Rutger’s Professor Ramu Govindasamy To Speak Out At The New York Produce Show And Conference … Research On Asian And Hispanic Produce Marketing On The East Coast Identifies A Profitable Opportunity
Jim Prevor’s Perishable Pundit, October 15, 2010
With the trade’s newest event, The New York Produce Show and Conference, coming up in November, we’ve written a number of pieces:
New Event Planned For 2010: Eastern Produce Council And PRODUCE BUSINESS Announce The New York Produce Show And Conference
New York Metro’s Economy Is 12th Largest In The World
Retail “Thought Leaders” Panel Announced For The New York Produce Show And Conference
Famed Food Writer Joan Nathan To Speak At New York Produce Show And Conference
A New Hypothesis On Local:
To Boost Sales, Sell It Through Supermarkets… Cornell’s Miguel Gomez Previews His Upcoming Talk At The New York Produce Show And Conference
One of the goals of the event is to uncover the great diversity of work done in the region and about the region. A great part of this work is done at the region’s many fine universities. We already discussed Miguel Gomez and some of the work he is doing at Cornell. We also learned of some intriguing research being done at Rutgers focused on the marketing of Asian and Hispanic produce on the East Coast.
We asked Pundit investigator and special projects editor Mira Slott to find out more:
Q. Could you provide a preview of the research you will be discussing at The New York Produce Show and Conference this November? What insights have you discovered about marketing ethnic produce to consumers on the East Coast?
A: Basically, this is a project funded by USDA, and we are on our third one now. The first one started about seven years back. The focus of that one was demographics and marketing of Asian produce to Asians in the Mid-Atlantic States. The second one broadened to include both Hispanic and Asian produce. The geographic focus was the East Coast and included Washington D.C. and 16 states bordering the East Coast.
That research is what I’m going to speak about at the show. We’ve completed that project, and recently received funding for a third research study focused on leafy greens and herbs for Hispanics and Asians. We had a substantial team of collaborators on the project:
Venkata S. Puduri
James E. Simon
Q: Did you assess all subgroups within the Hispanic and Asian populations or narrow your research to particular segments? I would imagine there could be dramatic differences within each… What were the parameters?
A: The top two subgroups within the Asian and Hispanic populations we chose for the study were Chinese and Asian Indian, and Puerto Rican and Mexican.
Q: What sparked the project?
A: These segments have grown dramatically in the past 20 years and the trend is expected to continue. If you look at Hispanic and Asian populations in the U.S., we’ve seen a 50 percent to 60 percent rise between 1990 and 2000.
Q: And since that time?
A: The most recent figures show 100 percent growth from 2000 to present. It used to be African Americans second to Caucasians in population size, now Hispanics have taken the number two spot.
We wanted to examine how this phenomenon impacted demand for ethnic vegetables and the opportunities to grow these vegetables in the U.S. This is a very niche market for the small farms. These demands are highly regionalized and specialized because of very concentrated local populations, and handled by small and medium-size farms.
Q: With the increase in ethnic populations, is there an opening for larger farms?
A: The big farms are doing high-volume, mainstream and don’t often cater to these specialized pockets because the production demands for these more unique produce items are relatively insignificant.
Q: How are you defining small to medium farms?
A: In the marketplace, there are many definitions. The USDA has a definition based on income, and some assessments are based on size of the farm.
Location is a key for ethnic produce; the way it works is that most farmers do sell direct to consumers depending on the location. If you know Newark or Jersey City, New Jersey, for example, the farmers’ market is a good outlet for small to medium growers.
In the study, we surveyed consumers in 16 states along the East Coast, Maine through Florida, plus Washington D.C. Our focus was Hispanics, specifically Mexicans and Puerto Ricans, and in the Asian population, Chinese and Asian Indians. We looked at buying behaviors of sample populations in those states, product demand issues, traveling and spending habits, whether born in the U.S. or immigrant, etc., compiling a myriad of interesting figures.
Q: Could you highlight some? [Editor’s note: you can read a copy of the full report: Demographics and the Marketing of Asian and Hispanic Produce in the Eastern Coastal U.S.A. here]
A: We looked at how much these different groups were spending on ethnic produce.
Q: How do you define ethnic produce?
A: It’s not simple. Essentially, it’s produce not available in the mainstream market, which is sold in specialty stores or ethnic stores, but you won’t generally find in the mainstream grocery store. Our study found the average Chinese consumer spending $32 per month per person on ethnic produce, versus $27 for Asian Indians; while for Mexicans $22 per person, and for Puerto Ricans, $23 per person.
Based on the populations in those states, and how many buy these ethnic produce items, we extrapolated those numbers to estimate the size of the ethnic produce market.
Giving a range, the Chinese were between $245 million and $295 million, Asian Indians between $190 and $230 million, Mexicans, between $280 and $362 million, and Puerto Ricans between $531 and $655 million.
Q: How did you come up with these numbers?
A: We asked respondents in a survey to fill out how much they spent in the previous year on average per family per household per month, and we divided that by how many in the family for a per person estimate.
In terms of household size, the majority have between two and four family members. Seventy percent of Chinese respondents had two to four members in their households, 65 percent for Asian Indians had between two and four members, 62 percent for Mexicans, and 61 percent for Puerto Ricans
Hispanics in general have a larger household size than Asians. We were surprised Mexicans had such a large household size. To be precise, 30 percent of Mexican households had between 5 and 7 members.
Q: Did you consider how many respondents were born in the U.S., or how long the respondent lived in the U.S., or whether they were a recent immigrant? Wouldn’t that affect the type and amount of ethnic produce they would purchase?
A: Yes, if the U.S. was their country of birth or they lived here longer, they may be used to mainstream. In our study, only 11 percent of the Chinese respondents were born in the U.S. and for Asian Indians, only 10 percent were born in the U.S., versus Mexicans where 55 percent were naturally born U.S. citizens, and Puerto Ricans, 69 percent.
We also categorized respondents by age. Although there is some variation on purchasing based on a respondent’s country of origin, the number of ethnic products consumed is still a huge number, given the size of the population of Mexicans and Puerto Ricans. Growers of ethnic produce could definitely make a difference in filling supply gaps and meeting these increasing demands.
Q: When analyzing potential areas of growth, did you look at particular crops? What crops have growth potential?
A: We started with 50 or 60 crops. We had a big team working on this, narrowing the scope down to 10 to 12 crops on the survey for each ethnicity, then learning how much they buy of those items and in what expenditures. Then we ranked the top five or six.
For the Chinese, the top items were Baby Pak Choy, Oriental Eggplant, Smooth Luffa (a type of gourd), and Napa Cabbage, a very popular vegetable.
Asian Indians preferred Bottle Gourd, eggplant, different types, including Raavayya, Bharta, Ridged Gourd, and Fenugreek Leaves.
Mexican respondents’ top purchases included Chile Jalapenos, Tomatilos, Calabaza Squash, Chile and Poblano.
The leading ethnic produce items for Puerto Ricans were Aji Dulce, Batala, Calabaza, and Cilantro.
These are major items in demand by these ethnic populations.
Q: What other insight did you glean from respondents? Were there any notable surprises?
A: We asked for their opinions in certain areas. For example, the majority of respondents want to buy produce grown on local farms. They also want to buy organically grown, but it’s really hard to find organic ethnic vegetables. We’re not there yet.
The majority said they were less willing to buy GMOs. In the case of genetically modified food, 40 percent of the Chinese are less willing to buy it, versus 62 percent of Puerto Ricans, 56 percent of Mexicans and 47 percent of Asian Indians.
Here is the percentage break down by ethnic group for those more willing to buy local: Chinese 64 percent, Asian Indians 54 percent, Mexicans 79 percent and Puerto Ricans 76 percent. This is good for small and medium-size farms because many go direct to consumers.
Regarding recently introduced or new products, there is a quite a variation on that as well: For Asian Indians, 34 percent are more willing to try a recently introduced product, versus 61 percent of Chinese, 57 percent of Mexicans, and 50 percent of Puerto Ricans.
If you look at the Asian Indian respondents, the majority are immigrants.
Q: How did this study compare to your earlier study. We’re the results markedly different?
A: The outputs were very similar on the two studies, but the first one only focused on Asians and was done on a smaller scale, with fewer states involved. The sample size in the second study is much bigger and more reliable.
The latest study on leafy greens and herbs, for which we received the funding last fall, is well underway. We just finished with the survey, and are meeting to review the results.
Q: Do you ask respondents questions related to food safety?
A: Just on quality, but not on food safety, which would be interesting to include in further studies…
We did ask how often they shop, the average number of trips per month to ethnic markets, and we learned that the frequency for Chinese is 5.8 times, or more than once a week. They go many times but spend less per visit. The average per month is 3.7 times for Asian Indians, 4 times for Mexicans and 3.6 times for Puerto Ricans.
Q: How accessible are these ethnic markets and are there opportunities for retailers looking to break into these niches?
A: In the last 10 years, the ethnic produce markets in the New York and New Jersey areas have multiplied. So, many of these specialty retailers have popped up in the area to meet the growing demands. As of right now, the business is really focused on independent ethnic stores.
Mainstream supermarkets like ShopRite are trying to expand into this area. Consumers are used to buying ethnic produce in ethnic stores. The supply chain is different. Mainstream retailers are not moving the product; it’s sitting on the shelves too long. They may have one or two SKUs, high priced and not turning, so the quality is not good.
The way they source the products is completely different for mainstream and ethnic stores. Even if a large chain is selling ethnic produce, it goes to a main distribution center, versus for an ethnic store, where it’s done by the brokers and goes directly to the store and it’s less expensive.
The mainstream supermarkets have tried, but it takes a while for something to become a mainstream product from an ethnic market, like Cilantro. Many ethnic products are still sold only in the ethnic produce markets.
We had asked about the distance that respondents travel to buy this ethnic produce. The majority traveled 10 to 20 miles to buy. Compared to the mainstream, it is far. They’re lucky to find some of these products and are willing to go further to get what they want.
Is there more availability? Basically it comes down to where ethnic populations are concentrated. I live in South Brunswick, New Jersey, and the Asian Indian population here has grown by leaps and bounds. Now ethnic retail outlets in South Brunswick have popped up in the last two or three years to accommodate demand.
Apna Bazar is popular. It has captured that audience, and weekends are very crowded. I’m sure it is selling a lot of produce and non-produce items as well. As ethnic populations continue to grow, new opportunities for supplying ethnic produce will abound.
This research is really fascinating because it conflates two separate issues — how to market effectively to certain ethnic minorities and how to market effectively certain produce items that have traditionally been associated with certain ethnic minorities.
The goal of the research was really to help producers. A great deal of the work at land grant universities in the eastern US is focused on identifying market opportunities for small and mid-size producers. Typically, California producers have big cost and marketing advantages because of their scale and their ability to produce virtually year-round, but they have heavy freight. The question is: Can the east coast researchers identify market opportunities where eastern growers can make a living because their costs of production and distribution give them a market window when western production and shipping to the East Coast is factored in?
In the East Coast, where you have big concentrations of ethnic groups — New York, for example has over a million people of Puerto Rican descent and almost a half-a-million people of Chinese descent — you have the opportunity for ethnically specific markets to spring up. We discussed this in a piece in Pundit sister publication PRODUCE BUSINESS, titled, Independent’s Carry On The American Dream.
When we convene at The New York Produce Show And Conference and attend this micro-session, we will be interested to hear what quantification Professor Govindasamy can offer regarding the degree to which these products are sold direct to consumer. As we discussed in exchange with one of his collaborators, Richard VanVranken, which you can read here, the overall percentage of produce sold to consumers is quite low. With the many obstacles immigrants face — language, income, etc. — it would be interesting if they find the time to go buy direct.
We are also interested in the notion that, whereas supermarket chains ship through distribution centers, ethnic-specific markets work with brokers and ship direct to store. We are sure that happens, but as someone who imported many a trailer of items such as Calabaza, our experience was it typically went through wholesalers, which we would see as comparable in cost to a distribution center.
We would also like to see generation-by-generation iterations on consumption and venue of purchase. As ethnic populations move onto the second and third generations, they not only acquire a taste for diverse foods and so eat less of their traditional items but, also, these generations tend to move out to the suburbs and, although there may be an occasional trip back to Chinatown and, today, people can order things on the Internet, they tend to buy what is available in their local stores.
Of course, that changes with the population as well. It has been often repeated that salsa now outsells ketchup, and bagels outsell doughnuts. This is because the non-ethnic-specific population gained exposure to these items.
When ShopRite sells an item because it knows it has demand from an ethnic group, it also is displaying it, and thus marketing it, before plenty of Anglos. Already a look at the list of Asian and Hispanic produce featured in this study includes items edging into the mainstream: Items like Bok Choy, Napa and Chili peppers aren’t so unusual.
We suspect there is a seasonal market for locally growing these items and taking advantage of lower freight than shipping from the west coast. We also suspect, since many of these items are delicious, that there is plenty of opportunity for mainstream retailers to take them seriously and merchandise them, market them, promote them to both an ethnic clientele and the mainstream population.
We look forward to learning more at The New York Produce Show And Conference.
You can find the website for the show here.
And you can register right here.