Are brands about to take over the produce department?

Discussion
Source: C.H. Robinson
Oct 15, 2021

A new survey finds that more than half of consumers consider it to be important to shop specific brands in the produce department versus non-branded products, led by two-thirds of Millennials and Gen Z respondents believing so.

The survey of more than 1,000 regular produce shoppers from Foodmix Marketing Communications further showed:

  • Almost 60 percent admitted to “loving” a fresh produce brand, however, they struggled to name a second brand that they have an emotional connection with;
  • Sixty-eight percent would pay more for branded produce.

The food marketing agency said brands with an established story generate trust and engagement that support strong trends toward healthy lifestyles and sustainability.

A Nielsen report from 2017 showed branded produce’s share at U.S. grocers expanding 7.7 percentage points between 2012 and 2016 to 38.5 percent. Brands were seen driving produce’s biggest trends, including packaged salads, diced and sliced vegetables, and to-go snacking. Enhanced branding and informational packaging also helped guide a heightened health-consciousness.

“In the past, retailers stocked produce items with a farmers market look and feel,” Nielsen wrote in the report, according to Supermarket News. “However, as consistent quality and trust has grown in importance among consumers, so has the opportunity to offer branded produce products.”

Stronger branding also draws more attention. In its IPO filing this year, Dole cited a 2020 IPSOS study that showed Dole had 73 percent of fresh fruit unaided brand awareness, 42 percentage points higher than its closest competitor.

The downside to a big push toward branded produce is margin compression.

Grocers have kept produce prices low throughout its history by stocking mostly unbranded product. Doing enhanced marketing may not be necessary amid healthy eating trends. Even developing produce brands internally, grocers would face packaging and marketing costs avoided in the past.

In January 2021, Robinson Fresh, one of the largest produce providers, began offering fresh produce under its own name for the first time in its 115-year history. Michael Castagnetto, president, said, “As we extend our brand from behind-the-scenes to the package, we continue our commitment to be the people our customers and consumers can rely on for the best produce on the market.”

DISCUSSION QUESTIONS: Do you see more positives than negatives in produce departments shifting toward brands, whether store or third-party versions? Would more branding and packaging accelerate or undermine the trend toward healthy eating?

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16 Comments on "Are brands about to take over the produce department?"


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David Naumann
BrainTrust

There are many pros and cons to branded and packaged produce. On the negative side, branded produce would likely drive up prices for consumers and cut into margins for retailers. In addition, it would create a hardship to small local farmers that supply produce to grocery stores. On the plus side, branded and packaged produce would make self-checkout and scan and go easier for consumers.

Neil Saunders
BrainTrust

Brands certainly play something of a role in prepared, packaged produce such as salad bags and pre-cut fruit and vegetables. However when it comes to loose produce they play virtually no role at all. Even in prepared the impact is variable. A brand like Love Beets adds flavor (like honey and ginger) to its beets so there is a real point of differentiation. However many standard salad bags and cut fruit are not particularly differentiated so it’s very easy to swap from one brand to another.

Liz Crawford
BrainTrust

I do believe that branded produce is the wave of the future in grocery. Brands can help guarantee quality and non-GMO claims, as well as sustainable practices which are important to younger shoppers.

Furthermore, while margin compression is an issue if prices are kept at parity to unbranded produce, there is expanded profitability if consumers become ready to pay more for brands. This then becomes an incentive for both private label and nationally branded produce.

Mark Heckman
BrainTrust

While I understand the “margin compression” issue, there are some distinct positives in migrating to branded, prepackaged produce. These branded products are inherently much easier and more time-efficient to stock and recondition compared to loose, fresh product. The allure of a reliable brand should also be a plus. Further and more to the ergonomic side of things, with retailers forcing more shoppers to shelf-checkout, scanning packaged product instead of dealing with weight and PLUs during that process is a time saver for shoppers. Overall, I see it as a positive.

Jeff Weidauer
BrainTrust

Branding in the produce department makes sense in a lot of ways, at least for the producer. But let’s hope no one starts packaging everything in plastic just to slap a brand name on it.

Bob Amster
BrainTrust

Branded produce will make it easier for consumers to purchase what they find to be their favorite version of produce. The downside is that consumers and society will have to deal with more packaging of which to dispose. Potatoes, apples and cucumbers do not need to be packaged. Maybe a brand sticker like the PLU stickers would work?

Ron Margulis
BrainTrust

Somewhere in my basement I have two wooden crates used to ship fruit from Central America with the brand names “Margulis & Lieberman” and “M&L” (stickers and all!). My grandfather and his partner tried to brand produce back in the 1920s and ’30s with very limited success (the company was a hit, the brand not so much).

There is a very fine line for retailers wanting to use produce and other fresh categories as a differentiator in the marketplace and the marketing of brands in those categories. If brands proliferate in the fresh areas, the only thing retailers can compete on is service — don’t even think about trying to compete on price! And that’s a tall order for even the most innovative companies.

Shep Hyken
BrainTrust

There is something special about fresh, home-grown, local produce. That said, the one advantage that brands may give us is consistency. If a brand name creates an inconsistent experience, they will lose the confidence of the customer. End of story.

Andrew Blatherwick
BrainTrust

In a world where more and more people are concerned with the environment, especially Millennials and Gen Z, I find it amazing that they would be driving a world of more packaging materials, greater use of CO2 in the packaging, more product miles and less local sourcing. The quality issue is surely more of them not knowing how to judge the quality of produce and hence it is an educational need rather than a marketing need.

Richard J. George, Ph.D.
BrainTrust

It’s ironic that produce departments are shifting toward brands. Produce departments, along with bakery, seafood and meats, represent significant opportunities for developing positive points of differential advantage. Now, the produce section runs the risk of looking like the rest of the primarily branded aisles of the supermarket. If the move is away from loose “farmer’s market” produce, then supermarkets need to develop their own branded produce that reflects the changing consumer needs. Don’t simply follow the branded trend, unless your brands provide the reason for a customer to pass one or more grocers to visit your store.

Patricia Vekich Waldron
Staff

Unless there is some type of differentiation, i.e.: added herbs, flavor or preparation, there is not much incremental value, especially given the shift to sustainable, local, artisan produced produce.

Brandon Rael
BrainTrust

The move to branding in the produce department is contradictory to the local shift: better movement, sustainability awareness, and farm-to-table consumer preferences. For most consumers, an outstanding and high-quality selection in the produce, seafood, meat, fresh and perishable sections is a vital differentiator to shop in-store vs. online experiences.

Product diversification strategies matter in the produce section. If there is a delicate balance between a “farmers market” local movement with some branded good element, that might be the winning combination for grocers. The downside of this movement to packaged produce items is the sheer amount of packaging, plastic, and waste that will go along with this.

Ananda Chakravarty
BrainTrust

More negatives. Don’t see this happening at all. The farmers market concept is still strong and freshness is inherent to the produce section of a supermarket. There may be some brand growth, but it still remains less than 40% and the growth rates of <2% per year is not threatening. Companies like Dole have a nice niche to work from, but it’s unlikely to drive any rapid growth for branded produce.

Harley Feldman
BrainTrust

Shifting to brands will likely increase prices on those brands. While the branding might help increase sales for packaged items, the branding will provide very little to no help on loose produce. Branding may help accelerate the trend toward healthy eating of the brand spends advertising dollars.

Craig Sundstrom
Guest
I’m skeptical of the survey results (a marketing firm concluding brands are important … really?) so let’s approach it from a more fundamentals approach: quality/consistency and packaging. Produce isn’t manufactured, obviously, so even a brand that buys from a certain farm or producer is still going to have some variability in product, which complicates expectations and messaging. If your apples are smaller and/or less sweet than they were last week, is that a defect? Has the brand changed or is it just a random fluctuation? Secondly, most produce is sold in bulk; unless suppliers actually begin to package their product — which would seem to be wasteful (and 180° from current sustainability goals) — branding would need to be accomplished in store, with signs and separate displays. A certain amount of confusion would seem inevitable, and maintenance from the store would be higher. Still, it’s not a crazy idea: I buy a certain brand of cherry tomatoes, and grapes are sold packaged (even if I don’t really care what brand I buy). And many raised… Read more »
storewanderer
Guest
1 month 23 days ago

Bad.

What if I only want one cucumber or one green pepper?

If one of the two green peppers, or cucumbers, in that bag of peppers is bad, the entire bag gets tossed. If these items are loose, the bad one gets tossed and the good one is still out for sale.

Oh, and also all of those mandatory thick printed plastic bags with the branding, much thicker and heavier plastic than the optional produce plastic bags at present are to place loose items in.

It may cut down some labor in the produce department though.

There are already many “brand” stickers on loose produce items. The summer fruit at Kroger this year was mostly tagged “Family Tree Farms” via the PLU sticker. Many green vegetables like lettuce have a branding on the PLU label. Many years ago around 2005 right before the first time it went down, Albertsons tried to brand all of its summer fruit like peaches, nectarines, etc. as “Pick’d Fresh” via the PLU sticker.

wpDiscuz
Braintrust
"If brands proliferate in the fresh areas, the only thing retailers can compete on is service -- don’t even think about trying to compete on price!"

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