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Successful retail promotions helped move huge 2009 Idaho potato crop

by Rand Green | September 15, 2010
"The biggest highlight" of the 2009-10 marketing season for the Idaho potato industry is the fact that the industry successfully moved “a very large crop,” said Seth Pemsler, vice president of retail for the Idaho Potato Commission in Eagle, ID. That achievement was attributable in a significant degree to some “hugely successful” retail promotions by the commission and the industry.

“At the beginning of the year, we were faced with this massive crop, not just in Idaho but everywhere,” Mr. Pemsler said. The challenge throughout the year was to get the crop “moved through the system” so that the storage facilities would be empty by the time the 2010 harvest started. It seemed a daunting task, but “we successfully moved” that large crop, he said.

As of Sept. 8, when The Produce News talked to Mr. Pemsler, most of the shippers had finished shipping all of their old crop and had either begun to ship new-crop Norkotahs or were shut down and doing maintenance on their facilities in preparation for the new crop.

“There are a couple [of packinghouses] still running [old-crop potatoes], but they will run out by the time the new crop comes in,” he said.

“By far, that is the most significant accomplishment of a marketing organization such as a commission — to assist the shippers in getting all the product they have sold, so that they can be prepared for the new year,” Mr. Pemsler noted.

During the early part of the 2009-10 marketing year, potato prices were exceptionally low because of the large inventories. But prices improved as time went on, and particularly as the old crop began to clean up. “Right now, pricing has been increasing,” he said. “So we are returning to more traditional pricing after a very low pricing year.”

While an increase in prices might seem at first impression to be something retailers would not favor, “the fact is, pricing got so low this year that everyone was using [potatoes] as a price competition, so retailers were actually not making as much margin” as they would have done at more moderate prices. “When you sell potatoes for 99 cents [per bag],” how much margin can you make?” he asked.

“So going back to more reasonable pricing is actually good for everybody,” including retailers who are not forced to compete on price with lower-than- normal margins, he said.

Among the keys to the year's success in moving such a big crop, according to Mr. Pemsler, were two highly successful bin promotions and “a hugely successful Potato Lovers Month Contest with 2,300 entries.”

In the bin promotions, he explained, “we offer an incentive to the retailer to put a bin on the floor” with bags of Idaho potatoes. “We can define the size” of the potatoes in the bags, and “in this case, it was small” potatoes. The commission ran two such promotions with bags of small potatoes during the year, at times when there was an excess of small potatoes being packed. “A shipper has to run continuously,” so if the potatoes that the shippers are bringing out of storage and running through the packingline are heavy to small potatoes, “they get too many bags.” Conversely, if the potatoes being run are heavy to large sizes, they would get too many cartons, and different types of promotions would be required.

In this instance, the challenge was moving the excess of smaller potatoes, and the bin promotions, featuring bags with small potatoes, helped move a large volume of small potatoes and balance out the mix.

There were other promotional activities as well. As an example, “we started off the year with a tie-in with Fresh Gourmet, which had a coupon good for 75 cents off Idaho potatoes, merchandised typically in the produce section” next to the potatoes, he said.

“All those were activities that we did early in the year and through the first six months, which helped stimulate demand,” and over the course of the year, Idaho’s market share increased by four percentage points. “The majority of that went through the retail channel ... because the foodservice channel is down and the retail channel is up during recessionary times,” he said. “Consumers are eating more potatoes at home and less potatoes out.”

For the 2010-11 marketing season, “we are starting off the year right away with a three-month promotion with Fresh Gourmet,” with the additional component this year of a retail sweepstakes,” Mr. Pemsler said. It will kick off Oct. 1 and run through December.

Potato Lovers Month (February) will be “similar to last year but, we believe, more successful,” with Mrs. Dash as the tie-in partner for the second year. “Mrs. Dash is going to drop an FSI in February with a potato recipe” and probably a potato coupon, he said.

“There will be additional tie-ins,” yet to be announced, in late winter and spring. And “as always, we will be out there offering retailers ad allowances” for running ads with the 'Idaho’ seal, he said. “That is something we have found to be very effective.”

(For more on Idaho potatoes, see the Sept. 20, 2010, issue of The Produce News.)