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Free-from & organic products abound at Alimentaria Barcelona

The chief innovations at the at Alimentaria 2018 show in Barcelona focused on healthier, better tasting food.

Hundreds of new products were presented at the Alimentaria food and drink trade show in Barcelona in April and standing out was the abundance of organic and ‘free’ products – such as free of sugar, salt, fat, lactose, gluten or frying – across all categories. Many of the innovations also responded to the growing demand for organic and functional foods and drinks among consumers, who also want them to be pleasurable and without need for much preparation.

“Eliminating or significantly reducing the amount of sugar, salt and fat in food and drinks constitutes the manufacturers’ main objectives when it comes to innovation, as well as devoting considerable efforts to maintaining enticing flavours and attractive presentations. Organic ingredients, ready-to-eat meals, gourmet ranges, baked dishes to replace fried ones, superfoods, vegan snacks and gluten-free and lactose-free proposals are also gaining momentum, as demonstrated by the latest developments on display,” the Alimentaria 2018 organisers said.

Apart from at exhibitor stands, the Alimentaria Hub was the place to learn about prevailing trends and within it, the Innoval exhibition showcased more than 300 new products. The hub was also the site of the Taste of Tomorrow exhibition featuring displays of startup projects aimed at revolutionising food and gastronomy. Following are just some of the interesting new products ED discovered at Alimentaria 2018.

Sea veggies: ideal for an umami kick from the estuaries of the Bay of Cádiz nature reserve are hand-picked wild delicacies such as sea asparagus (Salicornia), sea lettuce, red alga (ogonori) and Codium alga (miru). From Suralgas, Vejer de la Frontera

Beplus bioactive smoothie: dairy and gluten free smoothies made from organic fruit and veg. Four flavours with four functions: antioxidant, energising, detox and relaxing. Vitamin C-enriched and in convenient pouch formats. From Juan y Juan Industrial (Dulcesol group), Valencia

Seaweed snacks: a crispy, healthier, low-fat alternative to chips they come in a wide range of flavours including wasabi, curry, kimchi, Teriyaki sauce and sesame. From Godbawee Food, South Korea

Mango, tomato & hazelnut frozen lollipops: one of four new frozen lollipop products (another is green apple with pistachio) designed to delight as appetisers in the hospitality sector. From La Abuela Cándida, Ciudad Real

Fruit & vegetable crisps: Pinkfinch’s apple crisps (35g), banana crisps (35g), and green bean & sugar snap pea crisps (25g) use real fruit and veg. Naturally sweet, high in fibre, gluten and nut free, apt for vegans and with the texture of a potato crisp. Billed as each bag being “one of your 5 a day.” From Food Products, N. Ireland

Ginger up: three new products in the Ginger up range of drinks with energy and health benefits: ginger and pineapple, ginger and basil, and a ginger and apple shot. Other new products from the same company include a cucumber tea, organic juice range, and a carrot Gazpacho soup. From: Comfresh Iberian, Madrid

Tropical Kumato: described as having an aroma like that of tropical fruits, very good flavour and a little sweeter than the traditional Kumato. From Syngenta seed house

AdeS plant-based beverages: The leading seed-based beverage brand in Latin America, Coca-Cola bought AdeS last year and is now introducing the functional drinks in Europe. It promoted 4 formats with fruit juices: almond with mango & passionfruit, oatmeal with strawberry and banana, coconut with berries, and soy with apple. RRP €1.09 (250ml). From Coca-Cola Spain

Caramelised sesame seeds: organic sesame seeds caramelised with unrefined cane sugar available in varieties including with kale, wasabi, berries, ginger, lemon, aloe vera, chilli pepper, spirulina or guava, among other fruits and vegetables. Add taste to dishes, salads, yogurts. Other caramelised seeds include pumpkin, sunflower, poppy and chia. From Ecoriginal, Barcelona

Sun&Vegs Supersalads: Three different types – Mediterranean Rice, Arabian Quinoa & Asian Rice – of ready-to-eat salad products fresh from “the garden to the jar.” From Grupo Alimentario Citrus (GAC), Valencia

High taste protein products: The À Trois range of supplements was designed to be both tasty and nutritious. Includes chocolate protein bars, protein powders and 75% fruit juice energy gels. Ingredients include strawberries, blood oranges, Canary Island bananas, lemons, pumpkin, carrots and peas. From: À Trois Nutrition, Catalonia

JB

Photos: Alimentaria Barcelona

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EU tackles unfair B2B food trading practices

European Commission proposal aims to ensure fairer treatment for farmers & SMEs

A draft EU law to help protect farmers from unfair trading practices in the food supply chain was presented by European Commissioner for Agriculture Phil Hogan on April 12. Members of the European Parliament (MEPs) described the proposal as a landmark, but one that could yet be improved. The Commission proposal would ban the unfair trading practices (UTPs) considered most harmful to farmers. These are payments later than 30 days for perishable food products, last minute order cancellations, unilateral and retroactive contract changes, and making suppliers pay for wasted products. Member states would each have to designate a public watchdog to enforce the new rules and impose “effective, proportionate and dissuasive” fines for infringement.

The goal is to reduce the occurrence of UTPs in the food supply chain by introducing a minimum common standard of protection across the EU. The protection covers small and medium-sized agricultural producers (including their producer organisations) and other small and medium-sized enterprises (SMEs) in the chain who sell food products to buyers who are not small or medium-sized. Other practices will also be banned unless allowed in an upfront agreement between the parties. These are buyers returning unsold food products to suppliers; buyers charging suppliers for stocking, displaying or listing a food product; and obliging suppliers to pay towards a buyer’s promotion or marketing campaigns. Of note, SME food producers supplying large EU buyers would be able to invoke the rules and complain anonymously about abusive practices whether based inside or outside the EU. In the proposal, the Commission says there is a widespread consensus that UTPs occur throughout the food supply chain. Agricultural producers are particularly vulnerable as they often lack the bargaining power of the downstream players that buy their products and they have limited alternatives for getting their products to consumers.

More price transparency across EU food chain

Hogan said the proposal is “fundamentally about fairness and about farmers,” He also said it was historic, being the first time the Commission had proposed legislation in this area. He added it will be followed by measures to improve market transparency. This is expected to include, by the end of 2018, moves to increase sharing of data, such as on farmgate and other prices in the food supply chain, in addition to the Commission’s existing market observatories and dashboards. The Commission has also signalled supporting measures to promote consolidation – such as the formation of producer cooperatives without fear of contravening competition laws – in the highly fragmented farming sector. The initiative comes in the wake of a European Parliament resolution in June 2016 calling on the Commission to propose legislation to tackle UTPs in the food supply chain. In its motion for the resolution, Parliament noted the fruit and vegetable sector is among those where farmers and cooperatives face an extremely critical situation. At that time, Members (MEPs) stressed that selling below the cost of production, and the serious misuse of basic agricultural foods such as fruit and vegetables as ‘loss leaders’ by large-scale retailers, threaten the long-term sustainability of EU production of such items. They urged the Commission to put forward proposals against UTPs so as to ensure fair earnings for farmers and a wide choice for consumers, and to ensure fair and transparent trade relations among food producers, suppliers and distributors. Fair trading should in turn help to prevent overproduction and food waste, they also said.

Initial reactions broadly positive

Farm groups, agricultural NGOs and politicians have generally described the plan as an important step in the right direction, while some distributors and retailers argue it would reduce competition and see consumers pay even more for food. According to Eureporter, Oxfam, Fair Trade Advocacy Office and IFOAM-EU welcomed the move but called on the European Parliament and Council to strengthen the proposal. Friends of the Earth Europe argued for complementary measures to support direct sales and short food supply chains. FoodDrinkEurope called for the proposal to be widened to cover not only SMEs but all players in the supply chain. Similarly, European Parliament AGRI rapporteur Paolo De Castro also said the proposal was constructive but should encompass all agricultural production, including flowers and feed. Copa-Cogeca chief policy advisor Paulo Gouveia said it is important to address the “fear factor” that often prevents complaints and called for additional measures including modernisation of competition law.

What now

The two co-legislators, the European Parliament and European Council, will separately discuss amendments to the Commission proposal in coming months with a view to a common position and then final text being agreed before the Parliament elections next May. It would probably then be at least 1.5 years before the directive is transcribed into national laws in each EU state. Meanwhile, stakeholders can provide feedback on the plan until June 14.

_______________________________________________________________

About the proposal

The European Commission has asked the Parliament and Council to issue a directive on unfair trading practices (UTPs) in B2B relationships in the food supply chain.
UTPs to be banned:
1. Payments later than 30 days for perishable food products
2. Short-notice cancellation of orders for perishable foods
3. Unilateral and retroactive contract changes
4. Forcing suppliers to pay for wasted products
5. Unsold product risk transferred to supplier Parties’ *
6. Payments for stocking, displaying and listing agreement matters *
7. Contributions to buyer’s promotion campaign *
8. Contributions to buyer’s marketing campaign *

* parties’ agreement matters

  • SMEs are enterprises employing less than 250 people and which have annual turnover not above €50 million, and/or an annual balance sheet total not above €43 million.
  • A directive is a legal act of the EU requiring member states to achieve a particular result without dictating the means of achieving it.

UTP example
It is not uncommon that following an order given, a producer organisation prepares a batch (with the required grading, packaging and labelling) for which the quantities are revised downwards by the buyer (a retailer or its buying subsidiary) after the batch has left the packing station (e.g. to take into account short term fluctuation of demand at retail stage, in a just-in-time logistic approach). This means that the supplier (i) has to find an alternative outlet (usually at lower price, e.g. on a wholesale market) (ii) has to usually regrade and repack the goods not at its own premises implying extra costs and (iii) lose freshness of the product. In such cases, risks (short term fluctuation of demand) and related costs are entirely passed to the supplier (in many cases a farmer or a producer organisation) and directly result in an income decrease.

Why no outright ban on supplier contributions to retail promotions
Banning suppliers’ contributions to promotions as a general rule could cause losses to suppliers because consumers might instead buy other products, such as ones that were promoted instead. For example, if suppliers of fresh fruit and veg couldn’t contribute to promotions, retailers would have to bear the entire cost of them and might deflect the promotions to other categories of products, such as processed food products, thus negatively affecting sales of fresh fruits and vegetables.

Source: Commission document assessing the potential impact of the proposal for the UTP directive (Brussels, 12.4.2018, SWD(2018) 92 final)

Find out more:
https://ec.europa.eu/info/publications/key-documents-unfair-trading-practices_en
https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/market-measures/unfair-trading-practices-food-chain_en#legislativeproposal
Follow the proposal’s progress in the EU Parliament:
http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=&reference=2018/0082(COD)#tab-0

Main photo: EU Commissioner for Agriculture and Rural Development Phil Hogan (© European Union , 2018 / Source: EC – Audiovisual Service / Photo: Lukasz Kobus) 

JB

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Wholesale markets of the future

Ioannis Triantafyllis, member of the board of the World Union of Wholesale Markets, recently set out his vision for the future, one in which markets will still be close to the cities they feed while harnessing the latest in green and cold chain technology.

What should the next generation of wholesale markets be like? Ioannis Triantafyllis, member of the board of the World Union of Wholesale Markets, recently set out his vision for the future, one in which markets will still be close to the cities they feed while harnessing the latest in green and cold chain technology. At the Fresh Produce Forum at Fruit Logistica in Berlin in February, his presentation was part of a session titled ‘Wholesale Markets 3.0 – from distribution centre to food hotspot’. Triantafyllis, general manager of the Central Markets and Fishery Organisation in Athens, said the markets of the future should be near cities, or hubs or ports, but not necessarily in them. They must be the location for “functional shops”, with loading and unloading docks and whatever other facilities the wholesalers need, especially the meeting of cold chain requirements. As for the number of merchants, Triantafyllis argued for a critical mass only – not a lot, but also not too few, to avoid any monopolisation. Tomorrow’s markets should also have the latest in sanitation, environmentally-friendly (green) technology, be technologically ready and also socially responsible, he said.

What’s wrong with today’s markets?
Triantafyllis had started his presentation by looking at the many challenges facing the world’s wholesale markets today. Why are wholesale markets so unpopular, he asked. Among the reasons are that they are blamed for unnecessarily occupying urban space, for traffic congestion and waste production, and for being unnecessary in the long term, he said. “But someone has to feed the city. How can you feed the city when far away from it?” Triantafyllis stressed that the New Covent Garden Market is in central London and Rungis, which he said is considered the most successful wholesale market in the world, is just 6 km from the centre of Paris. As for concerns about markets causing traffic congestion, he said the alternative to trucks going into a central market would be for them to be spread about on city roads. Triantafyllis also pointed to other solutions, such as at Mercazaragoza, where it is possible to simultaneously load two 600m-long trains. “One rail equals four trucks so just imagine 40 of them,” he said. As for concerns about food waste, he said he believed the amount occurring was probably less than commonly thought. The Melbourne market, for instance, produces around 5,000 tons of waste annually and achieves a 95% recycling rate. Similarly, Mercabarna has a recycling rate of more than 80%.

The problems facing many markets
Among other challenges facing the wholesale markets in Europe is that most were built more than 40 years ago and so tend to be aging facilities. As they are also often owned by state or municipal authorities and their capital turnover is not so fast, it is difficult to find a private company willing to invest large amounts of money that is going to deliver slow returns, Triantafyllis said. Other problems are that the businesses inside markets are often family owned and run along old business models by people with no specific business education. There is limited use of marketing, technology and traceability, lack of central management and networking, and the level of merchants is not homogenised. Adding to the challenge is the rapidly changing environment within which markets operate, including stricter food laws, and the need to be ‘greener’ and better manage and reduce waste – which Triantafyllis said is the biggest problem – as well as to optimise logistics management, such as by adoption of last mile policies and use of urban consolidation centres (UCCs). The latter are things that are going to come in in our lives and most markets are not ready for them, he said. Quality market management is also essential but in order to make the necessary leap to modernity, many changes are needed than the states or local governments that own the markets need to be willing to allow. Added to that is the need for funding, such as to fix up the many old facilities.

JB

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Fresh produce opportunities in Singapore

There is strong demand for fresh products in Singapore, where significant opportunities exist for firms to sell food items that are both fresh and ready-made or easy to prepare.

There is strong demand for fresh products in Singapore, a country where the fresh fruit and vegetables market is estimated to have been worth about $1 billion last year.

“Even busy professionals who cannot make treks to the markets frequently will buy fresh produce and freeze it themselves to consume later. Therefore, significant opportunity exists for firms to sell food items that are both fresh and ready-made or easy to prepare.”

That’s among the advice in a case study in the 2016 Cold Chain Top Markets Report by the International Trade Administration, part of the US Department of Commerce.

Due to land constraints, as much as 90% of Singapore’s food must be imported, it says.

“Recent trends have shown Singaporean retailers sourcing more agriculture products beyond the region to meet the 5.5 percent annual increase demand of the local markets. Products range from generic to high-end organic foods.”

Among other interesting details:

  • Singapore’s retail food sector is among the most advanced in the world.
  • The mature nature of its mass grocery retail sector means retailers must be highly innovative to remain competitive.
  • Singapore has one of the highest per capita incomes in the world, presenting a high level of consumer purchasing power.
  • Catering to consumer preferences, rather than competing on price alone, presents an opportunity for exporters.
  • Singaporean customers often value the ease of shopping in convenience stores or online.
  • Rising obesity rates have created demand for healthy processed foods.
  • Wet markets still represent a major point of sale for fresh grocery products.
  • Many businesses use Singapore as a distribution center and a showcase for concepts to wider Asia.
  • E-commerce and direct-to-consumer deliveries of temperature-sensitive products can expect to find excellent opportunities in this market.
  • The growth of online shopping for food and groceries should increase demand for refrigerated deliveries and warehouses.
  • Singapore has a highly developed and sophisticated cold chain distribution system.
  • It is becoming a hub for perishable products moving from one part of the world to another.
  • At Coolport@Changi, a $16 million 8,000 m2 building is the transit point for 90% of the perishable goods passing through the airport.
  • Singaporeans pride themselves on living in a ‘foodie’ country.

Source: TOP MARKETS SERIES: COLD SUPPLY CHAIN (U.S. Department of Commerce | International Trade Administration | Industry & Analysis)
Photo of Singapore: Pixabay under CC0 Public Domain licence by Jason Goh (cegoh)

JB

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Costco’s arrival as America’s top organic grocer

Costco sees a big future in selling organic produce – if it can source enough of it.

Costco sees a big future in selling organic produce – if it can source enough of it.

The warehouse giant now ranks number one for organic sales among America’s retailers, besting even Whole Foods.

With annual sales already topping $4 billion, it anticipates exceeding $10 billion a year by 2020 thanks to the double-digit growth it expects every year until then. “We cannot get enough organics to stay in business day in and day out,” CEO Craig Jelinek told investors at a Costco shareholder meeting.

Indeed, organic agriculture is one of the fastest growing segments of American agriculture.

According to Forbes, organic food sales have generated double digit growth annually in the US for the past few years and the Organic Trade Association predicts sales will rise by 12-15% annually for the next three years. “While high demand without sufficient supply can lead to increase in prices of these products, Costco’s efforts should enable the company to sell organic food products at competitive prices in its warehouses by focusing on increases in supply, without impacting its margins,” Forbes said.

Now a major player in the field, one of Costco’s priorities is indeed to ensure a greater supply of organic foods at a time when demand is soaring but supply has not kept up, reports the Seattle Times.

An example of how it is pursuing this is Costco’s loan to San Diego-based Andrew and Williamson (A&W) Fresh Produce so it could buy equipment and land in Baja California, Mexico. Costco will have first dibs on organic food produced there.

Costco’s senior vice president of fresh foods Jeff Lyons is quoted as saying that Costco also gave A&W a loan for equipment to grow organic raspberries on other land in Mexico. “By helping them with financing, we got access to and purchased about 145,000 cases of organic raspberries that we normally would not have access to,” he said. Costco is considering doing something similar with other companies, including a large group with operations in Chile and Mexico, the newspaper said.

Meanwhile, it has this year started stocking organic strawberries that are grown on Equitable Food Initiative-certified farms in Watsonville, California, and sold under A&W’s new GoodFarms brand.

Item focused – no organic section

Why has Costco embraced organic food? At the United Fresh show in Chicago in June, Frank Padilla, a Costco vice president and general merchandise manager for produce and meat, listed these reasons:

• it resonates with Costco’s members

• it’s seen as a lifestyle, not a trend

• consumers want to eat healthy

• there are concerns about harmful pesticides & GMOs

• belief in sustainable farming

• similar patterns have been seen in other departments with concerns over antibiotics and added hormones.

Costco approaches organics a little differently to its key rivals. As Padilla stressed, it does not have an ‘organic’ section. As an ‘item’ business, it is selective in what it carries, with a limited number of SKUs, and does not ‘double merchandise’. Costco buyers look for items that complement its food sales mix, which for the 2015 fiscal year was 75% conventional, 14% organic and 11% hot house-grown.

“The danger is that it (an organic product) could be the only choice. If you don’t have the right quality, the right specifications, the right shelf life and value, you are going to turn the non-organic consumers off,” Padilla was quoted by Growing magazine as saying. “We also face the danger that if it’s not available at the time, you may not have that item to sell.”

In his presentation at the show, Padilla said other key facets of Costco’s organic principles are that there must be a reasonable premium to conventional and suppliers must be held to the same food safety and audit protocol.

And he outlined Costco’s strategy in organic food as follows:

• find great growers

• partner & commit to grower

• study the item

• learn the intricacies of certified organic

• develop a specification

• work on supply

• strive for efficiency & consistent supplies.

It is achieving success in the latter that remains’ one of Costco’s biggest challenges going forward as America’s new retail powerhouse in organics.

Costco
Sales in 2015: $116 billion
Headquarters: Issaquah, Washington state
715 warehouses worldwide
501 – US & Puerto Rico
91 – Canada
36 – Mexico
28 – UK
25 – Japan
12 – Korea
12 – Taiwan
8 – Australia
2- Spain
(as at end of 2016 fiscal year)

Images: presentation by Frank Padilla, a Costco vice president and general merchandise manager for produce and meat, at the United Fresh show in Chicago in June 2016.

JB

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America’s revolution in fresh food retail

The growing popularity of meal kit providers is something America’s supermarkets need to keep an eye on. Companies such as Hello Fresh and Blue Apron are effectively nabbing sales from retailers in the United States, warns Liz Webber from Supermarket News.

The growing popularity of meal kit providers is something America’s supermarkets need to keep an eye on. Companies such as Hello Fresh and Blue Apron are effectively nabbing sales from retailers in the United States, warns Liz Webber from Supermarket News.

Speaking at this year’s United Fresh Show, Webber said other emerging trends to watch in the retail of fresh food are the use of private labels to market produce, the offering of free produce for kids, the merchandising of ‘ugly’ produce, and cut and processed food.

Webber, senior digital manager for what is one of America’s leading food distribution trade magazines, also shared results of its 2nd annual Fresh Foods Survey. Based on 161 industry responses in March and April this year, it provides one of the most up-to-date pictures of fresh foods in America’s retail environment.

In a session titled “Fresh Foods: The Retail Revolution” at the show – held in Chicago in June – Webber said the survey showed the sector sees quality and freshness as the top priority for fresh produce consumers.

In saying what shoppers most want in perishables, 73% of those polled said quality and freshness, followed by convenience (34%), organic/natural options (30%), ease of preparation (18%), meal ideas (16%) and local food (11%).

More space for fresh food

The survey also shows fresh produce sales are on the rise in the retail environment. Nearly three-quarters of respondents said turnover in their perimeter categories – fresh produce, meat, deli, bakery, dairy and seafood – had increased in the last 12 months while about 22% said it had remained the same and 5% reported a decline.
There is also optimism going forward, with three-quarters of the retailers saying they expect perimeter department sales to increase in the next 12 months, while 21% anticipate no change and just 3.8% a decrease.

When it comes to the amount of space they devote to fresh foods, about 43% of the respondents said that compared to last year their fresh food departments have grown, while just over half said they had maintained the same amount of space and 4.5% reported less space.

Of those who said their fresh food department has expanded, 52% said they have devoted more space in fresh produce, followed by about 41% in prepared foods, 31% in bakery, 30% in deli, 26% in meat/seafood, 22% in floral, 21% in cheese and 13% in dairy.

Prepared foods: demand for healthy & heat-and-eat options

The survey shows the majority (76.1%) of supermarkets in the US now have a deli counter offering prepared foods. Webber said key trends in the deli sections are the offering of food that is healthy or that consumers can heat and eat.

In response to a question about what prepared foods offerings their stores currently have, the retailers also indicated self-service bars (52.2%), fast casual stations (44.8%) and full service restaurants (7.5%), while 9.0% reported having none of these.

As for who they see as their biggest competitors in the sale of prepared foods, nearly 38% of the retailers polled said their main rivals are fast casual restaurants such as the Chipotle Mexican Grill chain, 21% said quick service restaurant such as McDonald’s and 13.6% listed natural/organic retailers.

What gives such alternatives an edge? The retail respondents said these competitors have better location (41.8%), service (35.8%), selection (37.3%), price (35.8%) and other factors (17.9%).

SUPERMARKET NEWS / 2016 FRESH FOODS SURVEY

About the Survey

  • 2nd annual survey
  • Conducted exclusively for SN by Penton Research in March/April 2016
  • 161 industry responses

What Shoppers Want From Fresh

  • Quality/freshness: 73.2%
  • Convenience: 34.8%
  • Organic/natural: 30.4%
  • Ease of preparation: 18.1%
  • Meal ideas: 15.9%
  • Local: 10.9%
  • Other: 6.5%

Source: SN Fresh Foods Survey 2016

Trends to watch

  • Meal kits
  • ‘Ugly’ produce
  • Free produce for kids
  • Cut and processed
  • Fresh private label
  • Healthy offerings in deli
  • Heat-and-eat

Source: Liz Webber, Supermarket News

JB

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China’s love affair with online shopping and convenience stores

Nielsen research shows the lure of cheaper goods online is seeing more and more Chinese embrace ecommerce — particularly via smartphones. This trend and the increasing popularity of convenience stores are together eroding the market share of superstores and supermarkets and making them evolve.

The penetration rate of convenience stores and online shopping in China has jumped to 32% and 38% respectively from last year’s 19% and 35%, according to a Nielsen report.

The global performance management company says in terms of sales and penetration, superstores and supermarkets are losing their market share to convenience stores and online platforms, as more and more people, especially the young, prefer to use these two emerging channels, which are more convenient.

According to Nielsen China vice president Rachel Ma, Chinese consumers used to shop mainly at hyper/supermarkets when stocking up on household basics. But fewer do that now, preferring to get what they need at convenience stores or online, she said.

“Generally speaking, consumers are purchasing less at brick and mortar stores – basket sizes have decreased,” she said.

Price increasingly important to online sales

The main factors driving Chinese consumers to choose online shopping are cheaper prices, the ease of price comparison and delivery service.

Indeed, almost seventy percent (68%) of respondents go online shopping when there are sales. And the lure of cheaper goods was cited by nearly two-thirds of those surveyed by Nielsen as the reason they buy things online, up considerably from 42% last year.

And more than half of the respondents — up from just 15% the previous year — said they prefer online shopping platforms because they make it easier to compare prices.

Another 54% of respondents said they shop online because of the delivery service, up from 42% last year.

Nielsen says sales and promotion are still effective ways to also attract consumers and that online shopping platforms have been ramping up their promotional efforts of late. The penetration of shopping festivals is up to 95% and along with the mushrooming of shopping festivals and various kinds of promotions, the price war is among various ecommerce platforms is becoming fiercer.

It also warns that competition is getting fiercer among online shopping platforms due to product homogeneity, requiring companies to differentiate themselves and build competitive advantages.

Convenience makes mobile e-commerce king 

One of the most interesting changes to note is that in the last year, the mobile has overtaken the PC as China’s most popular device for online shopping. According to Nielsen, 81% of online shoppers use smartphones while just 59% use desktops and 57% use laptops. The overriding reason for the popularity of mobile shopping is convenience — 71% consumers say they find mobile devices more convenient than PCs. What’s more, 52% of the respondents said they prefer mobile devices because of the convenience of mobile payments, a rise of 10% year-over-year.

According to the China Electronic Commerce Information Center, the number of Chinese online payment users had reached 416 million by December 2015 — an increase of 112 million, or 36.8% — since the end of 2014. And mobile payment usage also soared last year, with the number of users reaching 358 million, an increase of 64.5%. The percentage of netizens who use mobile payments increased from 39.0% to 57.7%.

Superstores must offer pleasant shopping, attractive promotions

Nielsen research shows the penetration rate of hypermarkets and supermarkets did increase slightly in 2015, by two and one percentage points respectively, to reach 78% and 82%, and the frequency of visits by customers remains stable. However, the average shopping basket value fell from 172.4 RMB in 2014 to 162.7 RMB.

The fact that the sales and penetration growth rates for convenience stores and online shopping are outpacing those of traditional superstores and supermarkets is forcing the latter to transform so as to better meet consumers’ changing needs. They also have to adapt to the fact that the rise of online platforms has helped clue up consumers. These increasingly savvy shoppers are paying closer attention to promotions and how pleasant their shopping experiences are in store. Nielsen says the latter this can be harnessed by such stores to competitive advantage.

Friendly service, a wide selection of products, convenient location, an organised assortment and clean environment are the other factors which most influence superstore and supermarket shoppers.

Underlining the importance of location and brand image, 19% of the respondents said they had visited newly opened hyper/supermarkets in the past six months and convenient location (55%) and a good reputation (46%) are the main reasons they go to a new market.

“Therefore, hyper/supermarkets should focus on promoting brand image, interesting promotional activities to retain customers. In addition to that, opening new stores and exploring online platforms to attract new consumers are also important,” Nielsen said.

JB

Source: http://www.nielsen.com/cn/en/insights/news/2016/Nielsen-convenience-stores-and-online-shopping-become-major-consumption-ways.html

Image: By Mcy jerry at the English language Wikipedia, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=16985897

 

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Americans spend $170m more on table grapes

Nielsen figures show that the grape category was worth $2.7 billion in retail sales in the United States in the 52 weeks to May 28 this year, a figure 6.7% higher – equal to  $169.6 million – than that for the same period a year ago.

The fresh table grape category was worth $2.7 billion in retail sales in the United States in the 52 weeks to May 28 this year, a figure 6.7% higher – equal to  $169.6 million – than that for the same period a year ago.

Nielsen figures also show that the volume of fresh table grapes sold at retail also increased, rising 6.2% to a total of more than 1.21 billion pounds.

Indeed, there was not just growth in the overall grape category but in all subcategories, and in both volume and value.

Red grapes account for about half of America’s total spend on grapes and half the total grape volume sold at retail there. This sub-category grew 5.2% in value to $1.38 billion – boosting the total spend on grapes by $67.8 million – off a volume up 4.7% to 636.14 million pounds.

But it was white (green) grapes that made the biggest contribution to growth in the grape category in the last year in absolute terms. Though accounting for a smaller share of the overall grape category – 40.2% of the total volume and 41.2% of total value – white grapes generated 53% of the increase in spend (compared to 40% for red grapes), equivalent to more than $90.1 million.

Americans spent a total of nearly $1.12 billion at retail on white grapes over the year to May 28, which was 8.8% more than in the previous year. Similarly, the volume of white grapes sold was up 8.7%, to 489.2 million pounds.    

As for black (blue) grapes, the growth here was more modest, namely by 4% in value to $185.8 billion and by 3% in volume to 82.26 million pounds .

The ‘other’ subcategory saw the highest rate of growth in both value and volume at retail, shooting up 21.4% in spend to $19.56 million and 10.3% in volume to 6.7 million pounds.

And the ‘mixed’ subcategory logged the second highest growth rate, with a 14.5% upswing in value to $7.7 million and a solid 9.8% in volume to just over 3 million pounds.

 

Main image by Maja Petric via Unsplash (all photos published on Unsplash are licensed under Creative Commons Zero

JB

 

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Trends driving America’s produce category

It’s an exciting time for the produce department, but Nielsen Perishables Group says many staple categories are on the wane while on-trend ones are on the rise.

The recent wave of consumer interest and demand for health and wellness products has been great for the fresh produce business in the United States.

However, winning in produce requires more than just resting on the inherent health aspects of fruit and vegetables, warns the Nielsen Perishables Group.

Director of client services Jennifer Campuzano (pictured) told ED that in the US grocery retail sector, the average produce department dollar sales CAGR from 2011 to 2015 was 3.7%. And what’s more, it’s well-positioned to continue its steady growth, “as a widely purchased department that brings higher overall basket rings than those trips that don’t include produce,” she said.

Produce is the second-largest fresh department behind meat in US supermarkets, and rang in a total of $47 billion in the US in 2015.

But while it’s an exciting time for the produce department, Campuzano emphasised that the steady growth of the department over the past few years is being driven by trendy products – those that have adapted to contemporary consumer demands, such as convenience – while many staple categories are declining.

“Additionally, organics, innovative convenience products and differentiated assortment are becoming more common outside of high-end grocery, even within value retailers.

“And although a shifting retail environment and increasingly choosy consumers can and do present challenges, they also offer exciting new avenues for growth.

“Retailers and suppliers can now embrace a variety of opportunities within the store – think product innovation, merchandising across departments for more holistic consumer solutions etc. – and outside of the store (meal and grocery delivery, partnering with local suppliers) in order to win,” Campuzano said.

Simply relying on the health benefits of produce and trusting consumers to know and understand those benefits is not enough, however, to continue to drive growth within the department, she stressed.

“In fact, traditional staple categories like whole apples and bananas had flat or declining sales in 2015 (down 4.2% and 0.6% compared to the previous year), and products like value-added fruits and vegetables and mandarins, that offer additional benefit for consumers in terms of convenience, bold flavour, and snack-ability, are driving growth.

Organic outpaces conventional in sales growth

Produce is also well-positioned to take advantage of what we call ‘21st century health concerns’, Campuzano said.

“Twentieth century health concerns were all about reducing and removing – reduced/non fat, low sodium and sugar.

Today, 21st century health and wellness concerns are more benefit focused (high protein, grains and natural heart healthy foods) and how the food is sourced. Is it organic? Local? Gmo-free? 21st century health and wellness devotees want to know where their food comes from and what it’s doing for them.

“The perceived benefits of organic produce (free of pesticides, healthier, fresher) fall in line with these “new” 21st century health priorities, and help explain why sales of organic produce grew at nearly four times the rate of conventional produce in 2015,” she said.

JB

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Health & organic food trends driving US sector

The US is a net fruit importer and among fresh fruit imports, bananas claim over half the volume. This fruit ranks number one in US per capita fresh fruit consumption, followed by apples and oranges, and is mainly imported from Guatemala, Ecuador, Costa Rica, Colombia, and Honduras.

Demand for high-quality health foods is expected to help boost the otherwise stagnant consumption rate of fresh fruit and vegetables in the US, a market with a widening trade deficit in fresh vegetables.

Per capita fruit and vegetable consumption is set to remain relatively constant in the United States over 2015-20, just as was the case in the last five years, says IBISWorld. However, thanks to the population most likely increasing at an annualised rate of 0.8% over this period, slow growth in overall fruit and vegetable consumption can be expected between now and 2020, it forecasts. Also, rising consumer interest in organic and locally grown produce should keep helping the industry remain resilient. “Fresh produce consumption will continue to be impacted by general economic and demographic trends, including rising disposable income levels for households, and particularly millennials.” However, consumer demand for high quality health foods will remain a primary factor in the overall increase of fresh fruit and vegetable consumption, the business intelligence publisher says.

Health trend favours frozen fruit

But the benefits of the health trend shouldn’t be over-rated, warns Euromonitor International. The market research provider said frozen fruit sales benefitted more than fresh fruit from the trends towards healthier diets which influenced the fresh food market in the US last year. It said that while Americans are increasingly eschewing heavily processed foods for fresh and natural offerings, something that would seem an incredible boon to the fresh food market, “what has resulted instead is high growth in minimally (but still) processed food rather than in fresh food.” “What fresh food lacks is the element of convenience – nor does it have an adequate shelf life for many consumers. Americans are convinced of the health benefits of a whole food diet, but are unwilling to commit the time and effort to a diet comprised primarily of fresh rather than processed food,” it said. However, on the plus side, fresh foods that are humanely and sustainably produced are expected to record unequivocal increases in the future, it predicts.

Less head lettuce, more leafy greens

When it comes to vegetables, the health trend was perhaps a reason that over the 15 years to the end of last year, per capita use of head lettuce decreased 44%, something the USDA Economic Research Service (ERS) said “in part, is attributed to consumers switching to dark-green and leafy products like collard greens, kale, and romaine lettuce.” Over the same period, per capita use of potatoes (for both fresh and processing uses) fell 17%, from 138 pounds in 2000 to 114 in 2015.

Total per capita use of vegetables and pulses in the US last year averaged 375 pounds – down 3% on 2014 and 12% from a peak in 2000. More specifically, per capita use of fresh vegetables (including potatoes, sweet potatoes, and mushrooms) averaged 181 pounds in 2015 – down 1% from 2014, but fairly steady since 2009-11. In 2015, per-capita use increased for many fresh market crops – such as sweet corn, bell peppers, cauliflower and romaine lettuce – while that of asparagus, cabbage, leafy greens, and head lettuce, among others, declined. In terms of share, potatoes, tomatoes, onions, all lettuce, and bell peppers accounted for a 60% share of fresh vegetables available for consumption in 2015, the ERS said.

Retail channels increasingly offer fresh food

Euromonitor says that over 2010-15, American retail channels have changed the way fresh food is sold, with “an increasing prevalence of packaged fresh food sold via retail. For example, grocers have encouraged volume sales of fruit and vegetables by cutting and packaging the items in-store. Such practices increase retail profits, as these minimally processed products are sold at much higher margins. Retail is also benefiting from the popularity of internet retailers, which are increasingly successful at fast delivery in order to maintain product freshness,” it said.

2014 top food retailers/ wholesalers in US
1. Walmart
2. Kroger
3. Costco Wholesale
4. Target
5. Safeway
source: PMA/Supermarket news 2014 top 75 food retailers & wholesalers in the US & Canada

US vegetable production remains flat

Potatoes (44 billion pounds), tomatoes (32 billion pounds) and lettuce (8.1 billion pounds) were the three leading vegetable crops grown last year in the US and together accounted for about two-thirds of its production of commercial vegetables and dry pulses (including mushrooms, sweet potatoes and potatoes). In total, the US produced 127 billion pounds in 2015 in this category – largely unchanged from a year earlier – with a value of $20 billion (up 6% on 2014 due to robust domestic prices for most fresh market crops) and from a harvested area of about 6.9 million acres, according to the ERS.

As for fresh market vegetables (excluding potatoes, sweet potatoes and mushrooms), in 2015, the US produced 34.8 billion pounds, down 3% yoy as the area harvested declined. Despite entering its fourth year of drought, California still lead the country in fresh market production, accounting for 54% of the country’s annual fresh market vegetable output. Florida regained its position as the second largest source of fresh market vegetables, with 3% of output, and Arizona, which ranked second in terms of production volume last year, saw production drop 10% in 2015.

The three largest crops in this category – delivering 40% of the total production – were onions, head lettuce, and sweet corn.

Potatoes and sweet potatoes

Potato production fell slightly from last year to 44 billion pounds, with Idaho (30% of production output), Washington (23%), and Wisconsin (6%) still the top producing states in 2015. The production value fell 2% to $3.8 billion. Sweet potato production last year was up 5% to 3.1 billion pounds off a harvested area of 153,100 acres (+13%). The top grower States were North Carolina (50% of total production), California (20%) and Mississippi (12%).

Rising vegetable trade deficit

The US trade deficit in fresh vegetables widened in 2015. In terms of volume, fresh vegetable imports rose 1% to 14 billion pounds while exports fell 4% to 4.4 billion pounds, probably due to a strong US dollar and weak global demand. Last year, about 22% of vegetables consumed domestically was imported while 13% was exported to foreign destinations. In the fresh vegetables category (including potatoes and mushrooms) – in which the value of imports rose 4% on 2014 to $7 billion – about a quarter of the produce used in the US in 2015 was imported, up from 9% in the early 1990s, while 20% of processed vegetables and 21% of the dry pulse markets were supplied by imports. Mexico accounted for 69% of import value in 2015, followed by Canada (17%), Peru (5%) and China (1%). The import volume from Mexico expanded while that from Canada declined.

Vegetable exports down

Fresh vegetable exports, as a share of supply, remained relatively steady at about 7% last year but their value fell 6% to $2.2 billion due to shrinking market shares in Japan and Mexico. Exports to the US’s top foreign destinations – Canada, Mexico, and Japan – dropped 8% to $87 million as Mexico alone decreased 17% to $1.9 billion. Canada now accounts for 77% of US fresh vegetable export value. Fresh exports have a discernible seasonal pattern, with volume peaking during May-July and reaching lows during September and February. Besides the weather, demand from Canada – the leading foreign market for US exports of fresh vegetables – influences this pattern, according to the USDA. Canada’s vegetable imports are lowest during their summer growing season and peak in the spring when supplies of storage-type vegetables are exhausted and before their own growing season has begun.

Among fresh vegetables, lettuce (all types) is the largest fresh export ($431 million in 2008), but lettuce also enjoys relatively strong domestic demand. The same is true for tomatoes, the second-largest fresh export ($208 million in 2008). Exports account for 9% of domestic supply of all lettuce and 6% of fresh tomatoes. This percentage has slowly drifted lower over the past three decades, as growth in domestic consumption has exceeded that of export volume.

Bananas the top fresh fruit import

The US is a net fruit importer and among fresh fruit imports, bananas claim over half the volume. This fruit ranks number one in US per capita fresh fruit consumption, followed by apples and oranges, and is mainly imported from Guatemala, Ecuador, Costa Rica, Colombia, and Honduras. Mexico is the largest supplier of fresh and frozen fruit to the US, accounting for over 30% percent of both the volume and value of fresh and frozen fruit imports (excluding bananas), reports the ERS. Mexico ships mostly limes, tangerines, mangoes, grapes, pineapples, papayas, avocados and strawberries. Geographic proximity and the North American Free Trade Agreement (NAFTA) give Mexico a competitive advantage over other exporting countries. Chile is also a major supplier of fresh fruit, with a 20% share of the US import market, and boasts the advantage of counter-seasonal production, meaning it can offer fresh fruit at times when the US grows little, particularly over November to March. The US is the world’s largest importer of watermelons, taking a fifth of the global import volume, with its main sources being Mexico, Guatemala, Honduras, Costa Rica, and Nicaragua. These five nations also account for nearly all US cantaloupe imports.

Top fruit exports: apples, grapes, oranges

US exports of fresh market fruit account for about 15% of available supplies. In value terms, fresh market fruit exports (excluding melons) amounted to over $3 billion each year during 2008-10, capturing more than half of total fruit exports (excluding tree nuts).

The leading fresh fruit exports are apples, grapes, and oranges (including tangerines), with combined sales averaging over $1.5 billion annually, or about half the value of fresh fruit exports. Apples and grapes averaged over $700 million and over $600 million, respectively, in annual export sales during 2008-10, and oranges, over $500 million. Export sales of fresh berries, led by strawberries, more than tripled between 2000 and 2010 for a combined value of over $500 million.

Canada is the leading destination for US fresh fruit, generally accounting for over one-third of all fresh fruit exports. Other major markets are Mexico, Japan, Hong Kong, Taiwan, and South Korea.

Melons a major export

The US is among the top melon exporters in the world, ranked third in watermelon exports next to Mexico and Spain and fourth in cantaloupe and other melon exports after Spain, Guatemala, and Brazil. Melon exports increased slightly in share of US melon supplies, from 3-4% in the 1970s and 1980s to an average 7% during the 2000s. Watermelons accounted for more than half of US melon export volume in recent years, averaging over 300 million pounds, nearly one-tenth of the world’s total. An overwhelming majority of watermelon export volume goes to Canada, but Mexico and Japan are also relatively important markets for the US watermelon industry. Canada is also the primary destination for US cantaloupe exports, with Mexico serving as a distant second.

JB

Sources: IBISWorld, USDA ERS, Euromonitor