Take the lead in transparency

2/1/2016 - by Jeff Gelski

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Retailers should embrace such claims as organic and antibiotic-free, says Chris DuBois of I.R.I.

CHICAGO — Embracing antibiotic-free, organic and other claims associated with transparency could help supermarkets and other retail outlets further increase profits in the perimeter of their stores, said Chris DuBois, senior principal for Information Resources, Inc., a Chicago-based market research firm.

Chris DuBois, senior principal for Information Resources, Inc.

The Food Marketing Institute, Arlington, Va., recently commissioned I.R.I. to develop a retail report. Mr. DuBois in a Jan. 28 webinar gave details on how the transparency trend is leading sales growth in the store perimeter. He described transparency, which involves sharing information with consumers about where food is grown and how it is made, as being “very early” in its development.

Fresh perimeter U.S. retail sales overall grew 4.5% to $140 billion in the 52 weeks ended Nov. 29, 2015, he said. Within the category, sales of meat without antibiotics grew 23% to reach $2.9 billion. Organic meat sales grew 32% to reach $582 million. Organic produce, with sales growth of 13%, reached $4.5 billion. More sales growth came from deli meat without antibiotics (29%) and deli organic cheese (66%).

Chicken without antibiotics, which accounted for 12% of total chicken sales, contributed 67% of total chicken sales growth for the 52 weeks ended Nov. 29, 2015.

“Are you going to make private label chicken antibiotic-free?” Mr. DuBois asked. “Yes or no?”

Organic produce contributed 30% of total produce sales growth.

Organic produce contributed 30% of total produce sales growth. Price gaps between organic produce and conventional produce are closing, Mr. DuBois said. In 2011, organic baby carrots on average sold for $1.45 per lb. and conventional baby carrots sold for $1.26 per lb. In 2015, the average prices were $1.38 per lb for organic and $1.30 per lb for conventional. Some retailers might consider selling only organic baby carrots and dropping conventional baby carrots, he said.

Mr. DuBois listed several other areas likely to grow in popularity: seafood sustainability, fair wages to field workers, non-bioengineered/non-G.M.O. and animal welfare. Retailer/grower partnerships may become more common. Third-party certification may become more important in animal welfare.

Also, he said consumers perceive local product as having better quality, although it may not, and consumers are interested in traceability. People want to use their phone in the supermarket to find out where the food originated. Apps such as HarvestMark are allowing them to do just that.