Shannon Boase from CKF recently gave a presentation at the Global Berry Congress in Rotterdam entitled Better Blues: Costco's Canada Case Study.
"At CKF we do fiber packing as well as PET and foam, I personally am in the fiber division and have been in this business for over 20 years. I had my own company for 10 years. And then, 10 years ago, I sold it to CKF, so I've been trying to sell to Costco, Canada for 18 years. And they were never really interested until this year when they came to us and said they were ready to do a trial."
Costco wanted to start in the blueberry category and wanted to do a trial over a period of weeks in the spring into six DCs in Ontario, the most populous province in Canada. They worked with fruit from Agrovision.
"We worked together to put this trial together for Costco, Canada, and there were four criteria in Costco's plan. First of all, it had to protect the integrity of the blueberries in transit. The project was that the fruit was brought as bulk product in New Jersey, and they packed it just outside of the Port of New Jersey and then moved it into Ontario. So, number one, it had to protect the integrity of the blueberries. They could have no D&D, which is Costco speaking for damage and destruction. Sales couldn't go down, and then there had to be a positive impact or feedback from consumers. So, based on all of those metrics they reported every week to us, they didn't actually tell us the sales numbers, but it did grow. Based on that four-week trial, Costco then decided to go with our packaging."
Costco wants to reduce its overall packaging and reduce the amount of plastic in their packaging. According to Shannon, they track it by the weight of plastic that is removed from their supply chain.
"We were able to report that this particular package was 80% less plastic by weight than their current top seal. It has now become a commercial program. I would say that right now, Costco is putting some gentle persuasion on their suppliers to adopt the packaging. The challenges in the Peruvian blueberry industry this season are not ideal for adoption of the new packaging, but it is certainly the goal of Costco for all of their suppliers to transition to this packaging."
Challenges in getting the suppliers onboard
"No one really wants to change unless they have to. But if you have one of your largest retail customers, like Costco, saying, 'We would like you to change,' many of them, such as Agrovision saw it as an opportunity. We worked really, really hard with the suppliers, and we continue to do so to make sure that our packaging functions in their pack lines the same as it does for plastic. There is no compromise in terms of speed and no compromise in terms of cost. We worked with a supplier of film and ran trials before this trial and simulated the shelf life, we made sure that everything worked so that when the actual berries came in and were packed, there were no surprises."
Shannon said that one of the challenges is that retailers always want consumers to be able to see 100% of the berries, but this trial with Costco proves that you don't need to see all of the berries as consumers still buy them.
"We did a consumer observation study for Costco. We did not do any customer intercepts, it was all consumer observation. We saw that the Costco consumer did not mind the fact that they couldn't see 100%, it did not seem to impact their interest in the berries or their purchasing of them. They would pick up the punnet, shake it a little bit, and still purchase it."
Next step
"I'd certainly like to be in more Costco suppliers. We feel that there is more potential in the new year as the Peru season is stabilizing. But now Mexico is coming on and some of the other regions that supply blueberries to Costco. So right now, we've had four of the suppliers pack and sell into Costco, Canada, but in 12 months, I would like to see that double. And then I'd also like to see at least four, possibly six suppliers in the US market into Costco.
European markets
"We are already supplying some growers in the European market with smaller sizes, like 125 grams for blueberries. There's always a part of the market that is going to be interested in less plastic, and they will adopt this type of packaging."