Discriminating tastes

Sophistication has arrived in the oil and vinegar segment, which is drawing consumers with its diverse premium and gourmet offerings. Not only are shoppers refining their tastes, but theyre also doing right by their health in the process. Flavorful heart-healthy fats and exotic low-calorie, health-enhancing vinegars are bringing new excitement to the category.

However, volatile pricing and the pervasive consumer trend toward healthier eating still combined to bruise the U.S. edible fats and oils segment in recent years, global market researcher Mintel reveals in its August 2013 report, "Butter, Margarine and Oils – US." Between 2008 and 2013, retail dollar sales fell 1 percent to $7.8 billion. But innovation could revitalize the category, Mintel notes, pointing to a 2011 sales spike driven by new product launches.

Olive oil, a better-for-you oil that meshes with health and wellness trends, was a bright spot in the total shortening and oil category for the 52 weeks ending Oct. 6, according to data from Information Resources Inc. (IRI). Dollar sales were up 4.8 percent on the private label side and 1.5 percent overall.

Vinegar also showed impressive growth for the same period, with dollar sales up 9.1 percent on the private label side and 7.2 percent overall. (See the table, p. 56.)

New rivals for olive oil

Roasted nut oils are becoming more popular as another tasty and healthful alternative to olive oil for salads, dipping and baking, Matthieu Kohlmeyer, founder and CEO of Berkeley, Calif.-based La Tourangelle Artisan Oils, says.

Do
consider adding healthful roasted nut oils to the store brand edible oils lineup.

Dont
package high-quality oil or vinegar in cheap-looking packaging.

La Tourangelles product lineup includes hand-crafted roasted walnut, hazelnut, almond and pecan oils; avocado, grapeseed, toasted pumpkin seed, organic coconut, sunflower and canola oils; Thai wok oil and pan-Asian stir fry oil. The company does extensive private label packaging for mainstream, specialty and natural retailers, he explains. La Tourangelles traditional production methods date back 150 years, and its products are non-GMO certified.

By ingesting a variety of plant-based oils, consumers get a healthy balance of omega-9, omega-6 and omega-3 fatty acids, and antioxidants and essential vitamins that protect cardiovascular health, Kohlmeyer adds.

Health and diet concerns are driving the categorys trends, Kohlmeyer states. Organic cooking oil remains hot, and coconut oil is taking the category by storm, he asserts.

Like coconut oil, chia seed oil and organic oils in general are benefiting from the ongoing consumer desire for "superfoods" that are dense in nutrients. This superfood trend is also driving vinegar sales, Kohlmeyer says.

"People are trying to improve their nutrition. And [premium and organic products] taste better," he explains.

Kohlmeyer notes that chia seeds were fed to chickens in South America for years.

"It cost nothing then," he says. "Now its exotic. Now everyone wants it."

Quality counts

Agron Kosova, manager of Naperville, Ill.-based Fine Italian Food, adds that consumers now are more aware of the quality and diversity in the edible oils category. His company is the North American branch of Italy-based Compagnia Alimentare Italiana and produces olive oils, vinegars and more for private labeling. The lineup contains gourmet and organic offerings.

Do
diversify your oil and vinegar offerings in terms of quality levels.

Dont
miss opportunities to boost product knowledge and to share that knowledge with shoppers.

"More information can be found every day regarding the quality of oils," he says.

High-quality oils are valuable to consumers and can mean more profit for a store brand, Kohlmeyer advises.

"Give people the best quality product for the best possible price. Dont disappoint people," he says.

Kosova says store brand managers also should understand each type of oils seasonality so they are able to provide the freshest product available at any given time.

"Increase your knowledge regarding these categories to avoid (losing) your customers to competitors. Offer variety and choose the right products at the right price to move products from your shelves," he advises.

The rise in product knowledge on the part of consumers is not limited to the edible oils arena; consumers also tend to look for better quality vinegar these days, Jackie Finelli, sales and marketing manager for Modena Fine Foods Inc., a Clifton, N.J., importer and marketer of private label gourmet, specialty foods and wines, says. Modenas parent company is Acetum, located in Cavezzo, Modena, Italy.

"In recent years, Balsamic Vinegar of Modena has been growing in popularity. Consumers now seem to veer away from the standard vinegar selection and toward products such as the new vinaigrettes, glazes and specialty wine vinegars. In the case of store brands, many retailers are now offering more premium selections," Finelli reports.

Promote through packaging

The right packaging is important to differentiate oil and vinegar products on the shelf, Kosova points out.

"The higher the quality, the more expensive the packaging. But there has to be a balance between price, cost and quality of the products," he says.

Finelli says its especially important to demonstrate to consumers that store brands are not low-quality, low-price products.

"As the quality of vinegar on the shelf is improving, the packaging is now following in the same direction," she says. "Round and square bottles are very mainstream, and for store brands to differentiate, they need to provide consumers with something that has a more elegant and upscale appeal such as cruets and artisanal-style bottles."

And make the package visually interesting to the consumer, Kohlmeyer advises.

"Play with size and different packaging shapes," he says. "The 32-ounce and 64-ounce jars of oils are selling very well."

Retailers also could benefit from using the "Leaf System" for balsamic vinegar quality grading, Finelli says. The system is based on independent laboratory and sensory analysis studies to provide a clear and truthful grading of the product based on the age and percentage of ingredients and also on how the product tastes. The ratings help consumers understand the quality level they are buying and minimize confusion over price versus quality, she adds.

The value of knowledge

In addition to healthful offerings and great-looking packaging, consumers desire more diversity in this category, Kosova asserts. As such, store brand managers should increase their knowledge of whats available and be bold enough to change their shelves to find the best products to fit their stores.

Finelli agrees, cautioning retailers not to confuse consumers with too many choices of whats essentially the same product.

"Offering similar qualities and packaging is one of the main reasons for confusion among consumers," she says. "Very often, within the same shelf set, there are multiple offerings, but in reality, they are all just the same qualities and similar prices. So not offering differentiation within the set would be a mistake."

In addition, retailers should explain that different qualities have different usages, Finelli advises. They could share their knowledge here with consumers through the use of neck tags and shelf talkers, as well as demonstrations throughout the store, Finelli advises. And they could provide recipes, suggested usages and ingredient lists via QR codes, iPhone and Facebook applications.

To get the products noticed, she also recommends cross-merchandising balsamic vinegars and balsamic glazes with upscale cheeses, in the produce department for use in salads and, for glazes, in seasonal sets for spring and summer barbecues.