Packaging: Old and New Simplicity in delivery extends to the packaging as well. “What’s too much packaging?” Goforth asks. “Some things are just better in their original form.” He describes the popularity of clear, high-visibility pouches that showcase whole fruit. “We’re able to put six or seven nectarines in a bag and they buy the whole bag instead of one or two.” He’s also seeing an interest in traditional retailers using club-format higher quantity bulk packaging.
Totta predicts a continuation of personal-sized servings. But an increase in single-serves doesn’t necessarily mean more packaging and waste, as Wolter sees an upswing in demand for eco-friendly packaging, as evidenced by new products showcased at last year’s Fresh Summit expo in Orlando. Pure Flavor was one such example, with “packaging made from tomato plant fiber.”
Sweet New Varieties Not surprisingly, hybrids and sweeter, tastier produce are still winning the day, though not without a few struggles. Family Tree Farms specializes in hybrids, which customers mistakenly believe are genetically modified. “There’s a little bit of suspicion,” he says, but it’s not ‘weird science,’ “just pollen on a flower.”
As for the biggest and best foods that consumers are going to be excited about in the coming year, Totta touts the continuing wave of mango and kale popularity. Wolter predicts a rise in foods with specific dietary benefits for “healthier skin, improved energy levels, and gastrointestinal health.” She also expects continued consumer interest in plant-based diets.
Despite the extra work for food safety, Totta sees fresh-cut as “a trend on the upswing and not slowing down anytime soon. The demand for waste-free and labor-free fruits and vegetables is as strong as it has ever been.” New items developed overseas include blended red and yellow peppers that Totta describes as “zebra-type bell peppers with different colors. They look beautiful,” he en-thuses. Wolter predicts a “continued emphasis in the reduction of food waste.” This includes companies marketing more less-than- perfect produce.
Leadership and Advice for the Year While the presidential election caused a great deal of controversy throughout 2016, our experts aren’t particularly worried about the year ahead. In a Western Growers press release after the November elections, Nassif urged “leaders to mend broken fences and redouble their efforts to solve the many challenges facing our country.” Further, he expressed optimism about “pragmatic solutions to key agricultural issues.”
Totta, too, described himself as “not concerned” and added he is sure the “new administration will do what’s good for business” and leaders would “make the right decisions for our industry.”
Vaché advises everyone to view the larger perspective: “Consumers continue to seek fresh fruit and vegetables to help them lead a healthy lifestyle and we all play a part in our convoluted but marvelous perishable supply chain. Everyone needs to be engaged in industry initiatives, seek to understand how the regulatory landscape is changing, have a strong voice to support sound science, and remind our elected officials they work for us.”
Goforth agrees. “It’s such a dynamic industry, everything is related. At the end of the day, it comes down to how we can bring value. It’s a highly passionate business and we need to keep our passion.”
The year 2017 is finally here—and with it comes new ideas and old ideas made new again. If this year’s outlook can be summed up in a few phrases, they might be ‘Keep it simple,’ ‘Keep it relevant,’ and ‘Tell your story.’ But along with these adages comes a developing combination of low-tech conversation and high-tech notions that will keep the industry hopping as the year progresses.
Water & Labor Like last year, water and labor are among the more divisive issues. Sadly, little has changed, particularly for California.
Troubled Waters Tom Nassif, president and CEO of Western Growers Association, says his hopes that El Niño would bring significant water to the state’s northern reserves were not realized. He still paints a grim picture of conflict between farmers and environmentalists, proposed water tunnel systems, and uncertainty about who will finance future projects. “The water situation keeps getting worse rather than better,” he contends. “People are firmly entrenched in their points of view.”
There was a modicum of progress, however, in December when state senators passed a drought relief bill. Though it is only the first of many necessary steps to update California’s outdated water system, it is nonetheless a ‘win’ for agriculture and the fresh produce industry.
Technology, once again, will also play a pivotal role in helping growers do more with less. “We’re so far behind the curve, it will take a long time to make a palpable difference in the amount of water we have available. Many people will move into crops that don’t require so much water,” Nassif says, and believes some growers will even leave the country.
In terms of California labor, Nassif thinks legislation like the state’s AB 1066 bill, requiring overtime pay for agricultural workers, will have a negative effect on growers. “Our members tell us it will be more devastating than the $15 minimum wage increase.” In late November, growers were granted a reprieve—a federal judge in Texas blocked the overtime pay changes and issued a nationwide injunction on implementation.
Like those suffering from water woes, growers will turn to technology and more mechanization in the fields. “If you can’t get affordable labor, you have to automate,” states Anthony Totta, vice chairman and business and marketing consultant for FreshXperts, LLC in Lees Summit, MO. Unfortunately, he notes, today’s high-tech automation usually has a big price tag, and may drive small and mid-sized growers out of the industry.
Unexpected Results There could, however, be a positive byproduct to the labor crunch: collaboration. “There’s going to have to be more consolidation and more strategic alliances,” Totta says. “If it means working with other growers in other regions, that’s what you do.”
Additionally, like water-strapped growers, Totta sees movement toward hardier storage crops like potatoes, carrots, onions, and sweet potatoes as farmers shy away from riskier, more perishable crops like cilantro, spinach, bell peppers, and lettuce.
Don Goforth, director of sales and marketing at Reedley, CA-based Family Tree Farms Marketing, LLC, shared similar concerns. “Labor and water make doing business here very difficult. We’re expanding across our borders and going to other countries to produce. It’s the reality of the economics of agriculture.”
On the Horizon Looking to the future, Nassif says work on the 2018 farm bill should begin sooner rather than later. “One of the things we’re fighting for is to make sure the government walks the walk when it says ‘half your plate’ should be filled with fresh produce. The fresh produce industry gets very little from the farm bill in comparison to other commodities.”
On the retail side, Mike Kienzlen, owner of Arizona-based Retail Profit Solutions, considers labor a grocer’s “largest controllable expense.” Similar to growers adapting with less, he predicts technology will continue to lead the way. Retailers will be forced to break old habits of simply scheduling employees for a certain number of hours, and instead use software to calculate how much profit is obtained from every activity, from stocking shelves to breaking down cardboard boxes.
Retail Reboot? In addition to labor issues affecting the retail scene, other technology applications and generational changes are leaving their mark on this highly competitive landscape. From how grocers track data to how consumers access information—everything is moving faster now.
“It appears our industry has gone through an evolution of data analysis,” asserts Kienzlen. “People are maturing in their understanding of how to use data to drive business. One area where this is most evident is in shrink—measuring the amount of product retailers are discounting or throwing away—a major factor in the perishables industry. Tools such as mobile apps and hand-held scanners are helping grocers gather data far more quickly. “Analysis of this data is helping retailers see the problem: shrink is always bigger than you think—you think you have 1 percent and it turns out you have 3 percent.”
Brian Numainville, principal at Retail Feedback Group (RFG) based in Lake Success, NY, says new technologies are not just for the selling side of the equation. “As younger shoppers move more into the ‘shopping mainstream’ over the coming years, there will be more demand for a variety of shopping options, including online.”
The Online Conundrum And there’s one of the year’s biggest gambits for grocers: to increase online ordering systems and delivery or pickup options, or to begin offering these services if not already in place. Both options are expensive endeavors, but can have a handsome payoff if handled correctly.
Numainville says online grocery shopping continues to make gains in both users and customer satisfaction. Traditional supermarkets received an overall satisfaction rating of 4.39 out of 5 in a 2016 RFG survey, but online retailers are catching up—with some like Peapod and Fresh Direct receiving a 4.36 on the same scale. Numainville predicts slow yet continual growth in the online shopping segment.
Kienzlen concurs, noting the growing number of consumers who prefer not to enter a grocery store at all. “The next biggest thing is delivery,” he agrees, and this includes ‘virtual supermarkets’ where shoppers order online not from a store but “a highly organized and efficient warehouse.” In an interesting twist, Amazon—which mastered online-only sales and delivery—is now opening high-tech brick-and-mortar stores.
Apps and Interaction It will surprise no one to learn the demand for grocery apps and optimized websites for phones and tablets continues to climb. Numainville says a 2016 survey showed almost half of all shoppers said their primary grocery store was either not up to speed on the latest technology or wasn’t effectively promoting these capabilities. “So clearly, mobile-enabled websites and grocery apps are gaining traction with shoppers, especially with millennials.”
Suzanne Wolter, owner of FreshFit Solutions, a produce consulting firm, says this is a great opportunity for grocery chains that don’t have a strong digital presence. “Consumers, especially millennials that are interested in the companies where they purchase, relish being a part of the development process and can be an excellent resource for ideas.”
Segmenting and Service Numainville also predicts success for retailers who embrace segmentation. “For some, this will mean gravitating towards a particular segment of the market such as high-quality, high-service, or price-oriented shoppers. For others, it might mean having a format with a wide array of products that appeal to a defined customer segment, like millennials.” He also expects success for independent grocers that “really embed themselves in the local fabric of the communities they serve.”
Walmart learned the hard way about neighborhood stores. “Years ago, Walmart was the biggest problem for independent retailers,” Kienzlen points out—but not anymore—as these stores not only learned how to compete against Walmart, but triumphed. “It’s not price,” he emphasizes, “it’s service.”
Another service that’s springing up in supermarkets is resident dietitians. Kristen Stevens, president of the Wilmington, DE-based Produce for Better Health Foundation, confirms that on-site grocery store dietitians are “quickly becoming less of a trend and more of a solid business practice.”
It’s also a win-win for fresh produce as shoppers learn more about the health benefits of fruits and vegetables. Other benefits include stronger customer loyalty and increased community connections and support. Depending on the store, dieticians may “answer diet and health related questions, hold in-store cooking and tasting demonstrations, participate in community events and activities, or write newsletters and other types of educational pieces.”
Food Safety: Game On The coming year in food safety is all about rules and compliance. As compliance dates for the Food Safety Modern-ization Act (FSMA) go into effect, experts deal with a range of emotions: from fear and dismay at the expense and inconvenience to acceptance that the regulation is truly needed.
Dan Vaché, vice president of supply chain management for United Fresh Produce Association, warns that while FSMA makes good business sense, “it is not a panacea since the majority of produce has no guaranteed kill step to eliminate pathogens, and consumers still need to be reminded they too have a role in food safety.”
Totta calls food safety the “hottest topic in our industry” for several reasons. First will be a “merging of increased demand for precut vegetables with increased scrutiny,” followed by food safety management and protocols taking precedence over other business facets. “It’s going to take the energy and resources of the whole industry to keep up with the new laws.”
In addition, Totta notes, “People are creating positions in their companies for directors of food safety. Typically, producers don’t have complete expertise in the area so they either outsource it or hire someone. There’s a lot of demand for this type of position to be filled right now.”
Shipping & Delivery Transportation is in a similar boat as new regulations are hammered out and implemented. Vaché says both hours of service and electronic logging—which have been immersed in controversy for some time—will be finalized. He believes these two issues “will change the dynamics of the industry, with many current drivers deciding to retire or leave, due to mounting regulatory issues and the physical demands of the job.”
Transportation issues that still need to be resolved, according to Vaché, are infrastructure and the driver shortage. “We’re behind in investing in our roads and bridges, and air, river, and sea ports that must be upgraded and maintained,” he contends. Regarding the driver shortage, demographics are playing an increasing role and so is the economy. “When the economy is good, many drivers jump out of trucks and go to the construction industry where it pays well and you get to go home every night.”
Looking to the future, Vaché sees a few reasons to be optimistic, as parts of the industry are benefitting from less-than-truckload (LTL) or freight consolidation services and saving energy. Though not all products are suited for LTL shipping, he notes “we are seeing more of the traditional cold storage facilities reaching out to handle produce.”
As long as the economy remains stable, Vaché predicts the demand to move freight will grow along with driver income. He also stands by last year’s prediction on further “research, development, and real-world testing of autonomous vehicles, including trucks. We may see ‘truck platoons’ on interstates, perhaps not in 2017, but in the not-too-distant future.”
Fruit, Vegetables & Innovation While we tend to think of innovation as going forward to do what hasn’t been done before, sometimes it can mean taking a step back.
Get Personal, Tell Your Story Goforth believes the industry must get better at storytelling. “I think more than ever before, people really want to know the story behind their food,” he insists. “It doesn’t have to be a new thing; it doesn’t have to be arecreation of a product we’ve been selling for 100 years, just a rediscovery of it.
Growing in the ’Hood’ Managed farm communities, affectionately called “agrihoods,” are making their mark. These self-sufficient communities, built around a working farm, combine the best of the past and the future. One such community is Serosun Farms in Kane County, Illinois.
John DeWald, principal at Serosun, says the concept is similar to the golf course neighborhoods that sprang up in the 1990s. “But instead of golf courses, you get a farm.” As a model to preserve disappearing farmland, the community required an entirely new zoning category. DeWald’s sister, development partner Jane Stickland, lives in Serosun and manages the farm and an equestrian center. The development is building eco-friendly, sustainable luxury homes around the farm, allowing people to benefit from its field crops while going about their normal suburban lives.
In addition to Serosun, there are similar communities in Georgia, New York, California, Colorado, and Arizona. Most agrihoods are supported by a nonprofit foundation that promotes sustainable agriculture, DeWald says, and usually have a farmers’ market or hospitality center to help defray costs. He predicts the communities will become increasingly popular. “I believe traditional blah suburban subdivisions are not where millennials want to go, and not where people retiring want to go either.”
“Blueberries have been around for a long time, but now everyone understands the health benefits. Somehow, we did a good job telling people about blueberries. While I know there are many wonderful merits to technology and the way we communicate, including social media, I still think there has to be a conversation. At some level, people still want to talk to people,” he observes.
Dan’l Mackey Almy, president and CEO of DMA Solutions, Inc. in Dallas, TX supports the same trend. “More and more fresh produce companies are realizing how important it is to know the people buying their products beyond demographics,” she explains. “When consumers feel like a brand understands their individual needs, it builds trust and communication. People want to feel connected to the brands they choose to purchase.”
As Goforth describes, it’s not just stories on a blog, but stories told in person. “I’ve read some really good articles about what’s driving the surge in local farmers’ markets. When consumers hear the message directly from farmers, they feel connected, informed, and confident in their food choices. All of this leads to increased consumption and more sales.”
Of course, part of building trust and keeping things simple and clear may also lie in telling stories about brands as well as items. “Companies are starting to have more confidence in the importance of building their own brand identity with consumers as well as buyers to strengthen their bottom line,” says Mackey Almy.
Packaging: Old and New Simplicity in delivery extends to the packaging as well. “What’s too much packaging?” Goforth asks. “Some things are just better in their original form.” He describes the popularity of clear, high-visibility pouches that showcase whole fruit. “We’re able to put six or seven nectarines in a bag and they buy the whole bag instead of one or two.” He’s also seeing an interest in traditional retailers using club-format higher quantity bulk packaging.
Totta predicts a continuation of personal-sized servings. But an increase in single-serves doesn’t necessarily mean more packaging and waste, as Wolter sees an upswing in demand for eco-friendly packaging, as evidenced by new products showcased at last year’s Fresh Summit expo in Orlando. Pure Flavor was one such example, with “packaging made from tomato plant fiber.”
Sweet New Varieties Not surprisingly, hybrids and sweeter, tastier produce are still winning the day, though not without a few struggles. Family Tree Farms specializes in hybrids, which customers mistakenly believe are genetically modified. “There’s a little bit of suspicion,” he says, but it’s not ‘weird science,’ “just pollen on a flower.”
As for the biggest and best foods that consumers are going to be excited about in the coming year, Totta touts the continuing wave of mango and kale popularity. Wolter predicts a rise in foods with specific dietary benefits for “healthier skin, improved energy levels, and gastrointestinal health.” She also expects continued consumer interest in plant-based diets.
Despite the extra work for food safety, Totta sees fresh-cut as “a trend on the upswing and not slowing down anytime soon. The demand for waste-free and labor-free fruits and vegetables is as strong as it has ever been.” New items developed overseas include blended red and yellow peppers that Totta describes as “zebra-type bell peppers with different colors. They look beautiful,” he en-thuses. Wolter predicts a “continued emphasis in the reduction of food waste.” This includes companies marketing more less-than- perfect produce.
Leadership and Advice for the Year While the presidential election caused a great deal of controversy throughout 2016, our experts aren’t particularly worried about the year ahead. In a Western Growers press release after the November elections, Nassif urged “leaders to mend broken fences and redouble their efforts to solve the many challenges facing our country.” Further, he expressed optimism about “pragmatic solutions to key agricultural issues.”
Totta, too, described himself as “not concerned” and added he is sure the “new administration will do what’s good for business” and leaders would “make the right decisions for our industry.”
Vaché advises everyone to view the larger perspective: “Consumers continue to seek fresh fruit and vegetables to help them lead a healthy lifestyle and we all play a part in our convoluted but marvelous perishable supply chain. Everyone needs to be engaged in industry initiatives, seek to understand how the regulatory landscape is changing, have a strong voice to support sound science, and remind our elected officials they work for us.”
Goforth agrees. “It’s such a dynamic industry, everything is related. At the end of the day, it comes down to how we can bring value. It’s a highly passionate business and we need to keep our passion.”
