Engage The Opportunities

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

That consumers report produce consumption remaining steady is not particularly surprising. People change eating habits slowly, if at all, and produce is not the kind of big-expense, high profile item — such as, say, lobster — that consumers are likely to focus on giving up for economic reasons.

Despite the trade’s always-present interest in consumption, however, asking about consumption may be the wrong question for the industry in recessionary times.

After all, it is possible to maintain one’s consumption by buying at less expensive venues, purchasing items on sale, switching from fresh-cut to do-it-yourself bulk produce and buying items that are less likely to be thrown out. So consumption, which is a measurement in pounds, can be flat or even be increasing, while dollars spent can decrease.

The issue is not just “share of stomach,” it’s also “share of wallet” — and that’s a subject for PMA another day.

The challenge posed by frozen foods is substantial and growing. Quality has improved, and the ability exists to buy a product when and where it’s cheap and then pass on economies to the consumer. Add in the virtual elimination of the waste factor and one sees a formidable competitor.

On the other hand, frozen food has sustainability, carbon footprint, and food security issues, along with the inherent limitations in frozen food merchandising. So fresh produce has its weapons, but one wonders if irradiation — spoken of mostly in the context of food safety or insect disinfestations — will not one day save fresh produce by extending shelf-life adequately to make fresh less likely to be wasted.

Although we have little doubt that many would use coupons if offered, we see only limited application in fresh produce. In packaged goods, a marketer can plan a retail price by building in a margin for marketing efforts, including coupons. In fresh produce, items are typically sold at a market price, so there is no opportunity to build in an excess margin.

The few successful couponing schemes tied to fresh produce have usually been cross-merchandising programs, such as bananas and cereal, or salad dressing and salad vegetables, in which the cost of the coupon is paid for by the packaged product.

New technology, particularly store-based coupons, helps solve the other couponing problem: the lack of availability of specific brands in all outlets. For example, as big as the Chiquita brand may be, at any given time most supermarkets don’t stock Chiquita bananas. So giving out coupons in mailers and newspapers is a recipe for consumer frustration. What’s more, since stores typically only carry one brand at a time of most produce items, it would be nearly impossible for every chain to carry Chiquita bananas due to the simple fact that the brand itself doesn’t have enough bananas. So couponing in produce will have to evolve as some kind of store-based promotion using new technology.

Couponing is designed to get price-sensitive consumers to buy one’s product, without lowering the price for everyone. It has a place, but adds costs and complexity, and seems unlikely to dramatically transform the produce industry anytime soon.

As a partner in the Leadership Symposium, we were actively involved in getting industry leaders to Dallas (see our photo montage on page 16). Does the high attendance reflect optimism? Yes, but it may actually teach a more important lesson on how to approach marketing and business during challenging economic times.

When we were urging people to attend the Symposium, we knew that many would decline to attend, pointing to the recession. So what? The program is limited to 100 industry executives. That is such a small percentage of the industry that macroeconomic conditions are only trivially important, compared to the actual efforts made to attract attendees.

This is true for most produce companies. The vast majority of companies in the industry have sales that are insignificant compared to the entire scope of the trade. So whether consumers buy more or less is typically not the determinant of success for individual players. That’s a question of attitude, intelligence, and hard work.

So we enthusiastically join with Bryan in saying that retreating into one’s shell is extremely counter-productive. Read. Go to conferences. Visit customers. Think.

Focus not on the tiny dip in demand you might have experienced. Concentrate instead on the percentage of the industry volume that you are not selling. In such a highly fragmented trade, that is almost always over 99% of the industry volume.

All of a sudden, you will find your attitude changing. Instead of feeling a loss, you will realize how vast the opportunity is before you. Engage that opportunity and your road to success suddenly becomes clear.