What possibilities lie ahead in 2023? This was the theme behind IFPA's Virtual Town Hall, “Opportunity Abounds for Produce at Retail in 2023 - Keys to Driving Increased Volume.” Here are eight takeaways from the session.
1. Things are not the same. Jonna Parker, team lead, fresh with IRI said to envision a boomerang when thinking about the decade so far. “We had a lot of things propelling produce and food volume--the pandemic driving people home, then people not wanting to be home, then inflation,” says Parker. “What’s important about throwing the boomerang out around consumer demand is: it’s not coming back the way you expect it to if you’re looking at past decades and past behavior. What happened during the last recession, the last decade, even last year, feels like a million miles away. Just because people behaved a certain way before, doesn't mean they're all behaving that way again.”
2. “I deserve it.” This is a feeling consumers are sharing today and one that isn't necessarily consistent with inflationary times. “In December, we saw basket sizes preparing a Christmas or holiday meal trend a bit higher than we might have thought,” says Jonna. “Not because they wanted to spend more on the turkey or the yams, but because they were buying more premium escapes for their guests for their own celebration.”
Jonna Parker, team lead, fresh with IRI.
3. Continuing with home-based meals. Parker says before the pandemic, the best estimate is it was an approximate 50-50 split between food dollars spent out of the home and food dollars spent in the home. “In December 2022, the percentage of meals prepared in the home was back up to the pandemic-era high,” she says noting that 2022 also saw an all-time retail food and beverage sales high. According to the IR Shopper Survey December 2022, 21 percent of respondents planned to cook more at home in January 2023 over December 2022 while 27 percent planned to eat less in restaurants the following month.
4. Convenience is king. Parker notes that deli and prepared foods dollars are up much more than volume. “If we were going to be statisticians, we would say--why buy a rotisserie chicken when you could buy a whole one and cut it up and make it themselves? The reality is we are busier than ever and the pandemic didn't make us all Betty Crocker. Deli is seen as an escape from every day--it’s a trade for eating out of home,” she says.
5. Shopping is increasingly fragmented. In 2019, grocery stores made up 41.8 percent of the total all-outlet fresh food share. Last year? For traditional supermarkets, for the first time ever in IRI recorded history, fresh foods posted less than a 40 percent share of the total market. “Share increases in mass super clubs and the Internet have really driven fresh food dollars to be a more fragmented landscape than ever before,” says Parker. “Of our top selling produce households, we asked: what is the channel you shop most often for produce? Only 51 percent said traditional grocery stores cumulatively. Nearly half of consumers prefer to shop at a supercenter, a discount retailer, club stores and other locations.”
6. The switch to canned and frozen produce? “Because of inflation, we aren’t seeing people switch en mass to frozen or canned and fresh versus fresh,” says Parker. “The reality is we've trained consumers to expect something different and use it differently in fresh versus frozen versus canned produce.”
There is however a generational footnote to add in that frozen produce sales are being driven by younger consumers. “A lot of them are choosing frozen and yes some of it is an inability to cook but it’s also easier to shop because it’s branded, there’s consistency and great packaging. Older Generation X and Baby Boomers have been trained to shop a store and think about fresh produce a certain way,” says Parker.
Daniel Bell, senior produce and floral buyer, Grocery Outlet
7. The “health halo” continues. The pandemic drove consumers to think more about being healthier and take better care of themselves--look no further than the popularity vitamin C-packed citrus gained throughout the pandemic. “A lot of that has continued and we’re seeing a lot of variety there as well--we may have lost dollars in navel sales for example but we picked it up in Cara Caras and Blood Oranges and things of that nature,” says Daniel Bell, senior produce and floral buyer, Grocery Outlet. “For consumers, health is now more front and center for their thought process because of the carryover from the pandemic. Even for folks who could be economically challenged like a lot of our customers, they want to live longer and eat healthier and we give them that opportunity at a much lower price.”
8. Produce education is different. “Older generations grew up knowing about certain vegetables and this generation doesn’t know that as well,” says Bell. “However they have everything in the palm of their hands and they want information when they’re buying things. Education on our side remains the biggest challenge to get out to consumers what’s good and why to eat something. However, this generation isn’t afraid to ask questions either.”
For more information:
Siobhan May
IFPA
+1 (302) 781-5855
[email protected]
www.freshproduce.com