LIQUID ASSETS

Healthy is the key word, and the prognosis is good for the likes of pomegranate juice and other selected, natural juice flavors, retailers told SN.It's a new category that has sprung up in supermarkets' produce departments, and it's creating new sales, they said. Hitting the horizon about two years ago, the sub-category of refrigerated juices that includes Pom Wonderful pomegranate juice, Wyman's

Healthy is the key word, and the prognosis is good for the likes of pomegranate juice and other selected, natural juice flavors, retailers told SN.

It's a new category that has sprung up in supermarkets' produce departments, and it's creating new sales, they said. Hitting the horizon about two years ago, the sub-category of refrigerated juices that includes Pom Wonderful pomegranate juice, Wyman's wild blueberry juice, and some of Odwalla's newer flavors has catapulted in the last year. In fact, Information Resources Inc., Chicago, shows the sub-category it calls "refrigerated all other juices" increased more than 200% in dollar and tonnage sales in the 52 weeks ending Sept. 5. That's in the face of a 3% decline in total refrigerated juices. Pom Wonderful, clearly taking the lead, was up more than 500% from the previous year, with $38.7 million in total sales.

Granted, such growth is from a fairly small base a year ago, but the whole category is still on the rise. Retailers are cultivating the opportunity.

"We're looking to grow sales of these juices, and to get them into more of our stores. It's one of the key categories we're pushing. It's definitely a growth category with real potential," said Joe Ramirez, spokesman for Penn Traffic, Syracuse, N.Y., which owns and operates 107 supermarket units in the Northeast under the banners of P&C Food Markets, Bi-Lo Foods and Quality Markets.

"We've created our own category, which internally we call 'healthy juices' for these products. Most of them are brought in through produce. The preferred way to merchandise them is in upright, refrigerated cases in the produce department. Merchandising will become more uniform store to store as it goes on," Ramirez added, stressing the importance of the newcomers.

One New York City-area retailer told SN his sales expectations for Pom Wonderful have been fulfilled many times over.

"Pom Wonderful is doing better than we had ever expected. I guess I could say maybe 300% better than we had thought it would. It's a category unto itself that has enhanced produce sales. It's all incremental sales," rhapsodized John Catsimatidis, chairman and chief executive officer at 48-unit Gristedes, New York.

Gristedes merchandises Pom Wonderful original and five Pom Wonderful blends on the top shelf of the refrigerated produce case, and would gladly add more brands as they become available with vendor support, Catsimatidis stated.

Pom Wonderful's advertising in the consumer media gets much of the credit for booming sales in supermarkets. Catsimatidis particularly praised the vendor ads.

"The ads have raised consumer awareness, and that's always 70% of the problem -- or solution. In this case, the solution. I think it's great that we're able to sell a product like this in the supermarket. Health food stores and drug stores have been cannibalizing our business. So it's good that we have this product."

Other retailers, too, credited the consumer media ads for the juice line's rapid rise.

"It's very, very important," declared John Odahara, produce manager at Lazy Acres Market, Santa Barbara, Calif. "It's great that there are the healthy aspects of the product. They're pushing the antioxidant properties, and that these are good, pure products." Penn Traffic's Ramirez agreed. "They [consumer ads] tell about the product's antioxidant properties, and that's striking a chord with consumers."

The pomegranate company has also been successful on the public relations front, landing articles in leading consumer magazines. Restaurant chefs have taken up the pomegranate. At least one New York City Mexican restaurant chain features a margarita containing Pom Wonderful.

It was a deliberate and strategic move on the part of Pom Wonderful to go to market with the juice in supermarkets first, not in specialty stores or in health food stores. The Los Angeles-based company, which also markets fresh pomegranates, wanted to get mass exposure quickly, officials there revealed.

"We started in California at Ralphs two years ago. First, we went into about half their stores. But within a month, we were in all of them. They said their customers were asking for Pom Wonderful. We could have started with a specialty store to establish our identity first, but we decided to go after everybody right away: Kroger, Albertsons, Safeway.

"We did this in waves -- California first, then the Midwest, then New York. But in every case, with a marketing support plan around it that included print ads, billboards, even some radio," stated Kurt Vetter, Pom Wonderful's vice president of sales.

That support plan probably has helped establish wide distribution quickly, too, which can be a high hurdle for upstart products.

Rudy's Newport Market in Bend, Ore., wanted to carry particular juices in the category, including the Odwalla brand and Pom Wonderful, for quite a while before it was able to source the products.

"Our biggest problem is that we're off the beaten path, on the other side of the Cascade Mountains. We had seen these products at shows, but we couldn't get them because the distribution route didn't go by here," lamented Debbie Dory, co-owner of the single-unit, upscale market.

Now Rudy's has an upright, refrigerated case of Odwalla juices in produce, and has recently added Pom Wonderful in the healthy section of its signature beverage department.

A more recent newcomer to the category, Just Strawberries -- a pure strawberry juice drink -- has had distribution problems to overcome. Indeed, retailers told SN they've heard good things about the product, but logistics have kept them from sourcing the drink. The product's parent company, California Giant, Watsonville, Calif., is about to remedy the situation. It has named a former Del Monte Foods executive, Randall Freeman, to the new post of vice president of sales, advertising and marketing for fruit products. One of his major responsibilities, Freeman told SN, will be to expand sales of Just Strawberries juice drink across the country.

Retailers are doing their part to promote healthy juices. In fact, Gristedes gives Pom Wonderful a spot in its ad circular at least once a month. "We allow enough space to describe the product. People don't necessarily know what Pom is," Catsimatidis remarked.

Penn Traffic, too, frequently promotes its healthy juices. The company's ad circular last week spotlighted Bolthouse Farms juices.

"We carry several of Bolthouse's flavors, as well as five of Pom Wonderful's six varieties. We will also soon be adding some cranberry-based juices from Zeigler [Zeigler Beverages, Lansdale, Pa.]," Ramirez reported.

At supermarkets, the best bursts of sales for Pom Wonderful juice have come when the juice is paired with fresh pomegranates in store ads, Vetter observed.

More will be seen this quarter as the pomegranate harvest gets under way, he added. Last year, in mid-autumn, SN noticed some retailers devoted a large amount of space in their ad circulars to that pairing of fresh pomegranates and Pom Wonderful.

Retailers in their circulars touted the healthful properties of pomegranate juice.

King Soopers, for instance, dedicated about a third of a page to pomegranates and the juice, with a large-type message that said:

"Did You Know? The Antioxidant Superpower. Pomegranate juice is one of nature's most powerful antioxidants. Pom Wonderful pomegranate juice has more naturally occurring antioxidant power than any other drink."

A photo of a basket of pomegranates sat above the blurb, and a row of bottles of Pom Wonderful juices was below it.

Ukrop's, Richmond, Va., devoted a third of a page to the duo, too. Under a headline that said, "Fresh From Ukrop's Produce Department," there were photos of Pom Wonderful bottles, whole pomegranates, and a heart-shaped arrangement of colorful pomegranate seed pods.

In addition to announcing special prices for the products, the ad carried these messages: "Pomegranates are loaded with antioxidants" and "Visit www.pomwonderful.com for great recipes!"

That this group of healthy juices has become such a star is ironic, considering how the juices got started at retail, industry sources told SN.

"These fresh juices found a spot in produce because nobody else wanted to deal with them," explained Dick Spezzano, principal, Spezzano Consulting Service, Monrovia, Calif.

"In the beginning, most were DSD [direct store delivery] and they had a 14-day shelf life," Spezzano added. "Dairy didn't want that. Since then, the vendors have begun pasteurizing them, giving them a little longer shelf life,"

The birth of these juices came about because growers were seeking ways to sell more of their product, and it is working, Spezzano said.

"Look at Bolthouse Farms [Bakersfield, Calif.], one of the largest carrot growers," he said. "They wanted to sell carrot juice, but realized quickly that to get noticed, they would have to add other juices. So they came up with a whole line. Meanwhile, Pom Wonderful, the darling of the category, has had to add a lot of acreage to keep up with demand."

"[The category] started with very limited SKUs [stockkeeping units] of this type of juice, and has turned into anywhere from four to 12 feet of multiple-shelf displays in produce departments. It's a whole new juice category," he declared.

Shedding Light on Pomegranates

For a fruit that's been around for 5,000 years, the pomegranate hasn't had much press -- until lately.

If it hadn't been for Los Angeles-based Pom Wonderful, pomegranates would probably still be relegated to pepping up dried-flower arrangements and fall centerpieces.

Yet Pom Wonderful, which currently has 6,000 acres of California soil planted with the seedy, red fruits, has obtained great exposure for them in the consumer press in the last two years. That's a good thing because although consumers apparently love the company's pure, pomegranate juice, many are still puzzled by the fruit itself.

Recently, supermarket chains have been pairing the fresh fruit with Pom Wonderful juices in their ad circulars. Some are telling people what the fruit is and what part of it is edible. It's the seeds and their pods, surprisingly.

"Not everybody knows what a pom is. We put some description in our ads," said John Catsimatidis, chairman and chief executive officer at 48-unit Gristedes, New York.

Just a couple of weeks ago, Quincy, Mass.-based Stop & Shop featured the pomegranate in its ad circular's "produce tip of the week." The tip, which runs with a color photo of a pomegranate, tells consumers how to remove the seeds gently and efficiently.

Other supermarket chains are expected to offer similar explanations as this year's pomegranate harvest gets under way, industry sources said.