Category Spotlights

Bananas are the No. 5 category in the produce department.  The category continues to succeed during good times and bad, including recent economic recessions and supply shortages.  Their department presence and resilience can be attributed to their inherent affordability, effective promotional and pricing strategies and a continued department emphasis on one of America’s favorite fruits.

 

Bananas:  Year in Review

Bananas accounted for 5.8% of produce department sales during the 52 weeks ending May 28, 2011, and sold an average of $2,439 per store per week nationally, up 0.8% compared to the prior year. 

Regular bananas, with a 0.6% sales increase in the past year, comprise the majority of category sales.  Specialty and other bananas, both with significantly smaller shares, grew sales beyond the category average with 5.8% and 7.4% increases respectively.  

Although banana sales did not grow substantially in the latest 52 weeks, banana sales over the past five years had steady growth, up 18.3% from 2006 to 2010.

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Specialty bananas, which include plantains, baby, red, green/guino, burro and manzano bananas, was the only category to increase  average retail price from last year, up 3%.  Promotional price increased even more dramatically (13.8%), yet total volume for specialty bananas still grew 2.8% compared to the prior year.

Bananas are available in the produce department year-round, but sales trended higher in spring and early summer months during the latest 52 weeks.  Peak banana sales occurring the week of April 23 at $2,778 per store; this was more than $300 higher than the yearly average.

Though still a relatively small segment within the banana category, organic bananas are steadily gaining share from conventional.  Sales of organic bananas grew 6.3% over the latest 52 weeks.  Organic specialty bananas are leading the way in this trend, up 46% compared to last year.

Evaluating regional differences in bananas, the East region led sales with $3,196 per store per week.  Although the East region had the highest sales, it was also the only region to decline in dollars for the latest 52 weeks, down 0.7%.  Comparatively, the national average was steady with last year.  The Central region had the largest regional gain with a dollar increase of 2%.

 

Category Management Toolbox:  Effective Pricing and Promotional Strategies

Despite a 10% supply shortage in the past year, the banana category maintained strong performance in the produce department.  

The supply shortage began in fall 2010 and continued through the first half of 2011, due to inclement weather in Central and South America.   Guatemala, Honduras and Nicaragua were heavily impacted by the weather, and these countries are primary growing regions for the U.S.

As a result of the shortage, suppliers and retailers monitored promotions carefully to manage supply constraints.  Historically, fewer promotions occur in the first quarter of the year when supply is at its lowest.  This trend was magnified during the shortage.  In the first quarter of 2011, promotions declined considerably, with 2.6% of volume sold on promotion compared to 4.9% in the first quarter of 2010. 

Along with the reduction in promotions came a decline in the number of banana circular ads.  The ad count for bananas across the U.S. declined 32.3% in Q4 2010 and 23.5% in Q1 2011. 

Banana prices were forced upward during the supply shortage.  Both the non-promotional and promotional average retail prices increased steadily since Q4 2010, with a minimal 2 cent gap between the promotional and everyday prices in April and May 2011. 

The price increases did not steer consumers away, as bananas continued to be a very inexpensive product relative to other fruit categories.  In 2011 (to date through May 28), only eight out of 22 weeks posted declines in average volume sales.  Average dollar sales have grown week-over-week since the week of November 6, 2010.  A similar consumer response was seen during the 2008 shortage, where volume remained flat despite a 20% increase in average retail price.

The supply shortage is now over, presenting an opportune time to generate excitement for the category through promotions in late summer and early fall. 

 

Consumer Insights

Consumers continue to look for new and interesting produce items, especially those that have a strong value proposition.  Though bananas are a staple in many households, specialty bananas offer an opportunity to incorporate more variety into consumers’ fruit purchases.

Plantains, a staple in tropical regions of the world, are slowly growing in popularity in the U.S.  Ninety-four percent of supermarkets carry the specialty banana.  In the 52 weeks ending May 28, 2011, plantains sold an average of $58 per store per week nationally, up 7.1% compared to the prior year. 

Plantains have a significant opportunity to grow sales in the U.S. by increasing their household penetration and implementing more effective promotional strategies.

According to an analysis of loyalty card data from Perishables Group FreshFacts^® Shopper Insights powered by Spire, regular bananas had a U.S. household penetration of 84.7% during the 52 weeks ending March 26, 2011.  Specialty bananas, for which plantains account for 78% of sales, had a household penetration of 6.1%; however, this was an increase of 13.1% compared to the prior year.  Continuing to grow the number of households purchasing specialty bananas will consequently have a positive impact on plantain sales. 

Historically, plantains have seen little promotional activity to build excitement or entice new consumers.  In the latest 52 weeks ending May 28, 2011, only 6.2% of plantain volume was sold on promotion.  In addition, current promotional strategies have not proven effective at gaining new consumers.  Over the latest 52 weeks, subsidized volume for plantains was 80.2%, meaning most consumers would have purchased the product despite the promotion. 

These factors present the industry with an opportunity to bring new life to plantain sales by communicating their value and bringing in new consumers.

Plantains have many attributes that can be emphasized in promotion and merchandising strategies to drive new consumers and repeat purchases:

• Plantains are a versatile fruit that can be eaten in a variety of ways – raw, fried and baked – based on ripeness
• Plantains are an affordable fruit option, with an average retail price of $0.49 per pound
• Plantains are a great source of fiber and vitamins C and A. They are also high in vitamin B6, magnesium and folate. 

Usage and recipe suggestions are important to help consumers purchase the right plantain based on their desired usage.  Their versatility in preparation methods can also entice consumers to build purchase frequency.  Creating a destination plantain display, along with other tropical fruit, can help U.S. consumers see why the rest of the world is so smitten with plantains.