3 years ago

ThePartnership no. 14

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Bring on the produce!

Bring on the produce! Let’s talk some more about the guiding principles of growth, starting with maximizing household participation and meal occasions Roerink: In the U.S., produce has a household penetration of 99.7% so locating new customers is like finding a needle in a haystack. Instead. Efforts focus on eating produce more often by ensuring produce is on the radar for every daily meal occasion: breakfast, lunch, dinner, snacks and drinks, including produce-infused water and smoothies. Retailers are bringing convenience-focused solutions and merchandise produce into other departments, such as potatoes or stir-fry veggies in the meat department. Additionally, as Americans are increasingly looking to food in disease management and prevention, the industry started to highlight specific benefits, such as Vitamin C, antioxidant or fibre to encourage eating fresh produce over taking supplements. Retailers and brands use in-store signage, package callouts, recipes and different preparation ideas to drive demand by educating consumers about benefits and nutrition. Verwegen: Traditionally, the focus in vegetable consumption in Northern Europe resides within the dinner meal occasion. But the younger generations are moving away from three meals a day and integrate many more meal occasions — driving increased consumption of salads and vegetable snacks. Fresh cut facilitates easy consumption and a tailored, innovative assortment of salad and stir-fry is what consumers expect in today’s market, particularly Dutch and English consumers, to the point of driving store preference. Retailers are starting to experiment with merchandising assortment based on meal occasions – snack, dinner, smoothies, etc. – rather than by item. A good example is the summer barbecue, with a focus on sweet peppers, squash and other grilling vegetables. Driving a premium basket: organic, local, value-added and brands The third guiding principle for category growth is driving a more premium basket Roerink: This is probably the biggest opportunity in the U.S., from organic and locally-sourced to value-added (processed) and brands. For instance, organic represents almost one-tenth of all fresh produce dollars, but reflects 20 percent of all growth. Cut veggies deliver a much sought-after solution for time-starved consumers and are delivering tremendous growth, far ahead of fruit. Lastly, producer brands are making strong inroads in the produce department, recognized for their quality, consistency and safety. All these items present higher sales and margin opportunities for retailers and by educating shoppers on the benefits and stories; there is still a lot of upside. Verwegen: Take tomatoes as an example. Taste is the overriding driver of price premiums. Prices range an unbelievable 2 to 20 euros per kilogram; where the true premium is priced per 100 grams instead of kilogram. Value versus premium choices have become a fairly easy proposition for the consumer through private brand system applied by many Northern European retailers. Choices are highlighted by price and packaging of the own brands. A true selective top product marketed under a producer brand can help drive easier acceptance of premium pricing. Pre-tailing, retailing and post-tailing: engage to drive trips When the value is clear, the decision is easy How about trips? What is happening there? Roerink: American consumers shop for groceries nowhere near as often as Europeans, averaging 1.5 weekly trips. On top of it, just 56 percent of trips include fresh produce. To encourage purchases, American retailers are focused on being a produce destination, with a great variety of high-quality, price-competitive offerings. Second, retailers try to optimize the number of times produce is bought when people are in the store through eyecatching displays, promotions and cross-merchandising. Lastly, retailers try to connect with shoppers outside the store through social media, texts, apps, emails and circulars to entice them with hot deals or delicious recipes to buy produce just once more that week. Verwegen: Creating more purchase moments is a significant challenge in growing overall produce sales as trips have been slowly declining for years. For example, Market Research Institute GfK reported an average of 99 trips in the Netherlands in 2017. How can we get back to 100, or even 105? Price-based promotions through flyers remain important, but digital offerings are growing fast. In England quantity-based promotions (X packs for Y price) have particularly been popular. However, most retailers are moving back to price reduction based offerings as trips started dropping, effectively accomplishing the opposite of creating more purchase moments. The fourth guiding principle of category growth is operational excellence. What can retailers, and other players in the industry, do here? Roerink: In produce, the eyes decide. Bad quality or poor appearance can cost you a planned produce purchase, regardless of how cheap the offer. The industry can work together on optimal quality, freshness and variety. Additionally, great execution can generate an impromptu purchase. Eye-catching displays, sampling, great promotions and an enthusiastic produce clerk are top ways to drive unplanned produce purchases. American retailers are investing in retail theatre and customer service to make sure every store trip includes the produce department. After all, a wow in produce, truly is a win all the way around. Verwegen: We see very similar trends in Europe, with a lot of focus on the displays, store décor, frequent rotation of items, seasonal must-haves, etc. – all aimed at consumers spending more than they had planned. These are ideas we need to explore wherever they come from and we are finding inspiration in other areas of the store, different countries and in all channels of retail. As a player in the supply chain, we recommend you look at the fruit and vegetable world through the eyes of the shopper: visit stores and study ideas that create value. With the four guiding principles in mind, I’m convinced the vegetable industry still has a lot of growth potential. 20 | The Partnership The Partnership | 21

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