March, 2011

Research Perspective and Comments & Analysis

Health & Nutrition Claims Work For Produce: Hard, But Not Impossible To Make Money!

By John L. Stanton, Chair, Department Of Food Marketing, Saint Joseph’s University

 Given Wal-Mart’s new commitment to health and nutrition with fresh produce, one of the enduring questions among produce marketers is, “Does promoting the health/nutrition benefits of a product work?” I would not have the hubris to think that question can be definitively answered in this article, but there are some insights that might make the decision more effective and expectations more realistic. The first question to ask is, “What do you mean work?” The easy answer is, “make more money.” However, I am sure you guessed that it is not that easy because, among other things, one must specify over what period of time. 

The first problem is that consumers do not often do what they say they will do. In the short run, it may be difficult to get consumers to act on what they plan. While numerous reports show that consumers have a substantial desire to change their behavior toward eating more healthful foods, they often don’t. A Mintel report on Functional Foods in 2009 said:

“By and large, Americans have good intentions when it comes to diet and health. Nearly two-thirds of respondents claim to try to eat healthier foods these days, and more than half agree that they work at eating a well-balanced diet. Yet for many, healthy eating can be a challenge. Some 38 percent, an increase of four percentage points over 2006, say that they don’t have enough time to prepare and eat healthy meals. Fewer than half claim to try to avoid empty calories or check food and beverage labels before purchasing them. Fewer than three in 10 claim to eat five servings of fruits and vegetables a day, as long recommended by Produce For Better Health’s Five-a-Day program.”

A second issue in promoting healthful foods is the fickle nature of the American consumer, which is fed by the media hyping every new research report by PR-hungry researchers. Each week, some new report hits the airwaves about how this “new” nutrient will cure something. Consumers have become inured against the constant barrage of what cures what.

Nutrition has become a fad, not a trend. Some of the really big media/press “nutrients stars” in the past were lycopene (remember when tomatoes where the big health food star?), vitamin E, vitamin C, zinc, beta carotene, and there was even more hype for diets like low-carb, Scarsdale, Calcium-based, Grapefruit and the Hollywood diet, to mention a few. Google trends also show that concepts like low-fat, low-cholesterol, low-salt and zinc are all trending down since 2003. It is important to note that vitamin D still has a positive growth trend, as Google trends shows an upward trend in both vitamin D online searches and number of new releases. However, consumers are still searching for the fountain of youth that evaded Ponce De Leon so many years ago.  

In the face of these obstacles, can produce make money promoting health and nutrition? To answer this question, one must consider both the long- and short-term benefits. Let’s consider the short-term. By short-term, I mean look at whether sales increased more during the time period that a specific produce item is being hyped as having some important health value.

Let’s look at some other products for examples. Blueberries were identified as a “superfood” around 2000. Using USDA disappearance data, blueberries had an average annual increase in sales of about 6 percent from 1980 to 1999, and from 2000 to 2009, the increase was 30 percent annually. For perspective, that was 73 pounds in 2000 to 292 pounds in 2009. At the same time, prices for wild blueberries grew from $1.20 per pound to $2.45 per pound (cultivated had a similar pattern). Spinach had about an average annual increase of 14 percent in sales from 1980 to 2000. However, from 2000 to 2007 it increased about 17 percent per year.  Per-capita consumption went from .44 pounds to 2.2 pounds per year, the highest since the mid-1940s. 

Not all the health and nutrition promotions were successful. Look at oranges. Oranges have been promoted as a nutritious food for years yet, per-capita consumption of orange juice has been steady or declining...and everyone believes oranges are good for you! Oats were called a “superfood” and were identified as a cure for just about everything, and its sales increased by 2 percent per year from 2001 to 2008, when the sales increased an average of less than 1 percent per year from 1974 to 2000.

Orange juice may also provide another lesson: The value of the media spotlight to create a sense of newness. The issue with orange juice may be that everyone already believes that orange juice is good for you. Continuing the message may not be enough to motivate consumers to buy. On the other hand a “new” discovery about a food such as mushrooms and Vitamin D may attract new consumer interest for a new discovery. The media spotlight gives the marketer a new angle for the existing product. But remember, “new” doesn’t last forever!

Finally, there is the example of walnuts, which are a plant source of omega-3 fatty acids, another hot nutrient on consumers’ lists. Walnuts are an example of the difficulty of getting the facts right. A recent press release from the California Walnut Board reports, “Walnut harvest will be 17 percent higher than the previous year.” It also says, “Consumers continue to demonstrate a strong preference for walnuts...Nielsen reported in 2009 that omega-3 foods [which includes walnuts] bucked the recession and recorded a 42 percent growth last year.” However, it does not show how much walnut sales increased. However, USDA data shows a change in per-capita consumption, based on disappearance data, of almost no change averaging about 0.4 to 0.5 pounds.

Another reasonable question to ask is: Have other fruits and vegetables had increases in consumption similar to the superfoods mentioned above? In other words are these real increases or just part of an overall produce trend? Most research reports agree that consumers are not eating more fruits and vegetables. A report on WebMD highlighted a Johns Hopkins study that showed among U.S. adults, fruit consumption is holding steady, but vegetable consumption is headed down — even if you count French fries. Using this as a milestone, the increases shown above for the superfoods are substantial, as they have “bucked the trend.” The simple answer is that there may be positive short-term results from nutrition/health marketing, but expectations must be tempered.

However, the real value may be in the long-term. To look at the long-term, we have to go back far enough for a trend or fad to have come and gone — or stabilized. Using data from New Product News from 1989 to 1998, one can track the number of new products targeted to any nutritional segment as a reflection of the consumer interest in that area.

The following claims were tracked in the study mentioned above: low calories, reduced fat, reduced salt, no calorie and high calcium. It appears that in every case the number of new products peaks after two or three years after some media PR event, and then, just as quickly, falls. The interesting issue is the final equilibrium level is almost always higher than the starting point. This failure to fall back to the same starting point is the long-term benefit of the campaign. The residual effect, which, if maintained for years, would far exceed the value of the short-term run.

It appears that the evidence suggests that marketing toward nutrition can be a profitable approach. However, here are some lessons that can be used to make the process more successful. 

1. The short-run success comes from capitalizing on the fad aspect of the nutrient. When the spotlight falls in an area that your product excels, be sure to put as much resources against this as needed to ensure that consumers are aware of the “golden nutrient currently in fancy.” In other words, get in and get out!

2. Use every marketing tool possible to get that message across. Consumers are immune to advertising and promotional messages so a press release alone is not enough. In-store marketing is an ideal way to get the message across when consumers are in the buying mode. Packaging should be innovative and intrusive. It should catch consumers’ attention. More knowledge does not change behavior.

3. Remember that the real objective is to create a habit of buying and be ready to shift your marketing programs to a continuity objective when the spotlight moves. Keep them coming back when the “reason” they came is gone. Don’t waste money beating the drum on a hackneyed topic. 

4. The long-term results from a successful health/nutrition campaign may not be realized until the actual fad has moved on and you have a residual and permanent lift. If you believe the health and nutrition message, don’t give up too soon.

 

Despite Ambiguities, Ride The Health Marketing Tide

Professor Stanton’s article is exceptionally useful for the produce industry because so many firms and promotional organizations, and even the industry as a whole, default to health promotion without much evidence that this is particularly effective.

Even here, though, there is ambiguity between the impact of “news” regarding the healthful nature of a particular item and the promotion of that news. In other words, around the year 2000, blueberries may have been identified as a “superfood” and the blueberry industry may have promoted that fact and consumption of blueberries may have zoomed. But we don’t know to what extent industry or corporate efforts caused that boom, as opposed to the general dissemination of information through media, schools, etc.

We also don’t have very good information of the way the core characteristics of the product influence the way consumers react to health news. Blueberries are tasty, can be eaten raw and can easily replace other fruits, so one can increase one’s consumption simply by putting blueberries on a cheesecake rather than strawberries.

It is also notable that we are not certain that the very kinds of promotion that might work for individual shippers of a specific commodity will also work for the overall produce industry — after all, a blueberry shipper need only take business from another blueberry shipper, and the blueberry industry need only take business from other berries. For the overall produce industry to increase consumption, it has to take business from the chip industry or the cookie industry or some other non-produce food.

This speaks to another concern, as we don’t know the degree of passion such health reports create among consumers. Even a tepid observer of the news might hear something good about blueberries and toss them in the cart rather than another fruit. Getting them to reduce ice cream consumption so consumers can eat more blueberries is another matter entirely.

Of course, all this speaks to consumption, and the interaction of health news and produce consumption can also be complex.

If some good news comes out about the health benefit of eating pears, the one thing we know is that pear consumption in the world will not increase much this year or next or the year after. It can’t, because pear trees take years to produce fruit.

Possibly, if the good news drives up demand and the supply is fixed, prices may rise and so Dr. Stanton’s question — will producers “make more money”? — would be answered in the affirmative.

Yet the flip side of this phenomenon also indicates that with certain crops, one could see a significant increase in consumption and no increase in profitability for individual players. Imagine a grower of a row crop with low barriers to entry. If this grower has a fixed acreage and all the increase in demand created by some positive health news is satisfied by new growers, then our original fixed quantity grower benefits not at all from increased demand.

So Professor Stanton’s question about the producer making more money may then be answered negatively.

One other issue that may impact the way nutrition claims work is whether the claims happen to be true. Lots of claims are made and are even supported by individual studies. These studies, though, are often quite small and don’t have the rigor to actually establish a sustained health benefit. Sometimes, even when a health benefit is established, in can be inconsequential. For example, studies may prove a particular item to be an excellent source of some nutrient that is plentiful and so few people need more of this particular nutrient.

Another issue is whether health marketing, even if effective, is actually the most effective way to spend money in the promotion of fresh produce. In other words, maybe the industry should just do a little PR on the health claims and put its money into promoting the decadence and sinful luxury of berries with ice cream and chocolate.

Much of the data in Professor Stanton’s article speaks to issues such as how health-related news can lead to new product introductions. But not all, or even most, of these new products are likely to be fresh. In the produce industry, this is a key issue because very often, the product for processing is a totally different industry. So doubling apple juice consumption may mostly help the Chinese apple producers. A sudden surge in frozen broccoli sales won’t help the companies that grow and market for the fresh industry.

There is probably a real dilemma in marketing produce in terms of health claims. The claims most likely to boost consumption are A) Highly specific and B) Apply to sweet fruit.

The problem is also two-fold: A) The strongest science applies to the general proposition that a diet rich in fruits and vegetables can help people fight obesity, etc., and B) The items most likely to provide great benefit are rather bitter vegetables, not sweet fruit.

Professor Stanton gives us a worthwhile analysis because he tells it straight. Regardless of the certainty of any health benefit, there is a marketing tide, and one should try to ride it while one can.