Can Fresh Overcome Frozen And Canned Advantages?

By Jim Prevor, Editor-in-Chief, Produce Business

One way research can help us do business better is by focusing our efforts on inflection points or areas in which our efforts can make a difference. This piece of research by The Food Institute points to three such points:

1) By emphasizing the percentage of income spent on food in general and food at home in particular, this research leads to questions about the utility of focusing on price-reduction as a key component of increasing demand.

2) By focusing on the question of the relative growth of fresh versus processed fruits and vegetables, this research leads to a broader assessment of competition and raises the question of whether fresh product development and fresh marketing are really hitting the nail on the head. It even raises into question whether industry institutions, such as the Fruits & Veggies — More Matters initiative, which promotes fresh, frozen, dried and 100% juice, help or hurt the fresh industry by building overall demand or by sharing the fresh halo of healthfulness with the canned and frozen product.

3) In analyzing expenditures for produce overall and fresh produce particularly by geography, income, and family size, we are moved to question our product development and marketing to see if we are effectively targeting all the available market opportunities.

If we leave foodservice aside for a moment and just look at expenditures for food consumed at home, we see the latest figures indicating that just 7.5% of family expenditures goes for food consumed at home. We don’t have separate fresh produce numbers but, roughly speaking, about 10% of a supermarket’s sales go to the produce department. So we are talking about around 0.75% of family expenditures going for fresh produce — and that number includes salad dressings and other ancillary items sold in the produce department.

Now, of course, these are broad-based statistics. Individual families are in all kinds of circumstances based on income and psychographics. There are probably some impoverished vegans who only will eat organic produce but might spend more than half of their food budget on fresh produce, and there may be some carnivore-centric billionaires who spend heavily on lobster, filet mignon and fine wines — for whom produce is infinitesimal as a percentage of their food expenditures… let alone their total expenditures.

Still, on average, if something costs 0.75% of the family’s total expenditures, it raises into question whether price reductions are a particularly effective way of boosting demand.

Perhaps the real drivers of relative sales are competition with frozen and canned. The competitive advantages these products have been easy to identify, but less spoilage usually bubbles to the top of the list.

In today’s hectic world, few families are as predictable in their eating habits as in Ozzie and Harriett. That vision of life — where the man finishes work at 5:00 every day and comes home for dinner made by the wife who has been focused on making it, is no longer reality. Today families are torn in more ways; work schedules are less predictable, sports and activities pull children on unpredictable schedules, and working women have schedules of their own.

So perishable purchases increase in spoilage risk. Maybe that long-planned dinner gets postponed when Mom has to run off on a business trip, Junior’s game goes into overtime and the family hits fast food for dinner, or Dad has a pizza delivered to the office as he has to work late. All this means that the fresh produce purchased with the intent to make dinner that night may go to waste.

Of course, the lack of risk of spoilage makes it easy to keep reserves, which just might boost consumption. So if the teenager brings six friends over and you want to whip up smoothies for all — a freezer full of frozen fruit is going to make that unscheduled event into an occasion for more produce consumption. Otherwise, you might break out Coke and Chips.

How R&D and marketing can effectively address this competitive environment is unclear. But fresh is generally perceived as the optimum product, so this raises the question: Is it really a “win” for fresh produce to allow for joint promotions with a more processed product as the Fruit & Veggies — More Matters program does by promoting fresh, frozen, canned, dried and 100% juice products?

The commodity heritage of the fresh produce industry has led to a focus on commodity concerns. Common critiques of this condition include an excessive focus on yields and shipping abilities as opposed to flavor. The industry, though, is increasingly aware of these concerns and the breeding focus has shifted. This research suggests that another shift — in breeding, packaging, fresh-cut R&D and industry marketing — may be called for.

Instead of just focusing on flavor as an abstract, perhaps there would be a substantial upside to focusing in on characteristics that would appeal to specific segments of the population. This might involve different flavor profiles, packaging or marketing to appeal to different ethnicities, income groups, family sizes, geographies, etc.

These are complicated questions and have complicated answers. Good research can help provide both an impetus to asking the right questions and clues to what the right answers might be. This piece from The Food Institute can’t help but provide fodder for such thoughts.