Opportunity For Produce In Food Cost Hikes

The fresh produce department occupies the most valuable position in supermarkets. I choose these words carefully because this position is more than just the real estate. It’s a position combining profitability, image-setting for the whole store, nutritional appeal, a plethora of appealing cultural flavors in our melting pot society and the frequency of shopper visits, as produce is both fresh and perishable. As the produce department goes, so goes the store.

Profit margins aside, the department’s stocking of hundreds of unique produce items provides diversity to satisfy wide-ranging consumer tastes and preferences. Such diversity captures both sales of staple fruits and vegetables and lower-volume specialty items, adding to the department’s profit potential. Its potential is also seen as a bright spot for retailers and the entire produce industry amid the dreariness of today’s rising food costs storewide. Remember too that supermarkets have been the beneficiaries of greater customer traffic as people eat out less and eat at home more.

Consumer research conducted for Produce Marketing Association (PMA) by Opinion Dynamics Corporation in September 2008 indicates that despite a clear perception that fresh produce prices are on the rise, most consumers are reluctant to cut back on their fresh fruit and vegetable purchases. In fact, among the 500 consumers questioned in this national telephone survey, a full 70 percent of the sample either maintained their fresh produce spending during the three months prior to September or actually bought more fresh produce. Consumers seem to recognize the value of produce in managing food costs by downsizing or eliminating higher priced proteins in favor of retooling household menus with more innovative uses of the wide variety produce offers.

Consider that an overwhelming 88 percent of consumers surveyed say per-pound prices for fresh fruits and vegetables rose in June, July and August 2008. Yet in this same period, 26 percent of them say they have purchased more fresh fruits and vegetables. In addition, 56 percent of the consumers reported not making trade-offs about what to buy or not buy in the produce department as a result of price increases. PMA members will find additional insight in the full research report, which is available through PMA’s Solutions Center.

Furthermore, consider the recommendation of the Dietary Guidelines for Americans, which states that fruits and vegetables, along with grains, are the only food groups that people should be eating more of, not less. These guidelines, combined with the economic and nutritional value fruits and vegetables offer, present an ideal opportunity to increase produce’s share of the plate. Imagine shrinking waistlines and reduced obesity resulting from improved health as Americans eat more fruits and veggies to control their food costs. Think of how this should bring new meaning to “tightening one’s belt” during a recession.

Americans enjoy the lowest percentage of disposable income spent on all food, and we’re now seeing that cheap and plentiful eventually has a higher price long-term. The reality of increased food costs indicates that cheap is not sustainable, whether for our farmers, for our environment, or for consumers.

Yet, at the same time, within the competitive marketplace of all foods, what we offer in fresh produce is so superior that we should be promoting that advantage in marketing our products. Because the fresh fruit and vegetable industry already enjoys a high level of product diversity, consumer loyalty, health community support and product affordability unmatched by any other food category, our industry’s opportunity during economic market disruptions could be as bright as the sun that nourishes our crops. Strategically, we must ramp-up our communication of all the benefits of fresh produce, which have led to our shopping-cart staying power during these difficult times.

To ensure you are attuned to our changing economy and the message points that resonate most with customers, I encourage you to attend this year’s PMA Produce Solutions Conference, to be held in Nashville, TN, in March. Attendees will learn much more about the impact that economic market disruptions are having on the produce supply chain, and how to turn these obstacles into opportunities. After all, many great innovations and opportunities are sparked by the greatest disruptions.

We all must be on the lookout for opportunities everywhere and anywhere, including making sure we have an up-to-date understanding of our consumers’ perceptions. Most fresh fruits and vegetables appear to be among the last things consumers are willing to sacrifice from their grocery lists. This is a unique opportunity that could maintain — and perhaps even boost — produce department sales, and in the process lead to healthier Americans. Consider it a win-win situation.