Are brands about to take over the produce department?
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.”
- Study shows 68 percent of shoppers will pay more for branded produce – Foodmix Marketing Communications/PRNewswire
- Branded produce sales up 8 percent: Nielsen report 2-17 – Supermarket News
- Brands are having a big impact in the produce department – CNBC
- Dole Form F-1 Registration Statement – Securities & Exchange Commission
- C.H. Robinson Launches Consumer Brand As Robinson Fresh – C.H. Robinson
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?