FreshIncite February 2016

What We’re Seeing

Multi-buy promotions on the way outTop

mutli_buys1.jpg UK supermarket Sainsbury’s has declared it will phase out multi-buy promotions (like ‘buy one get one free’) by August, to be replaced instead by lower regular pricing.

The UK’s second-largest retailer said multi-buys were out of step with consumers’ modern higher frequency, lower volume shopping habits. Promotions that encourage consumers to buy more than they need are increasingly being seen in the UK as a cause of waste at home. Sainsbury’s move follows a similar decision by Asda in 2012. Consumers’ rising aversion to at-home waste is driving a shift to smaller portions in many categories.

While that underlying consumer driver of Sainsbury’s move is echoed in the Australian market, a similar retailer aversion to multi-buy promotions hasn’t so far played out here.

In 2015, multi-buy retailer promotions jumped up to 14% of total adverts for fresh fruits and vegetables, according to Freshlogic’s Adwatch™ retail promotion data. That’s nearly double the annual 7-8% share of total ads in 2012 to 2014. Multi-buy promotions’ share of total promotional activity has climbed steadily for the past 4 years in the Australian market, now representing 9% of all grocery adverts.

FreshIncite: If Australian retailers make a U-turn and follow this UK example, what could that mean for products that lean heavily on multi-buy promotions

Dale’s Downtown Meats create a new beer flavoured lamb Top

uralla_dales_downtown_meats1.jpg Uralla farmer and butcher Dale’s Downtown Meats has spent a year preparing and trialling their beer-fed lamb, which was declared ready in time for Australia Day barbeques. The New South Wales butcher uses spent grain from the local Uralla Brewing Company as feed for its lambs, which gives the animals’ meat a distinctive beer flavour.

Dale’s Downtown Meats sell the beer-flavoured lamb as a premium niche product, which is aimed at giving the butcher a unique point of difference.

FreshIncite: This appears poised to be a successful product, albeit with a likely gender bias, because the beer flavour message is so clear and easy to understand for consumers.

Thomas Foods launches recipe kit start-up Top

South Australian food processing company Thomas Foods launched in November a recipe kit start-up called Thomas Farms Kitchen (TFK), following an 18 month trial in Adelaide. Despite a recipe kit market already seemingly occupied by fast-growing businesses like HelloFresh and My Food Bag, Thomas Foods believes there is still room for another player in the expanding sector.

Thomas Foods sees TFK as an opportunity to get closer to the consumer, and avoid being relegated to an ingredient supplier to those who own that consumer interface.

Consumers globally are embracing the convenience of fresh recipe kits delivered to their doors. The US recipe kit market is expected to be worth several billion dollars by 2020, according to local researchers. Globally, there are around 170 companies offering recipe kit delivery services.

Household penetration still remains fairly low in the US, which leaves plenty of potential for subscription numbers increase in the coming years. Organic, gluten free and vegan options are seen as potential areas of growth.

FreshIncite: Its growing scale has given the ‘recipe kit category’ a formal name, and Thomas Foods’ investment clearly reflects the value of being involved in the consumer interface.

The Food Consumer

Australian farmers benefit from increasing demand for beef in China Top

aus_farmers_beef_demand_in_china1.jpg The changing diet preferences of China’s middle class have stimulated huge increases in Australian beef sales. MLA data indicates beef sales to China have surged six-fold in the last three years, moving to A$917m in 2015.

This demand reflects changes in the traditionally pork-based Chinese diet, combined with an inability to meet beef demand with local supply. Australia’s reputation for food quality and safety appears to have enabled our exporters to capitalise on the opportunity.

The markets available to Australian beef have been expanded, and this success into China has impacted the domestic market with higher pricing. This begs the question of whether similar impacts can be expanded to other food categories, where success in export markets may provide growth and expand the range of distribution options and lift the values received in local markets.  

FreshIncite: The scale of increased beef sales into China confirms the upside of export market growth, and also signals that this growth has potential to impact domestic market dynamics.  

Crowds of shoppers for EasyFoodstore openingTop

easyfoodstore_crowd1.jpg A large amount of shoppers gathered outside UK discount supermarket EasyFoodstore for its opening at the start of February, some queuing for six hours to take advantage of the introductory promotion where all items cost 25p (A$0.5). After running out of stock within hours, the supermarket was forced to reopen with bouncers on the door to manage shopper numbers.

All 76 lines of goods offered in the store are unbranded, fitting to the sales pitch ‘No expensive brands, just food honestly priced’. The retailer is clearly targeting bargain hunters, and the warehouse-style environment appropriately reflects that to their customers. While the 25p per item promotion runs out at the end of February, which might thin the crowds, EasyFoodstore is expected to keep all prices below 50p.

The retailer has stated it needs to sell approximately 4,000 items per day to stay in the black. At a future 50p per item over the 5 weekdays the store is open, that’s only a requirement for £10,000 per week; not a challenging target to aim for, if the opening-day crowds are any indication.

FreshIncite: EasyFoodstore is a demonstration of the consumer demand for discounted food and how these discount retail stores do not require a full product range to make a profit.

Vietnamese New Year creates demand for mini vegetable seedsTop

vietnamese_new_year_celebration1.jpg Premium mini vegetables were in high demand in Vietnam over the Lunar New Year festivities this month. The market saw growing demand for a variety of locally-grown mini vegetables produced in high-tech facilities using seeds imported from breeders in Japan and the US. The growth in demand is seen as stemming from the product’s quality and safety image.

The mini vegetables are popular both in supermarkets and traditional independent food retailers and wet markets, and are primarily being used as a part of traditional gifts and celebrations of Vietnamese New Year.

FreshIncite: The popularity of these premium, specialist vegetable varieties in Vietnam points to an opportunity for Australian exports, which also enjoy a reputation for high quality and safety credentials in Asian export markets.

Camposol drops canned goods to focus on fresh & frozenTop

camposol_logo1.jpg Major Peruvian agribusiness Camposol has announced it will stop producing canned goods to focus on its fresh and frozen business, which is believes offers the most attractive opportunities.

Camposol has over 14,000 employees during their high season, producing goods such as blueberries, avocados, asparagus, mangoes, shrimps and more. They are a major exporter to Europe and North America.

FreshIncite: The move to stop producing canned goods potentially reflects a consumer view of fresh and frozen food as healthier alternatives in Camposol’s developed export markets.

Chipotle banks on E. coli response visibilityTop

chipotle_store_logo_on_store_window1.jpg Following a long-running E. coli outbreak that began in the middle of 2015, US fast food outlet Chipotle temporarily shut down all 1,971 stores in early February for a four-hour food safety employee meeting.

The shutdown is the latest step in a very public campaign by Chipotle to reassure consumers that the long-running outbreak is being taken care of; shutting down their stores for a combined total of 7,600 hours is a very expensive declaration to customers they are seriously addressing the problem.

As part of a broad-reaching new ‘farm to fork’ food safety program implemented in January, the foodservice chain will now provide paid sick leave to staff so make sure they stay home while sick, DNA-based testing of ingredients before they’re sent to restaurants, and washing and cutting of tomatoes, lettuce and cheese in a central facility instead of in individual restaurants.

FreshIncite: In an attempt to regain consumer trust and put a full stop on the food safety challenge, Chipotle’s response to the outbreak has been very public and visible to customers. 

Retail

Garden variety roses for Valentine’s DayTop

roses1.jpg Garden variety’ old English style roses and other flowers have lifted in popularity in the US. The shift in demand is described as a preference for flowers that look like they originate from an English cottage garden, rather than long-stem roses that look like they came off a production line.

These products do present as classic heirloom and heritage varieties, but they’ve actually been specially bred for the cut flower market. They’re earning a substantial premium over standard roses, with up to US$125 being paid for a dozen roses this past Valentine’s Day.

This success is undoubtedly based on an appealing and different new product, however the strength of the premium paid is another signal about how much consumers welcome positive stories about the origin of what they are buying.

The strength of this interest is confirmed in the Freshlogic Mealpulse™ consumer panel responses, where the number of food consumers who state a willingness to pay a premium for local product has continued to increase to now reach 44%.

FreshIncite: The provenance premium is not limited to food products. 

Technology Frontier

Genuine Coconut wins 2016 Fruit Logistica Innovation Award Top

geuine_coconut_flia_photo1.jpg The winner of the 2016 Fruit Logistica Innovation Award was the Genuine Coconut, a green drinking coconut with a specially designed ring-pull mechanism, which enables the otherwise unaltered coconut to be opened and drunk like a can of soft drink with a straw.

The Kitchen Minis tomato plant finished in second. The Danish Northern Greens product is a small plant that produces up to 150 cherry tomatoes per season and is intended to be kept on consumer’s window sills.

The yellow stripped Enjoya capsicum supplied by Dutch group Terra Natura International came in third. The product boasts a high vitamin C content and is aimed for salads as well as being a snack option. It comes in various sizes and stands out due to its unconventional yellow streaks.

FreshIncite: Making ‘straight from the plant’ products a grab and go option is a common theme in this year’s FLIA.

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Freshincite is a publication prepared by Freshlogic

Freshlogic is a specialised provider of food market insights and analysis, with deep expertise in the dynamics of fresh foods. We deliver a range of services to industry and corporate clients, which aim to interpret market and supply chain conditions, or address challenges faced in food supply chains associated with changes in the preferences of consumers, supply dynamics, and economic settings.

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