PerishablePundit 060814

A really fascinating and possibly very important report that was solicited by the U.S. Food and Drug Administration has been received. It is called the Keystone Forum on Away-From-Home Foods: Opportunities for Preventing Weight Gain and Obesity.

What makes the report fascinating is that it is the first one I’ve ever seen that focuses on away-from-home foods. As the FDA explains, this is a very important category:

The impact of away-from-home foods is significant. Americans spend approximately 46 percent of their food budget on food prepared away from home and take in 32 percent of their calories from such foods.

The report looked at the obesity problem, recognized the significance of the category and came up with the following 13 recommendations. I give a little comment under each recommendation:

Recommendation 2.1: Shift the emphasis of marketing. The marketing of lower-calorie and less-calorie-dense foods should increase, accompanied by a reduction in marketing that highlights higher-calorie (or calorie-dense) foods or encourages large portions.

This is basically challenging the industry to find a value proposition appealing to consumers other than portion-size. In other words, right now the way many foodservice establishments sell food is heavily focused on providing consumers with more. The whole SuperSize phenomena is basically a way of telling the consumer that they can get more food at a lower cost per ounce and thus get a “better deal” but, of course, if that deal will make you obese, it is not a “better deal” at all. How can the industry address consumers without this traditional crutch?

Recommendation 2.2: Update marketing standards. Industry, government, health and nutrition experts, consumer representatives, and other stakeholders should work together to review and update standards for marketing away-from-home foods to children.

Politically the battle is brewing on marketing to children. Does it really make sense for McDonalds to tell children that if they want a toy, they better buy a Happy Meal. If the child eats a Fruit and Walnut salad, he can’t get the toy? Why do so many kid’s menus have no healthy options at all?

Recommendation 2.3: Promote low-calorie-dense dietary patterns. Strengthen and/or create education and promotion programs regarding away-from-home foods that promote the consumption of fruits, vegetables, no- and low-fat milk and milk products, whole grains, and foods low in saturated fats and trans-fatty acids, as recommended by the 2005 Dietary Guidelines for Americans.

Here the report recommends looking at programs such as 5 a Day and expanding them dramatically in this space. Same with efforts such as Milk Matters and Powerful Bones, Powerful Girls program, all focused on getting three daily servings of non-fat or low-fat dairy. Something not even on the table in the industry, the plan suggests looking at a national matching fund marketing program for fruits and vegetables. Many industry programs get support at retail because there are dedicated people working on commodity-specific areas. In foodservice, there is nobody who specifically is charged with caring if people eat more fruits and vegetables or more milk. The report is basically saying this lack of implementation of national dietary goals at foodservice needs to be addressed.

Recommendation 2.4: Promote enhanced “lifestyle education” programs. Use a combination of social marketing campaigns and consumer education programs to provide “healthy lifestyle” education to help individuals eat more healthfully in today’s food environment. Existing campaigns and programs could be enhanced or, as necessary, new ones could be created.

Once again, we look at the “more food” value proposition and look for ways to get away from it. But this time, we approach the issue from a societal promotion effort. Can we change the social expectations from simply wanting “more food” to wanting “better quality” food? Can we promote an energy balance concept, where people understand they have to take in calories in sync with what they expend?

Recommendation 2.5: Review the effectiveness of existing programs. The U.S. Department of Health and Human Services (HHS) and the USDA should, in partnership together, coordinate a comprehensive survey and analysis of existing government-sponsored education and social marketing campaigns related to managing weight gain and reducing obesity in the context of away-from-home foods.

This is a kind of a governmental inventory-taking. What is the government doing now? Is it working? What can be done to make it more effective?

Recommendation 2.6: Improve government access to data on consumer behavior and attitudes. Federal agencies should act immediately to increase the access of government researchers and policymakers to syndicated commercial databases. Key agencies should establish recurring line items in their respective budgets, thereby ensuring continual and timely access to the needed commercial data sets.

Inside baseball for the government in terms of gathering better data and better data sharing.

Recommendation 2.7: Ensure public availability of information. A means must be developed for continually improving the publicly available knowledge base regarding consumer interests, attitudes, and behaviors regarding away-from-home foods.

A lot of times, the government gets data under a non-disclosure agreement. This is saying that more effective ways of getting data out to the public needs to be found.

Recommendation 3.1: Promote the wider inclusion in foodservice of less-calorie-dense menu items and calorie-sparing cooking techniques that are widely accepted by consumers and that take into account constraints on operators.

This is really the crux of it. They want the foodservice industry to be conscious of the calories in each meal served. They want the industry to serve smaller portions of less calorie-dense foods. How to achieve this? Well partly it is the marketing shifts and societal education shifts mentioned earlier, which will make it possible, but also the report focuses on the whole supply chain working together toward this area. This includes making sure that evaporated fat-free milk, lower-fat cheeses and precut vegetables are all available in foodservice sizes.

Recommendation 3.2: Foodservice providers should develop and promote portion-size, plate composition, and menu-pairing options that help consumers in their efforts to manage their energy intake.

Here the suggestions are pretty specific:

• Reduce total calories in mixed dishes by combining moderate reductions in calorie density with changes in portion size.

• Retool menu items to provide lower-calorie-dense choices.

• For sandwiches, offer more fruit and/or vegetable options than just lettuce and tomato. For example, offer roasted red peppers, roasted eggplant, cucumbers, etc.

• Provide more options and promote meal bundles with fruits and vegetables (including salads), while maintaining traditional side options as well.

• Offer several portion sizes of each menu item.

• Adopt approaches to support portion-size reduction and/or curtail emphasis on “bigger means better” messages.

Recommendation 3.3: Foodservice providers should develop, make available, and promote beverage options that help consumers to reduce calorie intake

Basically apply the same thought process to beverages.

Recommendation 3.4: Industry and academia should conduct -- collaboratively, if possible -- research on the topics and questions listed in Chapter 3. In addition, a specific scientific survey should be conducted about the experiences of operators and restaurateurs in developing menu items that could aid in weight management.

More research, this time on operator experiences in doing all this.

Recommendation 4.1: Away-from-home food establishments should provide consumers with calorie information in a standard format that is easily accessible and easy to use.

A proposal for providing calorie counts for away-from-home food.

Recommendation 4.2: Research by multiple sectors should be conducted on how consumers use nutrition information for away-from-home foods; how this information affects their calorie intake at that venue; how and why nutrition information affects operators’ decisions, costs, and revenues; and unanticipated consequences.

A suggestion to study the nutrition information issue.

The gist of all this is that with food away from home accounting for a third of all calories consumed, no public health policy designed to address obesity can be successful if it doesn’t address this area.

The report lays an intellectual groundwork for what we can expect to be years of battle to bring the foodservice world into the web of the public health authorities.

It seems that this report is worth reading because the subject won’t go away.

My sense, though, is the report tends to overweigh the willfulness of the industry and underweigh the degree to which the industry responds to consumer preference.

The report acknowledges the issue, and thus the proposals to change societal values. But there is no reason to think such campaigns will be very successful, certainly not in the short or medium run.

So we are left in a dilemma over how to proceed.

But as food away from home grows in importance, the industry will find more and more pressure to be a proactive partner in solving social problems related to food such as obesity.

Get the complete report here.

One area that the Pundit intends to address a great deal in the months ahead is transportation and logistics.

It has always been true that in perishables, the product only has value if you can get it where the customer needs it, when the customer wants it.

My family was once considered the “coconut kings” — why did we want that title? It was a logistics issue.

We used to import a lot of items into the New York metro area. We would have Italian chestnuts and radicchio, Greek figs, French Granny Smith apples, Belgian endive and many other relatively low-volume items.

Since we had customers for all these items all across the country, the challenge was transportation. So whoever could get it to the retailers and wholesalers across the country when they needed it would get the order.

It wasn’t a matter of price; it was a matter of service.

So we would put together complicated truck loads of LTL shipments and snake them across the country.

Where did the coconuts come in? We sold them at break-even because they were big and helped us fill up the trucks. It was our secret weapon so we could always keep the trucks humming.

Of course, the Pundit isn’t the only one concerned about trucking. Bryan Silbermann, President of the Produce Marketing Association, and I engaged in an extensive discussion about the issue here.

The crux of the articles? Well Bryan put it best:

There is a perfect storm brewing now in the transportation sector of the produce and floral industries.

But things are happening. Most notably, the Dispute Resolution Corp. announced that it was providing the same protections for produce carriers as it did for the actual buyers and sellers of produce. Bill Martin, a noted expert on transportation and a Contributing Editor to PRODUCE BUSINESS, analyzed the significance right here.

Of course, there is a lot more to transportation and logistics than trucking. Have you seen the Atlanta Perishables Complex managed by Perishables Group International JV LLC? So often, air transport seems to make sense for perishables but the reality is that the product sits on a tarmac somewhere, breaking the cold chain, and the product is damaged.

This is the kind of facility you need if air transport is ever going to meet its potential for perishable transportation.

As if to provide proof that there is an association for every industry under the sun, into my mail box arrives word that the Tortilla Industry will be holding its 17th Annual Convention and Trade Exposition in Las Vegas, NV, from September 15 to the 17^th.

If you attend, you will acquire the latest knowledge of concerns in the tortilla production world. Things such as:

“The Latest Wrap about Kosher Tortillas”

“What You Need to Know About Allergens in the Production of Tortillas”

“Super Tortillas – New Ingredients/Innovative Products”

It really looks like a first class event with research due to be unveiled and a small trade show along with the conference and networking events.

With the Latino market booming, and products such as tortillas already having crossed over into the mainstream with the popularity of wraps, plus the trend in retail to set up in-store tortilla production lines as a theatre element, this event might be valuable for many who haven’t thought about it. You can get more information right here.

I’ve been digging through the mail all weekend — e-mail, snail mail and voice mail. There is lots of stuff in here. Many are well-wishers sending their best for the new launch. It was a lot of work launching the site, and it is a lot of work trying to do a good job every day, so each kind word means a lot. Thank you.

We also got a sizeable number of really specific critiques. Most involve suggestions of improvements of the actual functionality of the site, some to the organization of the content. I’m flabbergasted at how much time people spent to help us, and I appreciate every minute. Please know that we have teams of thousands (all right, maybe more like three people) working on version 2.0 of the Pundit. We will be unveiling it soon with as many upgrades as possible. So, please, keep those suggestions coming.

Many people also asked what the rules are for attribution of comments. You’ve probably noticed that at the bottom of each article, there is a “What’s your view” button. I hope everyone will send their feedback. There are plenty of people in this business who can contribute a lot. Some of the topics I write about because they are fun or interesting, but most of what is written here raises serious and substantial issues for the trade. Our goal at the Pundit is to help advance the industry, and by contributing your views, you add to the collective wisdom of the trade. So please send in your thoughts.

It is always nice to have comments attributed to the people who make them. It adds context and credibility. So, unless someone requests otherwise, I’ll attribute the comments to the person who made them. But sometimes discretion is required, so I’m happy to withhold your name and company if you prefer. Just mention it in your e-mail.

We’ll be featuring feedback frequently, but we have a very active and attentive readership, so it will sometimes take a few days before I post your comments. And if a lot of people say the same thing, I may just select one to represent the line of thinking.

Appreciate your help and, please, keep those cards and letters (and e-mails) coming.

Pundit’s Mailbag – Imagination Farms

We kicked off last week with an article focused on the rapid growth in the use of cartoon characters to promote produce.

The Pundit received an e-mail from Matthew Caito, CEO and a principal in Imagination Farms, the new non-transactional produce company set up to build the Disney Garden brand in the produce section. He tells me that although I caught the fact that they had signed agreements with Ito Packing and Crunch Pak, they have also signed marketing agreements with Four Star Produce, Progresso Produce and Sunwest Fruit Co.

I first met Matthew when he was a newbe as his dad, Phil Caito, and his uncle, Fred Caito, invited me to address the retail customers of Caito Foods Service. The company is based in Indianapolis, and the meeting was held at Notre Dame.

I met a great group of people, including another uncle, Joseph Caito, and, I remember, coming from a family of produce wholesalers myself, at being so impressed with what they had grown from their father’s work on the market selling bananas.

It was my first business trip to Indiana, my first trip to a wholesaler which had morphed into a massive service wholesaler, my first visit to Notre Dame and a trip I remember fondly. Still have a great clock they sent me as thanks after I got home, and some of the retailers I met that day still call or e-mail when they need information.

In any case Matthew, who dual tasks as marketing director for Caito Foods while launching Imagination Farms, seems to have inherited the entrepreneurial gene. He has partnered up in this deal with Don Goodwin, who is a player in this non-transactional space by virtue of his time at Green Giant Fresh. They have proclaimed their mission of their company to be “increasing the consumption of fresh fruits and vegetables among children” – a worthy goal indeed, and the pundit expresses sincere wishes they should both do well by doing good.

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Pundit’s Mailbag – Characters and Marketing

One of the industry’s veterans in the realm of marketing has both kind words for the launch of the pundit and also doubts about programs that we discussed to apply cartoon characters across a broad range of products.

First, Jim, thank you so much for spreading your abundant common sense on a daily basis. It is most refreshing. As a fellow pundit and sometime curmudgeon, I'd like to comment on cartoon characters and marketing to children. Specifically, an effective brand spokesperson must epitomize the product. Thus Bugs Bunny can sell carrots, Popeye can sell spinach, but Garfield can't sell apples. "Borrowed interest" is never an effective marketing tool.

— Frank McCarthy
Vice President
Albert’s Organics

Frank’s point is persuasive; efforts to extend brand equity beyond core values are always difficult. But, of course, it is difficult to sell products without any brand either. That is, doubtless, why a company such as River Ranch, which has long sold spinach under the Popeye brand, is extending that brand to other items with its Popeye Fresh Line. Clearly it would be preferable if they had a perfect match for each item but they don’t, so one suspects it is easier to sell retailers, and maybe consumers, on a line extension than on a new name or their corporate name.

After all, the biggest player in the industry, Dole, once just meant pineapple, and Hawaiian pineapple at that, to consumers. The last several decades have been spent expanding the meaning of that brand.

A lot depends on the commitment of the company that sells the rights to its characters. If the company just wants to license out the brand and not really care if it succeeds, that brand extension is quite difficult unless the character, as Frank says, is already closely aligned in the mind of the target audience with that product.

It is hard to know how anyone will act when the chips are down. Although Disney has officially denied it, supposedly, though, this is part of a strategic shift by Disney. It pulled out of its longtime alliance with McDonald’s and wants to ally itself with healthy eating choices for children. If this is true:

Key Questions For Disney:

Will Disney actually use its characters and resources to promote healthy eating? The Junior Pundits, three and four years old, are big fans of The Mickey Mouse Clubhouse. Putting a sticker on a package of an unrelated character is, to Frank’s point, not the strongest marketing tool. But if Disney will have the characters take a daily fresh fruit break on TV, well that will much more powerfully influence children.

What about on the website? Same thing with the theme parks. Shouldn’t The Land Pavilion be tied in with the program? How about changing the name of the farm you ride the little boat through to “Disney Garden”? If my children could see a connection between what we did at Epcot and what we propose to eat, that would add emotive power to the offer. In other words, is Disney, as a corporation, really committed to the idea of boosting children’s consumption of fresh produce? Or is this just a way to make a few shekels.

Which brings to the forefront a question: Why charge a licensing fee? Getting Disney’s various characters on healthy, fresh foods all over the world is a major plus for Disney – think of it as millions in free advertising. Why reduce the scope of the program and its likelihood of success by demanding money?

Why shouldn’t Disney pay Imagination Farms to build out the network and give them the mandate to get the widest possible distribution? The produce industry is too small and the margins on commodity products too tight to return any significant amount of money to Disney. But think about what it would be worth to Disney to affiliate itself with good health for kids and helping Mom feed kids right by holding a press conference announcing that Disney, as part of its efforts to help parents make sure their kids eat healthy food, was going to make its characters available without license fee to encourage children to want to eat them. I think the value of that stand-up attitude would far exceed any amount of license fee Disney will ever get for its brand in produce.

Is Disney ready for a disaster? This is a perishable food. One day there will be pictures taken of its logos and characters against pictures of rotten, moldy product on national television. One day someone may even die, as food safety or food security precautions break down. Disney needs to show an understanding and commitment to what they are dealing with.

Years ago on The Mickey Mouse Club, Jiminy Cricket was highlighted in a series called “I’m no Fool”, and it taught children lessons such as how to ride a bicycle safely. My kids watch the series on DVD today and still love it. Disney should make the point that it is aware of these possibilities and create a new set of short programs to teach children about healthy eating and proper care and handling of food. A lot of people suspect that companies such as Disney will have no stomach for a problem in an area so peripheral to what they do and so will cut and run at the first scare.

Of course, Disney isn’t the only one that has to make a commitment to getting children to eat healthy. The real problem with all these character schemes and produce is that most stores only sell one line of an item. This is profoundly different than in, say, the cereal aisle. In cereal, the large number of brands carried can be used to segment the market. So, even if everyone is buying corn flakes, we can have Mickey corn flakes for little kids, Disney Princess corn flakes for a little older girls, Power Ranger corn flakes for slightly older boys… on and on up to Lawrence Welk corn flakes for his fans.

The problem with cartoons is that if we sell plums with Goofy on them, even if they do encourage sale to parents with young children, how do we know what they will do regarding sales to other demographics? Do 14-year-old boys want to go to school with a Minnie Mouse banana in their lunch?

I can’t help but think that for cartoon marketing to really work, we need to test out a separate kids section. In other words, sell both a primary display of plums and a secondary display of plums stickered for kids along with other kid-friendly items. This might be a way to seeing an increase in sales due to stickering. Would the additional sales justify the space – I don’t know.

Which brings me to my personal pet peeve: Only in perishable food is it acceptable to do large-scale product launches without doing any research. There is no doubt in my mind, right now, that there are significant advantages to a shipper who doesn’t have a consumer brand in creating an alliance with one of the cartoon programs. The big advantage is that in hope of getting a 2% boost in sales of any item, the supermarket turns over 100% of the business in that item. So this is a big win for shippers.

But we, as an industry, need to know if this actually boosts sales and consumption, and what is the best way to get that boost? We need not only studies of store purchasing but also studies tracking families at home after they purchase these items to see if consumption rises. And they have to go on for months because we have to make sure the novelty effect doesn’t influence results.

As part of Disney’s commitment, they should put some of their marketing brains into these tests. They could partner with Kroger, with whom they have a separate deal, but Disney also has very close relations with Wal-Mart, through whom much-licensed toys, sheets, party goods and whatnot get sold, and Wal-Mart could use a little good publicity. Bet they would cooperate on this research project designed to evaluate how to best market fresh produce to children. Bet, working with Disney, they would be willing to release the research report to the whole world just to be in the vanguard of this effort to sell healthy food to children.

Then we could have some real data about what works for selling healthy fresh produce to children and getting them to consume it. That would be a truly magical day.

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