GREENING THE LABEL

The produce department is receiving a makeover, as aisles that were once filled with nameless produce commodities begin to sport private-label insignias.ntity; it is also helping to give retailers a higher profile in the minds of shoppers."Supermarkets, in trying to find a basis on which to differentiate themselves from their competition, can in fact look at [produce] as a place to accomplish it,"

The produce department is receiving a makeover, as aisles that were once filled with nameless produce commodities begin to sport private-label insignias.

ntity; it is also helping to give retailers a higher profile in the minds of shoppers.

"Supermarkets, in trying to find a basis on which to differentiate themselves from their competition, can in fact look at [produce] as a place to accomplish it," said Sharoff.

The move by retailers to brand their produce departments is supported by recent studies, cited by Sharoff, that show produce is the No. 1 reason shoppers patronize a particular supermarket. Their decisions are based on such factors as the freshness and quality of fruits and vegetables.

"You can't do it with nameless fruits and vegetables," he said. "You have to create a branded environment whereby the fruits and vegetables that you offer are associated back to you, the retailer."

He said he believes the trend will not only help retailers merchandise more produce, but will also benefit the consumer because of the increase in selection.

"It will probably expand the types of produce offered to the consumer over the next three to five years," he said. "I think it's going to dramatically change how the produce department is arranged, presented."

Spartan Stores, Grand Rapids, Mich., is one retailer that has found success in merchandising store-branded produce.

According to Mike Enzinga, produce sales coordinator for Spartan, sales have been flourishing due to "the consistency and the quality" of its private-label line.

"The value we've added is that we set the standard for grade; it's a controlled grade and a controlled pack," said Enzinga. "So, it's not an issue of price, it's more of quality and consistency. "

Spartan has built its private-label program department by department. As the wave of private-label goods continued to wash over the store, it finally broke over produce in 1992.

Enzinga said the first produce items to receive the Spartan label were potatoes and birdseed. He said the produce department's private-label program has continued to grow at the same speed as the other departments. The mix now includes apples and celery, and the category is continuing to generate demand, setting the stage for further product introductions, he said.

Spartan's use of a private label in produce has allowed the company to craft a unified image throughout the store,

"[Private label] ties in the Spartan name throughout the whole store," said Enzinga. "It's something that they can't get anywhere else. It's a recognized label from grocery through produce. [Consumers] recognize and understand the quality of it."

Enzinga said that each category plays its part in promoting the other, even though the categories may be unrelated.

Further enhancing the prominence of the Spartan brand name are the individual employees who are trained to merchandise the branded products.

"With each new item that we've added, we've shown [our employees] the label and the product and explained why it's able to be packed in a private-label," said Enzinga. "We show them the difference in the grade standards that we set on that item."

Another wholesaler/retailer that has recognized and filled the demand for private-label items is Oklahoma City-based Fleming Cos. It began delivering bagged salads to its retail customers last summer.

According to Piper Jaffray's January 1999 report, The Functional Food Chain, sales of prepared salads topped $1 billion in 1997, the latest year for which annual statistics are available. It marks a 16.5% increase over 1996 figures.

Likewise, in a separate report compiled by Information Resources Inc., Chicago, called Economic Times and Trends, sales of fresh salad and coleslaw kits hit $584.4 million in the third quarter of 1998, a 68% increase vs. the third quarter of 1995.

Currently, Fleming distributes its private-label line of ready-to-eat salad mixes to a majority of its more than 3,000 supermarket customers. It offers five salad varieties under the Nature's Finest banner: garden, Caesar, classic Italian, coleslaw and baby spinach.

The salads are sent to the retailers ready-to-shelve, packaged in breatheable, laminated bags that are designed to keep the product flavorful for 14 days. The bags are also stamped with the U.S. Department of Agriculture's "best if used by" date.

According to Don Sieling, national accounts manager of retail for Salinas, Calif.-based Tanimura & Antle -- Fleming's packer for the Nature's Finest line -- retailers have experienced 20% to 30% volume increases with private-label produce and have gross margins higher than national brands can harness.

"If the quality is second to none, than why not have your own store brand?" he asked. "Private label can work with the perceived national brand sitting next to or by itself."

Sieling said that retailers are also finding it successful to offer a number of choices within one category to increase consumer interest. "We are finding it better to have a family of products, at least five or six items, as opposed to one or two," he said.

For retailers hesitant to take on a private-label bagged-salad program, many are turning to companies that offer turnkey operations, like T&A. Sieling said his company has helped retailers throughout North America establish a program either under a store-brand or under T&A's label, Salad Time Farms.

Conversely, retailers looking to bring in an already established national-branded bagged-salad program can choose from a number of companies that are now entering the fresh-salad arena.