Consumers Demand More From Produce Brands
Tell your authentic story and you will build brand love.
By Bill Sherman, Market Research Director, and Dan O’Connell, CEO, FoodMix Marketing Communications
December 2021 – The produce industry’s biggest spenders want more from brands, and they want more brands to share their authentic stories. In fact, branding as a company strategy will help produce companies compete against private label and commodity offerings. Consumers have spoken, and their message is loud and clear: Add value and tell your authentic story and you will build brand love.
New research conducted by FoodMix Marketing Communications, Elmhurst, IL, reveals the underdeveloped state of branding within the fresh produce industry and how commodity growers can make a larger profit by leveraging their authentic stories.
With store brands and private labels currently in the forefront of the produce space, the research — conducted in August 2021 with more than 1,000 fresh produce consumers — shows a significant opportunity for branded produce companies to generate considerably more share within the industry.
Right now, inflation is a concern for many consumers, and many prioritize value for the money when shopping. But to focus on value alone would be to miss a more useful story that emerged from this landmark study. A large and lucrative part of the market is looking for other benefits — ones that tend to be more associated with branded produce than nonbranded — and will pay more to get those benefits.
We found that 68% of produce shoppers will pay more for a preferred produce brand. We’re talking more than pennies. Of those willing to pay more, 64% will pay a price premium of at least 6%. Among heavier users, 77% will pay more to get their preferred produce brands.
That’s a lot of potential margin to just leave on the table.
Consumers will pay more for branded produce because, as is true in many categories, well-developed brands are trusted. In the case of branded produce, among those who will pay more to get it, 49% trust it to be consistently high quality, 48% trust it to be higher quality, and 48% believe it’s made to the highest standards. Forty percent trust a produce brand to be fresher. In an era of safety concerns, it’s no surprise that 30% trust branded produce to be safer and disease-free vs. non-branded.
We know from this and other research that consumers look for brand stories that inform and educate about a product’s provenance. Consumers want to know who grows their food, where it comes from and how it gets to their kitchen. These stories do more than create engagement and establish emotional connections — in a world of uncertainty, they provide an additional level of safety assurance. Of those who will pay more for branded produce, 34% say one benefit they’re buying is comfort in knowing where their food comes from and that it’s grown safely.
Our research indicates that the percentage of shoppers who will pay more for branded produce is likely to increase. Why? Because younger consumers are more willing to pay extra for a produce brand vs. older consumers.
Eight of 10 Gen Z and millennials will pay more to get a preferred produce brand, vs. 66% of Gen X and 57% of boomers. These younger generations with greater affinity toward branded produce will comprise an increasingly larger part of the population.
Younger consumers are more willing to pay more in part because these consumers tend to choose products aligned with their values, and they believe branded produce can better deliver on those values. Twenty-nine percent believe branded produce is sustainably grown and processed vs. 19% of older consumers. They’re more likely to associate branded produce with fair trade practices.
The research revealed not just the power of branded produce; it showed the extent of the opportunity for growers to create higher-margin branded products.
Although half (54%) of shoppers say buying branded produce is important to them (an incidence that climbs to 67% among the heaviest shoppers), few produce brands are top of mind. Naming a favorite produce brand is a tough question for many consumers. When asked in our survey to name a second favorite produce brand, 41% couldn’t do it. This is a reminder that the fresh produce industry is still in its formative years of brand development.
When it comes to generating brand love, there’s room for growth among produce brands that have achieved customer loyalty.
Fifty-eight percent of consumers admit to loving their favorite produce brand. Much of the brand love in produce has accrued to a handful of legacy brands. Our research suggests that for growers who can go beyond the label in telling an authentic brand story that store brands cannot always deliver, there is plenty of room to create a large following of consumers who love your brand, advocate for it, and pay more to have it. pb
CEO and founder of FoodMix, Dan O’Connell has over 30 years of marketing experience on client and agency side.
Bill Sherman, research director, has managed market research initiatives at FoodMix for over six years. He has 30 years’ experience designing B2C and B2B research studies, including extensive work uncovering insights into consumers’ eating and dining attitudes and behaviors.
About FoodMix Marketing Communications
FoodMix Marketing Communications is a full-service brand marketing agency, supporting clients in the areas of market research, brand strategy, creative development, communications and innovation. FoodMix has been developing and executing integrated B2B, B2C and increasingly B2B2C brand campaigns for some of the biggest and best names in food for more than 30 years. For more information, visit www.foodmix.net.
Many Questions Remain About Branded Produce
By Jim Prevor
It does seem that product differentiation is the start because only product differentiation can make retailers feel obligated to carry
The idea that consumers will pay a premium for the branded produce they love is a break-through, but the research also shows that few consumers really connect with many produce brands. It is almost as if consumers yearn for a brand. What would it offer? Distinctive and preferred flavor and taste? Unique supply chain attributes, such as aligning with consumer preferences on the environment and labor?
Branding has been a challenge in the produce industry for many years and, primarily, for two reasons. The first problem is that most produce items are not distinctive. There are varieties, of course… Cavendish bananas or Red Delicious apples, but, typically, these same varieties are sold by many different shippers. They don’t represent a unique value proposition to consumers. The second issue is that produce brands do not, generally, have universal distribution. So it is not enough for a consumer to merely prefer a particular brand of, say, bananas; the consumers have to so prefer this brand that they are willing to switch retailers or make a special trip to get the brand.
One wonders about the actual effect of many of the findings of this intriguing research on purchase behavior. It is expected that consumers, sitting in their living rooms, trust branded produce to be higher quality, fresher and made to the highest standards. The issue, though, has been that when consumers are actually in the store staring at the product, the consumer trust can be overridden by their eyes. So the same consumer who might, in abstract, prefer branded produce, might, when confronted with nice looking unbranded produce, be perfectly satisfied.
The other question relates to how retailers interact with unbranded product. Again, in abstract, branded produce might be preferred, but maybe consumers associate unbranded product as having been selected by the market and, maybe, consumers trust the retailer they are selecting to buy from, so, the unbranded produce can get a kind of branded halo from the trusted retailer.
There are so many questions. Yes, every survey shows that consumers say they would like to know who grows their food, where it is grown, what journey it travels, etc., yet produce is complicated. Even if all sold under one brand, the pineapples come from a different place than the potatoes. In many cases, this information changes with the season — in the winter coming from, say, Chile, and in the summer from the United States. Even this oversimplifies because as the seasons shift, growing regions, even within the US or Chile, shift as well.
Sure the industry can make videos to explain all this, but with, literally, hundreds of different produce items, whatever consumers claim, are they really going to spend time watching videos about each product they are considering, and then re-watch the videos, say, ten times a year to note the various changes in production locations? This seems unlikely.
Still, there may be an opportunity. This research particularly notes that younger shoppers are willing to pay a premium to get what they want. The challenge for the industry is how to deliver this to consumers so they can pay us more money.
One obvious response is product differentiation, whether by flavor, such as Cotton Candy grapes, or other quality attributes such as the proprietary grapes from Sun World. Maybe, though, it is possible to distinguish through marketing such as Halos and Cuties. Or perhaps the answer is a hybrid approach where a distinctive variety is paired with a branding effort that draws on other cultural concerns, such as environmental sustainability, labor treatment and more.
It does seem that product differentiation is the start because only product differentiation can make retailers feel obligated to carry the item.
One big win for branding in produce may be the growth of online sales. First, the inability to personally see the product makes a consumer more likely to order a branded item. Many consumers who are happy to order soup from a kettle in the deli department do that because they can open the top and see it looks good. They would be uncomfortable buying a can of generic unbranded soup because they wouldn’t have confidence in what the soup would be like.
Equally, going into a store and seeing, feeling and smelling the produce may make consumers happy to buy unbranded produce or produce from a brand they don’t like that much but which looks good today. But ordering online is more like buying that unknown soup can, and consumers might well opt for branded produce in the same way.
If online delivery shifts to distribution centers rather than local stores, it will also be easier for retailers to stock multiple brands. One suspects brands will pay slotting fees to get included and, even if they don’t, why not offer consumers whatever brands they prefer? In a grocery store, the volume won’t allow for this, but in a big online distribution center, why not?
If there are consumers out there willing to express brand preference by paying premium prices, there will be producers and retailers willing to help make that possible. pb