Follow the Money Trail

Jim Prevor - Comments and Analysis

By Jim Prevor

There is in the world today a great disjunction. A visitor from Mars who landed to observe produce purchasing behavior on Earth and read all the research reports and consumer media reports would quickly see that consumers are now placing great importance on all kinds of values-based decision-making. They want transparency above all, though the clear implication is they want that transparency to reveal substantive value decisions around pesticides, labor, GMOs and more. After all, transparency that reveals bad things is unlikely to boost produce sales and consumption.

Our favorite Martian would almost certainly think that the largest supermarket chain in America is Whole Foods, as almost singularly it is on trend on all these points.

Yet, the total sales of Whole Foods is nothing more than a rounding error in the food industry. Wal-Mart is, by far, the largest food retailer in the country. Aldi is the fastest growing established food retailer in the country, and Lidl is the fastest growing start-up food retailer in America.

In other words, the largest chunk of the industry today and the prospects for future growth are strongly on the discount side. Now even discounters pay homage to trendy things, and so Wal-Mart has for decades been putting up pictures of farmers and having “store of the community” initiatives. All retailers know how to use words that appeal to consumers’ aspirational needs. But the evidence that consumer purchasing is being heavily swayed by all these things is, to be generous, quite slight.

Think of the facts: Consumers need to purchase a certain amount of calories to feed their families. If the produce industry — with its products known as being generally fresh, healthy and natural — is imperfect in its transparency, then consumers will do what exactly? Switch from buying Halos and Cuties to chocolate bars? Does this make sense?

Don’t think that in expressing these desires, consumers are also expressing the way they wish to allocate their time and money.

The biggest argument for transparency is not that it will boost produce sales; it is that it will keep us at our best. It’s the same reason restaurants should have open kitchens. Perhaps the theatre provides some marketing utility, but, definitely, management and workers behave differently when they know they are being observed.

It is extremely important to avoid being excessively swayed by anecdotal, non-scientific interactions with consumers. Who can be opposed to open dialogue? Engaging with individuals who are passionate enough to reach out to a company or an industry is the right thing to do. But there are more than 300 million consumers in the United States, so the fact that someone tweets something is important mostly as a matter of damage control – lest that tweeter influence others. One cannot assume these kinds of interactions represent consumer opinion.

It also is important to distinguish between consumer expression of aspirational values and actual consumer behavior. Consumers may want to be the kind of people who know their farmer, understand how food is produced, evaluate treatment of workers, assess the impact on the land of their food choices, support the local economy, etc., etc., but many are not at all willing to invest the time required to do this.

Now maybe they feel better just knowing it is there on a website. And this makes sense as even if they don’t read and study all this, they may assume some grad student, think tank or reporter has done so, and the subsequent disclosure will result in better behavior. But don’t think that in expressing these desires, consumers are also expressing the way they wish to allocate their time and money.

In fact, most of this type of consumer research is more directly useful to retailers than producers. What consumers are most likely saying is they want their retailers to know all this stuff and vet everything for them, so they can shop with confidence, even if they have not spent their evenings studying the details of where and how their kohlrabi is produced.

Of course, it is wise for the produce industry to engage with media, government, academia and others who can influence consumers and to use these venues to help clarify difficult scientific issues, such as GMOs, pesticides and the meaning of organic or natural. And using farmers as brand icons and industry representatives is nothing new. Take a look at the current Ocean Spray ads with the farmers in the bogs.

Allowing consumers and media in to see our operations is a positive and reinforces we have nothing to hide. Sometimes retailers can create standards directly, by, say, imposing inspections and requiring audits on such things as food safety or social issues. But they can sometimes achieve these purposes with more ease by simply requiring vendors to be transparent, allow media tours, etc.

If you think about the LA Times expose on worker conditions in Mexico, perhaps that could have been avoided had there been a retail requirement that to sell to us, you can’t live in darkness. Media and public tours of farm dormitory facilities can change these things. As is sometimes said: sunlight is the best disinfectant.SaveSave