At the 2013 POTATO EXPO, held January 9-11, 2013, in Las Vegas, the United States Potato Board gave a terrific presentation examining the "New Normal" for the fresh potato category. The USPB was asked to investigate an apparent disconnect in potato trends:
According to NPD's National Eating Trends, reported in-home consumption of potatoes has been steadily increasing since 2008.
The USPB's annual Attitudes and Usage study shows the percentage of consumers with positive attitudes toward potatoes has increased over the past few years, while negative perceptions of potatoes have continued to decline.
The story at the checkout is not as positive, however, as Nielsen FreshFacts reports volume sales for fresh potatoes has declined over the past three years.
So, why are we seeing volume sales continue to decline despite improved attitudes and reported consumption? After researching the question extensively over a period of several months, the USPB developed several hypotheses in an attempt to explain how consumption can be up while volume is down-in other words, how both measurements can be true. We would propose it's likely a combination of five factors, summarized as follows:
1) Channel Shifting. According to Nielsen Homescan, the traditional supermarket channel is gradually losing share of fresh food sales to club and mass channels. In addition, shoppers are using more stores: more than 50 percent of shopping trips for food/beverages involve going to two or more stores, and 70 percent of shoppers visit more than one format in the course of a month, with an average of three. And some significant players in the channels beyond grocery, such as Costco, Aldi, Whole Foods and Trader Joe's, don't share their sales data with Nielsen or IRI.
2) Fewer New Households. Fewer Americans were forming households after the recent recession: from 2007 to 2010, the number of adults ages 25 to 34 living with their parents shot up 26 percent (from 4.7 to 5.9 million), and one in five adults age 25-34 live with their parents or in other multigenerational households (the highest level since the 1950s). It is estimated there are more than 2 million fewer occupied homes than there would have been if Americans continued moving into new homes and apartments at the rate they did before the recession. Bottom line: fewer new households mean fewer new pantries to fill.
3) Smaller Portion Sizes (of potatoes). We can express our situation with fresh potatoes as a simple equation, with the unknown variable being serving size per occasion. When the USPB asked several experts in consumer food trends, "Are people eating smaller portions of potatoes?" we were told this was a possibility, as we were not the only ones asking the question. These experts shared: a number of their Consumer Packaged Goods (CPG) clients were looking into this same question since they were seeing volume declines, averaging 4 percent, where reported consumption levels remained constant.
4) More Precise Purchasing. While smaller portions are a possibility, it's more likely people are economizing more, as the recent recession has had a lasting impact on the way people shop for food. Shoppers across all income levels are looking to maximize their dollars, using coupons, doing comparison shopping and waiting for sales with the expectation of deep discounts. Today it's about being a "smart" shopper, which includes not buying more than you need simply because it's a good deal.
5) Less Waste. In thinking further about how consumers are economizing more, we may want to revisit the volume equation we gave earlier, as there is actually another factor to include in our equation: waste.
We're seeing the influence of consumers trying to reduce waste behind trends like simpler packaging, portion-controlled servings and reclosable packages, and suspect this is a major factor driving the continued growth of smaller potato bags. So the recent loss in volume could have more to do with what's not making it to the trash can vs. what's not making it into our mouths.
There is no denying, however, over a longer horizon, both reported potato consumption (i.e., in-home eatings) and potato sales at retail have declined. Our investigation looked at this longer-term decline, and found five key consumer trends at play:
You are certainly aware of consumers' ever-increasing interest in making healthier food choices, and know while fresh potatoes offer many nutritional benefits, they are often still dragged down by outdated beliefs. Recent improvements in health perceptions of potatoes have likely made potatoes a more "permissible" food to eat, but not yet seen as a food that you should eat for health (such as the "prescriptive" halo given foods such as kale).
Our eating occasions have profoundly changed in recent years, and many of our meals today are eaten alone. Consider 28 percent of U.S. households are single-person households, and The Hartman Group reports 46 percent of all adult meal occasions happen alone. And while potatoes are included in 30 percent of all dinner occasions, second in frequency only to poultry, they are only half as likely to be consumed when eating a dinner alone.
Of the 10 foods that grew most over the past 10 years, seven of them require no cooking or even assembly (e.g. yogurt, granola bars). As Harry Balzer, NPD's prominent authority on food trends puts it, "we are trying to eat without cooking."
With more moms working in the '80s, fewer children learned traditional cooking skills. For younger generations, cooking is increasingly seen as a "hobby" vs. a responsibility, although these consumers are still interested in acquiring cooking skills and exploring new foods. According to Mintel, who tracks consumer trends for the food and drink industries, "Among the behaviors younger cooks are especially more likely than their older counterparts to say they are doing more of are those related to information gathering and learning, such as reading about cooking online and sharing recipes."
The American food culture is shifting from packaged/processed foods to fresh/less processed foods. NPD's Harry Balzer observes, "Younger consumers crave variety and trying something new. They fear getting stuck in a food rut." This is one of the factors driving the interest in ethnic cuisines, some of which potatoes are not as strongly embedded in (e.g. Japanese, Korean and Chinese dishes).
Summing It All Up-The "New Normal" for Potatoes
What does all of this mean for fresh potato sales? We know the recession has changed the way people shop and eat, driving "smarter" shopping and smaller pantries. The increased interest and focus on health is a given, and mealtimes will continue to evolve-meaning more convenience, more variety and more immediate consumption occasions. Plus, the competition for potatoes' share of the dinner plate is only getting stronger, as innovation across food categories results in more options for consumers seeking convenience, variety and excitement. So what should potato suppliers be doing to respond?
Continue to stress the nutritional benefits of potatoes to retailers and consumers. There is an ongoing opportunity to leverage potatoes' equity as a "fresh and natural food" and create a stronger link between "natural" and "healthy" in shoppers' minds. Leverage nutrition/health messaging in all of your interfaces with retailers and consumers, including potato packaging, in-store communications as well as with out-of-store elements including print and digital communications.
Seek out innovation in the areas of convenience and variety to keep potatoes exciting and relevant. This could take the form of exclusive potato varieties, limited-time offerings or special packages. The end goal here is to encourage an incremental purchase that leads to an incremental consumption occasion, while broadening a shopper's "consideration set" for potatoes in order to make a positive impact on future category purchases.
Take full advantage of emerging technologies to provide even more information and ideas for using fresh potatoes to your retailers and consumers. Leverage your websites and social media platforms to serve up potato recipes and instructional videos, and then encourage deeper engagement with retailers and consumers by sparking discussions and inviting participants to share their own preparation ideas. In addition, encourage retailers to utilize the capabilities of their shopper loyalty card data to target underperforming households and deliver compelling offers on fresh potatoes, both by mail and online.
The "New Normal" doesn't have to mean sales opportunities for fresh potatoes are diminishing. On the contrary, it just means we need to be attentive to the shifts occurring in consumer/shopper behavior and counter with savvy, insight-driven marketing and merchandising initiatives. PG