade and consumer) about Chilean fruits. They just introduced a new online resource, www.fresheverydayproduce.com, and I have sent Kathy links to all of our materials, which she plans to use to help populate their site. Just had blues on ad (week of 2/10) and future ads include: Grapes on 2/24; Blues on 3/3; Grapes on 3/10 and Blues on 3/17. Suggested they promote stone fruit – big category that needs attention.

Promotions

Nash Finch: based in Edina, Minnesota. Is the second largest wholesale food distributor in the US serving independent retailers and military commissaries in 36 states. Their produce distribution is more limited with 6 DC’s. Nash also operates stores under their own banners including Avanza, Bag ‘N Save, , Family Fresh and No Frills. Working with various personnel to coordinate efforts but primarily Jim Drew (Procurement Manager) and Debra Milner (Berry Buyer). Have also received numerous calls and emails from the stores they service in surrounding states. They are in the middle of a Chilean Fruit contest which began on February 3 and goes to March 2nd. It’s open to their 75 retail stores as well as independents which could see as many as 250 entries. It’s the first time Nash has run a Chilean promotion like this and is anxious to build upon it in the future. Had hoped to have more promotable grape supplies for contest period, but didn’t work out unless they decide to extend the contest. Biggest problem has been with getting POS ordered and delivered as we were reprinting materials when contest began. The contest has helped their stone fruit business as it’s been minimal previously, and has also had very good success with blues. Could come back with a “grape kicker” if we see that keeping the promotion running another month will bring in strong new business.

Marsh Supermarkets: based in Indianapolis, IN with just under 100 stores. Working with Dave Rhodes (Director) and Tim Duerstock (Buyer). Kicking off a Grape & Stone Fruit contest from February 15 through the end of March ($2500 in prizes). The Feb. 14 – 20 ad (below left) highlighted stone fruit and their web update featured this fresh fruit recipe.

H. Brooks: premier 110 yr. old wholesaler in Minneapolis, Minnesota. Working with Scott Schaeppi (VP) and Nina Haag (Sales & Marketing) to develop a Chilean promotion. It is featured on the front page of their Feb. 13th newsletter which announces the contest ($750 in prizes) running Feb. 17 to March 16. We will be getting weekly coverage in updates for the next four weeks. During first contest week, grapes were on ad at many of their customers at $2.49 lb.

Indianapolis Fruit: based in Indianapolis, major wholesaler servicing accounts such as Niemann Foods, Buehlers, Martins, Sendiks and more. Coordinating efforts with John Cunningham (Sales and Marketing), Dan Corsaro (VP), Antonia Mascari (Mrktg Coordinator) and Ed Kopenec (Sr. Buyer). Each week a “what’s hot” email goes out, and this issue featured Lemon Plums. We have also made our POS available to all their customers, and they have supplies to send out whenever an order is fulfilled. Indy’s niche includes organics as well as new varieties, as they always want to bring their customers the “latest and greatest” which may not always be available from the mainstream retailers.

This week I sent out an eblast to my distribution list which began “as Chilean blueberries start to diminish, grape supplies finally get the spotlight”. It went on to say “from week 10 (March 4th) onward, look for strong promotional grape opportunities and give shoppers one of their top snack favorites. Lots of creative tie-ins such as Spring Forward with Daylight Savings, March Madness, St. Patrick’s Day, Passover, Easter, April Fool’s Day, Final Four and Tax Day.” I included some supply/availability information about reds and whites, parts of our “In the Loop” correspondence and the recent press release highlighting the “Glueten Free Crepe” recipe. Still waiting on specific contest interest from:

Fiesta Mart/Grocers Supply (Texas) – 51 stores; would be a Grape Extravaganza AWG-Springfield: have run a Chilean Fruit contest the past couple years AWG-Oklahoma City Divisions: did a Chilean Fruit contest last season

Additional contact has been made with the following retailers and promotions have been pitched to: Coborn’s (based in St. Cloud, MN with 44 stores) – in touch with Brian Hornstein, Director Roundy’s (based in Milwaukee with 159 stores under the Pick ‘n Save, Copp’s, Metro Market and Rainbow banners. Also have Mariano’s in Ill, opening its 9th store early March). Talking with Peter Crawford (Dir) and Dave Konieczka (Buyer) Martin’s Supermarket (based in St. Bend, IN) with 21 stores. Talking with Ed Osowski, Director Schnucks (based in St. Louis with 100 stores) – did grape demos last season. Talking with Jim Wood Brookshire Bros. (based in Lufkin, Texas with 70 stores) – talking with Darrell Brandon, Category Manager Riesbecks (13 stores in Ohio): talking with Pat DeMuth who just took over as Director/Manager Kroger – Houston Divisions: talking with Russ Richardson about a Grape Contest (238 stores in this division)

Regional Pricing Report – USDA Summary – Midwest Feb. 15th Feb. 22nd Black Grapes: 11 ads - $2.49 avg. 62 ads - $2.66 avg. Red Grapes ` 184 ads - $2.48 avg. 536 ads - $2.18 avg. White Grapes: 55 ads - $2.21 avg. 104 ads - $2.60 avg. Nectarines 462 ads - $2.49 avg 536 ads - $2.41 avg.. Peaches 454 ads - $2.51 avg 316 ads - $2.16 avg. . Plums: 410 ads - $2.52 avg. 363 ads - $2.15 avg.

Regional Pricing Report – USDA Summary – South Central Black Grapes: 18 ads - $2.82 avg. 30 ads - $2.50 avg. Red Grapes ` 721 ads - $2.89 avg. 439 ads - $2.65 avg. White Grapes: 366 ads - $2.96 avg. 298 ads - $2.94 avg. Nectarines 225 ads - $2.51 avg 618 ads - $2.37 avg.. Peaches 228 ads - $2.57 avg 592ads - $2.29 avg. . Plums: 358 ads - $2.82 avg. 235 ads - $2.13 avg.

Tradeshows I will be attending the Southeast Produce Council Expo March 1 – 3rd. While held in Orlando, this show gets a strong Midwest turnout as many retailers are looking to escape winter. Last year, about half of the retail/foodservice turnout was from the Central/Great Lakes region and as the show continues to grow it’s expected that will be the same next season.