New strategies for produce industry

The produce industry is changing as fast as companies can consolidate, consumers can alter eating habits and communication technology can transform itself to meet a growing demand for information.

Producers, packagers and other distributors must change as rapidly to succeed in an increasingly competitive market.

Trends to watch, according to Veronica Davis, president of Vanguard Marketing Strategies, Inc., include consolidations, global competition, increase in food service business, technology, food safety, packaging and distribution, and changing consumer preferences.

Davis discussed the changing landscape of the produce industry recently at the Texas Produce Conference and Trade Show at San Antonio.

She says 10 food store chains now control 45 percent to 50 percent of all produce in the United States. “That consolidation has occurred in less than five years,” she says. “The produce industry is dealing with a changing marketplace.”

She says the food service industry, including restaurants and buying clubs, will grow faster than traditional marketing outlets. “And the industry will have to pay more attention to food safety and phyto-sanitation. Third-party audits for contract certification will be a key.”

Consumer changes will alter the market, Davis says. “We see growth of ethnic populations and an aging population. Work formats have changed, so more employees are tele-commuting. The population is wealthier.

“Also, the family has been re-defined. We have a lot of single-mothers shopping for food. And shopping itself has changed. We have multiple marketing formats including traditional grocery stores, buying clubs, and on-line groceries.”

She recommends that producers and distributors look at the changing demographics and alter marketing strategies accordingly. “Find a niche and embrace third-party audits as a means to assure food safety. Also, be willing to cooperate with food store chains and the new markets. They are not the enemy. And develop customer-friendly products. That may require instructions on how to use unfamiliar fruits or vegetables. Also, convenience will be important.”

Davis says the U.S. produce industry also must look beyond local outlets. “Unfortunately, the United States does not have an export mentality. But we have to develop one. It takes five to ten years to develop export markets.”

David Russell, Standard Fruit and Vegetable, Inc., of Dallas, says his company has embraced change and is moving toward a technology-oriented industry with more emphasis on partnerships, value-added products and revised marketing strategies.

“Partnering with other businesses to share information, especially between buyer and seller, will be critical,” Russell says.

“And we have to look at changes. The food service industry, for instance, is growing faster than the retail side.”

Part of the evolving strategy, he says, is to determine consumer preferences and concentrate on more value-added products. He says contracts will replace reacting to market prices.

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