Packer Extra - Sept. 15

From The Packer Extra:


COLLEGE PARK, Md. — If the evidence doesn’t fit, food safety officials should acquit tomatoes as a source of the Salmonella Saintpaul pathogen in the now-concluded massive foodborne illness outbreak, one industry leader asked Food and Drug Administration officials here Sept. 11. Go here for the story.

Higher prices alter consumers’ purchases

WASHINGTON, D.C. — Consumers say steep rises in fresh produce prices would cause them to slash consumption of fresh fruit and vegetables in favor of other options, according to a recent survey from the Produce Marketing Association. Go here for the story.

Chile’s U.S. exports projected to rebound

Chilean fresh fruit exports to the U.S. dropped by 10% during the 2007-08 season, with a corresponding bump up in shipments to Europe, but many U.S. importers are looking to the future with optimism. Go here for the story.

Sweet Sunshine grape well received in debut

A new challenger to California’s venerable thompson seedless mid-season table grape favorite has emerged. Go here for the story.

Distribution center helps Stater Bros. compete

Stater Bros. Markets, a San Bernardino, Calif.-based chain of 165 stores, opened the doors of a new refrigerated distribution center. Go here for the story.

Dream on people

One of the more interesting sessions at yesterday's Consumer Federation of America food price conference was the presentation by Kathy Means of the Produce Marketing Association. Means revealed details of a consumer survey sponsored by the association that was conducted in May. I'll have coverage in The Packer about the results, but one particularly interesting result of the survey had to do with the "grow your own" movement.

The PMA survey asked who consumers would react if prices of produce would increase by various increments. Relating to the idea of "grow your own," 8% of consumers said they would plant a garden if produce prices increased by 10 cents or less per pound. If that seems high to begin with, but just wait until what you hear consumers say about their green thumbs if prices would increase by $1 per pound; a full 21% of consumers say they will "grow their own" produce if prices increase by that amount.

Are you kidding me, people? There is no way that 21% of people will "grow their own" if produce prices increase by $1 per pound. Okay, there are some capable backyard gardeners who can pull off tomatoes and cukes. But one in five stretches credulity.

I'm not faulting the survey, I'm saying that sometimes consumers just say things that have no basis in fact. Forget about "growing your own" fresh produce; just put down the Oreos and chocolate covered donuts.

Walking on ice: the U.S. consumer

Although the economy grew surprisingly well in the second quarter, the signs are much less rosy for the third quarter. Which candidate will the American voter trust with the economy? The guy with seven houses or the Harvard educated elitist? That question could represent the essence of this election. Does McCain's promised slash and burn reform of spending reassure or trouble Americans? Does Obama's lack of track record in leadership put him in a vulnerable position? Here are a few headlines about our fragile consumer psyche in the wake of the steep fall in the Dow yesterday.

Dow plunges on warming of financial tsunami - Just what we don't want to hear. From the FT:

Weary investors in the United States received a further pummelling yesterday as data showed new unemployment claims at a near-five-year high last week, a leading fund manager gave warning that America faced a “financial tsunami” and key retailers released disappointing sales figures.

The mounting nervousness about America’s economy dragged down shares. The Dow Jones industrial average fell 344.60 points, or 3 per cent, to 11,188.20, and the S&P 500 closed down by 38.20 points, or 3.3 per cent, at 1,236.80 points.

Consumer spending slows

From the NYT:

'Consumer spending, responsible for the bulk of U.S. gross domestic product (GDP), slowed in July as the effects of the government’s stimulus package tapered off.

The Commerce Department announced that consumer spending grew at a 0.2% rate in July. But on an inflation-adjusted basis, consumer spending dropped 0.4%, as high prices took their toll on the household budgets of strapped consumers.

"The temporary impact of the stimulus has passed, and it looks like consumer spending is on track to decline in real terms in the third quarter," John Ryding, the chief economist at RDQ Economics, told The New York Times. "It’s certainly a wake-up call to people who [Thursday] looked at the GDP report and said, ‘Hey, the economy grew by 3.3%, so everything’s O.K.’ "

Economy stays stuck as consumer cut back From the NYT:

The nation’s economy failed to pick up speed in August and the final days of July, as rising prices and a weak job market prompted consumers to reduce spending and shop at discount stores to try to conserve cash.

Economic activity stayed “weak, soft or subdued” across the country, according to the Federal Reserve Bank’s beige book, a regular snapshot of the economy. The latest edition of the survey, released on Wednesday, signaled that the economy spent the summer in a rut, with consumers feeling little relief from the government’s tax rebates.

Other headlines:

Coffee shops feel jolt

Wal-Mart follows shifts in consumer spending

New York: prepare to tighten your belts The NY governor is taking the lead in budget cutting; could McCain-Palin be next with this message?

"Te time to act is now."
Powerful words erupt from the mouth of one of the most powerful men in New York State.
Governor David Paterson is addressing the people of New York in a live televised speech. He says New York will be $26 million in debt within three years if things don't change. He says New York State must tighten its belt as its residents have, in order to recover from a recession.
He calls it a recession.
"For too long, we have done less with more, and paid more with less, " he says, "Your government is going to follow your lead."

TK: And by the way, the rest of the world isn't feeling so good either. From Bloomberg:

The euro declined to an 11-month low against the dollar on speculation a credit-market slump will push European economies into recession.

Japan adrift in recession - From The Standard:

Asia's largest economy was left rudderless again yesterday after Japan's prime minister quit suddenly, sparking concerns that free-market reforms will be put on the backburner as a recession looms.

Japanese stocks ended at a five- month low as the return of the revolving door politics of the recession-ridden 1990s left the country searching for its third prime minister in less than two years.

Whoever replaces Yasuo Fukuda will inherit the same problems he faced - a deadlocked parliament, a worsening economy, an ageing population and huge public debts.

TK: Check out this link to audio presentations by Steve Lutz, John Stanton and Desmond O'Rourke at the recent U.S. Apple Association marketing conference. All three talks tied in what is going on in the economy with impacts on produce department sales.

Of Denial & Reality

Got an EMail from a colleague yesterday, asking that I respond to a query from a survey taken by a family member. And that question was, how many servings of fruit do I eat daily?

We enlightened produce people are conditioned to respond, yes, YES, I eat fruit as naturally as I breathe. I walk jauntily down the avenue plopping berries into my mouth, whistling and avoiding cracks in the sidewalk. (In reality, I'd be running to the other side of the street to avoid that lunatic.)

Alas, I only wish that was the case. While I really do eat tons of vegetables, especially this time of year when the gardens are bountiful, my fruit intake is sporadic at best. A responsible person would be full of self-loathing at the thought that I'm not doing nearly enough to help my business thrive. Not me.

I've come to the realization that it's actually the produce business that's the cause of it all. Some may call it denial. I happen to, on the other hand, define it as the end run around blame.

Here's the way I see it. I eat vegetables because they're good for you, and in filling my stomach they keep me from eating a 32-ounce porterhouse or a vat of au gratin potatoes in one sitting. But taste? I suppose a killer salad, dressed in olive oil & balsamic vinegar with fresh herbs, is pretty enjoyable. Ranch dressing on broccoli is OK. Even soy sauce on grilled asparagus. Naked veggies, to my way of thinking, are eaten out of guilt after looking downward at your own waistline. A Catholic upbringing will do that to a person.

Fruit is a different story. Fruit is like a Siren song, luring you with its beautiful, tactile appearance. Come closer, it says. Touch me, buy me, eat me. Hah! Only then do you find that the gorgeous white flesh peach or perfect-looking, shining Thompson red seedless grapes are fool's gold after all. Although both these commodities have their time in the sun with outstanding taste, at times it falls way short, as can be said for almost every fruit available. They don't always taste as good as they look. Believe me, I know--I'm a tomato broker.

So, as a savvy produce person, I choose my fruit wisely, thus my overall consumption is down. But once I find ripe fruit in season that has taste, I can't get enough. A ripe Mexican mango. Michigan blueberries when they're really into production. An almost-too-ripe baby banana. Good stuff.

The point is that it's funny how I'll eat a carrot because it's healthy to do so, with taste as an afterthought. But give me a tasteless piece of fruit, I'll spit it out, silently note your abject ignorance, and won't talk to you for the rest of the day.

It's the difference between cats & dogs, men & women, Republicans & Democrats...

Later,

Jay

Lying about your vegetables

"Approval bias" dogs research efforts to find out what people really eat. How much more do people in the f/v business overestimate their produce consumption? This insightful NYT blog entry looks at the topic. From the post:

It’s long been known that people claim to eat far less than they really do. Some studies suggest people underreport their caloric intake by 30 percent or more.
But when it comes to fruits and vegetables, it appears people lie in the other direction — vowing that they consume far more than they really do. The finding, reported in the current Nutrition Journal, suggests the data the health community has collected on fruit and vegetable consumption are tainted by “approval bias.” We know we are expected to eat five or more servings of fruits and vegetables a day, so that’s what we say when we are asked, and we may even really believe it


Researchers from the University of Colorado in Denver randomly selected 163 women who were recruited by telephone and told they would be taking part in a general health survey. Half the women were sent a letter describing the survey as a study of fruit and vegetable intake. The letter included a brief statement of the benefits of fruits and vegetables, a Five-A-Day sticker and a Five-a-Day refrigerator magnet. The rest of the group received a general letter, without mention of fruits, vegetables, stickers or magnets.


Within 10 days of receiving the letters, the study subjects answered a food frequency questionnaire and were asked to recall how many fruits and vegetables they had eaten in the past 24 hours.
Because the two groups were randomly selected, average fruit and vegetable consumption should have been similar. However, the group that had seen the five-a-day promotional material reported far higher consumption, 5.2 servings per day, compared to 3.7 per day in the other group. And 61 percent of the five-a-day group reported eating fruits and vegetables on three or more occasions the prior day, compared to just 32 percent in the other group.




TK: Lesson to the industry; don't trust research results when consumers surveyed readily know that the questions are being asked on behalf of a produce group.

How will consumers react?

What will consumers do? That's a big question going forward, as higher costs from pricier inputs and steeper truck rates take their toll on the margins of grower-shippers, wholesalers, retailers and on the budgets of consumers. Will consumers eat less food, cut down on use of their cars, or both? Since everything is costing more, will food be hurt more or less than other categories?

I just visited with another East Coast wholesaler who said the high cost of transportation from the West Coast may result in greater importance of local/regional vegetable production this summer. He said it is not unrealistic to think that $16 broccoli in New York City could be $8 freight, $2 to the wholesaler and $6 to the grower. That makes it tough for that West Coast grower to see much profit opportunity in that market.

Still, supply and demand will dictate what the market does, both for East Coast vegetables and West Coast produce. If consumers adjust more quickly than we think to higher costs, some the damaging effects of the fuel run up could be short lived. On the other hand....

In praise of eating at home

Take that, restaurant chains. The Food Marketing Institutes's recent report about consumer behavior came with the assertion in the second paragraph that 71% consumers are eating out less because of economic concerns. Not just that, but children who eat meals at home with family are less prone for substance abuse!
The survey would have been couched a little differently had it been released by the NRA, but surely both supermarkets and restaurants are feeling the impacts of tighter consumer budgets.
Also note in the summary the huge rebound in the confidence of consumers in the safety of the food they buy in both supermarkets and at restaurants. Although confidence is up, consumer beliefs about safe good are "fragile," the FMI states. Also note some interesting data about the appeal of nutrition issues in shopping, which relates nicely to our Fresh Talk poll this week.

While FMI said that sustainability programs are an emerging issue, only about 20% of consumers surveyed deem the issue "very important" when selecting a primary store.

Higher fuel and food costs and other economic pressures are having a pervasive impact on how consumers shop, cook and dine, according to the Food Marketing Institute (FMI) U.S. Grocery Shopper Trends 2008 report released here (May 5)

Economic concerns are compelling Americans to cook at home more and eat less often at restaurants (71 percent). In fact, families eat their main meal at restaurants only 1.2 times per week, down from 1.3 in 2007 and 1.5 in 2006.

Consumers are buying fewer luxury foods (67 percent) and more store-brand items (60 percent) and eating more leftovers (58 percent). The high cost of fuel is contributing to the decline in the number of shopping trips — below two per week for the second straight year at 1.9.

When deciding where to shop, 37 percent of consumers cite “low prices” as the overriding factor — up from 31 percent in 2007 and well ahead of the second most often cited factor (convenient location at 13 percent).

“Food retailers can turn these economic challenges into benefits for consumers and the industry,” said FMI President and CEO Tim Hammonds. “As people eat out less often, we can help revive the great American home family meal tradition. This presents retailers an opportunity to win back a share of the meal-time market long owned by restaurants, and it provides American families important health, economic and social benefits.”

Consumers equate eating at home with eating healthier. As many as 91 percent say they eat healthier when dining at home, according to the report. This number includes 39 percent who believe home-cooked food is “much healthier” (click here to view release with charts). Families also save money since a restaurant meal costs more than twice as much per person, a median of $12 compared with $5.

Meals at home have a social benefit for children and the family. Research shows that children who dine regularly with their families at home are healthier, superior academic performers and less prone to substance abuse.

Many of these benefits are evident in the words that consumers use to describe a home-cooked meal. Click here to view the graphic known as a “tag cloud.”

Confidence in Food Safety Returns to 81 Percent, But Fragile

The report also found that consumers’ confidence in the safety of food bought at supermarkets rebounded to 81 percent, from the 18-year low of 66 percent last year (click here to view release with chart). Their confidence is fragile, however: only 11 percent are “completely confident,” down from 15 percent in 2007, and 70 percent are “somewhat confident.” Consumer confidence in the safety of restaurant food increased to 65 percent, from 43 percent in 2007.

“Retailers are taking extensive measures to help safeguard the food supply from the source to the consumer’s kitchen,” said Hammonds. They are ensuring that suppliers worldwide observe the most rigorous safety standards through independent audits and certification, such as FMI’s Safe Quality Food (SQF) Program.

Numerous companies send managers and employees to FMI’s SuperSafeMark^® program to learn the requirements of the U.S. Food and Drug Administration (FDA) Food Code. The industry and government are expanding programs to educate consumers how to keep food safe. These include the award-winning Fight BAC!^® initiative and Be Food Safe, which was launched in 2007.

Shoppers Trust Safety of Food in Supermarkets

These efforts may be making a difference based on the trust that consumers have in the safety of different types of food in supermarkets. For example, 93 percent agree with the statement, “I trust the fresh produce my grocery store sells is safe.” Nearly as many agree with the same statement about canned and boxed foods (92 percent) and meat, poultry and fish (90 percent). As with the confidence numbers, high numbers of consumers agreed with these statements “somewhat” rather than “strongly.”

They expressed less trust in the government: 79 percent agree with the statement, “I trust the U.S. Department of Agriculture (USDA) to ensure that the food I purchase is safe,” and 76 percent hold this view about the FDA. Only one-third “strongly agree” with these statements regarding the two federal agencies.

When food recalls are announced most consumers turn to nongovernmental sources for information, led by television (81 percent), and then the Internet and newspapers or magazines (39 percent), radio (31 percent), friends or family members (22 percent) and government websites (17 percent).

How Nutrition Concerns Affect Shopping

Nutrition is very much on the minds of shoppers with 41 percent “very concerned” about the nutritional content of the foods they eat, and 47 percent “somewhat concerned.” At the same time, many continue to fall short in acting on these anxieties: 62 percent of consumers believe their diets could be healthier, including 12 percent who rate the room for improvement “a lot.”

The shoppers most likely to say their diet needs significant improvement include:

§ Baby Boomers (68 percent), especially men (75 percent).

§ Shoppers earning $75,000-$100,000 (70 percent).

§ Consumers aged 25-39 (69 percent).

§ Parents with older children (69 percent).

When evaluating whether a food is nutritious, shoppers focus most on the fat content listed on the Nutrition Facts label, with more than half checking saturated fat, trans fat and total fat. More than four in 10 check the calorie count, look for whole grains and focus on the salt, sugar and cholesterol levels.

Most shoppers (82 percent) hold themselves responsible for ensuring that the food they eat is nutritious. Accordingly, those who choose to diet most often follow their own plan (49 percent). Weight Watchers is the most popular formal plan, used by 22 percent of consumers on a diet (click here to view release with chart).

Supermarkets are responding to consumer health needs with products and services. For example, 82 percent of stores now feature natural or organic foods, up from 80 percent last year and 72 percent in 2006. In fact, nearly 60 percent of food retailers feature store-brand organic foods, according to FMI’s The Food Retailing Industry Speaks 2008 report, offering customers lower-cost alternatives.

Health clinics are now featured in 9 percent of stores, and 5 percent have a dietitian on hand to provide consumers nutritional guidance.

Many Consumers Don’t Know What or Where to Eat Two Hours Before Dinnertime

Consumers remain challenged planning meals, especially dinner. In fact, 28 percent of consumers do not know what they will eat two hours before dinnertime on weekdays; the number jumps to 35 percent on weekends. On weekdays, those most likely to lack plans are members of Generation Y (46 percent), single men (43 percent) and single mothers (38 percent).

Two hours before dinnertime, many have not even decided whether to eat at home or a restaurant. On weekdays, the plan-less are led by Generation Y (27 percent), single mothers (21 percent) and single men (19 percent).

These consumers create a large market for fast-food, takeout and delivered meals. Supermarkets are responding with meal solutions and quick-stop areas for dinner, often featuring their own checkout stands. The number featuring quick-stop areas increased from 36.8 percent in 2007 to 50.6 percent in 2008, according to The Food Retailing Industry Speaks 2008 report.

Emerging Issues: Sustainability, Reusable Shopping Bags and Cloning

Consumers are beginning to look for retailers who have a recycling and sustainability program: 20 percent deemed this “very important” when selecting a primary store, and 41 percent “somewhat important.” More than half of supermarkets (51 percent) sell reusable shopping bags, and nearly as many consumers (44 percent) use these bags at least once a month.

More than half of shoppers at least some of the time:

§ Use high-efficiency, energy-saving light bulbs (70 percent).

§ Recycle cans (70 percent).

§ Buy locally grown products (68 percent).

§ Recycle plastic (62 percent).

§ Recycle paper (62 percent).

§ Use environmentally friendly cleaning products (53 percent).

Consumers remain uneasy about eating products derived from cloned animals. As many as 77 percent are not comfortable, including 44 percent who are “not at all comfortable” — up significantly from 61 percent and 31 percent, respectively, in 2007.

More than eight in 10 consumers (81 percent) believe cloned foods should be labeled as such. In fact, nearly six in 10 (58 percent) hold this view “strongly.”

Methodology

Data for U.S. Grocery Shopper Trends 2008 were collected through surveys conducted by Harris Poll Online among a nationally representative sample of 2,020 U.S. shoppers. Respondents must have met the following requirements to participate in the survey: a minimum of 15 years of age, primary or equally shared responsibility for food shopping, and they must have shopped for groceries in the past two weeks.

This report was made possible by the generous support of PepsiCo. To purchase a copy ($95 for FMI Retailer/Wholesaler Members, $175 for FMI Associate Members and $250 for nonmembers), contact the FMI Store at 202-220-0723 or www.fmi.org/

It's not easy being green but people are up to it

This press release has all kinds of interesting data from a survey of organic/green shoppers querying their buying habits in view of the slumping economy. One in six consumers reported buying fewer natural and organic foods because of economic pressures. From the news release on PR Newswire:

Consumer interest in buying green environmentally friendly products and healthy organic food remains high despite the tough economy and rising food and energy prices. A recent market research survey released by Mambo Sprouts Marketing showed that consumers are placing a priority on buying green and 2 in 3 or more are using coupons, stocking up on sales and cooking meals at home to stretch their grocery dollars.

Even with the faltering economy and rising food and energy prices, about 9 in 10 (88%) consumers reported buying the same (52%) or more (36%) green environmentally friendly products vs. 6 months ago. About 7 in 10 consumers are still willing to spend up to 20% more for "green" sustainable products. Only 1 in 6 (17%) respondents reported buying fewer natural and organic foods, as individual comments suggested that short-term savings would have long-term costs to their family's health and the environment.

Results showed fuel prices are driving dual aspects of consumer behavior. Respondents are shopping closer to home and combining trips to reduce gas expense as well as buying more local and seasonal produce for lower prices and to reduce food miles and their carbon footprint.

Natural and organic consumers are using a variety of money saving strategies to offset higher food and energy prices, including: 1) increased reliance on coupons and sales; 2) preparing more meals at home; 3) wasting less of their purchases; 4) preparing more meatless, vegetarian meals; and 5) buying less bottled water -- using filtered and tap instead.

Money saving topics of interest to 2 in 3 consumers included: finding healthy coupons and offers online (77%), saving money on organics (74%) and healthy kid's meals and snacks (65% of families). According to Mambo Sprouts, consumer commitment to green and organic products reflects the increased media attention and awareness of the health and environmental benefits of buying organic, locally-produced, sustainable food.

The Mambo Sprouts survey focused on interest in shopping for green and organic products in tough economic times. The survey was issued in April 2008 and completed by over 1,000 natural and organic consumers. The survey was fielded by Mambo Sprouts Marketing, a leader in natural and organic product marketing and promotions (http://www.mambosprouts.com).

Website: http://www.mambosprouts.com//