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Hassavocadoboard.com Sites All Themes Hab Pdf Hab Annual
Opportunities to Build
Hass Avocado
Retail Sales
2012 ANNUAL TRENDS REPORT
Hass Avocado Board | 230 Commerce, Suite 190 | Irvine, CA 92602
www.hassavocadoboard/retail
TABLE OF CONTENTS
Key Opportunities& Suggestions
4
Retail Facts, Figures & Trends
5
Rising Retail Prices 5
Fruit & Vegetable Prices 5
Food Drought & Increased Food Prices In 2013
6
Retail Store Performance 6
Changing Retail 8
New Store Formats 8
Other Shopping Experiments to Watch 9
Retail Produce Performance
10
How Retailers Reach their Consumer Base
10
Nutrition, Locally Grown & Flavor Trends
12
Other Retail Trends & Highlights
15
Consumer Facts, Figures & Trends
17
The Economy
17
The Changing Consumer: Quick Thoughts
18
Technology at Retail
20
Food Safety
20
Sustainability
21
Targeting Consumer Demographics
22
Consumer Trends Projected for 2013
24
Appendix
25
Top Fruit Categories
25
Retail Top 25
25
Retail Expansion, Consolidation & Streamlining
26
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PREFACE & OVERVIEW
Each year Hass Avocado Board (HAB) tracks and monitors the retail
trends, changes and challenges that impact the retail and produce
industries. The year 2012 has seen some dynamic shifts in an already
vibrant industry. Increasing food prices, store closings, consolidation,
new store formats, and economic pressures are just the tip of the
proverbial iceberg. Next add droughts, mega-storms, politics, and
more, and it suggests that everyone needs to keep their collective
“eyes” on retail. Time is a valuable asset – and in order to minimize
your time reading, HAB has developed this report to provide you
with key learnings in a quick and easily digestible format. The report
will focus on retail with an emphasis on fresh produce.
While this report cannot highlight every issue facing retail today, it
does recap the industry trends for 2012 and calls attention to factors
that may impact retail grocery, and in turn, Hass avocado sales in the
coming years.
Visit hassavocadoboard.com/retail to learn more about HAB’s
retail research and data program and how it’s helping stakeholders
increase category performance.
Emiliano Escobedo
Executive Director
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1
With the addition of
online shopping... It
will be important for
retailers to integrate
online and in-store
models of a
multi-channel
platform to increase
market reach.
KEY OPPORTUNITIES
& SUGGESTIONS
• With healthful eating and heightened consumer awareness on
nutrition, avocados can be easily marketed and cross-promoted
with other healthy food items.
• Consumers are mixing produce items with protein to
stretch dollars to improve healthful eating. In fact, research
indicates that when meat is on sale, it drives this consumer
behavior and incremental sales.
• As the economy improves, consumer demand for new,
interesting, innovative products will increase.
• There will be a continued demand for fresh fruits and
vegetables to meet consumers’ desire for healthful
options along with increased snacking opportunities—
help retailers understand that avocados are an important
healthful choice.
• Provide retailers with easy-to-understand information to tell the
avocado success story, both in nutritional value and retail sales
value. Build the category and increase consumption.
• Consider building out communication campaigns targeted to the
aging Boomer population, Millennial Moms, Hispanic shoppers,
and Cosmopolitan Kids with tremendous spending influence.
• Utilize digital technology to help consumers use their devices to
find recipes and usage ideas online.
• With the addition of online shopping, the playing field is bigger,
tougher and more demanding. It will be important for retailers to
integrate online and in-store models of a multi-channel platform
to increase market reach.
• Be an industry leader and consumer advocate regarding
sustainability and food safety initiatives.
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2
Inflation from
increased prices
and transportation
costs has
impacted the
supply chain all
the way through
to the retail shelf.
RETAIL FACTS,
FIGURES & TRENDS
Rising Retail Prices
Left unchecked, rising prices could represent a threat to all produce
commodities. Rising food prices reduce the spendable cash of the
consumer, and many have already been hit hard in the past few
years. With less disposable income, consumers will need to decide
where best to spend their dollars at the grocery store and, in
particular, in the produce department.
Fruit and Vegetable Prices
Inflation from increased prices and transportation costs has impacted
the supply chain all the way through to the retail shelf. According to
the Bureau of Labor Statistics, prices for food purchased for at-home
consumption increased 5.3% during 2012. Moreover, the USDA is
projecting further pricing increases for fruits and vegetables into
2013 with estimated increase of 3-4% in 2013 (see Fig. 1). 1
Changes in Food Price Indexes, 2010 through 2013
Fig. 1. Source: Bureau of Labor Statistics, 2012.
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The U.S. is
the world’s
biggest
producer
in the
corn
market
The drought of
2012 could impact
the world’s corn
supply by
60
billion
tons
While the full
impact of the
drought isn’t
expected to affect
food prices across
all parts of the
store until 2013,
many grocers faced
the 2012 summer
with low supplies
of locally grown
crops.
The 2012 Drought Impacts Food Pricing in 2013
The severe drought of 2012 (considered by many to be the worst
since the 1950s) has damaged corn and soybean crops in the Midwest
and may lead to further food price inflation in 2013. While the full
impact of the drought isn’t expected to affect food prices across all
parts of the store until 2013, many grocers faced the 2012 summer
with low supplies of locally grown crops. 2
• The United States is the world’s biggest producer in the corn
market, and the drought could impact the world’s corn supply by
60 billion tons as a result. Food prices in the United States may
have an impact on prices worldwide. 3
• Animal-based food prices may be hardest hit. The USDA projects
that poultry products may increase 3-4% in 2013. Beef and veal
may increase 4-5% from 2012 averages. Dairy products may
increase to 4.5%. 4
• Higher prices in these key protein areas may reduce the
consumers’ purchase of produce items.
Taking Action
Some companies and commodity groups have already started to
combat these inflationary pressures with marketing strategies that
emphasize the nutritional value of their produce. One example is the
mushroom industry, which has been developing alternate uses for
mushrooms. For example, mushrooms make a good substitute for
a portion of the meat used in a hamburger, thus reducing the cost
of protein while improving the overall nutritional value of the meal.
Other commodities are introducing alternative uses for their produce
such as replacing an ingredient in a dessert recipe or snack item with
a produce item. For instance, avocados can be added to cake, ice
cream and smoothie recipes for added texture and flavor. Keeping
commodities, and their alternative uses, front of mind with the
consumer can be important during a period of inflation.
Retail Store Performance
Consumer shopping in multiple channels continues to grow and
change.
• Supermarket sales increased 3.8% from March 2012 to March
2011 to reach $584.37 billion in retail sales. Growth was
generated by two key factors: an increase in the number of stores
and price inflation, as noted above. Total store count was up 1.2%,
and per store sales increased 2.7%. 5
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• Conventional format supermarkets continue to make up the largest
portion of the sales pie, with 68.24% of total sales, compared to
65.65% last year. The continued encroachment of supercenters,
limited-assortment stores and natural/gourmet food formats
continues to produce positive gains. 6
Supermarket Sales by Format
Total Supermarkets ($2 Million or More)
Supermarket – Conventional
Supercenter (Grocery and Mass Merch)
Supermarket – Limited Assortment
Supermarket – Natural/Gourmet Foods
Warehouse Grocery
Military Commissary
Number of
Stores
Percent of
Total
Sales $
(Millions)
Percent of
Total
36,569
26,830
3,645
2,909
2,531
476
178
100%
73.37
9.97
7.95
6.92
1.30
0.49
584,369
398,776
136,218
14,259
26,357
3,817
4,942
100%
68.24
23.31
2.44
4.51
0.65
0.85
Fig. 2. Source: Progressive Grocer Market Research, 2012 7
There are nearly 40,000 stores with over $2 million in sales, yet
the total number of outlets in the U.S. with some level of produce
distribution during the year is 177,000 including small neighborhood
stores, convenience stores, etc. 8
• Stores with over $2 million in sales: Traditional chain stores
dominate independents in sales by store count, up slightly to
82.26% of the total count in 2011. Grocery chain operators had a
net gain of 354 units (up 1.2%), compared to a gain of 66 units for
independents (up 1.0%). Chains garnered an even stronger share of
sales, capturing 94.3%, compared to 5.7% for independents. 9
Average Per Store Supermarket Performance Measures
Sales Volume ($ Millions)
Selling Area (Square Feet)
Number of Checkouts
Number of Full-Time Equivalent Employees
Average Weekly $ Sales
Dollars per Store
Dollars per Square Feet
Dollars per Checkout
Dollars per Full-Time Equivalent Employees
Dollars per Full-Time Equivalent Employee Hours
Fig. 3. Source: Progressive Grocer Market Research, 2012
2011
2010
2009
$15.98
33,320
9.7
68
$15.57
33,300
9.7
66
$15.64
33,250
9.6
67
$307,306
$9.22
$31,681
$4,519
$112.98
$299,373
$8.99
$30,863
$4,536
$113.00
$300,769
$9.05
$31,330
$4,489
$112.00
10
Retail sales performance increased in 2011. Dollar sales per square
foot (total store) increased to $9.22, an increase of +$0.23 from 2010
and +$0.17 from 2009. Sales per checkout grew $31,681 in 2011. This
represents an increase of +$818 from 2010 and +$351 from 2009. 11
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Smaller store
formats are
becoming more
significant as
the distinction
between the
stock-up trip and
the fill-in function
becomes less
defined.
Changing Retail
Prior to the recent recession, retail growth was often accomplished by
adding square footage. Convenience stores, supercenters, and dollar
stores expanded rapidly adding approximately 150 million square feet
of grocery category space from 2009 to 2011. However, traditional
grocery stores have not grown in terms of square footage (see Fig 3.),
but are focusing on the premise that smaller may be smarter. Smaller
store formats are used for a quick trip, fill-in function. This smaller
store format is becoming more significant as the distinction between
the stock-up trip and the fill-in function becomes less defined. Small
store formats are viewed as having price or value, assortment or
convenience. Differentiation is a significant factor. The more successful
stores have two or more of these attributes. 12
• Since 2005, square footage of dollar stores and discount stores both
grew by 23% and supercenters grew by 48%, while supermarkets
have grown by 4%. 13
• Warehouse clubs, drug stores, dollar stores, ethnic food stores,
and convenience stores have had an increase in patronage while
traditional supermarkets, limited assortment stores, and discount
stores have seen a decrease in visits. 14
• Target stores have expanded the food section at 1,100 of its 1,772
stores. 15
• Dollar General offers 20 SKUs of produce and has 50 feet of frozen
and refrigerated space. 16
• Club stores are the top channel for stock-up trips; drug and dollar
channels are luring customers away from club and grocery stores
for stock-up and fill-in shopping trips. Consumers may shop several
stores in one day. 17
More about New Formats
Retail chains are searching for new ways to attract shoppers. One
method, mentioned above, is through new smaller store formats
(neighborhood stores) designed to compete more directly with the local
independent retailer. These smaller footprints are designed for a quick,
limited assortment shopping experience. But these new formats are
still a “work in progress” as evidenced by Tesco’s decision to end their
“great American experiment.” Despite an investment of $1.6 billion
in December 2012, Tesco put all of their U.S. outlets (Fresh & Easy
stores) up for sale. 18 While these small format stores were never able
to catch on with the American shopper, another small footprint store,
Trader Joe’s, has been flourishing. Obviously, there is more to successful
retailing than store size.
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Ultimately, we believe that smaller formats will succeed as an aging
population begins to alter their shopping behavior in ways that save
time, effort and transportation costs.
These limited assortment stores, by definition, carry fewer products.
Staying “front of mind” with retailers will be more important than ever
to ensure that Hass avocados are on hand at these locations.
Other Shopping Experiments to Watch
Kiosks
Tesco successfully experimented with virtual grocery shopping in South
Korea. Consumers entering the subway were met with large interactive
video screens loaded with images of grocery items. Consumers used
their smart phones to snap QC codes for the items they wanted to
purchase. The items are then delivered to their homes.
In the United States, Peapod developed a similar method using static
billboards positioned in local train stations. Again, shoppers utilized
their smart phones to place orders for delivery.
As these new limited-item formats and methods of shopping become
more prevalent, it may become increasingly difficult to maintain a
high level of presence for some commodities. For avocados, however,
growing demand helps to give Hass avocados an edge over many other
produce items in these new store formats.
Best Food Day Ads
Retail promotional methods or tactics have changed. According to
Grocery Headquarters, supermarket circular ads decreased in four of
the five fresh departments, except the produce department, which
increased retail ads by 2%. Additionally, promotional pricing increased
at a faster rate than non-promotional pricing. This is especially true in
produce where the promotional price increased by 7.1% compared to a
non-promotional price of 3.4%. 19
• Volume is growing in products that appeal to the flavor and
convenience needs of shoppers. Pre-cut and globally inspired fresh
products, such as mangoes, specialty peppers and tropical fruits
that appeal to food enthusiasts seeking unique flavors, are part of
this growing trend. 20
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Retail Produce Department Performance
Ranking of Categories by
New Product Activity
78%
Price Promotions
Sampling
71%
69%
Signage
55%
On-Shelf Prmotions
In-Store Coupons
How Retailers Reach their Consumer Base
35%
Suggestive Selling
by Employees
29%
22%
Other In-Store
Promotions
12%
Digital Coupons
Mail Coupons
• Year-to-year total department produce sales generated $52 billion
versus $50 billion a year ago, which is a 3.6% gain. 21
• Retailers are adding more quality-focused, value-added,
convenience-oriented products developed for immediate
consumption and quick preparation. 22
• The top five concerns in produce departments are the summer
drought; competition from Walmart and traditional supermarket
rivals; wholesale prices; and profits. 23
• Between fruits and vegetables, fruits accounted for the most
significant growth in 3Q produce sales with berries, cherries and
avocados driving a 5.3% increase compared to the same period last
year. 24
• The avocado category grew 14.5%, outpacing total fruit’s trend
(12.4%) by 2.1 points for the 13 weeks ending 12/2/12 (see Fig 13.,
page 34).
8%
Other
2%
Other Digital
Promotions
2%
Fig. 4. Source: Progressive Grocer Media Market Research, 2012
Sampling
Sampling products at retail is once again increasing in importance with
consumers. Sampling was, at one time, a key method of introducing
consumers to new products. While these methods waned in more
recent years, the proliferation of produce items at retail has created
a need to return to sampling as a powerful way to initiate trial among
consumers.
Signage
Signage also appears to be making a comeback. For years, many
traditional retail chains preferred a clean and clutter-less look in
their stores, limiting the amount of in-store signage and messaging.
On the flip side, an alternate method used by many independent
stores and Hispanic chains is the strong use of signage to help create
a shopping experience that is full of colorful point of sale materials
carrying product messaging. This successful use of signage among the
independents and small regional chains may impact the larger chains’
acceptance of adding POS back into their merchandising mix.
Based on a nationwide retailer survey from Progressive Grocer,
retailers use the following methods to promote new products: Source:
Progressive Grocer, August 2012 edition (see Fig 4). 25
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Social Media
Social Media is certainly a well-received medium. Consumers have
adopted a number of social sites for their use on a daily basis including
Facebook, Pinterest and many others. However, it appears that retailers
overall have been less infatuated with social media. Fifty-one percent
(51%) of retailers reported using social media to promote themselves
and only 25% considered it to be an effective medium to entice
consumers into trying new products. 26
Percentage of Retailers using Social Media to Promote New Products
49%
No
51%
Yes
Fig. 5. Retailers were asked, “Do you use social media to promote new products?” Source:
Progressive Grocer Media Market Research, 2012
Retailers Rate the Effectiveness in Attracting Consumers to try
New Products through Social Media
50%
Not Verry Effective
25%
Not At All Effective
Somewhat Effective
Very Effective
Extremely Effective
11%
5%
9%
Fig. 6. Retailers were asked, “How would you rate the effectiveness of social media in
attracting consumers to try new products?” Source: Progressive Grocer Media Market
Research, 2012
We fully expect retailers to completely embrace social media as time
progresses.
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Nutrition, Locally Grown and Flavor Trends
Nutrition, locally grown and flavor are three trends that continue to be
the most prominent among consumers.
Retailers ranked the following new product attributes in importance to
their appeal to consumers: 27
Fresh food
has become the
health “halo” for the
grocery store. The
perimeter of the
store drives consumer
perceptions of the
entire store.
Retailers Rate of importance for New Product Attributes and their
Appeal to Consumers
New Size
22%
Organic
31%
Ethnic
31%
Sustainable Packaging
Familiar Brand Extension
New Flavor
Locally Sourced
Healthy
39%
52%
53%
58%
65%
Fig. 7. Retailers were asked, “How important are each of the following new product attributes
in their appeal to consumers?” Source: Progressive Grocer Media Market Research, 2012
Nutrition, health and wellness have become a more integral part of
the grocery industry. Fresh food has become the health “halo” for the
grocery store. The perimeter of the store drives consumer perceptions
of the entire store.
Whole Health / In-store Nutritionists
Whole health (tying health throughout the entire store) was presented
to the industry 15 years ago as a $42 billion opportunity. The $2.6
trillion in health care spending (Medicare & Medicaid and health and
wellness at all levels) in the United States in 2010 is projected to grow
to $4.6 trillion by 2020, according to figures from the Washington D.C.based Office of the Actuary at the Centers for Medicare & Medicaid
Services, and reported by health policy journal Health Affairs. 28
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Many retailers are leveraging this interest to benefit both their shopper
base and their own sales. As an example, Hy-Vee stores began by
investing in dietitians in 2000. The chain, which has over 200 stores,
makes dietitian services available at more than 85 of their stores. The
services include counseling and health information, cooking classes,
and demos throughout the various departments in the store. 29 Many
other chains have added nutritional services, information and assistance
to their stores. Several stores provide shoppers with healthful food
ratings posted at point of purchase. These ratings are designed to help
consumers make more nutritious purchasing choices.
In-store health
clinics...could
impact 75 million
diabetic Americans
in 10 years.
25 million Americans
are affected by
gluten intolerance.
Produce companies
and commodities
can leverage their
fresh fruits and
vegetables for those
avoiding gluten and
other food-based
allergens.
Obesity / Health and Wellness Centers
Food retailers are emphasizing the many products and services their
stores offer that support a healthy lifestyle. Some retailers are opening
health clinics. The in-store health clinics may be useful in addressing
the obesity epidemic, which affects nearly a third of Americans and
the related diabetes that could impact 75 million Americans in 10
years. 30 Supermarkets are in a position to enhance the value of clinics
by leveraging their food connection as part of nutrition and weight
counseling.
Food Allergies and Intolerance
More than 75 million people have food allergies and intolerances,
including peanuts, soy, dairy, eggs, fish and shellfish. Another 25 million
U.S. consumers are affected by gluten intolerance. In less than five years,
gluten-free has gone from a category sold in natural food stores to a
broad-based offering sold in mainstream food stores. 31
• “Free From” claims may become more prevalent. Gluten-free
is relatively mainstream, with lactose-free set to follow. Other
emerging products will include meat-free lines, with technology
allowing the development of innovative vegetarian foods, as well as
fat-, sugar-, and salt-free alternatives.
• The current gluten-free category size is $3.3 billion and the “freefrom” (foods eliminating ingredients) category represents $0.5
billion. The free-from business grew $63 million, a 25% increase in
the past two years (from $210 million in 2008 to $365
million today). 32
• Due to the awareness of food allergies and intolerances, this
business could be $10 billion by 2020. 33
Produce companies and commodities may have an excellent opportunity
to leverage their fresh fruits and vegetables as a part of a healthy
lifestyle for consumers avoiding gluten and other food-based allergens.
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Organics is
the fastest
growing sector
in agriculture.
Sales of organic
products have
increased annually
by as
much as
20%
Locally Grown
A leading trend of fresh fruit and vegetables is locally grown or
hyper-local produce offerings from foodservice and retailers. Many
independent grocers are turning to locally sourced foods because
of freshness and sustainability. Procuring products from nearby
locations means less fuel in transportation costs and local community
support for the area the store serves. Some smaller grocers are taking
local sourcing to the next level by becoming suppliers themselves by
growing herbs from their rooftop gardens. Local sourcing is also easier
for Independents than for the big chains. Big chains are built around
efficient supply chains, and small, local deliveries are often not efficient
for that business model. 34
According to a survey by the National Restaurant Association, chefs
believe fresh produce and nutrition will rank among the top restaurant
trends for 2013. 35 Chefs are moving toward local sourcing because it
has become top of mind for consumers. Restaurants tend to be more
respected and trusted when they use local sources for fresh produce and
other commodities.
Organic Produce
Organics is the fastest-growing sector in agriculture and the high growth
rate is expected to continue. Sales of organic products have increased
annually by as much as 20% and represent a $31 billion sector, according
to Certified Organic Farmers (CCOF). Fruit and vegetable sales, which
represent 39.7% of total U.S. organic food value, have experienced the
most growth, reaching almost $10.6 billion in 2010, up 11.8% from the
previous year. Organic produce represents 12% of all fruit and vegetable
sales. 36
Organic sales continue to increase and the term organic is still significant
in generating sales. However, industry observers indicate that the
marketplace is becoming too crowded with labels, claims and stories and
the term organic is being used less often. 37
Organic avocado sales represented 2.23% of the total avocado category
with $27,928,194 for 46 weeks ending 11/4/12, per Symphony IRI/
FreshLook Marketing data (see Fig. 12, pg. 33).
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Local, sustainable,
and artisan are
today’s marketing
terms that help sell
produce.
Other Retail Trends & Highlights
Grocery retailers are adopting store innovations designed to keep
shoppers returning. They are turning categories into small departments,
developing merchandise solutions, and re-thinking assortments on the
shelf. For example, retailers are linking items that represent a shopperneeds state into solution sections such as cough and cold and wellbaby or a salad section with packaged salads, croutons and dressing all
merchandised together to make easier shopper decisions.
Artisan
Local, sustainable, and artisan are today’s marketing terms that help
sell produce. The word artisan, which used to mean handcrafted, is
printed on many food items and is used in the foodservice industry.
For example, Dominos’ Pizza promotes an Artisan Pizza. This use of the
term in so many sections of the food industry may actually be diluting
its meaning. Datamonitor has found more than 800 new food products
dubbed “artisan” in the past five years. The consumer draw is the desire
to break away from the over processed, mass-produced foods. 38
• “Natural” products have had solid growth over the years. However,
due to lawsuits and regulatory pressure, the definition of “natural”
and whether highly processed foods can use that description is
under scrutiny. As a result, some companies are using “additive- /
preservative-free positioning. The use of GM-free (GeneticallyModified) claims is also growing. 39
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Snacking
accounts for 53% of
all eating occassions.
Healthful snacks are
among the fastest
growing occassion.
Snacking
Snacking is an ever increasing trend not just in the U.S. but worldwide.
Fruit is near the top of this growing trend. Many fruits are convenient,
on-the-go items, and are easily consumed with minimal preparation
and mess. Since 2003, the frequency of snacking (annual snack meals
per capita) increased by 15 snacks per person. Morning snacks are
driving growth within the snack occasion, possibly due to a more
healthful choice of items. Healthful snacks are among the fastest
growing occasion. Snack selections such as fruit, yogurts and bars are
growing the fastest. Healthful behaviors encourage more frequent
snacking. Snacking accounts for one of every five consumption
occasions. 40
• The $1.6 billion frozen snack market grew by 21.6% between 2006
and 2011. Part of this can be attributed to cash-strapped consumers
switching from restaurant meals to more at-home entertaining and
eating. 41
• Snacking accounts for 53% of all eating occasions. Adults snack as
much as children do, and women snack more than men. 42
• The top snack foods consumed during the in-home/carried snack
occasion in ranked order include: 43
1. Salty Snacks
2. Fruit (fresh and dried fruit and nuts)
3. Frozen Sweets
4. Cookies
5. Candy/Gum
6. Crackers
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3
Due to the recession,
consumers have
shown a renewed
interest in saving
money by eating
meals at home. This
trend is helping push
growth for produce
items.
CONSUMER FACTS,
FIGURES & TRENDS
The Economy
The recent recession had an impact on retailers. In 2012, as
the economy steadily improved, 42% of consumers remained
convinced it would get worse. Consumers plan on discount shopping
permanently, which represents an additional 19 million households
adopting this “new normal” behavior. Those households that were
more impacted by the recession report that they will continue
seeking value once the economy improves. 44
•
•
•
•
Shoppers are more focused on value
Consumers are looking for lower prices in general (61%) 45
Consumers are looking for lower prices on specific items (53%) 46
Other value-seeking habits include seeking discounts, buying
private label brands, and acceptance of living with less. 47
However, due to the recession, consumers have shown a renewed
interest in saving money by eating meals at home. This trend is
helping push growth for produce items that support consumers’
desire to create restaurant-quality meals at home while placing a
greater emphasis on fresh food.
Consumers are more engaged with fresh foods. This interest in
food is reflected in better sales performance on items with unique
and new flavors; products reflecting global tastes and interest; and
information on food production methods, sourcing, and origin. The
produce department represents about 10% of total store sales,
and more than 40% of baskets include an item from the produce
department. This underscores the power that fresh foods have in
driving consumer trip behavior. 48
• USDA’s Economic Research Service (ERS) estimates total food
expenditures for all food consumed in the United States was
$1.14 trillion in 2011. Food purchased for home consumption
accounted for $659.4 billion. 49
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• U.S. consumers are spending a smaller percentage of their
income on food. According to USDA, food expenditures by
families and individuals as a share of disposable personal income
were 9.8% in 2011, versus 11.5% in 1991. Food purchased for
home consumption accounted for 5.7% of total U.S. disposable
personal income in 2011. Food purchased away from home
accounted for 4.1% of disposable personal income in 2011. 50
The Changing Consumer: Quick Thoughts
Mobile phone apps, 24/7 access to the Internet, the proliferation
of new and exciting products, and multiple sources and outlets to
purchase products are all changing the way people shop. Consumers
no longer shop in a straightforward, linear fashion. Shopping is now
a 24-hour, seven-day-a-week activity. Shoppers today are busy and
tech-connected. What once appeared to be a “direct purchase path”
(see it, want it, buy it) has become a series of events managed by the
consumer, not by retailers and manufacturers.
Food culture is
shifting with the rise in
technology. Shoppers
are busy and often
tech-connected.
Consumers are looking for:
• Simplicity
• Price
• Cleanliness
• Quality
• Variety
• Information
• Simplicity of the shopping experience remains a key factor
affecting the shopper’s choice of stores.
• Grocery shoppers claim they are more likely to shop with
coupons, search out discounts or lower prices at their primary
store and alternative grocery stores, and to stock up on sales
items. 51
• Top factors in 2012 that were important to a person’s selection of
a primary store included: price, cleanliness, high quality produce,
and a great selection of items (especially produce, meats, and
frozen/prepared items). Consumers are also looking for sales or
specials, high quality meat, accurate shelf tags, and easy to find
“use” or “sell by” dates. 52
• Fresh and natural foods have broad appeal and are sought after
by 40% of consumers. 53
• Shoppers are interested in nutrition labels, organic products
and locally sourced products. Research from the University
of Michigan indicates that food labels making organic, locally
produced or fair trade claims can mislead consumers into
thinking foods are healthier. The altered perceptions are
attributed to the power of the health and wellness message.
Health halos evoked by social ethics can promote higher
consumption recommendations for poor-nutrient food. 54
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• The demand for organic produce is part of a more comprehensive
trend in ethical retailing. Consumers want supermarkets to treat
their employees fairly, to care about green store design, and
stock products their customers can believe in. Research indicates
that 59% of consumers want a connection to the farmer; 79% of
consumers want environmentally friendly foods; and 75% want a
reduction in pesticide use. 55
• Food culture is shifting. The average consumer’s knowledge of
food has evolved to have greater meaning. Words such as fresh,
natural, organic, local, and ethical all fall under the concept of
“good food.” 56
• Consumers are looking for positive nutritional benefits such as
high fiber content or whole grains over seeking out products
with “reduced” negative attributes such as sugar or carbs.
Women were more concerned about health overall, and younger
consumers showed a preference for “emerging” nutritional
attributes such as gluten-free, dairy-free and vegetarian
or vegan. 57
All of these are excellent signs for the future growth of the produce
industry.
Consumers tend to eat healthy food to: (multiple responses allowed) 58
How Consumers Choose Healthful Foods
To stay well
To live longer
Because I feel better throughout the day
To lose weight
To maintain my weight
As an aid in treating illness/disease
I don’t eat healthy food
Other Men
61%
49%
41%
26%
29%
21%
13%
3%
Women
73%
49%
51%
36%
30%
20%
6%
3%
Fig. 8. Multiple responses were allowed for the survey. Source: Progressive
Grocer Media Market Research, 2012
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Technology at Retail
Technology is changing the way consumers shop for groceries.
Consumers find online shopping to be an easier way to find items,
read reviews, compare prices, and research products. However,
online purchases of fresh foods, produce, groceries and beverages
are made by very few shoppers. Consumers who do purchase
groceries online do so for the convenience, home delivery, and lower
prices.
Groceries Top Coupon Quest
Groceries
90%
Dining Out
49%
Clothing
Cosmetic/Beauty
Products
Pet Items/
Services
Entertainment/
Activities
34%
29%
18%
16%
Fig. 9. Source: Supermarket News, Coupon Use Shows
Volatility, 12/10/12
• Online purchases of grocery items typically include items such
as health and beauty, health care, pet products, and home
essentials. More than half of consumers purchase groceries
online occasionally, but mostly in specific, non-food categories
including books, music, electronics, clothing and footwear. 59
• 52% of consumers use technology while grocery shopping. 60
Shoppers use technology most often to obtain lower prices,
research products and make lists.
•32% use online coupons 61
•31% use mobile technology for tasks such as making shopping
lists, finding recipes, or researching products 62
•23% check prices at multiple stores online before they go grocery
shopping 63
•82% of shoppers are using more online coupons in 2012 than
2011 64
•41% of shoppers use coupons on most shopping trips 65
•Supermarket News issued a report citing top categories where
consumers are most interested in finding coupons, coupon codes
and deals. Groceries were the top coupon requested at 90% (see
Fig. 9) 66
•Retailers are expanding their outreach with customers by linking
social network data to customer loyalty programs, primarily
revolving around fuel discounts. Gas prices have a direct impact
on retail spending so fuel discount programs are expected to
continue to secure loyalty in a meaningful way. 67
Food Safety
Confidence in food safety has grown from 2007 when it was at its
lowest. Consumers are moderately confident in the safety of produce,
meat and poultry items; however, confidence is less than it was in
2011. Consumers see grocery stores as the least likely place for food
safety problems to originate. According to Food Marketing Institute’s
U.S. Grocery Shopper Trends report, more than 90% of shoppers
“strongly” or “somewhat” agree with the statement that they trust
their grocery stores to ensure the food they eat is safe. 68 More than
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half of shoppers named food processing and manufacturing to be
where the food safety breaches occur. 69
Contaminated
food makes
48 million
American’s
sick every year
and costs over
$77 billion in
aggregated
economic costs.
A product’s
sustainability
impacts consumer
shopping decisions
including products
and retailer choice.
Consumers want
help from retailers
to find and choose
eco-friendly
products!
• According to the NPD Group, during the period from January
through August 2012, 60% of U.S. consumers were “somewhat”
or “slightly” concerned about the food supply; 25% were
“extremely” or “very” concerned; and 15% were not concerned at
all. 70
• Foods produced or grown in the United States and Canada have
the highest consumer confidence at 97% and 93%, respectively.
Foods produced or grown in Africa and China have the lowest
consumer confidence at 34% and 33%, respectively. 71
• Contaminated food makes 48 million Americans sick every year
and costs over $77 billion in aggregated economic costs. 72
• 2012 has had nearly twice as many illnesses due to recalls as
2011, with recalls of cantaloupes and hundreds of thousands of
jars of peanut butter. 73
• Consumers demonstrate a level of sympathetic category
avoidance. For example, the salmonella outbreak in cantaloupes
in 2011 caused some consumers to avoid honeydew and
watermelon, and to reduce or avoid purchases of all three of
these melons for up to 12 months. 74
Sustainability
A product’s sustainability impacts shopping decisions including
product and retailer choice. Some consumers consider retailers’
corporate sustainability practices when deciding on purchasing an
item from them.
• Food appeal, health, wellness, sustainability, and social justice are
issues influencing consumers to think more critically about food
values—the quality of their food, where it comes from, how it’s
produced and what it’s really worth. 75
• Fewer plastic grocery shopping bags are entering the waste
stream. 76
• Kroger published its first sustainability report five years ago. Since
then, public awareness of green technology, waste reduction
and energy conservation has increased. Kroger has reduced
overall energy consumption by 30% since 2000; has kept 159
million additional plastic bags from entering the community; has
improved fleet efficiency by 8%; and has eliminated 22 million
pounds in solid waste. 77
• Consumers want help from retailers to find and choose eco-friendly grocery products that are convenient, affordable and
practical for their lifestyles. 78
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Baby Boomers
• 80 million strong
• Wealthy
• Diverse
Hispanic Shoppers
• 35.3 million
strong
• Spend the most
on meat
• Shop at mass
merchandisers
Millennial Moms
• 82.5 million
strong
• $2.4 trillion in
spending
• Heavy online
and social media
users
Cosmopolitan Kids
• $215 billion in
spending
• sophisticated
shoppers
• Tech savvy
• Most shoppers believe a healthier planet means a “healthier me.”
Seventy-six percent (76%) of grocery shoppers expect that better
personal health is a big benefit of an eco-friendly lifestyle. 79
• Consumers consider the following grocery chains to be the most
eco-friendly: Whole Foods (81%); Trader Joe’s (74%); Wegmans
(65%); Publix (51%); and Harris Teeter (50%). 80
• The top three eco-actions for shoppers are: to limit the amount
of garbage their household produces (67%); to choose foods
or beverages that are packaged responsibly (65%); to use less
plastic (62%). 81
Targeting Consumer Demographics
Baby Boomers
Baby Boomers (born between 1946 and 1964) share a similar affinity
for products that help them stay in good health. At nearly 80 million
strong, this generation is one of the most influential generations of all
times. It is estimated that 10,000 people will turn 65 every day for the
next 20 years. 82
• Overall, the boomer generation is huge, wealthy and known for its
individuality and diversity.
• At a macro level, boomers spend similarly on private label goods
versus the average shopper, yet the drug and dollar stores are
winning a disproportionate share of private label spending among
this group. 83
• Spending on health care and produce increases with age,
influenced by an increasing concern with a proactive approach to
healthy living. Eighty-seven percent (87%) of consumers over the
age of 65 are trying to eat healthier food. 84
Hispanic Shoppers
The Hispanic population now numbers approximately 50.5 million.
The Hispanic population increased from 35.3 million in 2000 when
this group made up 13% of the population according to the U.S.
Census. By 2015, it is projected that total Hispanic spending will hit
$1.5 trillion, up from roughly $978 billion in 2009 according to the
Selig Center for Economic Growth. 85 On average, Hispanics spend
$300 more per year on groceries than non-Hispanics, according to
the Bureau of Labor Statistics’ Consumer Expenditure Survey. They
allocate the most money for meat, followed by dairy, fruit, vegetables,
poultry, and eggs. 86
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• Both Hispanics and non-Hispanics are equally likely to shop at
supermarkets, while Hispanic primary grocery shoppers are more
likely than non-Hispanics to shop at mass merchandisers. 87
• Supermarkets offer a variety of ethnic foods and will likely expand
their selection of foods that appeals to the Hispanic consumer in
light of the expected increase in the Hispanic population over the
coming years. 88
• Hispanics are more likely to be responsive to in-store
announcements compared to non-Hispanics. 89
Millennial Moms
Millennials (born between 1977 and 1996) are starting to raise
families. In fact, 68% of all births are to Millennial Moms according
to The Parents Network. Today’s “mom market” is made up of 82.5
million mothers and represents $2.4 trillion in spending power.
Traditional marketing efforts are giving way to the digital age, as
moms’ time is harder to come by. This group doesn’t clip coupons
or check the local ads for what’s on sale. This group can be reached
through Facebook, Twitter and Pinterest with integrated messaging
between them. Pinterest is the new popular social platform offering
quick visual resources. Retailers and suppliers can create boards for
products, weekly ads and recipes, which can then be followed or repinned to share with followers. Additionally, 18.3 million moms read
blogs every month. 90
Cosmopolitan Kids
According to the Division of Nutritional Sciences at Cornell University,
Cosmopolitan Kids (the new generation of kids that are more
sophisticated than previous generations) have tremendous purchasing
influence. Their research indicates that three- to five-year olds have
an annual purchasing influence of $15 billion; six- to eight-year olds
influence $45 billion in spending; nine- to 11-year olds influence $65
billion in spending; and 15- to 17-year olds influence an amazing $90
billion in purchases.91 Kids spend seven hours a day in the e-world and
are the most sophisticated consumer. Supermarkets are using mobile
apps, website pages, QR codes and in-store promotions to get kids and
their parents involved with fresh produce and to build relationships
with their youngest consumers now.
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2013
• Some retailers (Whole Foods) offer Kids’ Club sections to their
website with a range of events for kids that involve produce
and healthful eating, as well as story time, tours and classes.
Additionally, kid-themed birthday parties and specialized “Kids
Platters” offering such selections as Honey and Banana Roll-Ups,
Peanut Butter and Fruit Roll-Ups, and Fruit and Nut Rollups are on
the rise. 92
• Today’s kids are more sophisticated than previous generations
because they are media- and tech-savvy. They travel, go out to
dinner more often than ever before, take cooking classes, and host
catered parties. 93
Consumer Trends Projected for 2013
Emerging trends expected to impact the food market through 2013
and beyond include:
Vegetables
will star as
the main
dish rather
than just
a side
or salad
dish!
• Fruits used with savory flavors will be incorporated into appetizers,
soups and meat dishes. 94
• Chefs will create better-for-you food that actually tastes good by
exchanging butter and bacon for broth and beets. 95
• Vegetables will star as the main dish rather than just a side or
salad dish. Vegetable dishes will cater to vegetarians, vegans,
flexitarians, foodies, and nutritious-conscious consumers.
Beverages will also be infused with vegetables such as celery juice
cocktails. 96
• More and more restaurants will offer all-inclusive menus and
services to accommodate vegetarians, vegans, gluten free and
wheat free diners, eco-conscious diners and children. 97
• A greater emphasis will be placed on the aging population driven
by a rising consumer understanding of the role of a healthful diet.
Established medical brands may enter into mainstream aisles as
well as the promotion of nutrients in anti-aging products. 98
• The continuing emphasis on local and seasonal foods will lead
toward a local, seasonal and more distinctive regional style of
cooking. 99
• Consumers will continue to use mobile technology when
grocery shopping to make shopping lists, find recipes or
research products.100
• The top four menu trends from the National Restaurant
Association are projected to be: (1) locally sourced meats
and seafood, (2) healthful kids’ meals, (3) environmental
sustainability as a culinary theme, and (4) children’s nutrition as a
culinary trend.101
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APPENDIX
Retail Produce Department Performance
Apples took the number one position as the top fruit category for the 13 weeks ending 12/2/12 based on total
$ sales. Avocados held the number one placement in pounds versus a year ago. Overall, avocados placed sixth
out of the top 10 fruit categories.
Top Fruit Categories
TOP FRUIT CATEGORIES
(Ranked by $ Sales)
Rank
Category
1
2
3
4
5
6
7
8
9
APPLES
GRAPES
BERRIES
BANANAS
MELONS
AVOCADOS
ORANGES
TANGERINES
PEARS
TOTAL FRUIT
Percent Change vs.
Year Ago
Dollars
Pounds
16.1%
14.2%
20.7%
3.4%
15.5%
14.5%
13.3%
14%
4.3%
12.4%
1.5%
2.5%
16.7%
5.3%
6.7%
30.7%
7.2%
10.5%
-0.5%
6.0%
Fig. 10. Source: SymphonyIRI/FreshLook Marketing, 13 weeks
ending 12/2/2012
Retail Top 25
For the first time ever, all 75 companies on Supermarket News’ list of the top 75 food retailers in North
America achieved annual sales in excess of $1 billion. Industry observers attributed the increases this year
primarily to the impact of inflation. 102 The top 25 list of retailers:
1. Walmart Stores
2. Kroger Stores
3. Costco Wholesale Corporation
4. Target Corporation
5. Safeway Stores
6. Supervalu Stores
7. Loblaw Cos.
8. Publix Super Markets
9. Ahold USA
10. C&S Wholesale Grocers
11. Delhaize America
12. 7-11 Stores
13. H-E-B Stores
14. Sobeys Stores
15. Dollar General Corporation
16. Meijer Inc.
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17.
18.
19.
20.
21.
22.
23.
24.
25.
Wakefern Food Corporation
BJ’s Wholesale Club
Metro Inc.
Whole Foods Market
Giant Eagle Stores
Trader Joe’s Co.
Family Dollar Stores
Associated Wholesale Grocers
Aldi Stores
Retail Expansion, Consolidation and Streamlining
Openings 103
• 99 Cents Only – 28 stores opened
• Costco – 10 stores opened
• Family Dollar – 500 stores opened
• Walmart– 100 stores opened
• Walmart Neighborhood Markets – 8 stores opened
• Walmart Supercenter – 135 stores opened
• Walgreens- 198 stores opened
Closings 104
• Family Dollar – 100 stores closed
• Food Lion -113 stores closed
• Genuardi’s – sold 16 of their stores to Giant, closed several stores, and only has 4 stores left under their
Retailer Banner
• Marsh Supermarkets – 3 stores closed
• SuperValu (Albertson’s / ACME / Save-A-Lot) – 60 stores closed
• Pathmark, A&P, Superfresh & Waldbaums closed a combined 14 stores which took place in NJ, NY, PA
and CT
Acquisitions 105
• Whole Foods will be taking over the lease at Foodmaster’s Charlestown, MA location along with five other
locations in the Boston area.
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105
OTHER SOURCES
Avocado Category Weeks Ending 12/2/12
Last 13 Weeks, Prior Year
$212,073,836
$4,186,898,039
Last 13 Weeks, Curr Year
Last 13 Weeks % Chg vs YAG
$242,766,594
$4,706,773,543
+14.5%
+12.4%
Fig. 11. Source: SymphonyIRI/FreshLook Marketing, 13 weeks
ending 12/2/2012
The Total U.S. Avocado category retail dollars for the 13-weeks ending 12/2/2012 were $242 million,*
which represented 5.2 percent* of the Fruit category.
The Avocado category retail dollar growth of +14.5 percent versus prior year outperformed the Fruit category’s trend of
+12.4 percent.
Organic Avocado Sales Weeks Ending 12/2/12
Organic
Avocados
Conventional
Avocados
2011 Units
2011 Sales
13,275,496
$26,263,795
2011 Units
2011 Sales
974,205,124 $1,302,902,884
2012 Units
17,198,390
2012 Units
2012 Sales
$27,928,194
2012 Sales
1,159,507,231 $1,250,151,416
Fig. 12. Source: SymphonyIRI/FreshLook Marketing, 13 weeks
ending 12/2/2012
+DVV$YRFDGR%RDUG_$118$/75(1'65(3257
33
HAB Top Categories
Fig. 13. Source: SymphonyIRI/FreshLook Marketing, 13 weeks
ending 12/2/2012
+DVV$YRFDGR%RDUG_$118$/75(1'65(3257
34