Spicing up the mix at mass retail - spice sales - Food Merchandising

Discount Store News, April 3, 1995 by Laurie Freeman

Discount and chain drugstores are beginning to catch on to a very profitable aspect of the grocery business - without shelling out a lot of dough in the Process.

Spices, a $1.5 billion category at retail, is dominated by the grocery business. Only 4.5% of sales are handled by non-supermarket retailers, a percentage that spice manufacturers hope to change as non-food retailers build their convenience food sections. Spices and seasonings sales rose by 50.6% at mass merchants last year, compared to only a 3.2% rise at food stores, according to Information Resources Inc.

McCormick & Co., Hunt Valley, Md., is the largest manufacturer of spices and seasonings, with about a 39% share of the category. The company in recent years has touted its Spice Time value-priced spices as a viable line for drug and discount store retailers.

While McCormick is dominant in the supermarket business, a number of smaller companies are carving out profitable niches in the mass market discount and drugstore channels.

What's enticing about the category is simply placing spices in a high visibility area, such as by the front registers, can help move more than 150 units weekly, according to Rose Spice Co., Wilmington, N.C., maker of Spice Rack spice's. In the case of Spice Rack, whose glass-packaged spices carry a suggested retail price of 99 cents, every item that turns produces a 37% margin, usually with little overhead expense. Mass merchants Bradlees, Stuarts and Ann & Hope all began carrying Spice Rack within the past year and Gel Spice Company, Bayonne, N.J., cited its strong sales through Dollar General and Wal-Mart as evidence of the direction the business is going.

Unlike when shopping at grocery stores, consumers tend not to put spices on their shopping lists when going to discount outlets and drugstores.

"It's a high impulse item, and what we've found is that consumers will pick it up if they notice it," said James Anderko, national sales manager for Rose Spice. "That's why we recommend high traffic areas or end-aisle displays."

Spices now are stocked by major drug chains including Genovese, Revco, CVS and Eckerd, with tests being conducted by Walgreens and Rite-Aid. Mass merchandisers carrying spices include Bradlees, Hills, Caldor and Kmart. Target Stores is in the process of adding spices, having recently held discussions with McCormick & Co. about the possibility of testing its value-priced Spice Time line.

Warehouse clubs, of course, carry spices in value-pack sizes and all the supercenters merchandise a full section of spices.

"Spices, traditionally a grocery store category, has become a very exciting part of our basic business," said Claudia Joseph, buyer for Hills, the Midwest regional discounter. "By maintaining a competitive everyday price and hot promotions throughout the year, we have enjoyed a profitable business. Our customers' response to the quality and pricing has been overwhelming."

Rose Spice has put together a spice program under its Spice Rack moniker that stocks 35 to 42 spices in a 24-linear-ft. section. But if a retailer feels uncomfortable with devoting even that amount of space to spices, the company can create smaller displays that come packed with the top-selling items, including garlic powder, paprika, onion powder, cinnamon, Italian seasonings and black pepper.

Spice Rack spices come in 6-oz. glass bottles, both to give the appearance of a gourmet spire and also to help keep the spices fresh, said Stedman Stevens, president of Rose Spice. Glass bottles "are more expensive, but they keep out air and moisture better than plastic packages, and [spices] retain their flavor better when put in glass containers."

Rose Spice conducts planogram reviews at least annually, tweaking each retailer's selections to individual store traffic patterns. Garlic powder, one of the most popular items, can account for up to 12 facings in some planograms to take advantage of sales of 80 units weekly, said Rose Spice's Anderko.

Although some retailers report success with spices without much ongoing promotion, others like Genovese, CVS and Revco have tapped into seasonal promotions, such as featuring Spice Rack's green and red sugar sprinkles, all-spice, nutmeg and cinnamon sticks during the October to December holiday season. These items are offered at special prices and are not generally available during the rest of the year, noted Anderko.

"The biggest challenge is letting people know there are spices in drugstores, in discount stores. They aren't tied into buying spices only at the grocery store," said Anderko. We do recommend that retailers promote spices at least once a month in their circulars."

Most retailers, like CVS, Revco and Eckerd, are stocking spices in their food and snack departments. CVS prominently displays spices in its center promotional aisle, while Revco has spices next to popcorn, snacks and candy. Eckerd currently has one shelf for spices, placing the line next to coffees. And Bradlees does a terrific job with spices at its front register endcaps, according to Anderko.