Sep 2, 2010
11:09 AMOut of the Orchard
Past, Present and Future Innovations in the Produce Industry
Recently I participated in a survey conducted by a major produce magazine to identify the most important innovations that have shaped the industry in the past 25 years as well as those that will shape the future. They will use the survey results in an upcoming issue of their magazine. Below is what I submitted.
It is hard to rank them in order; those I mentioned have been important for certain segment of the industry and may be more important for some than others.
Category Management (UPC/PLU) - This has been a good and bad area of influence. It has helped retailers track their inventory and even reduce their labor pool at the buying level, but has hurt some growers by adding costs. For example, costs of the plu stickers are passed on to the grower. It has also reduced inventories at retail and caused some retailers to curtail items carried, putting pressure on the important, but less purchased, category items or varieties. Going forward, the UPC will help eliminate errors at checkout and provide more accurate sales data. In addition, it has the potential to provide much more information to the retailer and the consumer about the product.
Internet Communications - First, there were the multiple phones on the buyers' and sellers' desks. Then came the fax machine speeding and streamlining transactions. Then the Internet brought instant communications, reduced operator errors and provided access to quick and accurate photos of product or problems, reducing the time for buyer-seller adjustments, and increasing the efficiencies of the entire chain. This has helped increase global trade as well.
Supercenters - Supercenters continue to eat away at traditional retailer’s market share. Today’s shoppers spend money in many different formats, depending upon the reason for their shopping trip. Stock up, quick trip, convenience, etc. Supercenter’s one-stop shopping and lower prices made great inroads over the past 25 years. However, their footprint, check-out lines, limited customer service, and sheer size will limit growth as shoppers get older and time continues to be more of a factor for people.
Fresh-cut produce - Time and convenience have driven the category into a huge and fast-growing segment of the produce industry. Packaging and safety innovations have helped in the growth. Food safety will be a big factor in how it develops the future. Even with some slowdown due to the recession, this area of the industry has much more potential going forward.
Global Trade - Opportunities outside of our borders have expanded faster than those inside the United States. At about 310 million people, the U.S. population is less than 5% of the world total. With the fast-growing middle classes in many emerging markets and former Soviet Union block countries, global trade in produce will continue to be a big influence going forward.
Varietal Development - New varieties, including club varieties, are driving many categories in produce. Consumers and retailers have access to an explosion of varieties offering different (but not always that unique) flavor profiles. Growers are attracted to the faster production that many of these varieties offer as well as the perceived better returns. The money can be good if you can grow the new variety well in your area and get in on the early side of the curve. However, lately there seems to be a new variety every season and consumers have a hard time distinguishing many of them.
Looking ahead to the next 25 years is difficult. Who would have seen or predicted the changes that have taken place in the past 25 years? There will be many changes that we haven’t even dreamed of, especially with the fast pace of innovation today. However, following are some areas I see becoming more important in the next several years.
I would group "sustainability" and "locally grown" together as trends that will drive the industry. More consumers, chefs, and retailers are interested in products or companies that they perceive fall into these categories. This will continue to grow, however the local trend may come to face the realities that many places do not grow fruit and vegetables year around. I believe the term may morph into “buy local when in season.”
I would also group "third-party audits" and "food safety" together. Third party audits have been increasingly important domestically and internationally and have been, in part, driven by food-safety concerns. The audits as well as retail, food service, and government demands have increased costs to growers, and there is a need to standardize the protocol instead of having to do three or five different audits. It will also be important for retailers, especially in Europe, to discontinue their push for their own unique audits over and above what is safe and acceptable, only to try to prove a point of differentiation. With the food-safety bills floating through congress and the recent egg recall, food safety will continue to move to the forefront and will continue to be important in the foreseeable future.
Social Media - Social media marketing and promotion is gaining momentum rapidly. Consumers do not want to be "sold to", but rather have a conversation or learn about a product or company. With the smart phones and iPad becoming ubiquitous, the use of Facebook, YouTube, Twitter, Foursquare, and coupon sites, such as Groupon, will continue as companies learn to tap into this medium to reach consumers. (This summer Starbucks was the first brand to reach 10 million Facebook fans.) Companies will also continue to use game sites or development of their own games to entice consumers and spread the word about their products.
Mechanical harvest and packing - labor issues continue to hamper the productivity of our growers and drive up costs. I expect some breakthroughs in mechanical harvest and packing that will reduce dependence on scarce labor, increasing efficiencies, lowering costs and keeping American farmers competitive.
I would love to hear your thoughts on the past and future trends that have shaped the produce industry.
All pears all the time, Kevin