Value-Added Answers Desire To Do Things Quicker, Without Compromising On Quality

By Anne-Marie Roerink, Principal, 210 Analytics

When visiting my native Netherlands I was reminded of the vast amount of value-added produce Europe offers its shoppers. Walking through produce departments where the range of precut and washed fruits and vegetables easily rivals that of unprepared produce, and meat departments with a predominant presence of pre-marinated and pre-cut meat, to refrigerated areas that offer complete fresh meals, I sighed that with a selection like this, I would be cooking all the time.

Supermarket chain Albert Heijn, for example, does an amazing job at offering a variety of vegetable mixes for signature Italian, Asian or Dutch dishes in produce, then carries through these meal themes in the meat department with pre-marinated and cut chicken, pork or beef. Solutions like that would be a big piece of the dinner puzzle to my time-challenged, dual-working, with-two-toddlers-household. For me, it puts convenience front and center.

And I’m certainly not alone in my quest for easier planning, shopping, preparation, on-the-go consumption options and packaging innovation. Consider these figures:

• According to the Lake Success, NY-based Retail Feedback Group, U.S. shoppers increasingly seek speed and convenience in pre-trip preparation. They found that more than one-quarter of shoppers have taken to digital shopping lists, either using apps or websites, citing speed, access to prior purchases and easier tracking of promotions as examples of convenience. Online ordering is also growing rapidly.

• Ease of shopping — in 10 produce categories, fixed weight exceeds 70 percent of sales, and in 20 categories it tops 40 percent of category sales. Fixed weight speeds up the decision at the point of sale, and is particularly enjoyed by Millennials and Generation X.

• Packaging innovation — solutions addressing on-the-go, kid-friendly, resealable, toppings or dressing included, etc., are all experiencing year-over-year growth. For example, cut fruit grew nearly 17 percent, according to IRI, and cut vegetables 13 percent. Snack pack vegetables gained 8 percent.

• Meal preparation — speed also matters in the kitchen. IRI found that microwave-ready vegetables grew 5 percent and ready-to-cook vegetables saw 12 percent growth.

This growth is driven by both increased household penetration and buying frequency. The 2016 Power of Produce study found that about two-thirds of survey respondents have bought some kind of value-added produce item in the past three months. For some (17 percent), this is their routine, go-to solution for fresh produce; but the majority of value-added buyers purchase select items only, or when in a hurry, when on sale or for special occasions. This translated into value-added fruit and vegetables, which includes all produce with some level of preparation, growing at a pace far ahead of the total market — at 10.1 percent versus 3.9 percent for total produce and 2.5 percent for unprepared produce.

Purchase predictions for 2017 show a status quo for 70 percent of current buyers, but 21 percent expecting to purchase more. Importantly, among those who say they purchase value-added produce “whenever possible,” 54 percent expect to further increase purchases, underscoring that growth is driven by a smaller, but loyal core to the segment. These include Generation X, affluent households, and families with children. And this is an important recognition because as much as I would like to see U.S. produce departments transform into European-style, value-added destinations, it isn’t for everyone. Demographics, lifestyle and life stage greatly impact purchasing habits; and items successful in one store may not work in another.

Barriers to growth include shoppers’ desire to cut/prepare fresh produce themselves versus having others handle the product (52 percent); the higher cost (49 percent); distrust of quality and freshness of the product (38 percent); and food safety concerns (26 percent). Additional concerns mentioned include the limited shelf-life of value-added produce, packaging waste and lack of availability such as organic or local.

While both dollars and volume show growth, there is a significant gap between dollars gaining at double the rate versus volume,  signaling some caution surrounding price premiums that need to be commensurate with the added benefits.

With control and cost being the two biggest obstacles to category engagement, retail tactics specifically addressing these concerns may help drive further growth. Sales promotions, whether item-specific or meal BOGOs, may allow current non-buyers to experience the convenience, de-emphasizing cost in the future. Explanations on sourcing and safe handling/processing may help overcome control or food safety issues, all the while driving messaging of health, freshness, and convenience.

Chances for continued, if not accelerated, a growth of household penetration, basket size and buying frequency are bright. Retailers and manufacturers who are changing offers rapidly and broadening assortment will undoubtedly unlock future growth.

Source: The Power of Produce 2016 — Shopper research by the Food Marketing Institute. Commissioned by the FMI Fresh Foods Leadership Council and made possible by Yerecic Label and Hill Phoenix. Research conducted by 210 Analytics.