Growing Industry

Growing Industry

SN ASKS Growth Opportunities Retailers and produce industry executives are once again gearing up for the Produce Marketing Association's annual Fresh Summit International Convention and Exposition, scheduled for October 15 - 18 in Orlando, Fla. These industry leaders will meet during uncertain times. The U.S. economy has continued to sputter since last year's Fresh Summit, but the theme for this year's

SN ASKS

Growth Opportunities

Retailers and produce industry executives are once again gearing up for the Produce Marketing Association's annual Fresh Summit International Convention and Exposition, scheduled for October 15 - 18 in Orlando, Fla.

These industry leaders will meet during uncertain times. The U.S. economy has continued to sputter since last year's Fresh Summit, but the theme for this year's show — “Let's Grow!” — reflects PMA President Bryan Silbermann's tempered sense of optimism regarding his industry's near-term future. After all, interest in healthy eating has continued to grow throughout the downturn. The industry's global prospects look great, and PMA, along with the United Fresh Produce Association and the Canadian Produce Marketing Association, is closer than ever to realizing the long-term goal of electronic traceability throughout the produce supply chain. PMA has also continued to solidify its relationships with leaders the U.S. Food and Drug Administration and the U.S. Department of Agriculture as the Obama administration continues toward its goal of overhauling the nation's food safety system.

Below are excerpts from a conversation between SN and Silbermann, in which he discusses the upcoming show, the need for produce suppliers and retailers to demonstrate transparency and authenticity, as well as opportunities that retailers should be on the lookout for in their produce and prepared food departments. Silbermann also shares some predictions regarding what's in store for the produce industry in the coming months, and discusses recent progress with the Produce Traceability Initiative and other key industry goals.

And, whether you're reading this special annual supplement at the PMA show or in our regular September 20 issue of SN, be sure to check out the rest of the supplement for profiles of two new independents, as well as coverage of other current trends in produce, including the renewed popularity of outdoor displays, and the use of social networking tools to encourage healthy eating.

SUPERMARKET NEWS: Could you tell me a little about the “Let's Grow!” theme of this year's Fresh Summit? What's it about, and what are some of the ways the theme will be evident to attendees?

Bryan Silbermann: Clearly it's about sustaining and growing your business. When you look at how our speakers, from [former Procter & Gamble Chairman and CEO] A.G. Lafley on through — are focused on innovation, that's really a critical piece for growth.

The past two years have really been about survival for companies during a period of financial turmoil that we've all been going through. So you've seen a lot of cutbacks, you've seen some consolidation, some rationalization of product offerings and so forth. And I think what you're starting to see this year — and I mentioned it last year in my State of the Industry presentation — are those ‘green shoots’ starting to emerge.

It has taken longer than I expected at the time. The recession has certainly continued longer than we all anticipated. But I do think that the economy is improving. And, I do think that consumers are more focused now on fresh products than they ever were before, for a whole range of reasons that I'll get into in a minute. I think the opportunities for retail really are there in ways that weren't even apparent a year ago.

The other thing I would say, is that there's tremendous opportunity for global growth. I was on the phone with the Secretary of Agriculture recently, and they had released the latest farm income figures for the U.S. While a lot of the growth has been in the large commodity crops, rather than specifically in fruits and vegetables, there is no question that farmers have not suffered as much as the general population during this downturn — people have still got to eat.

I do think that exports are one bright star for our industry, and imports are going to continue to be strong, as they have been during the past couple of decades. So import and export opportunities are part of the rosy picture that's now emerging.

SN: During last year's state of the industry presentation, you noted that U.S. consumers are still feeling the impact of the recession, and that an erosion of the country's “psychology of affluence” would have a long-term effect on shopping and spending habits. How are these changes affecting retail produce departments?

BS: I do think that the latest figures that just came out indicate that consumer confidence is up. And while shoppers are still very focused on basics and looking for value, there's no question that people are starting to dip their toes into the water.

You look at some of the categories that are doing extremely well. Fresh-cut products are continuing to grow. Look at the berry category, which is not an inexpensive [category]. It's still growing like gangbusters.

In the tomato category, products like on the vine tomatoes are growing. There's clearly a redefinition of what value means to people.

By no means am I suggesting that the entire U.S. population falls into this. You've got pockets of the population where it's still potatoes and root vegetables and other lower-priced items. But there's definitely signs that people are starting to move out of that hunkering down phase and moving to higher [priced] items. Value is starting to be defined a bit more broadly.

Having said that, I think the downward turn in the psychology of affluence is going to be with us for a long time. People are not just going to snap out of it and start going on spending sprees. But in terms of specific produce categories, you are seeing growth in some higher [priced] items.

SN: Are you seeing opportunities that some retailers may be overlooking right now, because they're still anticipating that hunkering down attitude?

BS: I don't think so. They know what their shoppers want, they've got the ear to the ground and they're watching what people are buying. The opportunity areas that I would stress would continue to be organics, where there's a strong continuing interest. There's definitely strong interest in locally grown, however it's defined. And there's an increasing interest in shoppers across the board of putting a face on the product — they want to know who grew this product and where it came from.

SN: There have been a couple of recent instances where farmers market groups have accused retailers of being disingenuous by setting up “farmers market” areas outside their stores, even though there are no farmers present. Is this crossing a line?

BS: First of all you've got to be authentic. I see absolutely nothing wrong with retailers having a farm-like appearance in their produce departments. It's why so many produce departments in the past 20 years have gone to a woodsy look with lower lighting levels than the rest of the store — to create a more intimate feeling in the produce department. That's an integral part of marketing.

I also see absolutely nothing wrong with retailers setting up farmers market type areas, especially if they are promoting locally-grown products, and are communicating within that space who the local farmers are, and even more so if local farmers are present. I certainly know several companies that are doing that — having local farmers in their store doing the sampling and so forth.

If the company is saying it is a locally grown product and it isn't, that's a totally different issue. But I see nothing wrong with creating a farmers market type atmosphere.

And, I would pose exactly the same question to farmers markets as I would to the retailer — how authentic are you in educating and informing your consumers about the origins of the product? As an example, there's a small farmers market here in Wilmington, Delaware that my wife loves to go to, and they sell bananas during the summertime when they're open … So, you can go to a farmers market just as easily as you can go to a supermarket and buy a product that wasn't grown by the farmer or grown anywhere near where the farmers market is located.

You just need to be transparent, regardless of whether you're a farmers market or a supermarket. Where did the product come from? Which products were grown locally? Who was the farmer? It's really about informing the consumer, being absolutely transparent and letting consumers make their choices.

A lot of times supermarkets get criticized because they're big. Because they're big, they shouldn't be involved with farmers markets [some opponents argue]. I reject that.

It's the same kind of criticism that was leveled at Wal-Mart when it rolled out its organics program. How can you be Wal-Mart and be organic? That's nonsense to me. Why should organics be limited to a certain store format? … As long as they're authentic, I have no problem with it.

SN: Food Safety and Traceability remain top concerns for the produce industry. Could you give our readers an update on the current state of the Produce Traceability Initiative? How will these issues be addressed at Fresh Summit?

BS: The new leadership council for the Produce Traceability Initiative is almost final. It is going to be meeting on Wednesday, October 13 [two days prior to the beginning of the show] under the chairmanship of Cathy Green. And in addition to the three associations that have been coordinating PTI until now, GS1 U.S. is now also a full partner.

With their insight and help, we've really been able to reach a higher level of executives in the major buying companies in both retail and foodservice. We have commitments now from the highest levels at major retailers to really drive the decisions of the leadership council, and commit their companies to following the timeline of PTI. This will be the first in-person meeting of the new leadership council, and we will be sharing the results in followup workshops during Fresh Summit.

One of the key things I think we need to realize, in terms of traceability, is that so much of the focus for the PTI timelines to get barcodes onto boxes and so forth has been around traceability for food safety purposes. And when you look at the broad spectrum of benefits, and the [return on investment] for a company, it goes far beyond that.

This is something that we've really learned from the foodservice sector. They see value in barcoding and capturing that data in terms of the business supply-chain efficiencies that it can generate.

The PTI — while it's been built on food safety needs, and the need to have traceability for that purpose — really has an underlying economic benefit that we are going to be digging into through some of these pilot programs that we have talked about. Doing case studies to really demonstrate the economic benefit of having case [level] coding, and what that does for companies up and down the supply chain.

It's not just about having better data in the event of recalls. It's really about making the supply chain much more efficient, and driving costs out of the system.

SN: PMA has been working on several initiatives to encourage restaurant chefs to include more produce on their menus. How can this benefit U.S. consumption trends, and could supermarket prepared food departments be on the lookout for similar opportunities?

BS: The best-of-class retailers already are [pursuing those opportunities]. They already have chefs doing the kinds of things we're talking about in our Foodservice 2020 initiative with the National Restaurant Association and the International Foodservice Distributors Association.

I think there are certainly things that retailers ought to be paying attention to across the board. Number one is, there continues to be huge interest among consumers regarding what's happening in culinary trends. It's not just the TV shows with chefs. People are more interested in knowing about where their food comes from and how they can prepare it.

It's part of the “high tech, high touch” trend. Other expressions of that trend are [an increase] in home gardening, community gardening and community supported agriculture. They're all elements of this desire to get closer to their food and understand their food better.

So, whether its in the prepared food departments of supermarkets or in the fresh, non-prepared side of the produce department, there has to be an understanding by retailers that people are getting much smarter about food. They want to know more about food, and they need help with ideas for preparing that food.

There's a huge level of interest in the chef demonstrations that we do at our foodservice conference. There was intense interest in the think tank we held with NRA and IFDA on reimagining the restaurant experience. It's really a major theme of this [Foodservice 2020] initiative, reimagining what the restaurant experience means. You're seeing that across the country.

There's a much stronger swing toward less protein on the plate, more plant-based foods on the plate. It's a balancing of protein and plants. That's been happening for the past decade, but it's never reached the crescendo that it's reached in the past couple of years … More healthy options provided in restaurants.

And there's so many new flavors available in terms of ethnic cuisines that Americans haven't really tried — everything from Korean to new Mediterranean. There's really an interest in new flavors.

There is no section of the supermarket more capable of highlighting the variety of flavors available to consumers than produce departments. That's not just the fruits and vegetables themselves. It's also fresh herbs and spices. It could be a huge area of growth for retailers if it is handled right. The whole focus on flavor and educating consumers about how they can use produce, paired with flavorings, or paired with dressings, marinades or spices is something that the best retailers are already well down the path on.