Fresh Start: Fresh Market Plots Beverage Overhaul

Facing a sustained double digit decline in beverage sales, The Fresh Market’s director of grocery Dwight Richmond knew the retailer needed something more than the standard category reset to fix its issues.

Last month Richmond, a former Whole Foods purchasing coordinator who joined The Fresh Market in December, put into motion his plan to turn around the massive drop in beverage sales for its 161 stores. In an industry wide email to brands, Richmond declared that “no one is safe in this review” and laid out a new strategy to modernize the North Carolina-based retailer’s offerings. He told BevNET this week his plans including eliminating crossover between brands in the cold case and the ambient shelf, redefining categories, emphasizing functional beverages, and scaling back on sugary carbonated soft drinks (CSD).

“As I told my team, the foundation of the road of beverage at The Fresh Market is lined with patches from potholes of failures past,” Richmond said. “So what I have to do is jackhammer the whole category apart and lay a new foundation, and not just put a patch over a patch.”

According to Richmond, the main source of The Fresh Market’s declining beverage sales was its own failure to keep up-to-date with consumer trends. He noted the retailer had gone as many as 18 months without an active reset; The company is now aiming to reset its functional beverage cooler on May 22, while the rest of its beverage sets are scheduled to reset on June 19.

The refrigerated functional beverage set — which includes “live” products such as kombucha, water kefirs, and switchels — was finalized two weeks ago. Additional categories will begin being reviewed this week. Commenting on his decision to take a “no one is safe” approach to the reset, Richmond said the company even cut back on the number of products from kombucha category leader GT’s Living Foods, and said that larger brands, like Fiji Water, will have to submit samples and compete alongside startups.

With limited shelf space compared to its larger competitors, The Fresh Market is also drawing a harder line between cold case brands and those on the ambient dry shelf. Richmond cited a need for a greater diversity of products and is now requiring brands to pick between the two sections.

Calling it the “Manhattan real estate” of the store where “every inch” matters, Richmond said the cold cooler will be reserved for high performance brands willing to “pay to play” and provide tactical promotional support. But the retailer also plans to treat the dry shelf as an incubator, where brands that show strong velocities can eventually graduate to cold case.

“If we look at the cold case as Manhattan real estate, do we look at the ambient shelf as The Bronx? Well, everybody’s looking at The Bronx as the new Manhattan,” he said. “So it isn’t that we look at it differently, it’s just that program wise, support wise, mix wise I almost want to look at the ambient shelf as an incubator stage for what could be cold case. I want to be more risk taking in my ambient shelving than I am today.”

Part of the new segmentation includes redefining the carbonated drink category. Single-serve canned sparkling waters, for example, will be moved out of the water segment and into the CSD set. Excluding Coca-Cola Company products, The Fresh Market will also cut back the amount of traditional CSDs in order to make space for healthier options, with an emphasis on zero calorie and fruit-sweetened products.

“Our consumers are screaming at us that sparkling water is the new soda, so why don’t we treat it like the new soda and why don’t we merchandise accordingly,” Richmond said. “So we’re going to be questioning a lot the rules and redefining them based on our consumers very clear purchasing habits and very clear demands.”

For the water section, Richmond plans to focus on high quality products with sustainable packaging, citing JUST Water as one potential brand. Though canned sparkling waters will move to the CSD section, premium glass-packaged sparkling waters will remain in the water space.

In the functional set, Richmond said the company is preparing to add 40 new products, including national and regional brands. In addition to “live beverages” like kombucha and adaptogenic teas, Fresh Market is also carving out space for coffee, energy drinks, and plant-based waters. For functional products in particular, Richmond was sure to have a variety of flavor profiles while also making the effort to select products that appear to have staying power beyond flash-in-the-pan trends. He also researched and recruited specific brands to round out the set, one example being plant-based superfood smoothie KiiTO.

“We’re looking at syndicated data, looking at cutting data, look at each brand’s own internal data and ranking, we’re going to arrive at a conclusion to create a new and improved beverage section at The Fresh Market,” he said. “But the response has been great. And what I’m seeing is that people are excited that we’re out to make a difference here.”