ONTARIO, Ore. — Most of the onions grown in the Treasure Valley wind up in foodservice channels, but some grower-shippers say the economic downturn has given retail sales a boost.

One recent change in the foodservice industry that affects Treasure Valley onion shippers is the decision by the Chili’s restaurant chain to drop its onion bloom appetizer, one of the knockoff versions of the Bloomin’ Onion popularized by Outback Steakhouse, said Grant Kitamura, president of Murakami Produce Co., which has a marketing agreement with Idaho Falls, Idaho-based Potandon Produce LLC.

To meet demand for onion blooms, valley growers began growing super-colossal size onions about two decades ago, Kitamura said. With Chili’s decision, super-colossal demand has fallen, he said.

The economy also has had an effect on foodservice sales, Kitamura said. Demand for foodservice sales has fallen off, while retail demand has increased, he said.

For Murakami and Potandon, that has meant a slight shift to smaller onions and varieties with more skin, and an increase in the use of 3- and 5-pound consumer packs.

Retail sales were up about 20% for Murakami last season, and Kitamura expects a similar increase in 2010-11.

Even so, foodservice still accounts for about 60% of Murakami’s sales, he said.

Ontario Produce Co. Inc. is adding a new packing machine that will allow it to double its consumer pack capacity, said Bob Komoto, the company’s sales manager.

The upgrade reflects a higher percentage of the company’s business tilting toward retail, Komoto said.

“During the recession we’ve seen foodservice business diminish a little bit,” he said.

The new machine, which should be up and running for the fall harvest, will pack mostly 3-pounders, but also 5-pounders and 10-pounders, Komoto said.

J.C. Watson Co., Parma, Idaho, is looking to diversify its customer base more, and educating its wholesale customers is part of the effort, said Jon Watson, president.

“We’re working with wholesalers to capture some regional retail customers,” he said. “We’ve been heavy to foodservice. Now we’re providing customers with the tools to expand more into retail.”

The company expects further growth this season of its 3- and 5-pound wicketed mesh onion retail bags, Watson said. This will be the third year the company packs them.

The company packs yellow, white and red onions in the consumer bags, which are equipped with quick locks, Watson said.

To Joe Farmer, operations manager for Nyssa, Ore.-based Fort Boise Produce LLC, Chili’s discontinuation of its onion bloom is an example of a larger, economy-related foodservice trend affecting Treasure Valley shippers.

“People are still going out to eat, but maybe they’re not willing to buy the appetizer,” he said.

Foodservice is the dominant channel for Nyssa-based Snake River Produce Inc., said Kay Riley, general manager, but if onions don’t size this year because of the sluggish start to the growing season, retail may be the only home for some smaller onions.

“They’ll have to; I don’t see what choice there is,” he said.

About two-thirds of the onions sold by Parma-based Champion Produce Inc. go to foodservice, said John Wong, the company’s sales manager.

Historically, foodservice companies have liked the region’s variety of colors and sizes, he said. Also, being close to the potato-growing capital of the U.S. makes it easier for buyers to pick up their onions right after picking up their spuds.

More recent industry trends also have played a role in the strength of foodservice dem
and for onions in the Treasure Valley, Wong said.

“We’ve seen (restaurant) chains more inclined to do business with large foodservice providers,” he said.

Also, he said, Americans are eating out more. And more of them are eating more ethnic foods, which are often heavy on the onions, Wong said.

“It’s the No. 1 vegetable in the world, and used in every diet there is,” he said.

Baker Packing Co. expects to ship about 60% of its onions this season to foodservice customers, up to 30% to wholesalers and 10% directly to retailers, a normal mix for the company, said Jerry Baker, owner.