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Meet Your New Boss: Part 6
Chris DuBois doesn’t mince words. “What’s happening in food retail is the biggest revolution since the 1950s. Farmers who take advantage of it will do well in the future. Those who ignore it won’t. I believe that with all my heart,” he says.
DuBois is an expert on the topic. His firm, IRI, tracks and analyzes consumer shopping trends, and his specialty is the grocery store perimeter: fruits and veggies, meats, dairy, deli items, and all the other things outside of those center aisles. He gets frequent invitations to speak to farm, agribusiness, and other food-industry groups on IRI insights into trends.
Recently, DuBois and his IRI colleagues, along with the Food Marketing Institute (a trade association), presented a webinar series on the five top trends in fresh food based on their latest consumer research and observations.
On the surface, it may appear the lessons here are for grocery stores, but DuBois contends, “All of the lessons will impact farmers directly.” Here’s a summary.
This trend represents the increasing desire of consumers wanting to know how and where their food is grown or made. One example is consumers’ interest in GMOs in food. On social media sites, there are 10,000 to 15,000 postings every day related to GMOs, one of the largest food topics, and the major discussion is about GMO labeling. Animal welfare is also on the transparency list, with increasing interest in third-party verification of farm-production practices.
More digital and diverse than ever, consumers want more convenience and personalization in their food decisions. This trend is driven heavily by young consumers, with millennials (age 35 and under) now the largest population segment at 75 million people in the U.S. The online shopping trailblazers also make food purchases. Even if they don’t buy online, over a third of all consumers price-shop online before buying. Many consumers are online nearly all the time now, averaging six hours a day. There are over 700,000 Facebook logins every minute.
Ethnic diversity is still increasing. Between now and 2020, the U.S. population is expected to grow by 25 million people; over half will be Hispanic.
Anything that makes cooking and eating easier is winning. This includes fresh, quick, and healthy meals; customizable portion control; and greater ease in buying groceries.
Snack-size vegetable packages, such as carrots or celery, are an example. Growth is twice that of larger packages. Precut fruit sales are growing 10% a year. Precooked and ready-to-cook meats are growing much faster than traditional meat sales.
A driving factor in this trend is the fragmentation of today’s households. Only 20% now comprise a married couple with children. Singles living alone make up 28% of all households.
New Supply Chains
This one could impact farmers most. Change is happening in several ways: direct farm-to-consumer sales, integrated local networks, retailer direct sales, and even vertical farming. All are driven by the desire for more authentically local products.
Farmers markets, CSAs (community supported agriculture), and on-farm sales all continue to grow. There are more than 6,000 CSAs operating now.
Integrated local networks involving partnerships between farmers and grocers are growing at double the rate of other produce sales. When retailers integrate in-store and website marketing, procurement, and supply planning with local farmers as partners, that creates enormous brand equity for all parties.
In some cases, retailers even invest in their own farms or install vertical growing chambers right in the store for ultimate freshness.
Fresh Prepared Food
The grocery store perimeter is the focus of expansion, and, in many cases, the upgrades compete directly with traditional restaurants. Fresh prepared food is adding 7% to 10% of grocery store business every year, on average. It already has surpassed fast-food giant Burger King in business volume, and it’s growing faster than Starbucks.
Sales of prepared meat items – like pulled pork, BBQ chicken, and meatloaf – are growing at a 30% annual clip or more in some stores.
For farmers, DuBois summarizes, the opportunities in these trends are big. “You may partner with retailers in an integrated network or go direct to consumers yourself,” he says.
He feels the most vulnerable segment of the food chain is the intermediary wholesaler – the middleman in food distribution.
“Retailers are looking for transparency, and partnering with local farmers gives them that. That’s your opportunity. It will require the trust factor to develop between you and the retailer, and that can take years. You need to start building it now.”