November, 2013

Research Perspective and Comments & Analysis

How Evolutions In Meal Planning Are Changing The Produce Department

Kellie Beckel Senior Marketing Manager, Nielsen Perishables Group

Consumption patterns have changed from planning a week’s worth of home-cooked meals to planning only a few hours or minutes in advance. Shoppers are increasingly visiting the grocery store just to get something for dinner that night. The rise of “almost homemade” meals, snacking, prepared meals, and shifts in foodservice offerings have implications across the entire store, and the produce department is no exception.

Almost Homemade

Although many consumers enjoy cooking at home, they’re often too time-strapped to prepare an entire meal. Enter “almost homemade,” the concept behind meal solutions that are fast and easy, but still give the consumer a sense of having played a part in meal preparation (however minimal).

The packaged salad category offers evidence of this growing trend in the produce department. During the 52 weeks ending Aug. 31, 2013, the “completes/kits” sub-category accounted for 16 percent of packaged salad sales, which was an increase of 2 percentage points from the previous year. The category had a near 20 percent increase in the number of unique items; dollar and volume sales were up 23 percent, respectively. 

Many frozen meal starters are ideal for pairing with a side of fresh vegetables. Merchandising or cross-promoting these items together can drive incremental sales from the time-strapped shopper seeking a convenient almost homemade meal.

Prepared Meals

While some consumers still like to have a hand in preparing their meals, others are increasingly seeking prepared grab-and-go solutions from grocery stores. While this trend primarily benefits the deli department, certain produce items within deli prepared foods are playing a growing role in this upward movement.

During the past year, deli-prepared foods increased dollar and volume sales 7.7 percent and 5.9 percent respectively. Within deli-prepared entrees, vegetable entrees increased dollar and volume sales 8.9 percent and 10 percent, respectively. The deli salad bar contributed nearly 20 percent to deli salad sales, and increased dollar and volume sales 6.8 percent and 3.8 percent respectively.

Produce products also drove dollar and volume growth in the deli-prepared sides category. Potato and corn sides drove category sales with dollar increases of more than 10 percent, while broccoli and squash sides each increased dollar and volume sales by more than 20 percent.

While this growth is good news for the deli, it’s important for retailers to understand the space and its buyer in order to avoid cannibalizing from other areas of the store. Retailers and suppliers can help build on prepared foods sales and bolster produce sales by pairing prepared items with fresh produce complements to create almost-homemade solutions.

Snacking

Snacking as a meal supplement, even as a meal replacement, continues to gain traction particularly with the increasingly influential Millennial demographic. Several produce department staples are natural fits for snackers. Products like apples, grapes, berries and bananas satisfy consumer demands for both healthy and grab-and-go options. For example, the smaller Clementine orange variety outpaced overall orange growth, increasing dollar sales 37.6 percent and volume sales 42 percent, while oranges decreased dollar sales 1.2 percent and posted a slight volume increase of 2.6 percent.

However, categories that are tailor-made to meet snacking needs are posting rapid growth. In the produce department, the snacking vegetables sub-category (including items such as snacking carrots with dip, celery, vegetable mixes, vegetables and hummus) increased dollar and volume sales 15.8 percent and 17.2 percent, respectively, during the 52 weeks ending Aug. 31, 2013. The number of unique snacking vegetable items selling on store shelves increased 11.7 percent from the prior year, proving suppliers are innovating to meet growing demand. Fresh-cut fruit posted similar growth during this time period, up 15.8 percent and 16 percent in dollars and volume as well as 17.1 percent in unique items selling. 

Another growing snacking category is produce dips. During the latest 52 weeks, produce dips increased dollar sales 6.5 percent and volume sales by 8 percent. Additionally, the number of unique produce dip items selling on store shelves increased 6.6 percent. Vegetable dips had the highest contribution to produce dip sales, increasing dollar and volume sales 7.6 percent and 10 percent respectively. Vegetable dip sales outpaced fruit dip sales, which remained steady compared to the previous year. Fresh guacamole and onion dip increased dollar and volume sales by more than 15 percent, while fresh salsa increased dollar and volume sales 11 percent respectively.  Vegetable dips also drove the increases in unique items selling, increasing 9.2 percent compared to the prior year.

For retailers and suppliers seeking to capitalize on the snacking trend, merchandising that touts the healthy, convenient grab-and-go aspects of produce can help frame the shopper’s mindset. Merchandising items like celery and apples with dips and spreads could also spur incremental sales.                

 

Five ‘Evolving’ Challenges For Increasing Produce Consumption

A number of years ago, the head of the organization that represented egg producers gave a speech, and he confessed that egg producers had a problem. “The problem is that people want meals,” he explained, “And eggs are an ingredient.” For many vegetables, the problem is similar.

This research highlights the “four horsemen” of dietary change:

1) A confluence of trends that show people have neither the time nor the competence to cook, so they look for foods that are either ready to eat or easy to prepare.

2) Changes in societal patterns that make the “big three” meal occasions less predictable and that lead to more grazing or frequent eating and snacking, with a concomitant demand for easy-to-snack-on foods.

3) Higher education levels, more travel and a more ethnically diverse population allowing for more experimental eating and more rapid change in eating habits.

4) The latent instinct to prepare meals, to cook for one’s family and to be a nurturing contributor to the household through food preparation.

A salad kit is easy to prepare, easy to bring to work or school, and can use interesting ingredients. If one is serving it to family, then one can easily add a personal touch with some tomatoes, cucumbers, steak or Grandma’s homemade salad dressing. So there clearly are ways that the produce industry can ride these trends. Yet, the research also points out five fundamental challenges that the produce industry faces:

First, although we have various items that become hot and trendy, there is little evidence that these trends serve to increase consumption as they mostly replace other produce items. So a restaurant chain, such as Houston’s, rides the kale trend and introduces a kale salad in peanut vinaigrette side dish — but it is simply a replacement for some other vegetable item. It has zero net effect on overall sales of produce to the restaurant and, since we don’t know if more people eat the kale than would have eaten the old produce side dish, we can’t know if it has any positive or negative impact on overall consumption.

Second, the consumer quest for convenient food mostly leaves the vegetable category struggling. Increasingly, it means that growth in the category will come as a consequence of the creativity of the fresh-cut processing sector. Can they create the items that will turn vegetables from ingredients into foods?

Third, the rising interest in purchasing ready-to-eat or almost-ready-to-eat meals obviously helps take-out at restaurants, the deli counter, and prepared food bars at retail, but how does the produce department thrive in an age when business is shifting? Although one might think that for the grower-shipper, it makes no difference if the produce is sold in the produce department or via the deli or a restaurant, it actually makes quite a bit of difference.

The produce department, and the people who run it, actually care about produce and increasing the sales of produce. In contrast, the food buyers at restaurants or deli generally couldn’t care less if the consumer eats produce or dairy or meat or pasta — losing someone at retail who actually cares about selling our products is a big loss.

Fourth, the idea of “almost homemade” is really another take on the “Hamburger Helper” effect, in which consumers feel good about doing something to create the meal, even if it only takes a minute. The problem is that boosting consumption will probably require more, not less, culinary expertise and intervention, as the key is to use techniques for cooking vegetables that cultures, which did not have access to much protein, used to make produce tasty. Cross-merchandising and marketing with frozen entrees may be successful, but won’t be the sea change we need to boost consumption. Plus, although fresh broccoli alongside a frozen entrée might be a little more upscale, very often that frozen entrée is thrown in the freezer for use on an unpredictable date in the future. Isn’t it likely that the consumer satisfied with a frozen entrée will be just as satisfied with frozen broccoli?

Fifth, it is great to see growth in categories such as dips, salsa, juices, etc. —  as long as produce is tied with these items. Due to practicalities, happenstance and strategy, it is nice that these products are rung up under produce, but the key is that the consumer must use baby carrots, celery sticks and grape tomatoes with the dips — not chips — and eat a salad — not a cookie — while they sip the juice. If not, regardless of how retail classifies these things, for many growers these ancillary categories are competition.

What is certain is that the consumer is changing, and as the consumer changes, so will retailers. If it is to remain vibrant and strong, and a key differentiator for the retailer, the produce department must evolve as well.                            pb