October, 2007

Research Perspective and Comments & Analysis

Sharing The Value Chain

This year’s PMA Fresh Summit expo halls will be chock full of industry efforts to better connect with consumers, from more environmentally friendly production practices, to easy-serve and recyclable packaging, to licensing popular characters to engage children in healthful eating. But perhaps one of the most influential actions a company can take involves not the face of a cartoon character but the face of the people behind the produce, according to PMA’s latest consumer survey of consumer attitudes about social responsibility.

We learned loud and clear from a telephone survey of 1,000 key consumers at the end of July that the social responsibility of companies growing and selling produce is highly important to consumers when making produce purchase decisions — in fact, 55 percent place the highest degree of importance on this factor (with a mean score of 4.1 out of 5).

Not surprisingly, however, respondents diverged on how they define social responsibility. They were read a list of issues related to social responsibility in growing and selling fresh produce and asked to rank their top three issues. Organics tops the list for 13 percent of respondents, while distance from farm to store and fair living wages each rate next with 11 percent. Global warming garners 8 percent and recycled and recyclable packaging earn 8 and 7 percent respectively — and when combined at 15 percent, packaging rates higher than any other issue. (Meanwhile, 9 percent of consumers reveal they don’t know what their most important social responsibility issue is — again highlighting that this social trend is still in its formative stages in the minds of many customers.)

This research tells us consumers look to their produce suppliers to help them be more socially responsible — and this presents us with the opportunity to build a deeper relationship with them. Yet, in working to make the produce supply chain more efficient over the years, it looks as if we have missed this opportunity; consumers now view themselves as more socially responsible than they view business, including the produce industry.

About one-third (33 percent) of surveyed consumers label themselves as extremely socially responsible, another 32 percent as at least somewhat socially responsible. Meanwhile, only 24 percent assign the same tags to business in general; the produce industry is better perceived, with 33 percent rating us as being either somewhat or extremely socially responsible. Clearly, for a produce industry to which sustainability is central to our very being, we have room for improvement.

What can we do about it? Consumers draw conclusions of social responsibility from the face a company reveals. To them, produce isn’t about building a better supply chain; it’s about building a better value chain. In focusing the past few decades on making our supply chain more efficient, we lost a link to our end customer. We must now get back to the basics — we must devolve to evolve to the next level of customer relations.

It shouldn’t be hard for us; sustainability is at the very heart of our farming traditions. We need to share the values inherent in our value chain by putting a face with the food our customers eat and touting our already socially responsible activities. And where we find ourselves lacking, we need to consider change.

First, look in the mirror and inventory the sustainable steps you’re already taking. Share how your organization takes responsibility for the impact of its activities on customers, employees, shareholders, communities and the environment — whether paying your workers a fair wage so their children can go to college with yours or analyzing your packaging to maximize product protection while minimizing environmental impact. Then, maximize your communication opportunities through that packaging, your Web sites and other means to share your company’s story. Place a friendly company face on packaging; post family recipes online. Reveal the human side of your business, and make your customers a part of that experience. Social responsibility is all about connecting, less about selling. Yet if positioned honestly and authentically, social responsibility speaks directly to consumers’ values and can earn unwavering customer loyalty in the process.

As I walk the floor of Fresh Summit in Houston, the heart and soul of our industry will come alive in the new and familiar faces I see all around me; it always does. As growers and suppliers of the most healthful and delicious foods available, we know social responsibility is embedded in our work — in sound growing and production practices, consumption and nutrition, packaging and transportation, and food safety and security. Doing an even better job of revealing our industry’s heart and soul may well be the key to our success for decades to come.

Let me add a special footnote for those readers of Produce Business who are in Houston and reading this article: I hope you’ll consider attending Jim Prevor’s presentation on new research just conducted in the United States and United Kingdom during the workshop entitled What Do Consumers Really Think About Corporate Social Responsibility?

I know Jim will have a lot to add to the understanding of a consumer trend that is still in its formative stages. Hosting this important workshop is just one way in which PMA is helping develop our collective understanding of a social trend growing stronger every day.

Just Being Nice?

When consumers tell us things that are hard to believe, the role of the researcher is to ask simply this: I wonder why the consumer is telling us such a thing? So when Bryan explains the PMA research shows “the social responsibility of companies growing and selling produce is highly important to consumers when making produce purchase decisions,” we have to wonder what this could possibly mean.

The vast majority of items sold in the produce department are not branded; others have labels with names of obscure produce companies unfamiliar to consumers. In most cases those names aren’t the actual grower anyway — just a packer or processor. Plus only a few names sell more than one category. A typical produce department can represent hundreds of vendors and tens of thousands of growers.

One would have to believe at least 55 percent of consumers are spending countless hours on the Internet researching produce vendors and their suppliers to think consumers have any information on this subject — much less enough for it to be a “highly important” factor in purchasing decisions.

Since nobody really believes this, we are left wondering what this statistic could mean.

This question is reinforced because in response to PMA’s social responsibility list, no issue was ranked as No. 1 for more than 15 percent of consumers. This raises the likelihood that not only don’t consumers have the information needed to evaluate produce companies on social responsibility issues but there is also no consensus on what social responsibility actually means.

This is important because it is quite possible consumers mean different things by terms such as “social responsibility” than do “experts” in this field. Experts tend to be talking in macro — how a chain or a store impacts the world. Consumers often look at these things in micro — how a store or chain affects my community.

So to the experts, a chain that spends millions buying “carbon offsets” may score high on sustainability. Consumers might view a chain that doesn’t do that but spends the same money rebuilding a local park, helping local schools and hospitals, etc., as more “socially responsible.”

It is not surprising consumers would consider themselves more socially responsible than business. The term is so vague and so subjective it almost boils down to being “nice” — treating other people well, not littering, cleaning up after oneself, etc. With such a definition, we shouldn’t be surprised if consumers think they are nicer to their friends, relatives and co-workers than companies are to their employees or suppliers.

In all likelihood, PMA’s finding about the high value consumers place on social responsibility points to three ideas:

1) It gives us a sense that this is part of the zeitgeist, a German expression roughly translated as “the spirit of the age.” People do not live in isolation, and part of what they search for in selecting product and services and choosing shopping venues is the approbation of friends and relatives. So we can surmise that when social responsibility distinction can be communicated to consumers, a positive reputation for social responsibility will be an effective tool in attracting customers.

In another time, people might have been proud to tell their friends all the fresh produce items at tonight’s dinner party were grown in their own Victory Garden. Today they might identify that the store where they shop supports local farmers or the produce is grown in a way good for the environment.

2) The study also may point to the risk of being identified as not socially responsible. Because consumers have so little information, allegations and news reports can powerfully influence their actions. This is nothing new. The famous “grape boycott” was successful both because consumers wanted to avoid companies perceived as socially irresponsible and because they had no knowledge of the way grape farmers treated their labor nor of the intricacies of union politics.

There is also a waterfall effect. Retailers who don’t want to be seen as socially irresponsible may simply stop carrying brands or products identified negatively on these measurements. In any case, there is an enormous downside risk to being identified as socially irresponsible and, this, as much as any upside to being identified as socially responsible, might justify efforts by any industry member to perform well in this regard.

3) We can see the incipient importance of certifications. Combine a desire to be on the right side of these issues with consumer ignorance of the facts and a virtual impossibility of gaining the facts on their own, and one has a recipe for certifications to be effective at boosting sales, enhancing retail reputations and preserving shelf space at retail. Consumers may not be able to investigate a company’s environmental impact, but a “Rainforest Alliance” certification can reassure.

The consumer cannot be expected to know how much a grower in a third-world country pays its employees, but a “fair-trade” certification can allow consumers to feel good about their purchase. Retailers can be expected to want to benefit from the halo effect of these types of certifications as well — thus making a certification a powerful argument for a slot in the warehouse and shelf space in the store.

Bryan has it precisely correct when he says, “Social responsibility is all about connecting, less about selling.” It is ultimately about setting aside the usual commercial concerns such as product and price and allowing customers — both trade customers and consumers — to evaluate whether you, as a company, are the kind of organization they want to do business with.