Revolution In Food Industry Requires Evolution

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

If you look at a graph of the percentage of retail sales prices of food going back to the farm, you will find this number has been shrinking for decades. There are many reasons and many implications.

Two of the reasons are clear and related: First, you have changes in the nature of consumers and, second, you have changes in the nature of the product being sold.

On the consumer side, you have had many stages that led to today’s consumer: most notably the growth of the percentage of working women ushered a need for more prepared and convenience items to save time. Then, as a consequence, the next generation grew up without knowing much about cooking from scratch. A more affluent population – two working adults – allowed the resources for a family to “outsource” much food preparation. This can be through more prepared food or eating out and takeout.

On the product side, new technologies, such as modified atmosphere packaging, allowed for the creation of convenient products and their national distribution – all at reasonable price points. No boom in convenience foods would be possible without more convenient foods to buy. After all, Fresh Express first introduced packaged salad in 1989.

Of course, how retailers and the whole supply chain react to these facts matters a great deal — although people value convenience, they value other things as well. For example, there is a dynamic known as the “Hamburger Helper Effect” that speaks to the needs of people — especially mothers  — to feel, well, needed. Many of what are called “convenient-involvement products” could be sold completely ready to pop in a microwave — but that doesn’t give the “cook” much satisfaction. Ten minutes of moving stuff around a pan on the stove — well that is cooking. Or to put it another way, this gives a mother the feeling that she is making a special contribution to her family and to the well being of her children.

So the issue is not just making things ever more convenient; it is doing so in a clever way and finding opportunities to market products in a way that buying and serving them is fulfilling for the consumer.

Now convenience shopping is being redefined. It wasn’t all that long ago that the supermarket itself was a convenience, saving people from separate trips to the butcher, the baker, the fishmonger and the fruitier. And, more recently, what the Wal-Mart supercenter did was broaden the “one-stop” shopping offer even further, with food being purchased along with car batteries, for example.

Yet, pre-set orders on an online shopping service or a device that responds to verbal commands, such as the Amazon Echo, pose real challenges for the food industry. If shopping trips are increasingly based on a list established some time ago, or the frequency of trips depends on consumers knowing about things so they can ask for them, well, how then can the industry introduce new products without consumers going to the stores? In produce, where product quality varies, how can we let consumers know the peaches are particularly sweet this week?

It is not obvious that the produce industry does such a great job on these issues now. It is quite common for new items to languish because they are given so little shelf space and so little time. The online systems often do a better job of describing the condition of produce than supermarkets do.

Still, marketing to consumers who aren’t in the store is a challenge. Some of the challenges may be resolved as the technology gets better. Why can’t consumers ask Google, Siri or Alexa what fruit is particularly good today? Why can’t some artificial intelligence ask a question about new products, varieties, etc. — perhaps projecting holographic images or suggesting produce based on the latest health research.

Yet most likely, consumers will have to be influenced outside of the shopping experience. So consumers will learn through the media, including social media, word-of-mouth, advertisements and other marketing about a new variety or new product, and they will place online orders based on this outside information.

We are just beginning to understand how this might revolutionize the world of produce. This columnist’s older son, William, has a favorite delivery service. What is interesting is that he doesn’t just place an order at a restaurant and have them deliver. He will order soup from one favored place, an appetizer from another, main course from a third and dessert from a fourth.

If marketing is going to take place out of the store, why can’t an artificial intelligence arrange for delivery of a preferred brand of bananas? If there is an interesting variety of grapes or apples, or a new fresh-cut item, or a newly flavored beet, why can’t that be ordered even if a particular store doesn’t carry them?

Of course, there are complications, delivery costs, etc., to work out, but the revolution in the food industry will continue to roll out. The challenge is to not allow it to roll over your own company or sector in the industry.