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    EXPERT COLUMN: Leveraging ‘Local’

    Retailers and suppliers are finding big business in this growing trend

    By Suley Muratoglu

    There was a time when production and marketing mavens at every rung of the food and beverage industry wrote off the “shop and eat local” movements as passing fads, fueled by next-wave hippies toting hemp shopping bags to the weekly farmers’ market. But these days, “small” and “local” have become what multinational agri-financing giant Rabobank Group calls a “permanent and mainstream trend” that has “changed the competitive landscape” of the food industry.

    From farmers to gardeners and shopkeepers to chefs, entrepreneurs have been maneuvering to cash in on the “locavore” movement, which the USDA defines loosely as buying “food produced near its point of consumption.” This geographic component to ‘local’ foods – the acceptable distance from farm to table – can vary wildly, from produce grown within the same county according to the rules of some stickler farmers’ markets, to fare from up to 400 miles away, which is the federally defined upward boundary for marketing a food as either local or regional, according to the USDA’s 2010 report “Local Food Systems: Concepts, Impacts and Issues.”

    In the direct-to-consumer arena, there are now nearly 8,000 farmers’ markets in the United States, with growth of nearly 350 percent between 1994 and 2012, including a 9.6 percent jump between 2011 and 2012 alone, according to a 2012 USDA marketing study.

    Consumers are willing to pay more for local foods, studies show, because they perceive them to be fresher and better-tasting, and because these purchases are seen as supporting the regional economy.

    Yet less than 1 percent of all U.S. food is sold directly from farmer to consumer, notes the USDA. Fortunately, the many sentiments driving the farmstand trend, such as the desire for connection with the origins of fresh and nutritious foods that are grown and transported safely and sustainably, represent valid and likely points of market entry for mid- to large-sized retailers and producers with national distribution chains that want to leverage local.

    Beyond geography, the local cachet of a product extends to its “provenance,” a term that the USDA uses to encompass elements like the personality of the farmer, his or her growing or animal husbandry methods, and even intangibles like the beauty of the farm. These things help make up “the story behind the food,” as detailed in “Local Food Systems.”

    That is a concept Austin, Texas-based Whole Foods Market has understood since its inception. Farmers’ photos and stories have long been incorporated into the artistry that is the Whole Foods produce department, and the upscale chain now has an interactive map on its website, from which customers can get the origin story of their arugula or asparagus, for example.

    But local has grown beyond niche, thanks to consumers’, manufacturers’ and retailers’ recognition of its benefits. Bentonville, Ark.-based grocery giant Walmart, which has food sales of $150 billion in the most recent fiscal year and is the nation’s largest seller of fruits and vegetables, according to CNBC, committed this spring to doubling its purchases of local produce by December 2015.

    Fresh fruits and vegetables are still a relatively small part of our diets, with approximately 70 percent of the food in Americans’ shopping carts having been processed in some way, according to Marketplace.org. Less than ideal arability of local soils, availability of water, and other climatic factors can sometimes make local sites impractical for farming. National manufacturers have invested considerably in efficient infrastructure and transportation systems as well, and the notion of setting up regionalized plants is neither practical nor desirable.

    Nevertheless, retailers and producers can learn from the local food movement and leverage it. Consumers seek out local produce because of its social and environmental good, in addition to great taste and quality. Likewise, with today’s available technologies and contemporary packaging formats, processed and packaged foods can deliver on fresh flavors, maintain ingredient quality and preserve food nutrients. National manufacturers can also fulfill consumers’ appreciation for the social and environmental benefits that local brings.

    Shrewd examples of manufacturers following this recipe for success include the following:

    • Truitt Brothers, A Salem, Ore.-based bean farmer and processor, understands the value of provenance to its customers, describing its philosophy as “food manufacturing with a conscience.” On its website, the company describes its five bean varieties as “sustainably cultivated on family farms in the Pacific Northwest.” Truitt Brothers also touts its Tetra Recart packaging as “earth-friendly Tetra Pak cartons.” Consumers far from the Pacific Northwest can appreciate the sustainable nature of the farms and the care with which the beans are processed and packaged, in close proximity to where they were grown – a clever twist on local.
    • As a spice merchant, Norway, Iowa-based Frontier Natural Growers has no choice but to source globally, but it touts its relationship to farmers and their local communities on its website. The company also created what it calls a “Well Earth” sustainable sourcing plan aimed at protecting local environments and populations. Though its growers may be far away, Frontier offers consumers nothing less than “the opportunity to use their purchases to influence the way the world does business.”
    • Clinton, Mich.-based organic powerhouse Eden Foods has nationwide distribution but still touts local sourcing on its website: “Approximately 75 percent of Eden Foods are organically grown on more than 360 family farms of North America with over 80,000 acres of vibrant farmland, and growing every year.” Elsewhere, the site touts the company’s connection to its farmers: “Eden buys all food from and pays farms directly, getting more cash to them. Most is grown a few miles to a few hundred miles from home base.”

    What does this mean for national manufacturers and brands? In his white paper “Local Food Trends,” Chef Lance Avery points out that “larger businesses that ignore this trend will continue to lose a segment of the local market share. To be a part of this ever-growing local trend, large food manufacturers will need to re-examine their roots, core goals and mission in order to provide a positive impact on local communities and the local food trend in general.”

    Suley Muratoglu is VP for marketing and product management at Vernon Hills, Ill.-based Tetra Pak.
     

    By Suley Muratoglu
    • About Suley Muratoglu

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