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Matt Alexander, Volm Companies

Not Your Grandpa’s Potato Marketing Reality

A generation ago, seemingly every household in North America had a 20 pound bag of potatoes under the sink, and potatoes made their way into virtually every meal. Not so today. As consumer demand changes, the potato value chain needs to shift, adapt and constantly innovate to keep potatoes front and centre on consumers’ shopping lists. Because bulk potatoes no longer sell themselves as they did in generations past, packers must work harder to catch customers’ eyes and appeal to their priorities. Not surprisingly, savvy packers are now placing increasing emphasis on unique, innovative, value-added packaging.

The potato market is currently divided into two major segments, each motivated by very different priorities. The first segment is the traditional commodity market: consumers who buy potatoes in bulk and prioritize price above almost all else. This group is shrinking: fresh potato sales continue to decrease by five to six per cent each year as alternatives like rice, pasta, quinoa and value-added potato options gain increasing market traction.

The second market segment buys small amounts at a time of value-added and specialty products like fingerling and creamer potatoes, and packaged, pre-cooked or ready-to-microwave potato side dishes. This rapidly growing market segment typically buys for just a meal or two at a time and, while price sensitive, is willing to pay for quality, aesthetics, convenience and social priorities like eco-friendliness.

Consumers in this segment demand to know more about their products: sell by date, nutrition information, point of origin are all labelling priorities. However, they spend less time in a grocery store and less time cooking than generations past, so typically understand less about the utility of the product. As such, packaging aesthetics and marketing innovation play an increasingly crucial role in getting product into consumers’ hands.

As the second market segment expands, packaging of fresh produce is becoming a major differentiator. Increasing sales of value-added, specialty potato products is driving a proliferation of potato varieties which, in turn, is pushing demand for differentiated packaging. And, consumers are willing to pay more for packaging that adds to their experience. Environmentally friendly packaging solutions, like sustainably made, fully biodegradable potato starch-based poly film, is a significant growth trend in the market today. That said, while eco-friendly messaging resonates with consumers, the opportunity has not yet translated into packers being willing to pay more for specialty packaging solutions.

The reality is that anyone who thinks they can make money selling potatoes the way they used to sell potatoes is likely to find themselves out of business quickly. Yet, retailers and packers should welcome the pressure to innovate, since innovation is keeping the industry fresh and alive, and is constantly offering new opportunities to those who are creative and forward thinking.

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