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Case Study: Origin matters

Market for 'local' food keeps retailers ahead of the competition

 - Photo courtesy of Lummi Island Wild
By Lisa Duchene
August 01, 2007

Consumers bought so much sulfite-free shrimp bearing the Wild American® Shrimp quality label at Wild Oats stores last fall that the retailer plans to promote it again. Gulf of Mexico shrimp sales climbed to more than 45 percent of Wild Oats' total shrimp sales during the October promotion.

"Our consumers want to know where their food is from," says Marc Okeon, seafood category manager for Wild Oats, the 110-store natural-foods chain in Boulder, Colo. "Whenever possible, we deliver as much information as we can." For a small, but growing percentage of consumers, the origin of food matters, as a trend favoring local products gains steam. The number of farmers' markets grew 40 percent between 2002 and 2006. The market for local food - normally produced within 250 miles of where it is sold, but definitions vary - has grown to about $5 billion, estimates Packaged Facts, a division of Marketresearch.com, which conservatively estimates local food will be a $7 billion business by 2011.

Whole Foods Market in Austin, Texas, has a policy for its stores to buy from at least four local vendors and Wal-Mart is working on tailoring selections to local communities, according to Marketresearch.com.

"Now that any national chain can talk about having organic products, 'local' is a concept stores are moving toward to stay ahead of the competitive curve," says Laurie DeMeritt, president and COO of the Hartman Group, a Seattle market research firm.

Some even call local "the new organic." Luckily for the import-heavy seafood category, this trend is not limited to just the 250-mile geographic limit, but to food connected to a place. Copper River salmon is the quintessential seafood example. Consumers paid up to the mid-$30s per pound on the West Coast for the first Copper River fish of the season.

In Wild Oats' seafood department, the local-food trend is translated to "buy domestic," says Okeon. Other retailers echo Okeon, noting that consumers respond positively to locally harvested fish.

Russ Casteel, the seafood merchandiser at the 32-store Haggen/Top Food and Pharmacy chain based in Bellingham, Wash., markets the origin of about 30 to 40 percent of the products in th e seafood department. He'd like to increase that to 70 to 80 percent.

"We found that when we can brand a product and tell a story about it, it really attracts a specific consumer and is interesting to them and increases the marketability of that product in our area," says Casteel.

One story Haggen's tells is of Lummi sockeye salmon, a four- to six-week mid-August run of fish passing Lummi Island in Puget Sound on their way to the Fraser River in British Columbia. The Lummi Indian tribe tosses nets between two floating platforms, a technique that Casteel describes to customers as the most sustainable of fisheries. They harvest about 30,000 pounds a season, selling most to Haggen's markets.

Casteel has found telling the story behind the product is a competitive advantage over big supermarket chains. But that also extends to imported seafood. When Haggen's began country-of-origin labeling, as required by law since late 2004, customers were surprised at the large amount of imports and questioned their safety. Today, because of the information Haggen's provides, customers accept imported product as healthful and of high quality, says Casteel.

Roundy's Supermarkets, a 155-store chain primarily in Wisconsin and Minnesota with a few stores in Chicago, is expanding its promotion of Rushing Waters rainbow trout, farmed in Palmyra, Wis., 20 miles from the Roundy's warehouse. Rushing Waters' proximity and daily deliveries allow the fish to be in the display case within 18 hours of harvest.

Bill Bonzheim, Roundy's seafood merchandiser, markets the trout as the "freshest fish in the fish counter" and sells it for $7.99 a pound for boneless and $4.99 a pound for whole, dressed fish. Trout sales are up tenfold, says Bonzheim.

"We want to attach ourselves to a local guy and provide a nice opportunity for marketing and great fish," he says.

Bonzheim is smart to highlight the fish's freshness in his marketing, according to a study conducted at Iowa State University that pinpointed freshness as the top reason consumers buy local foods.

Consumers in Boston, Seattle and the Midwest cited freshness as their chief reason for buying local and more than 40 percent of Boston and Seattle consumers surveyed said they purchased local foods.

At DeMoulas Supermarkets, a 58-store chain in Massachusetts and New Hampshire, customers ask for local fish and favor New England cod and haddock, but otherwise pay little attention to the country of origin, says Bob Hartman, assistant seafood director.

The Food Marketing Institute, in a letter to the U.S. Department of Agriculture opposing COOL as a costly program that makes no difference to consumers, said marketing programs like the one for wild Alaska salmon work well with consumers interested in purchasing local or regional products. Only 2 percent of consumers polled considered country of origin to be an important attribute when buying seafood, according to FMI's Grocery Shopper Trends 2005 report.

Consumers so passionate about origin that they'd want to know their fisherman or farmer on a first-name basis make up only about 12 percent of the U.S. population. For most other consumers, origin is one of myriad purchasing factors or not even on their radar, says Kirk Cornell, director of ethnographic research for The Hartman Group.

Research of consumer attitudes indicates retailers are increasingly becoming information brokers, one reason Cornell recommends retailers market origin. Another reason is premium price. "When consumers start to know something about products, they're willing to spend more," says Cornell.

 

Contributing Editor Lisa Duchene lives in Bellefonte, Pa.

 

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