Today’s Consumer
Tomorrow’s Catalysts
for Industry Change
The Changing Consumer

Excerpt from 1950’s Home Economics
Handbook:

“Have dinner ready: Plan ahead even
the night before to have a delicious
meal on time. This is a way of letting
him know that you have been thinking
about him and are concerned about his
needs…”
--Leslie Blankenship, Columbus, OH
The Changing Consumer
Working women
 Wealthier HH’s
 Family redefined
 Growth of ethnic
 Aging population

Who is the consumer?

Depends on market strategy
Retailers
 Wholesalers
 Foodservice
 Primary Shopper

Today’s Issues
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Dynamic Consumers
Global Marketplace
Convenience
Consolidation
Food Safety Concerns
Health & Wellness Attitude
Technology & Science
The Dynamic Consumer
Age of
Household Unit
Population of Age
Forecasted %
Group
Change in
Population of Age
(thousands)
Group
2000-2005
Under 25
96,969
3%
25-29
17,861
4.1%
30-39
41,856
-7.1%
40-49
42,519
4.8%
50-59
30,589
15.1%
60-64
10,757
19.8%
65+
34,987
4.1%
Dynamic Consumer Implications

Generation X – wants more
specialty produce w/ bold and
varied flavors in their
foodservice meals.

Baby Boomers - are aging and
their food choices will be
influenced by health, travel and
new experiences.
Dynamic Consumer Implications

Population Segmentation


Hispanics are the major produce
consumer by race and this population
segment is growing nine times faster
than other races.
Ethnic Foods – will account for about
15% of growth in food sales in the
next 10 years
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75% of ethnic food sales are to
mainstream consumers.
The largest ethnic categories are
Mexican, Chinese and Italian.
The Global Marketplace
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New varieties
Year-round availability
Fewer limitations on shipments
NAFTA/WTO/GATT
Increased travel
Higher disposable incomes
Fruit Per Capita Consumption
(lbs)
Fruit
1990
1995
1999
Apples
19.6
19.0
18.8
Avocadoes
1.1
1.4
1.7
Bananas
24.4
27.4
31.4
Cantaloupe
9.2
9.2
11.9
Grapefruit
5.9
5.9
5.9
Honeydew
2.1
1.9
2.8
Oranges
8.5
12.8
8.6
Pineapples
2.1
1.9
3.1
Watermelon
13.3
15.7
15.9
Vegetable Per Capita
Consumption (lbs)
Vegetable
1990
1995
2000
Bell Peppers
4.5
6.3
6.9
Broccoli
3.4
4.4
5.7
Carrots
8.3
11.3
13.5
Corn
6.7
7.8
9.5
Garlic
1.3
1.9
2.5
Head Lettuce
27.8
22.5
24.4
Mushrooms
2.0
2.1
4.3
Onions
15.1
18.0
19.4
Potatoes
46.8
49.2
47.4
Tomatoes
15.5
17.1
17.5
Top Growth Categories
(Fresh Trends-% growth store sales-99-2000)
12
10
8
6
4
2
0
Melons
Lettuce
Bananas
Tomatoes
Apples
Top Sales Contribution to Chain
(Fresh Trends 99-2000)
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Bananas Apples Tomatoes Salads Grapes Potatoes
Convenience Trends
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Aging, dual-income, busy families
want and will pay for convenience

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Common Convenience Items

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NOTE: The fresh-cut industry has
grown by 20+% and the Home Meal
Replacement (HMR) industry has grown
by 10%.
Bagged Salads, Peeled Carrots, Cut
Melons
Growing Convenience Categories

Apples, Potatoes, Vegetable Medleys
Consolidation Trends
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The Retail Industry experienced
nearly 40 mergers in 1999
The Foodservice Industry
experienced over 100
Top eight chains are responsible
for over 50% of produce sales
Top Five Players
($ Billion Grocery Sales)
50
50
38
40
34
30
23
20
20
10
0
Kroger
Albertsons
Safeway
1995
Ahold
2001
Wal-Mart
Why Consolidation?
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Take advantage of economies of
scale
Survive global competition
Take advantage of all available
food dollars
Establish private label programs
Food Safety Concerns
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Consumers fear unknowns such
as…
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cross contamination, pesticide residues,
biotechnology and terrorism
76% of all consumers believe their
produce is safe, yet 65% still have
concerns about harmful chemical
residues
Apples, grapes, strawberries, lettuce
and tomatoes rank highest among
consumers of at risk produce
Food Safety Trends
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Move towards increased demand for
Organic Foods
Produce represents over 50% of
organic food sales
Organic produce sales account for
3% of total produce sales
Tomatoes and apples are the most
often purchased organic produce
Ages 45-54 and 18-34 are the prime
consumer
The West Coast is the strongest
organic market
Improving Food Safety

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Research to improve breeding
and reduce pesticide use
Increased tracking of product
from field to fork
Third party safety and sanitation
audits
Increased education for
handlers and consumers
Health & Wellness Attitudes

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Today’s consumer is better educated
and more aware
Media influences perception of self
Consumers want miracle cures for
anti-aging, cancer prevention, etc.
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Lycopene: watermelon, tomatoes,
grapefruit
Anti-Oxidants - blueberries
Diets are still popular and 68% of
consumers choose fruit and
vegetables as the key component
Total US Fresh Produce
Consumption (lbs)
330
320
310
300
290
280
270
260
1990 1992 1995 1996 1997 1998 1999
Technology & Science
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Biotechnology
Category Management
Returnable Plastic Containers
(RPC’s)
Online Shopping
Electronic Data Interchange (EDI)
PLU codes replaced by scan data
Additional Consumer
Trends & Comments
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Apples, bananas, oranges and
watermelons account for over 60%
of fresh fruit consumed
Consumers buy more fruit than
vegetables
Average produce purchase is about
$3.76
Produce snacking is up
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In 1999, 14% of consumers used produce
as a snack compared to 31% in 2000
Vegetables account for over 64% of
produce sales
Reasons for Produce
Growth
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Increasing ethnic populations
Health Conscious Consumers
Rising interest in ethnic specialties
Exposure to new varieties and exotic
produce
Growing proliferation of fresh cut and
convenience products
Use of produce in foodservice
Additional Retail Trends &
Comments
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Bulk produce accounts for about 74% of
sales
Produce contribution to store profits
exceeds 20%
Gross margin has remained flat at
about 35% (difference between cost of
produce and selling price)
Size of produce department increased
from 2600 sq ft to 3600 sq ft
Number or stock keeping units (SKU’s)
increased from 200 to 600
Today more consumers pick their
supermarket based on produce
selections
Retail Share of Produce
Sales
10%
2%
88%
Supermarket
Supercenter
Other
What Can We Expect

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An Always Changing Consumer
A Smaller Global Marketplace
More Convenience Items
Increased Consolidation
Heightened Food Safety Concerns
Growing Health & Wellness Attitudes
Better Technology & Sound Science
Opportunity Factor
Ability to Adapt to Change + Vision for
the Future + Sound Planning – Fear =
Opportunity