Research Reports

It isn’t often that trends converge for the benefit of food retailers.

But that’s just what is happening today, as the demand for healthier products meets a passion for ethnic foods, creating fertile ground for Hispanic and Asian produce sales.

“Consumer thriftiness and health-consciousness will continue to exert a notable influence over the food and beverage ingredient and flavor trends to emerge in 2011, the Packaged Facts report, “Food Flavors and Ingredients Outlook 2011,” says. “Ethnic food will remain a bright spot for foodservice and retailers ... and vegetables, more so than fruit, will take on added importance in 2011 as they move to the center of the plate.”

That trend opens a door of opportunity for retailers, which can gain a competitive edge by merchandising Hispanic and Asian produce.

“As the U.S. Hispanic population continues to grow and Latin cuisines become more mainstream, even non-Latin consumers are demanding produce items like chili peppers, tomatillos, jicama, key limes, cilantro and corn husks,” says Hazel Kelly, public relations specialist at Frieda’s Inc., a Los Alamitos, Calif., marketer and distributor of more than 600 specialty produce items. “Asian cuisine is also as popular as ever, and items like fresh ginger root, baby bok choy, daikon, egg roll and won ton wrappers, and fresh lychees are big sellers.”

Consequently, produce departments devoid of the specialty fruits and vegetables customers are craving could be left behind.

Tracking the trend

Several factors are driving the demand for Hispanic and Asian produce. The boom in the U.S. Hispanic population, experts say, is key.

“The Hispanic population represents more than half of the nation’s population growth. This growing demographic is creating a tropical fruit and vegetable trend that almost forces retailers to take notice,” says Doria Potts-Blonder, sales and marketing director at New Limeco, Inc., a grower, packer, importer and shipper of tropical fruits and vegetables based in Princeton, Fla. “More and more retailers are starting to carry Hispanic items to meet the demands of their customers.”

Many of those customers have been dining at home due to the economy, says Kathy Means, vice president for government relations and government affairs for the Produce Marketing Association. “People aren’t eating out as much, so they are spending more time at home trying recipes ... and Hispanic and Asian customers are looking for their native foods.”

Cooking shows, new cookbooks, online recipes and consumers’ penchant for travel are prompting consumers to eat ethnic foods they didn’t even know about before, industry experts say.

Why carry ethnic produce?

Whatever is boosting their cachet, Hispanic and Asian fruits and vegetables are produce department “musts.”

“Every store has to offer specialty ingredients beyond what that big store carries because the little store typically cannot compete well on price,” says Robert Schueller, director of public relations for Melissa’s/World Variety Produce Inc., a Los Angeles-based company that offers more than 1,000 exotic produce and specialty food items to retailers under its Melissa’s brand name. “Stores need to cater to their five-mile-radius customer, or the bigger stores can put them out of business. Everyone wants a one-stop shopping experience.”

Carrying produce that appeals to different demographic groups is essential to growing market share, says Mike Moreno, sales manager at Cimino Brothers Produce in Salinas, Calif. Broccoli – not typically considered an ethnic item – is one example.

“Asians will not pay a premium price for broccoli if that price includes a large, unusable stalk. Broccoli crowns are a much better value,” Moreno says. “Short-cut broccoli crowns produce better yields than the traditional standard bunch broccoli with much less wasted product. Many customers buy these types of crowns from their own smaller ethnic markets to use at home, so why shouldn’t the larger retailer attempt to gain some of this market as well?”

It is, Potts-Blonder says, a matter of profit. “Most Hispanics tend to spend more money in the produce department regardless of the economy. If you have what they need, with good quality and decent price, they will (buy the produce and) increase your revenue.”

Retailers appear to be heeding that advice.

“We are seeing in increase of just over 10% for Latin/Hispanic produce and about a 12% increase for Asian produce items,” Schueller says.

Moreno says demand for Mexican product in the U.S, particularly broccoli products, is on the upswing. “Cimino Brothers ships between 10 to 20 truckloads of Asian short-cut broccoli crowns each week from Mexico into Asian wholesalers in the U.S., as well as to a growing number of retail chains, he says.

Latin and Asian produce are two of Frieda’s most popular categories, Kelly says.

What fruits and vegetables are driving ethnic produce sales?

At Frieda’s, fresh and dried chili peppers, tomatillos, jicama, key limes, cilantro, corn husks, papaya, ginger root, baby bok choy, daikon, egg roll and won ton wrappers, and lychees are popular. At Melissa’s, top sellers include fresh chili peppers such as jalapenos, serranos, pobalanos and Anaheims; plus jicama, chayote, tomatillos, cilantro, corn husks, ginger, bok choy, baby bok choy, napa cabbage, edamame, Japanese eggplant, sugar snap peas and snow peas.
Sunset jewel papayas, coconuts, mangoes, ginger, sour orange, eddos (sometimes called the potato of the tropics), malanga, calabaza, boniato, limes, jicama and plantains are among New Limeco customers’ favorites, Potts-Blonder says.

Merchandising Tips How retailers merchandise and market ethnic fruits and vegetables can determine how much they will add to produce department profits. Hazel Kelly of Frieda’s and Robert Schueller of Melissa’s/World Variety Produce share their merchandising advice. • Keep it convenient. For bulk items like chili peppers, consider pre-bagging by weight. If priced at $2 a pound, pack in 1-pound bags. • Educate. Signage is key with ethnic produce. Include product descriptions, including heat level for chili peppers, and usage suggestions. • Cross-merchandise. Place ethnic produce with items considered “everyday” products. Consider including taco shells, tortillas, masa, rice and Asian sauces in displays. • Include Mexican/Latin and Asian recipes in your ads. This will increase suggestive selling and impulse sales because 70% of produce purchases are impulse buys, Schueller says. • Practice meal idea merchandising. Group products as ingredients for popular recipes, and include recipe signage or tear-pads, Kelly says. For example: Display tomatillos with garlic and onions for salsa verde; cilantro with limes and avocados for guacamole; jicama with mango and onion for fruit salsa.

Besides broccoli crowns, retail-style bagged and bulk broccoli florets, napa cabbage and jumbo carrots – all grown in Mexico and distributed out of Laredo, Texas – lead Cimino Brothers’ sales, Moreno says.


Marketing and Merchandising

Understanding the customers you serve as well as the produce you purvey are the first steps in building a successful ethnic produce program.

As Kelly says: “Often, produce managers do not know a lot about the ethnic products they sell, which makes it a challenge to order, merchandise and sell. That is probably why the most successful produce departments are staffed by persons who mirror the ethnic/demographic makeup of their shoppers.”

The way stores approach display is an important component when merchandising Hispanic and Asian produce.

“While many retailers opt to keep these categories grouped separately from mainstream produce items, it might be worthwhile to consider integrating more popular ethnic items,” Kelly says. “For example, retailers might place baskets of red and green chilies alongside tomatoes and garlic and offer a recipe card for homemade pico de gallo salsa.”

Key holidays – Cinco de Mayo (May 5) and Mexican Independence day (Sept. 16), the Christmas holidays and Chinese New Year, for example – offer business-boosting opportunities, as well, Kelly and Schueller say.

“Cinco de Mayo is a great opportunity to promote jicama, tomatillos and chilies,” Kelly says. “And corn husks are hot during the winter holidays because Latin-Americans usually make tamales for Christmas.”

Creating signage in the colors of the country’s flag a few weeks preholiday can stimulate sales, Schueller says.

And always make pricing apparent. “Hispanic and Asian consumers typically want to know an item’s cost before they reach the register, Schueller says. “Keep pricing clear and simple.”

Keeping abreast of what customers are watching also can help determine a profitable product mix. “Smart retailers watch the cooking shows because they are drivers for retail. The shows get people thinking about what they want to make at home,” Means says.

Once you’ve chosen your ethnic produce lineup, consider sampling each product, displaying it correctly, and offering recipes and handling tips so customers know how to use it. “If they don’t use a product successfully, they won’t buy it again,” Means says.

Jicama is one example. Typically merchandised on the wet rack with salad items, moisture on the skin will promote decay unless the jicama is waxed, Kelly says. “Retailers should consider merchandising jicama on dry tables, or even with tropicals, as many Latin cultures enjoy jicama more like a fruit than a salad ingredient,” she says.

And remember: Beware of the dangers of shrink, and buy accordingly.

“Initially, a new product won’t sell as quickly as products customers are used to buying, so adjust your inventory so shrink doesn’t go too high,” Means says.