February, 2013

Research Perspective and Comments & Analysis

Boomers Grow Up Eating Their Fruits And Vegetables

By Darren Seifer, Food & Beverage Industry Analyst, The NPD Group

What does a tomato or a banana mean to a retailer’s customers? Actually, it can mean quite a bit in terms of driving retail traffic. The NPD Group’s food market research, which continually tracks what individuals eat and drink, shows that 60 percent of primary shoppers say liking a store’s produce is one of the reasons they regularly shop at a particular store. Having consistently fresh produce and a wide selection is of great importance to getting these consumers to walk through the doors. Understanding and meeting the needs of the different types of produce consumers is another key to driving traffic in the produce area. Let’s take Baby Boomers as an example of a produce consumer base.  

As we move into the next 10 to 20 years, a major consideration for producers, manufacturers, and retailers alike will be the aging Boomer population. Comprising roughly 25 percent of the U.S. population, this generation will see kids leaving the home and parents entering retirement years (or at least planning to retire). We have seen this with other generations before, but this time it’s happening on a much grander scale.

Fruit and vegetable consumption tends to increase as consumers age, tied to increasing health concerns. Also consider that older Boomers, those born between 1946 and 1955, already have begun to increase their consumption of store-fresh fruits and vegetables. National Eating Trends reports the average older Boomer consumed fruit 182 times in 2012, up from only 118 times in 1999. The story is similar for vegetables: now older Boomers consume vegetables about 174 times per year, but in 1999 the average was 149 times.

This research also reveals some channels are doing much better than others at attracting these consumers. For instance, a greater percentage of shoppers more loyal to conventional supermarkets/grocery stores say they like the produce at those stores more than shoppers of natural/gourmet stores that specialize in organic produce. At first it seems counterintuitive, but peeling back the onion’s layers shows the natural channel is best at attracting people who are looking for unique items as well as organic foods and beverages. This channel pulls in produce-minded consumers who are loyal to other channels, but who are willing to shop around for their produce. This emphasizes the importance of produce to the natural channel, but it also highlights opportunities for other channels to increase their basket sizes with stronger produce offerings.

Since vegetables are often served as a side dish, particularly at dinner, it’s important to look at produce in the full context of eating. Marketers and retailers should consider either cross-marketing or placement strategies that more closely align with consumers’ dinner plates. For example, when looking at all dinners containing a vegetable side dish, chicken, beef, and pork are the top center-of-plate dishes served in those instances. Sandwiches and burgers are also top main dishes at dinner, however, they are less likely to be consumed with vegetables, NPD’s National Eating Trends data shows.

There has also been much concern recently surrounding children’s eating habits and that they may be contributing to obesity. A study conducted by the University of North Carolina showed kids are snacking on about 586 calories per day from snacking occasions alone, which is up from 418 in 1977. While it is true that kids often snack on sweets and savory items, the silver lining is that parents seem to be taking charge of their children’s snacking habits. Over the past 10 years, fruit has grown to become the top snack food for kids, particularly those ages six to 12. This hints at opportunities for retailers to adjust their fruit sections to accommodate snack-minded consumers, and shows retailers’ commitment to the health of customers and their families.

NPD’s food market research shows that the quality and freshness of produce is a driver of store traffic and builds retailer loyalty. Boomers grew up hearing that it was important to eat their fruits and vegetables and it’s a lesson they increasingly practice as they age. Understanding the life stages of consumers and their mindset about produce will help increase store traffic, loyalty and dollars.

An Opportunity Not To Be Missed

Certain behaviors are closely correlated to age. Want to be a Public Policy genius? Find a cohort of children much larger than the current generation of teenagers and young adults and declare that violent crime will increase over the next 20 years. Want to be a genius twice? As this large generation hits 40, confirm that the generation behind is much smaller, then announce that violent crime will decline over the next 20 years.

So the produce industry may well get in trouble as it looks over the next few decades and sees rising per-capita consumption, which is actually caused not by increased popularity of fresh produce, but by the age curve of consumers. We may declare ourselves geniuses for our marketing acumen and be totally shocked when consumption starts to drop as the high-consuming age cohort begins to be superseded by much smaller numbers.

Whatever people consume, it is not hard to come up with reasons why produce quality, variety and price would compel shopper visits. Grocery items are interchangeable, so it is difficult to drive traffic with your spiffy display of Tide. Yet it is also true that one shouldn’t overplay the meaning of surveys such as this. Things that tend to win the acclaim of large numbers of shoppers also tend to quickly be focused on by most chains. So they become not so much a winning strategy as the ante necessary to play in the game. There are, of course, differences between banners in their emphasis on fresh produce, and thus, on the quality and variety available and even on the price, but if you compare, well, apples to apples, say two upscale chain stores of around the same square footage serving similar demographics in the same neighborhood, typically, one finds pretty similar produce departments.

So the consumer winds up getting attracted by offerings that seemingly are of low importance on surveys. In other words, if cleanliness is important to 98 percent of shoppers, and as a result all the stores focus on cleanliness, then it might be the selling of Kosher food or organic food, though important to only a tiny percentage of consumers, which actually drives store choice.

The role of produce in attracting shoppers from one store to another is interesting. In urban areas, there has been an explosion of ethnic retailers. These retailers succeed in no small part because of their razor sharp focus on a particular consumer, specifically consumers of a particular nationality or ethnicity. This focus tends to edit grocery assortment severely, so most shoppers won’t be satisfied by these stores — they don’t carry the brand of pasta sauce or soup the mainstream consumer seeks.

However, although some of these stores add some produce items, say carrying more chilis or peppers, they typically offer a robust produce selection. In fact, because these ethnic stores are quick on the dime and opportunistic buyers, they often can offer very good produce for truly bargain prices. So the produce selection serves as an independent draw for mainstream consumers.

Marketing and merchandising, as Churchill said of Russia in another context, is a riddle wrapped in a mystery inside an enigma. So if one must choose, it is not completely clear whether it is wiser to merchandise with the main-plate protein because side dishes are customary there, or to merchandise with the sandwich and burger fixings to push the idea that produce can enhance these items. Of course, the real winner is when one can introduce consumers to meal alternatives where produce takes center stage — say a stir-fry, where the protein is more an accent and the produce is the star.

There are, indeed, lots of opportunities to sell snack fruit to children. A not insignificant part of the boom in Mandarins is that they are such a perfect fruit for children. Being small, the Mandarins fit in the hands of a child; they are seedless, sweet, easy-to-peel, really a perfect storm of snack fruit for a child. Add in the role of fresh-cuts, where things such as watermelon spears and cubes have transformed a relative rare summertime specialty into an everyday dish in refrigerators across the country.

Of course, if we really want to train children to eat healthy, we have to condition their taste buds to appreciate more bitter vegetables. That is a tough sell, but the good news is that with all the Baby Boomers around, all suddenly mindful of their mortality, displays and information supporting the health benefits of vegetables of all types have an appreciative constituency ready and waiting. That is an opportunity to boost sales, please customers and help the health of American consuming public — in other words, an opportunity not to be missed.