Refreshing assortment

Fresh-squeezed refrigerated juices are bringing novelty, sales and high margins to the produce aisle.
by Richard Turcsik

The produce department manager has a new main squeeze—fresh juice. Shoppers thirsting to find something new are snapping up an ever-expanding cornucopia of flavors and varieties, fueling strong sales growth. Coupled with high margins and even higher retails, it’s easy to see why fresh-squeezed premium juices are becoming the darlings of retailers everywhere.

“There is definitely a trend with juices being sold in the produce case,” says Matt McLean, the president and “Uncle Matt” of Uncle Matt’s Organic, Inc. of Clermont, Fla. “Mainstream grocers are giving more feet to sets, offering more selections from fresh juices and blends, and are putting organic juices into those sets as well. Definitely produce is being aggressive in trying to put grab-and-go juices there, along with some larger sizes, too.”

“The fresh juice category is completely on fire,” says Monty Sharma, CEO of Naked Juice Co. in Azusa, Calif. “The category grew last year by 38%, and this year it is again projected to do some very good numbers because in many, many cities around the country, the category is just beginning to take hold.”

Take a secondary market like Scranton, Pa. “In a place like Scranton, you’re likely to find five or 10 juices in the produce aisle, sitting right amongst the fruits and vegetables. But if you go into a Ralphs in L.A. you’ll find a full end cooler with at least 100 SKUs in it,” Sharma says. “We believe that when this category blows out nationwide, in the manner that it is in the big cities, it will be a huge category, easily in excess of $3 billion.”

The category is so hot that it is attracting the attention of the big players. This fall PepsiCo’s Chicago-based Tropicana Products division is rolling out nationwide its line of Tropicana Pure, which is sold in the produce case and is currently in limited distribution in several markets, including St. Louis. The line consists of Pomegranate Blueberry, Mango Orange, Triple Berry and Valencia Orange varieties and is packaged in one-liter, hourglass-shaped bottles that have a suggested retail price of $3.79.

Refrigerated fresh-packaged juices are a sweet spot in a juice industry that has been stagnant in recent years, says Gary A. Hemphill, vice president, information services, at Beverage Marketing Corp. in New York, who pegs overall nationwide growth in the 6% to 8% range. “The overall fruit beverage category has been essentially flat, but fresh-packaged juices have been one of the few bright spots,” he says.

That’s because they are often considered a step above their dairy case and shelf-stable brethren.

“What natural health beverages stand for, and certainly what Odwalla stands for, is we source the highest-quality fruit and vegetables to make our drinks,” says Ashley Schmidt, brand manager in the Houston office of Half Moon Bay, Calif.-based Odwalla. “By putting ourselves in the produce section, it is really putting ourselves at our source and highlighting our heritage of where we are from. It reinforces for consumers that these are healthy alternatives to get fruits and vegetables in the diet in a more convenient format.”

“Juices in produce need to be not-from-concentrate, premium-type juices that are as close to fresh as possible,” says Wade Groetsch, president of Blue Lake Citrus Products, Inc., Winter Haven, Fla. “That’s what produce is about and that is what we should be marketing. That is part of our sales pitch to produce buyers.” He notes that other, less premium juices will be more at home in the dairy case. That’s where Blue Lake is pitching its new Blue Lake Organics brand because that line is made from concentrate. However, it is recommending its Noble and Noble Organics premium fresh-squeezed brands be merchandised in produce.

Blue Lake has expanded Noble this summer to include lemonades in regular, Raspberry Lemonade and Strawberry Lemonade flavors. The line will be seasonal by default, according to Groetsch “We’d be more than happy to sell it year-round, but in the winter we typically see the lemonade business drop off to the point where we can use it as an opportunity to increase distribution for our orange and orange tangerine juice using that same shelf space,” he says.

WATERMELON, TOO
He’s not the only one expanding his offerings.

Just six months after introducing watermelon juice, San Francisco-based Sundia Corp. added Watermelon Pomegranate, Watermelon Blackberry and Watermelon Limeade to its lineup. Sundia says the lycopene health benefits of watermelon are driving the sales, and when teamed up with the positives of the other juices, such as the heart-healthy properties of pomegranate juice, a grand slam is all but guaranteed.

“Unless someone wants to eat tomato sauce or drink tomato juice every day, naturally increasing lycopene intake can be difficult,” says Brad Oberwager, Sundia’s founder and CEO. “Our watermelon juices are a more practical and delicious option.”

It’s all part of the nutraceuticalization of the category.

“The consumer that is looking for high anti-oxidant, high anti-inflammatory juices is looking for them in produce, in the cooler case. That is why it is so important for us to be there,” says Dan Haggart, managing partner at Northwest Orchards in Bellevue, Wash. Northwest Orchards manufactures the Cherrish line of tart cherry juice, which, although shelf stable, is merchandised in produce, usually next to Odwalla, Naked, Bolthouse and POM Wonderful. “I’ve seen where they’ve taken POM and put it over in the nutrition department at a Fred Meyer store and it just bombed. I’ve seen other chains where for some reason they’ve put it in dairy and it didn’t really do well. It really belongs in that produce cooler set,” Haggart says.

Cherrish, which is available in Tart Cherry, Cherry Cherry, Cherry Blueberry and Cherry Grape varieties, was downsized from a 16-ounce to a 10-ounce bottle to make it more affordable. Suggested retail on a 10-ounce bottle is $2.49, although many retailers are selling—and turning—it at $2.99. A 32-ounce bottle was introduced at the beginning of the summer.

“The two that are really knocking them dead in the antioxidant business are POM and ourselves, and we’re at the high, high end of it,” Haggart says.

“When we launched POM in 2002-2003, it was quite an effort to get it into the produce department,” says Fiona Posell, vice president, corporate communications, at POM Wonderful in Los Angeles. “It has really been an evolution since then with more and more juice products making their way into the produce department,” she says. POM is broadening its line with iced teas (see sidebar). It has also transitioned its mainline pomegranate juice from glass bottles to easier-to-handle plastic, and is introducing a 48-ounce multi-serve plastic bottle.

“Over the last three years POM has grown considerably in terms of our presence in the consumer’s mind, and also shelf space in the fresh produce department,” Posell says. “That strategy was born out of our desire to link the pomegranate juice with our fresh pomegranates, which we grow. We are not a juice company, we are a pomegranate company. We are really all about the fresh fruit and the healthy product derived from that fresh fruit.”

DISTINCTIVE FRESHNESS
It’s the freshness factor that sets produce department juices apart from the rest.

Best-known for carrots, Bakersfield, Calif.-based Bolthouse Farms has a nine-SKU line of produce department juices that include carrot, orange, passion, strawberry banana and newly reformulated Vedge, which is made from 10 vegetables including tomatoes, carrots, celery, beets, parsley, lettuce, mushrooms, spinach, watercress and bell pepper, seven more than the previous formula. The line is flash-pasteurized and cold-aseptic filled, giving it a 40-day shelf life.

Produce department juices have a noticeably shorter shelf life than dairy case cartons of OJ. “Because our products are flash-pasteurized, they don’t have an extensive shelf life on them, but for consumers looking for more fresh alternatives than what they find in the dairy case, they like the shorter shelf life because they know the ingredients are sourced fresh,” says Odwalla’s Schmidt. “Because the juice is flash-pasteurized, it is fresh but not overly processed.”

“These juices really belong in the produce aisle because they are so fresh and have a short shelf life,” says Sharma of Naked Juice. “When you buy a bag of salad it only has a seven- to 15-day shelf life.” Naked and some competitors used to make non-pasteurized juices, but those had to be discontinued because of health concerns with E. coli, salmonella and other issues. “Lightly pasteurizing the juice is the way to go,” Sharma says.

The popularity of the segment has caused other problems to crop up.

“The retailers are really struggling now in the produce section because there has been such an explosion of new juices in the area,” says Groetsch of Blue Lake. The introduction of bagged salads, which required upright refrigerated cases, paved the way for the growth of the juice segment. “As retailers saw that the space devoted to salads could shrink a little bit, they started putting in dressings and juices,” Groetsch says. “Then that category just continued to grow and grow and got more cooler space.”

ADDING COOLER SPACE
Major players, including Odwalla and Naked Juice, install their own coolers in stores and in most markets use direct store delivery to service them several times a week. “Retailers are trying to add more cooler space to bring up their variety because consumers are aware of all of these premium juices,” Groetsch says. “That forces Odwalla and Naked to put in their own coolers, which allows smaller players, like us, to maintain our real estate.”

Retailers are merchandising fresh juices in a variety of places within the produce department. Some opt for endcaps and some go with a center island, while others place organic offerings with the organic produce. “We want to be as close to the fresh fruits we are representing with our juices as possible because that is where you usually get the consumer looking for that type of product,” Groetsch says. “We haven’t necessarily found that one area is better than the other, except you want to have the visibility when the customer walks into the produce area to see the range of products, and not have them tucked around the corner.”

Retailers just starting out with fresh juices should place them next to their corresponding produce, according to Sharma. “Put carrot juice next to the carrots and orange juice next to the oranges,” he says. “The customer is buying oranges and right next to it they’ll see the juice, so maybe they’ll take it instead. It’s really convenient, it’s portable and they don’t have to squeeze it or put it in a blender.”

And it allows for a fair price comparison. “If you look at the price of a pound of fruit, and what you get in a Naked Juice, they are fairly comparable,” Sharma says. “That tells the consumer, ‘Why don’t you just buy this? It is the same thing. There is nothing added to it. It is just fresh-squeezed fruit.’”

That is why consumers—and retailers—have the hots for fresh juices.