Hit me with something new.
Perhaps more than any other produce event in North America, the Produce Marketing Association’s Fresh Summit expo serves a useful and always anticipated role in introducing the produce trade to new products.
While companies are not as bound to new product introductions at produce shows compared with a decade ago, the mass of exposure and conversation that a show like Fresh Summit can generate cannot be ignored.
As a reporter for The Packer all these years, I’ve had the opportunity to visit many booths and simply inquire, “What’s new this year?”
Even if their standard lineup of products are tried-and-true market leaders with never-better sales, the instinct of produce marketers is to scratch the itch of something new.
And like trade journalists on the expo beat, the buying community yearns to hear about new products.
It’s not easy to determine how many new products are introduced in the produce department every year. DataMonitor statistics indicate that new fruit and vegetable products accounted for about 6.9% of the nearly 22,000 food and beverage new product introductions in 2010. That falls in the middle of food and beverage categories, well short of the 25.8% share of new food and beverage product introductions boasted by the candy, gum and snacks sector, but solidly above 1% share of new product introduction for soups.
Even with a strong launch pad such as Fresh Summit, success with new products is not easy.
According to University of Toronto researcher Inez Blackburn, the failure rate for new products launched in the grocery sector is 70% to 80%, with the failure rate for new products from smaller firms at about near 90%. The research didn’t identify success rates within the produce sector.
Any of us who have been around the industry for more than a few years have heard the narrative of the growing numbers of stock-keeping units in the produce department, fueled by packaged salad and value-added produce. However, the latest numbers on this statistic are not readily available with a Web search.
Statistics from Cornell indicate the average number of SKUs in the produce department rose from about 150 in 1960 to average of 600 by 2009. I couldn’t find any more recent data than that, but some trade sources indicate it is not unusual to see a high-end store with as many as 850 SKUs in produce.
I recently put forward a question to members of the LinkedIn Fresh Produce Industry Discussion Group on the question of how buying and selling produce has changed over the years. “What are some ways that produce buying and selling has changed since you came into the business?”
Reading their responses, I think some of the changes relate to how retailers have begun to manage at least a portion of their produce department like they manage consumer packaged goods.
Rick Eastes, California-based industry consultant, said the abundance of items in the produce department affect logistics, product promotion, packaging, product placement in the produce department and pricing strategies.
Rick writes in a recent e-mail about the topic:
“The biggest change I have witnessed in the produce business over the last 20 years is the blurring of pricing policies in the ever expanding produce marketplace due to the dramatic expansion of ‘choice.’ The concept of an f.o.b. per-shipping package “price” is virtually obsolete. New varieties, new colors, and new flavors of the expanding offerings virtually 52 weeks a year in the retail produce marketplace are leading to the application of a type of fuzzy logic based on data points, display space allocation, and pseudo-branded product offerings. This diversity is creating totally different ways for both producers and buyers to ‘value’ their offerings to the final consumer.
If we then consider the expanding categories to differentiate one offering of a single produce item, the choices may be; organic produce vs. non-organic, Global Food Safety Initiative certified items, Rainforest Alliance, and or third party pesticide certifications and traceability programs. How fresh produce is ultimately priced then becomes complex in the extreme.
The most difficult dilemma for today’s consumers to resolve is how to define “value”. In the past, you could ask a person to define “quality and value”, and at the very least they could say “I know it when I see it”. Today, that ability is a far different task than it was 20 years ago in the produce department.”
Rick’s insights are spot on. The complexity of an expanding array of produce items, with little increase in produce department space, makes for challenging times. To some suppliers, retailers seem unable to react to “market buys,” or adjust their specifications for what “nature” grows. Buyers, they believe, are simply ordering what their spreadsheet tells them to buy.
One produce marketer commented: “Shouldn’t retailers break from “the Program” and for two weeks offer the consumers in their markets a true economic value on a medium piece of fruit?”
Other suppliers lament that technology has crowded out the personal element between buyer and seller, robbing conversations between supplier and buyer about how a peach eats, or the striking color of flame seedless grapes.
We can be thankful that spreadsheets and computers won’t get in the way at Fresh Summit. Face-to-face meeting with buyers at Fresh Summit will give suppliers and exhibitors both a chance to extoll the virtues of their new products and to passionately persuade retailers that unexplored promotion opportunities also exist for the tried and true commodities.