August, 2006

Research Perspective and Comments & Analysis

Culinary Cues For Retail

As I attended PMA’s 25th Anniversary Foodservice Conference & Exposition in Monterey, I was struck by the learning opportunities for retail and foodservice. Watching students from the Culinary Institute of America (CIA) as well as published experts weave their artistic magic, I wondered how we could capture some of that artistry into retail merchandising.

Dining out is a mind- and taste bud-expander for retail shoppers. Consumers enticed by a restaurant culinary experience often set the food trends that migrate to retail. It is the wise and profitable produce manager who monitors and capitalizes on foodservice cues to meet the next trend before it begins.

PMA research reveals 37 percent of people indicated they tried a fruit or vegetable in the last year while dining out and later looked to buy that fruit or vegetable at retail. This is most likely for those 46 to 54 or under 30, those earning $50,000 to $75,000 a year, African-Americans and Hispanic-Americans.

When asked to specify which fresh fruit or vegetable that was, a cluster of produce items rose to the top of the list — headed by mangos at seven percent. Broccoli, asparagus, apples, strawberries and cantaloupe were all mentioned by six percent of those surveyed.

If I were a savvy retail salesman or marketing guru working for a produce company, I would be checking foodservice trends to advise my retail customers what they need.

All research points to convenience as a major reason foodservice enjoys nearly half of consumer food dollars. Dining out is in a variety of ways a liberating experience for the time-starved consumer.

Retailers are blurring the lines between foodservice and retail with a new generation of take out/home meal replacement products and services. Consumers interested in duplicating the foodservice experience at home are responding in droves.

Menu items become recipe ideas for the home. The following are retailer-relevant highlights from two PMA-sponsored foodservice studies — each involving 1,000 consumers — in recent months.

Taste matters most (and produce rules)

I will beat this drum until the message truly resonates — taste matters most. It matters most in foodservice and retail, and it matters most if we are to reach our goal of increasing consumption. Consumers rate fresh fruits and vegetables on a menu as a key factor when deciding which restaurants and entrées to choose. PMA consumer research indicates flavorful produce availability is a major factor when choosing a retail store.

Lessons learned in a restaurant apply to retailers

Almost four in 10 consumers liked a produce item so much when dining out that they sought it out when shopping. This is a great introductory tool. Retailers can take the cue — consumers are willing to try what was previously a mystery if they have sampled it.

Nutritional content is important…

Consumers claim to focus on health when dining out, particularly those over 45. Twenty percent say they order from healthy sections on menus, when they’re available. PMA research shows that, at foodservice establishments, women consider nutritional value in addition to taste. Fifteen percent of consumers regularly ask for more healthful substitutions.

…but don’t make the dining table a nutrition lab

People are conscious of a meal’s nutritional component, but they don’t want too much information. Most consumers do not want nutritional content listed on the menus. Two-thirds of the public prefers nutritional information be available separately upon request.

Organics are in demand, but the premium has limits

While a substantial number of consumers are likely to order organically grown produce from a menu, a 20-percent cost premium would move a majority away from the choice.

Our research shows organic produce has met great acceptance but has not yet captured the public’s heart. When consumers were asked, “Are you more or less likely to order a fresh fruit or vegetable menu item if it is organically grown?” 34 percent said it made no difference, 35 percent said more likely and 28 percent said less likely.

The most likely to order organics are under age 30. The 35 percent who say they would be more likely to order fresh fruits or vegetables from a menu if they were organic often give health-related reasons, followed distantly by taste, overall nutritional value and environmental friendliness.

Salads are hot

Side and entrée salads were a popular consumer choice. Satisfaction with produce is similar for fine dining, casual dining and fast-food venues. Attentive produce merchandisers see a broad dining sector that consistently wants salads. The market for salad ingredients and the broad range of dressings, kits and toppings seem in no danger of a slowdown. Consumers are looking for ways to easily mix packaged salad basics with a ready-to-eat protein to mirror the experience of salad entrées prevalent in casual chain restaurants.

It’s very important to note 87 percent of consumers indicate they order produce at the foodservice level because of taste. A note to retailers: only 8 percent said this is “somewhat important!” One percent indicated taste is “not very important” and 2 percent said taste is “not important at all.”

One of the biggest challenges we face is how we reward suppliers who deliver great tasting, de-commoditized products time and again so that retail merchants can sell, and sell, and sell. It’s one thing to say taste is where it’s at for the consumer, but it can be another thing altogether for suppliers to receive consistently higher returns for the value they’ve added in this way.

We must listen to our consumers and understand what they treat as value. With taste at the top of their decision tree, where do we then put it on our industry’s value chain? There is so much more value in our produce than meets the eye.

Poor Taste No Accident

As with motherhood and charity, few are prepared to say a word against taste. Certainly there is unanimous agreement that produce items should taste wonderful. Obtaining this, in some cases, may require complicated varietal research and a changeover of crops. In other cases, it may require the development of new taste-based specs for retail procurement.

We could improve the taste consumers experience on many items right now, except that short-term interests of the trade stand in opposition. Take apples, for example. Here is a dirty little secret: Apples require refrigeration. Frieda Caplan once addressed the Washington apple growers, pointing out they spend fortunes refrigerating their warehouses and shipping in refrigerated trucks. Then their product is, more often than not, put out in the stores on a non-refrigerated display.

There is plenty of blame to go around. On the one hand, it is terrible for retailers to make a conscious decision to reduce the eating quality of the fruit they are selling by putting items needing refrigeration on dry racks. On the other hand, trade promotion groups and individual shippers regularly push to get placement on big dry tables at the entrance to produce departments — regardless of the effect on the product.

In the short term, putting any item in a large display in a prominent location — far easier to do when you aren’t limited to refrigerated cases — is a surefire way to boost sales. But long term, people who buy mealy apples will buy fewer.

The same dynamic occurs with many seasonal fruits. The first fruit hits a short market with consequently high prices. This encourages growers to pick fruit not at its peak of flavor. Retailers often demand this sub-standard fruit so they can gain a competitive edge over other retailers as the first to feature it.

Unfortunately, the dynamic is now well established. The first fruit of the season comes out. It is bought up at high prices. The poor taste turns off consumers. This reduces consumer demand for weeks.

The challenge for the industry is how to break the cycle that perpetuates poor taste. In Florida, the state restricts shipment of grapefruit without a minimum brix level. There may be a possibility of putting this type of taste standard into grade standards, and PMA might serve a useful purpose by putting together a task force to examine its feasibility.

There may be a competitive advantage for retailers or shippers willing to make taste a priority and eschew things such as dry racks for produce that requires refrigeration or featuring early product without taste.

But it is not an accident that a lot of produce isn’t optimal in flavor. There are real issues driving this, and resolving those issues is the key to improving flavor.

One reason people enjoy fresh produce in white tablecloth restaurants is that the chefs exercise judgment. A product may be available 52 weeks a year, but chefs don’t put it on a menu 52 weeks a year because the taste isn’t optimal. Great restaurants adapt their menu to the availability of great ingredients.

Retailers can help consumers enjoy produce in that way by highlighting the quality of various produce items. This function isn’t really in the DNA of most produce departments because from time immemorial, produce was available only when it was fresh, seasonal and tasty. So the mere display of peaches was an announcement local peaches were in and juicy. Then they were gone.

Now, when produce departments sell pretty much everything all the time, consumers would benefit from some guidance about what is really at peak flavor — right now. The produce department is a funny place. It has the variety of frozen or canned — but without the consistency of flavor. This is both a challenge and an opportunity for effective merchandising and marketing.

Bryan’s take that retailers should focus on learning from foodservice is a wise one. However, the competition between the two sectors is overrated. Those numbers showing 50 percent of the consumer food dollar being spent on foodservice focuses on dollars, not amount of food. Most food is still bought retail. In addition, much of the foodservice business is inaccessible to retail competition, with hospitals, prisons, the military, nursing homes, etc., all in foodservice. Add to this cruise lines, hotels and vacation eaters, plus those who want an out-of-house experience: teenagers on dates, harried parents looking to get away from the kids. There is no competing to win over any of this business to retail.

All this exposure to foodservice, however, does alter consumer expectations. Consumers who knew only iceberg lettuce try a spinach salad and learn they like it. They read on a menu that they are eating heirloom tomatoes and decide they love the flavor.

There is a lesson in this for retailers as it implies they need to be looking for products restaurants like to feature. There is also a lesson for shippers and promotion boards.

Many years ago, I heard a speech at a pistachio growers meeting by Dick Spezzano, who at the time was working as the produce director for Vons and had recently finished his gig as chairman of PMA. He urged growers to consider doing what was necessary to get their pistachios into a bucket at the Sizzler salad bar. There could be no better sampling program.

Sizzler has gone through Chapter 11, Spezzano is now a consultant, and the PMA chairman isn’t a man — she is a woman named Janet Erickson who works for a foodservice operator named Del Taco. A lot has changed, but the point still resonates: The produce trade needs to look at foodservice and try to take advantage of an extraordinary sampling opportunity.