Reinvigorate Sales

Sales for the last year were down almost across the board in the edible oil category, according to Information Resources Inc. (IRI), a Chicago-based market research firm. Overall oil and shortening dollar sales fell 1.8 percent to just less than $3.5 billion in sales during the 52-week timeframe ending April 19. Even olive oil, typically a strong player in the category, saw overall sales decrease by half a percent to slightly more than $1 billion in sales. Only Asian cooking oils showed strong growth, increasing 16.1 percent to $43.2 million in sales.

In contrast, overall vinegar dollar sales grew 7.7 percent to more than $516 million, IRI data reveals.

To promote growth in oils and further growth in vinegars, retailers might want to consider educating the consumer on the health benefits associated with different oils and the differences in quality and taste among oils and vinegars, as well as their cooking uses. And an educated consumer could be more likely to view higher-quality, higher-priced products as worth the expense.

Call out healthful attributes

After years of being considered unhealthful, many oils are recognized to offer a number of health benefits today. Olive oil has long been considered one of the most healthful oils, but other oils are also beginning to gain traction among consumers.

“Olive oil and other alternative oils such as peanut and grapeseed oil naturally help lower cholesterol, which is likely fueling interest in alternatives to standard vegetable oil,” states “Butter, Margarines and Oils,” a July 2014 report from global market research firm Mintel.

Christine Brown, marketing sales manager for Adams Vegetable Oil in Arbuckle, Calif., mentions that health-conscious consumers also are turning to oils that were once considered highend, including avocado oil, coconut oil and palm oil, because of their health claims.

But not all consumers are aware of the health benefits of some oils, states Luca Bombarda, U.S. marketing manager for Modena Fine Foods Inc., Clifton, N.J. Instead of assuming the consumer already knows the health benefits of an oil or vinegar, retailers could put that information on the label as a value-added benefit to the customer. And consumers are looking for more than just “heart healthy” benefits. For example, many of them are also looking for GMO labeling. Michael VanFleet, vice president of retail at Stratas Foods in Memphis, Tenn., says many brands, including store brands, could take advantage of this trend by labeling, when appropriate, non-GMO oils. While many corn or canola oils cannot be certified as non-GMO, other oils such as olive, peanut and sunflower oils could.

“Although it’s not always labeled as non-GMO, there are non-GMO oils on the shelves,” VanFleet says. “There’s [an] opportunity for retailers to communicate with customers via the label.”

Brown suggests promoting oils as organic, if possible, because of the strong growth in demand for organic products.

“I see the growth of organics as really high,” Brown states. “If you have a private label [oil] with organic [labeling], you’ll do very well with that.”

Consumers are also using organic oils for health purposes that don’t involve consumption, says Matthieu Kohlmeyer, founder and CEO at La Tourangelle Inc., Berkeley, Calif.

“More consumers are buying natural and organic oils for skincare, haircare and body care,” he says. “Organic oils present great opportunity.”

Emphasize quality, flavor

Besides highlighting health claims on store brand oils and vinegars, retailers could set such items apart from other products by emphasizing their high quality and quality differences among the offerings.

“This is the main trend [at] this moment — adding more products and different qualities to the shelf,” says Agron Kosova, manager of Fine Italian Foods Inc. in Naperville, Ill. “Everyone is [looking for something new.”

Mark Coleman, vice president of the retail division of Catania-Spagna Oils in Ayer, Mass., says quality, especially in oils that are expected to have flavor, plays a significant role in consumer decision-making. Unfortunately, quality is not always emphasized by retailers for their store brand products.

“Retailers continue to bid out the olive oil category, and this only leads to lesser quality of oil on a product that should be quality-driven,” he says. “Reverse auctions and online bids have hurt this category, specifically in private label. Soybean oil or canola oil should be bid out as there are no flavor characteristics involved. Olive oil is much different, where its flavor is what matters.”

Consumers also need to know that the quality of the product is worth the price attached. Bombarda says tasting areas could help customers understand the differences among oils and vinegars, and even nudge them toward purchasing higher-quality oils and vinegars. Taste testing areas seem to have worked particularly well for balsamic vinegars.

“People tend to ignore the price because the high-quality balsamic vinegar tastes so well,” he says. “It’s a very simple concept, and it has been very successful.”

On lower-end bottles, retailers could attach a pouch with a sample of a higher-quality oil or vinegar for the consumer to taste, Bombarda adds.

Teach them how it’s used

Some stores might have dozens of different types of oil on their shelves, and many consumers simply don’t know how to use them. And consumers aren’t likely to buy something new if they don’t understand how to use it.

“I don’t think a lot of people know what oils to use when you’re making a salad dressing, when you’re deep frying [or] when you’re sautéing,” Brown says. “If you educate the consumer, you bring attention to your products.”

VanFleet suggests reorganizing planograms to group oils based on how they’re used. A nearby chart or color system could help customers make more informed decisions.

Vary the packaging

When it comes to packaging options for store brand oils, Coleman says he’s seeing many manufacturers switch from heavy glass bottles to PET plastics.

“There is tremendous savings in the bottle cost [and] freight due to lower case weight and reduced damage costs,” he says. “Most national retailers have made this transformation on their private brand product lines over the past few years.”

While PET bottles could be a real money saver for retailers, Mintel suggests that retailers and manufacturers also consider making the packaging as functional as possible to appeal to consumers. In its March 2015 report, “Butter, Yellow Fats and Oils,” Mintel says 81 percent of survey respondents said “packaging should offer an extra functional benefit such as enabling 100 percent product dispensability [or] aiding in food preparation.” And almost 25 percent said they would pay more for oils that come in spray bottles.

“All-natural propellant-free sprays are gaining a lot of placement, and sales are growing nicely,” Kohlmeyer says. “Propellant-free sprays are clearly a great way to add value to the category.”

Varying package sizes is also important.

“We are seeing the 51-ounce size continue to be the ‘football’ item in this category, as it enables the retailer to feature a larger-sized olive oil for under $10,” Coleman says. “The $9.99 price point in this category is still what makes or breaks large ‘volume’ sellers.”

But smaller sizes are important, too. Smaller, less-expensive offerings allow consumers to try new products they might not otherwise purchase in large volumes, VanFleet says.

“A smaller package size is less of an investment on a core pantry staple, and it takes up less room on the pantry shelf,” he adds.