Economic Challenges And Opportunities

The incredible see-sawing of this winter’s weather in Delaware brings to mind the rollercoaster ride our industry has faced the past year, with cost inputs soaring up and then plunging down along with the global financial crisis. Where inflationary pressures consumed our attention last summer, we now read daily about deflation as the current threat to watch. Are we in the produce industry better protected than most businesses to adjust to this rollercoaster ride?

The results from Produce Marketing Association’s (PMA) latest consumer survey signal relief sprouting from under the cold economic downturn that took root last fall. Consumer responses show that, in general, fresh fruits and vegetables have been insulated from the harshest blows of the horrible economic conditions. In fact, the vast majority of the 500 shoppers surveyed by Opinion Dynamics for PMA say they have maintained their produce consumption at around the same level as six months prior to the survey, which was conducted Dec. 29-30, a time when holiday spending can add insult to injury for already recession-stretched shoppers.

One of the most interesting insights into shopper behavior uncovered by this latest research is that part of their steady consumption may be due to the fact that an overwhelming 95 percent of the primary shopper sample expects prices of fresh fruits and vegetables to naturally fluctuate during any given year. In other words, it is precisely because most fresh produce is viewed as a seasonal product whose price is impacted by shifts in weather and other factors that consumers give us some leeway in this poor economy. That fresh fruits and vegetables afford good economic and nutritional value because they pack many essential nutrients at a low cost per serving should only add to consumer loyalty these days.

At the same time, I need to draw your attention to continuing signs that I previously mentioned in my State of the Industry speech last October, which is that more consumers are looking at frozen foods as a cost-driven alternative to fresh produce. We have to remain very watchful of the competitive challenges posed by some frozen products, whose sensory quality, price points and convenience have improved markedly.

Retailers are being pressed to adjust to consumer demands for greater value throughout the store. Our research shows that promoting customer loyalty and purchases by re-exploring coupon solutions could go a long way in this economic downturn. Forty-three percent of the sample says they would be extremely likely to use coupons for produce, contrasted with only 33 percent who say they are not likely at all to use coupons.

Among the coupon clippers, circulars are their most likely source, followed next by mail and then in-store distribution. New technology offerings are still a small factor here — even in this age of constant connectivity, respondents cited e-mail and mobile devices as far less popular coupon-delivery vehicles. It will be very interesting to watch how this number changes over time once shoppers become more comfortable with their portable devices.

The fundamental demand for our fresh products is undeniable, and we have so many social trends on our side to drive demand. But we must also keep vigilant and focused through the current market turbulence long enough to plan for our future. In January, I was struck by the outstanding turnout and energetic dialogue at the Leadership Symposium hosted by PMA’s Foundation for Industry Talent and co-sponsored by PRODUCE BUSINESS and Cornell University.

In the depths of winter, and with the economy at its darkest, 100 industry leaders came together to discuss the skills needed to build a stronger produce industry. This was yet another sign of the enduring optimism of our industry, of businesses that are built by people looking ahead, rather than dwelling on the past. Whether at the Symposium, the upcoming Produce Solutions Conference in Nashville, TN, or the Foodservice Conference & Exposition to be held July 24-26 in Monterey, CA, industry leaders continue to look for valuable education and relationship-building opportunities to spark ingenuity.

I am always thrilled to see member companies capitalizing on PMA’s free resources, such as the crisis management and product recall guides and the complete consumer research reports highlighted monthly in this column. In the past two months alone, I have presented research to chronicle consumers’ produce purchase behavior before and during an escalating recession, a chronicle that will build in the coming months. This research can be routinely and proactively mined by members seeking to understand consumer behavior.

Spring weather brings rain as much as it does warm, refreshing breezes, and the recession’s unrest will undoubtedly stir more threatening days ahead. But like spying the season’s first robin, this recent news of consumer’s produce loyalty during the toughest financial times is a welcome sign.