What do you think consumers want?
April 26, 2016 By Hugh McElhone
What potential do you see for locally grown organics in the next five to 10 years, and is a price differential on organic versus conventional sustainable over the long term?
Crystal Cottrill, Loblaw Co.
“Yes, absolutely sustainable. Speaking in broad terms for the whole year, not just locally, we can’t get enough. In fact, demand far outweighs supply. With local stone fruit, I only received 0.002 per cent of my purchases as organic and my service level was probably about five per cent,” she said. Growers need to look at organics as an investment.
“Local grapes are another story. We’ve been carrying them for about three years now and it grows about 10 per cent a year. With respect to the price differential, if we can keep it within a dollar per unit then sales are very steady. If we go above that then sales go down, but if it’s close to conventional than consumers will switch to organic. Of course, cost depends on volume so it may be a challenge for the first few years. But it is accepted for consumers to pay more for organics if you stay within the threshold,” she said.
Oleen Smethurst, Costco Canada
They just started dabbling in organics and found some consumers were surprised that organic stone fruit exists. The premium price, if not too high, is important and is coming in line with more commodities. “There is definitely a market for it,” she said.
Robert Periera, Sobeys
At the end of the day, the number one concern for consumers is buying locally, followed by organic. If you have both, then you are satisfying the customer need that exists. As for price, he said organic consumers understand what drives that cost and accept the gap in price.
Gabriela Yung, Walmart
They have a very limited organic offering at Walmart but are seeing double-digit growth in what they have. “The price gap needs to exist so consumers understand there is a difference but it also needs to shrink,” she said. In the U.S., she has seen similar pricing for organics, but the key difference is smaller packaging.
Michael Ecker, Vineland Growers’ Co-op
They had some success with grapes and growers find them easy to produce organically. Peaches and stone fruit in general are a bit more difficult in this climate but there are opportunities and there have been some successes, he said.
Are private label brands important to the growth of your company in the fresh produce department and where do you see this in five to 10 years?
Yung: Definitely, the private label is mandated in their company’s strategy with general merchandise. As they grow in scale, they are just starting to explore the feasibility of the private label with fresh produce, she said.
Periera: This is a big element in organics. Private labels are strong in packaged products and have a strong presence in their future outlook. “It is something we can capitalize on any innovation that comes into the category of the department and leverage it from that perspective.”
Smethurst: “It’s very important to have the grower brand on the label. It’s your product, it’s your quality and consumers want to know where it’s coming from,” she said.
Cottrill: Private brand is very important to us. Last year, 30 per cent of total sales, including grocery, were private brand and 25 per cent of all produce were private brand, which is a 50 per cent growth. There are a few reasons why they use private labels; it groups growers and produce, which reduces labels and helps keep it clean at the cash; it helps promote mature labels that may be a bit stagnant with promotions and increased marketing.
They don’t want to lose the farm feel so with the farmers’ market they try to tell a story, with a grower bio and photos. “This instills a sense of pride in the grower and consumers build confidence in the product,” she said.
What is the market opportunity for new varieties such as plumcots and pluots?
Periera: “The opportunity is all about relevancy and the innovation that comes into the category. We have to continue to refresh our offering over time and continue to drive that excitement into our department,” he said. This includes telling the grower’s story, plus telling consumers what these new varieties are and include taste profile applications. To remain relevant in the customers’ eyes, that’s were the opportunity is.
Smethurst: “This is a huge opportunity and one of my pet peeves,” she said. They have had huge success promoting plumcots, pluots, as well as apriums in California. “We can’t keep the product on the floor so the opportunity is immense. It’s frustrating that we are so far behind in Canada with new varieties needing 15 years for development. It would expand the industry. The flavours and profiles are amazing, some of the best fruit I’ve ever eaten and we don’t have it here,” she said.
Yung: “It’s a growth item for us. We actually found that it’s not a replacement, it’s like canabalizing the plum category. It’s a complimentary item. So we are seeing 20 per cent growth year after year and we branded plumcots out of California, and the shame of it all is we carry U.S. fruit through the summer … because I can’t get it locally,” she said. When it is available in 15 years, there will be growth potential, definitely.
Cottrill: ”We brought in pluots from Chile and they are doing really well. People are interested in trying new products, new varieties. We just need to educate them so the consumers know. That will bring in the excitement that Robert was talking about,” she said.
What innovations in technology and practices have you seen in other areas of the world that you would feel Ontario fruit growers could look at adapting to improve the quality of the product?
Smethurst: “Go to the U.K. They are far advanced in packaging and it’s beneficial to the product visibility and product quality,” she said. Everyone is trying to reduce plastics and reduce costs through higher technology and this should be encouraged.
Cottrill: “The U.K. is definitely more advanced than we are in packaging. Look at what you can do at your own packing facilities … because your fruit is tree ripened, ensure pre-cooling, make sure it is cold and not breaking that cold chain is likely the best thing you can do,” she said. In other areas, there is increasing use of stainless steel lines, which reduces bacteria, GPS planting to maximize orchard space, and different sorting technology out of New Zealand that uses infrared to check for blemishes.
Periera: “Cold storage again is important,” he said referring to its use in cherry production in Washington state. “It comes down to capital investment. There is a lot of technology out there and it’s whatever fits your business model best,” he said.
Yung: “With what I’ve seen with stone fruit, any technology that lessens handling of the fruit is best … but you have to spend a lot of money for this technology,” she said. On one farm, she said the fruit is touched only once before it goes to packing, which has resulted in 30 per cent less throws, plus it reduces labour costs.
Do you see an opportunity for fresh cut, sliced or processed stone fruit in the future and where?
Periera: “Yes, to offer a convenient local offering to our consumer is something we absolutely want to take an opportunity on,” he said. It’s more difficult with in-store preparation but it’s something they want to explore in the future.
Yung: “Definitely, but it has to be at a retail that is acceptable for consumers to have to pay a bit more… we are interested but have to justify the cost,” she said.
Smethurst: Selling something that is prepared the way we want to eat it is a challenge, such as mangoes so they don’t taste like green apples. “If it could be done properly, it would be hugely important,” she said.
Cottrill: “The only place you can find a pre-cut peach is on the shelf in a Delmonte or Dole can. There is definitely a demand for it,” she said, and she had recently met with a grower who was looking at buying the technology for selling a processed pre-cut peach.
How has the increase in immigration influenced your stone fruit offering and are there opportunities for local growers?
Cottrill: They have introduced white flesh peaches and nectarines nationally, and promoted them hard over the last two years. They have fast become a mainstream item. As a result, sales of mature categories like yellow plums and apricots are also selling well, she said.
Smethurst: “Our focus is to get the best eating fruit out there. If it tastes good, people will buy it,” she said.
Periera: “We are definitely bringing in the fruits relevant to that customer base… even more than the immigration aspect, the social media and food networks are emphasizing those taste profiles and the customer’s changing palates,” he said. They are also exploring varieties in different formats such as the cut program, as well as the origin of the fruit, both locally and internationally, with its different taste profiles, plus educating consumers on the fruit available.
Yung: “Stone fruits are very mainstream so it’s not new to the ethnic customer but what we did notice was that a lot of them from the south-Asian and Asian demographic, they prefer ripened fruit and high brix,” she said.
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