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- In Marketing Commodities
it’s ‘What Matters,’ Stupid
- By Matt McCallum
Publisher
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- Vegetable and fruit commodity promotion groups need to sit up and take notice of what the National Potato Promotion Board (NPPB) is doing.
A few years ago they were almost voted out by a group of disgruntled growers in Idaho and other states. It was a wake-up call to the organization, and they decided to hire Tim O’Connor as their new CEO and make radical changes to the organization to “re-invent” the potato.
The first thing the board did was stop all generic advertising. At first people thought they were crazy - after all aren’t agricultural commodity promotion programs supposed to go to trade shows, pass out coupons and advertise “Eat more commodity X.”
Just throwing your message out to the wind doesn’t work anymore because the consumer market has become more fragmented and the retail environment is consolidating faster than commodity prices are dropping.
No longer is mom staying home cooking for a large family. This “traditional family” had been the potato industry’s core base. Unfortunately that base now only makes up 15% of the consumer market.
There are now DINKS (double income, no kids), single parents, single adults, empty nesters and two-income families to market to. And this doesn’t even consider the changes in the diversity of this nation. By 2020 the Hispanic population will increase from 13% of the U.S. population to 20% and will include 75 million people with $1.3 trillion in purchasing power. Wow - what a potential new market.
The NPPB also took a hard look at the changes occurring in the retail marketplace. The top 10 grocery chains now move 53% of the volume. In a few years this will grow to 70%. Look around you, there are becoming less and less choices for the consumer. The NPPB decided if potatoes didn’t hitch their wagon to the winners, they would lose the market.
Let’s face it, no matter how good of product you have, if the major chains won’t carry it and promote it, the product will never get sold.
Potatoes have a lot going for them in the marketplace. Right now they have a 100% distribution, nine out of 10 American consume them every two weeks and people consume them from birth to the grave. How many products have that going for them?
The problem is selling on price and quality has been the way potatoes have been sold in the past and that commodity mentality caught up with the industry. Potatoes used to be the number-one profit center in the produce isle - now they are number six. Over 60% of retailers said sales of potatoes are flat or declining and that profits are also decreasing.
The NPPB decided they had to stop the slide. They took it upon themselves to do research that could show the retailer how to increase sales of potatoes and prove it with consumer data. The NPPB also decided the industry had to come up with new and innovative ways to sell potatoes to the increasingly segmented marketplace.
To help shippers cope with these changes, the NPPB recently released its Shipper Toolkit to help move the industry in the right direction. It will also be holding workshops to help train shippers. The promotion board also has published a research report covering consumer demographics, potato packaging, scanner data and consumer attitudes and eating habits. This information will help the industry focus on these new markets and find ways to sell more potatoes to them.
NPPB’s plan is coming together and it will change the face of agricultural marketing forever. Other commodity groups are far behind the curve on this issue. Many still think the American consumer will buy produce because they hear about it in a radio jingle or see a billboard promoting it. Some groups even think the consumer will buy it, just because it was grown in this country. Let’s get realistic. These programs have been put together to make the grower feel good and say “wow look at my product on the billboard” or “they have to buy my product because if they don’t I’ll go out of business and we’ll be importing our food from China.”
These are totally logical arguments if you are a grower. But, in the end the consumer doesn’t really care. They are too busy to look up. They just want something new and convenient. And, they aren’t going to buy a product because of guilt.
In the end the consumer buys what they desire and we’ll never change that. And the mega chains only buy what will make them money and you have to prove it to them!
Tim O’Connor said the potato industry had to find out “what matters” and it did. Let’s just hope the rest of the U.S. produce industry wakes up and takes notice of the new marketing realities.
For more information on the NPPB visit www.uspotatoes.com or call (303) 369-7783.
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