IN 2009, we learnt a lot about the fresh produce category. For the first time, Nielsen released fresh produce purchasing data from Homescan*, its 2500 strong household panel, which has been operating for over 10 years and has been selected to demographically and regionally represent New Zealand.
In 2008, the fresh produce industries in New Zealand and Australia started asking questions. There was a sense that extreme economic events such as rising petrol prices, rising mortgage prices, rising dairy prices were beginning to influence the way New Zealand households were purchasing fresh fruit and vegetables.
Were people shopping more the independent fruit and vegetable outlets? How were the supermarkets trading in comparison? How should we and can we adapt our product offerings to maintain and grow sales?
Will a more stable pricing strategy through peaks and troughs in supply stimulate more consumer demand for my product? Who is willing to pay more and what are they willing to pay more for?
From a market research perspective, these questions are really exciting because answering them can help confirm, help challenge and also enlighten current industry thought.
Ultimately answering these questions supports actions that lead to increased purchasing of fresh fruit and vegetables - through better more targeted ranging for Kiwi shoppers and increased profitability for growers, wholesales and retailers.
So what have we learnt so far from picking apart the purchasing behaviour of Kiwi fresh fruit and vegetable shoppers. There follows a summary of some of the major findings uncovered through 2009.
In 2009, fresh fruit and vegetables accounted for 11% of overall household food and grocery expenditure. On average, Kiwi households buy fresh fruit and vegetables every five days and spend on average $16 per shopping trip. This makes the produce category the most frequently-shopped grocery category and one of the largest basket categories in dollar terms behind alcohol. In short, fresh produce is a significant proportion of the household budget and it is an important driver of footfall and revenue for the retailers.
Over the last two years, with so many external pressures and threats to the household budget, Kiwis have begun to shop around more for their fruit and vegetables.
In summer 08/09, there were significant consumer shifts in expenditure towards the independent fruit and vegetable retailers particularly in the Upper North Island and South Island where outlet choices are higher.
This was particularly evident in the fruit categories where generally, the more perishable the fruit type, the higher the purchasing in the independent trade. Nationally, Kiwis spent 25% of their fresh produce budget in non-supermarkets in 2009.
In 2008 and 2009, Nielsen included fresh produce questions in its annual Shopper Trends survey and asked New Zealand consumers about their attitudes towards fresh produce retailers.
The results show the number one reason for purchasing in most independent outlets remain their cheaper prices. However by late 2009, the number two and three reasons for shopping in independent produce retailers, freshness and quality, appear to be weakening.
Though the summer 09/10 season is not over yet, this subtle shift in shopper perception of quality and freshness in the independents is starting to filter through in the Homescan purchasing data. Early indications are the independent trade’s sales have reached a plateau this summer.
Perhaps what has been the most exciting and revealing work we have done this year, has been the deconstruction of Kiwi Households from being a big homogenous group of 1.5 million households into clusters of households based on whether they are pre-family, young or established family or post- family households.
These four key stages of our lives have a huge influence on the way we consume food in the home and ultimately how we buy fresh fruit and vegetables.
A lot of investment is being made in spreading the healthy eating and 5 fruit and vegetable a day messages to Kiwi children. And I’ve got great news. Homescan fresh data collected over the, last three years shows the message is getting through.
The purchasing of fruit and vegetables amongst households with children is increasing at a faster rate than households without children. This investment is having a positive effect.
However, did you know that 65% of all fresh vegetable sales and 60% of all fresh fruit sales in New Zealand are to households without children? Lifestage distinguishes us from each other how young or old we are, what is important to us and how we live. And it also distinguishes what fruit and vegetables we buy.
Young families (kids under 10 years) account for over 40% of all prepacked fruit sales. Young families also prefer to buy smaller fruit types and smaller graded fruit - which are better suited to smaller hands and lunchboxes.
Some 50% of the “established family” fruit budget goes on two types of fruit - apples and bananas. Whereas,only one-third of the total fruit budget of “child-free” households is spent on apples and bananas.
Households without children buy a wider variety of fruit than households with children, particularly older children. Practicality and affordability are likely to be key factors driving these decisions.
Empty nesters (post family) buy less fruit per trip, but are willing to spend slightly more for quality. They currently tend to buy more “loose” fruit so they can choose individual pieces. Empty nesters tend to buy less pre-packaged fruit and vegetables possibly due to the large sizes of the packs available.
To the sceptic, these facts and the many more that we are unearthing all the time are nice to know.
To the brave, these facts are market and product development opportunities. These can allow you to distinguish your fruit and vegetables from other growers, other wholesalers and other retailers. They can help you identify and target your produce to specific New Zealand households and in doing so allow you to drive increased volume sales or increase value sales.
One of the most rewarding pieces of work we did this year was for a New Zealand vegetable grower. This grower had literally been throwing away a particular grade of their crop rather than selling it.
Now they grade it, package it and price it to appeal to a specific group of New Zealand households and it is selling on the shelves of 150 supermarkets in New Zealand. That is how you add value to your business and to the fresh produce industry in New Zealand. If you are feeling brave, please give us a call. We would love to help you uncover untapped potential in your fresh produce business.
