Presentation on theme: "Mario Flores, Director of Product Management, Naturipe Farms (EE.UU)"— Presentation transcript:
Mario Flores, Director of Product Management, Naturipe Farms (EE.UU)
U.S. Fresh Fruit and Vegetable * Value Chain, Estimated Dollar Sales, Billions, 2010 Preliminary institutional wholesalers food service establishments supermarkets and other retail outlets consume rs exports farms shippers integrated wholesale- retailers produce and general-line wholesalers farm & public markets imports $6.1 $26.8 $12.3 $ $ $ $2.380 Source: Cornell and UC Davis compilations based on US Census, ERS/USDA, NASS/USDA and other data. Preliminary estimate. *Excludes nuts and pulses
Market Shares of Top 4, 8 and 20 U.S. Grocery Chains, Share of U.S. Grocery Sales Excluding Club Stores, 1992–2009 Source: Phil Kaufman, USDA/ERS, percent 64% 50% 37%
Consolidation of the Fresh Produce Value Chain Higher retail concentration levels have led to shipper consolidation so today shippers are larger and better equipped to offer services (incl. food safety, traceability, data-based sales and marketing support, consumer insights). Fewer, larger buyers have enabled shippers to reduce their customer lists and to focus more on understanding the needs of key accounts – becoming account-driven. Scale is increasingly important – investment capabilities and competitive wherewithal. Scale can help achieve buying and selling advantages but can only be managed successfully with focused management, real- time data management systems and operational excellence.
Top Factors in U.S. Consumer Selection of Primary Supermarkets 2011 Source: FMI Grocery Shopper Trends 2011 *Was 64% in 2007 **Was 55% in 2007
Information Technology Information technology, business intelligence will play a vital role at all levels of the value chain going forward. Firms embracing this may gain competitive advantages. This includes a better understanding of consumers and the tactics that increase consumption without sacrificing return for the commercial buyer or seller, e.g., promotional efficiency. SKU rationalization and store clustering are keys to better coordination of supply and demand, lower shrink and greater value chain efficiency – opportunities to achieve via retailer-vendor partnerships – but must be done leveraging best shopper data. Lower retail profits are an obstacle to greater investments in technology.
North American Market (US & CAN) Total Retail Sales grew $981 Billion in 2010 (7.7% inc) Top 10 Retailers Account for 69% of Sales Top 20 Retailers Account for 82% of Sales Market Has Been Consolidated Fresh Produce Represents 12.5% of Total Sales Berries Represent 10% of Fresh Produce Sales Berry Sales Increased 5.8% Straws 55%; Blues 26%; Rasp 11%; Blacks 7% 9
Who Are Top 26 Retailers 10 RankRetailerRankRetailer 1Walmart14Meijer 2Kroger15Dollar General 3Costco16Wakefern 4Safeway17Metro 5SuperValu18B.J.’s Wholesale 6Loblaws19Whole Foods 7Publix20Giant Eagle 8Ahold21Trader Joe’s 9C&S Wholesale Grocers22A & P 10Delhaize23Family Dollar Stores 11H.E. Butt24AWG 12Sobey’s25Hy-Vee Eleven26Aldi’s Source: Supermarket News
US Retail Environment Improving 11 Retailer Comparable Sales Growth, 2010 Comparable Store Sales Growth, 2009 Costco 7.0%+3.0% Kroger 2.8%+2.1% Publix 2.3%-4.7% Safeway-1.8%-2.5% Supervalu-5.1%-6.5% Target 2.1%-1.6% Walmart US -0.8%-0.5% Whole Foods Market 7.1%-0.9% Sources: company annual reports and investor relations announcements compiled by R. Cook.
Top Food Industry Trends Shoppers have migrated towards retailers with strong value for money credentials; on-going channel-blurring trend Many retailers have lowered prices to close the gap with discount competitors Retail strategies include new pricing initiatives, format development, e.g., smaller, price impact, and fresh food formats by non-traditional grocery retailers (Walgreen’s, Target P-Fresh) Cost-cutting to maintain margins, seeking efficiency gains Lowering inventory levels, SKU RAT, painful lessons already Retail corporate restructuring to eliminate duplication and generate cost savings Store brand/private label growth
Supply Chain Imperatives Streamlining the supply chain, improving vertical coordination, involves identifying mutually beneficial strategies and tactics, e.g., promotions, packaging, logistics Identifying which activities add more value than cost Eliminating non-value-adding activities Decreasing internal operational inefficiencies – due to lack of ERP’s and underutilization of BI they are often hidden or not considered important enough to attract attention in more favorable markets – but with margin squeeze they count Sustainability/social responsibility goals, metrics and verification will become more important and firms will seek competitive advantages The same goes for traceability and food safety expectations and requirements; foodservice has led in food safety; and there is a growing and more active government role
Berry Market Trends at Retail Value is Key Pack Size and Quality are the key components Retailers are Up Sizing Packs Small Packs are a luxury purchase Margins have been reduced Pressure to provide value to consumers (Price Wars) Available Ads Space reduced 25% Health Message Major Driving Force Convenience Organic Sales Rebounding Private Label is increasing 14
Why Retailers Love Berry Consumers? They Spend Money Most Berry Consumers are categorized as: Lifestyle Cosmopolitan Affluent Suburban Comfortable Country (Rural) Behavior/Stage Older Bustling Families Empty Nest Couples Start-up Families
Primary reasons consumers buy berries are: Great Taste Health Benefits Make me feel good & good for my family Other attributes to be stressed Convenience Versatility Available year round
U.S. Consumers Rank Key Factors Affecting Their Produce Purchase Decisions, Fall 2009 v. Fall 2008 Source: Lutz, Brand Performance and Produce, Produce Business, Jan On a scale of 1-5 with 5 being most important.
Source: The Hartman Group and PMA, Identifying Consumer Trends in the Produce Category, Policies that US shoppers say they want from their produce providers, 2010
2010: How comfortable are you that food grown/produced outside the U.S. is safe? Source: U.S. Grocery Shopper Trends 2010, FMI.
How to use Blueberries Why this is good for you Not a special occasion – Good for Every Day As production matures (Globally) o We have to convince consumers that they need to eat blueberries as much as – strawberries, apples, grapes o Not specialty item o Packaging implications – encourage larger quantities o Create retail and foodservice programs to sell more
Last 52 Weeks
Total US - FRUIT Top 10 Fruit Categories - Dollars Fruit – % of Dollar Sales 52 Weeks ending 9/11/2011 – FreshLook Marketing (FLM)
Total US - FRUIT Top 10 Fruit Categories - Pounds Fruit – % of Pound Sales 52 Weeks ending 9/11/2011 – FreshLook Marketing (FLM)
Berries Sales Breakdown by Variety 18.2% of total fruit $1,834M $244M $422M $867M
Total U.S. Retail Volume and Dollar Contribution by Variety 4-wks and 52-wks ending 8/14/2011 Data Source: SymphonyIRI Group / FreshLook Marketing27
Total U.S.: Regular/Conventional Retail Volume and Dollar Sales 4-wks, 13-wks and 52-wks ending 8/14/2011 Data Source: SymphonyIRI Group / FreshLook Marketing28
Total U.S. : Regular/Conventional Per Store, Per Year Averages by Segment 52-wks ending 9/14/2011 Data Source: SymphonyIRI Group / FreshLook Marketing29 Per Store Volume Averages Per Store Dollar Averages +3% vs. PY -1% vs. PY +8% vs. PY +3% vs. PY +9% vs. PY -7% vs. PY -1% vs. PY -3% vs. PY +7% vs. PY +12% vs. PY
North America Retail Blueberry Sales Chile vs. Total $ and Lbs Last 52 weeks ended 9/14/2011 Million s 30.2% 38.3% Supermarket Channel only
Chilean Blueberries vs. Total U.S. Ave. Retail price/lb Last 52 weeks ended 9/14/2011 Supermarket Channel only
Source: Perishables Group FreshFacts® Powered by Nielsen. Berries – Strong Positive Growth for All Varieties Trend Comparison, U.S. Supermarkets, 52 Weeks Ending Percent Change vs. Year Ago in Dollar Share of cat. 54.4% 25.2% 11.8% 7.3% 1.3%
US & Canada per Capita Blueberry Consumption 34
U.S. Fresh Blueberries (High-Bush): Production, Imports & Exports, 1,000 Pounds, Selected Years Thousand Pounds Sources: USDA/ERS, October Fruit Yearbooks thru 2004; GATS/FAS/USDA online queries for 2010 trade and NASS for 2010 production, July 2011.
Metric Tons Source: GATS/FAS/USDA online data queries. US Fresh Blueberry Imports by Key Country of Origin,
US Supermarket* Fresh Blackberry Sales: Quantity, Dollars and Average Retail Price, % Change 2010 vs 2009 *Excludes club stores and supercenters Source: IRI
1,000 lbs Production Imports U.S. Fresh Blackberry Production and Imports, P (but USDA/NASS tracks only Oregon where most production is processed ) Sources: ERS/USDA Fruit and Tree Nut Situation and Outlook Yearbook, Oct for production through 2007; NASS/USDA Noncitrus Fruits and Nuts 2010 Summary, Julu 2011 for production ; GATS/FAS online queries for trade data. This grossly underestimates actual USA production.
North American Blackberries
Source: IRI US Supermarket* Fresh Raspberry Sales: Quantity, Dollars and Average Retail Price, % Change 2010 vs 2009 *Excludes club stores and supercenters
Mt tons Mexico Chile Canada Guatemala US Fresh Raspberry Imports by Key Country of Origin, Mt tons Source: GATS/FAS/USDA online data queries.
Positioning for Success
44 Supplier Organization Customer Organization Buyer Salesperson Source: The Hale Group, Ltd. Traditionally, the main, and sometimes the only, contact between a supplier and an retailer was the sales organization
45 Producer Organization Producer Organization Customer Organization Sr. Mgmt. Innovation Finance Food Safety Logistics Marketing Sales Seller & Buyer Transparency Sr. Mgmt. Innovation Finance Food Safety Logistics Marketing Sales Seller & Buyer Transparency Source: The Hale Group, Ltd. Broadening the communication increases the effectiveness and efficiencies – and creates deeper, stronger and lasting corporate relationships
Becoming Marketing-Driven Becoming customer-centric. Understanding that you will get there faster if you work together. Next level is to become consumer-centric. Consumer-centrism will increasingly be achieved via supplier- customer partnerships. Suppliers and customers must choose strategic partners – align with those who will succeed in the marketplace. Growers should receive higher returns over time if they market through the wide-line berry shippers that have the key accounts and are leaders in the marketplace. Selling through brokers and wholesalers contributes to market fragmentation, disorderly markets and downward pressure on prices.
Conclusions Suppliers and buyers who partner together to identify mutually beneficial actions may gain a competitive advantage in their respective markets Successful partnerships are likely to be based on achieving logistical or operational efficiencies and/or consumer insights that get THE RIGHT PRODUCT TO THE RIGHT CONSUMER AT THE RIGHT TIME Getting a handle on “meaningful” consumer segments that can be effectively targeted is challenging but today smaller segments may be reached more cost-effectively with “new media” – how to achieve this is a challenge
Conclusions Investments in information technology are critical to both streamlining the supply chain and firm level efficiency Costs of meeting certification requirements of various types will grow along with public expectations about ways of doing business Vertical coordination can better match supply and demand (meaning a profitable market-clearing price for efficient growers) Effective positioning requires understanding the fundamentals of the rapidly evolving food and fresh produce distribution system!