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Kroger shelf space boosts area brands

Nabbing space on Kroger store shelves is paying big dividends for several better-known area brands.

Cincinnati-based Kroger Co. stocks many popular local food brands at its area stores to attract loyal shoppers, separate itself from competitors and increase profits, experts said.

The company’s “shop local” model also gives Dayton-area brands such as Esther Price Candies and Mike-sells Snack Food Co. distribution through hundreds of Kroger stores in southwest Ohio and other Midwest states.

“Kroger is probably 75 percent of our wholesale sales,” said Esther Price spokeswoman Peggy Weaver. The Dayton-based candy company delivers its products to more than 200 Kroger stores in Dayton, Cincinnati and Northern Kentucky, as well as to Kroger warehouses in Columbus and Indianapolis, she said.

Mamma DiSalvo’s pasta sauces are available at Kroger stores from Cincinnati to Celina, said Bobby DiSalvo, co-owner of Mamma DiSalvo’s Italian Ristorante in Kettering. “It is great exposure,” he said.

Other Dayton-area brands at Kroger stores include Bowman Landes, Brucken Foods, The House of Nuts and Pine Club, a company spokeswoman said.

Kroger is the largest traditional grocery retailer in the U.S., with 2,424 supermarkets in 31 states, including 23 stores in the Dayton market, according to company materials. The company had $96.8 billion in total sales for fiscal year 2012, up 7 percent from $90.4 billion in fiscal 2011.

Kroger employs the same shop local model at its stores nationwide, as part of its “customer first” policy, said Mark Nolting, the company’s Midwest region local merchandise manager. “Shoppers benefit by having the ability to buy local items or local brands in the local Kroger store,” he said.

For example, shoppers can purchase Esther Price candies any time at Kroger, regardless of whether one of the confectioner’s seven Dayton- and Cincinnati-area stores are open. “We’re sometimes a spontaneous purchase at Kroger, or a quick pick-up for people that are grocery shopping and need a gift,” Weaver said.

Local sourcing allows Kroger to differentiate itself from major competitors such as Meijer that carry a similar selection of national brands, said Serdar Durmusoglu, a University of Dayton associate professor of marketing. The practice makes Kroger appear more like an upscale independent grocer such as Dorothy Lane Market, which also carries a selection of local brands, he said.

Nolting declined to discuss corporate strategy or sales figures.

Local products must meet Kroger guidelines that include federal certifications and manufacturing facility inspections, Nolting said. Brands are selected though customer requests, as well as internal and external reports, “to see if those items might resonate with our shoppers,” he said.

“Obviously, once an item gets on the shelf it has to stand on its own. It has to have good sales and good movement for us to keep it on the shelf,” Nolting said.

Mamma DiSalvo’s has seen a “big increase” in sales of its signature sauces because of the number of Kroger stores in which they are sold, DiSalvo said. Kroger’s distribution network also provides more exposure than many of the area independent grocers that also carry local brands, he said.

Being on Kroger shelves has helped raise awareness of the family-owned restaurant that gives the sauces their name. “That could bring potential customers into our restaurant, also,” DiSalvo said.

Esther Price, which recently opened a new store in West Chester, avoids locations near Kroger stores, so it doesn’t take away sales from those sites, Weaver said. “We don’t want to defeat the purpose of Kroger having our product,” she said.

Cincinnati-based Graeter’s started selling its ice cream in the deli section of a dozen area Kroger stores in 1987. Today, the company’s ice cream is available in more than 2,000 Kroger stores from coast to coast.

However, it is unusual for a local brand to achieve national distribution through Kroger, Nolting said. “Typically, it becomes maybe more of a regional item, more so than a nationally distributed item,” he said.

For example, Cincinnati’s Montgomery Inn Barbecue Sauce now has “fairly far-reaching regional distribution” because of Kroger, Nolting said.

Kroger tends to distribute local brands regionally because other parts of the country often have similar products that resonate with shoppers in those areas, he said.

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