With so much emphasis placed on the concept of increasing consumption with industry wide programs, it is important to remember that consumption cannot be increased in general unless it is increased for specific items.
For the last quarter century, the big growth in the produce categories came from two areas, the growth of counter-seasonal imports and the development of fresh-cut produce, especially bagged salads.
Most items are now available year-round so the counter-seasonal trade is not likely to grow any faster than the produce department as a whole. On the other hand fresh-cut, with the opportunity to innovate with packaging and product to meet consumer needs, holds out the promise of future growth.
Yet the promise is not being realized. The core of this category — bagged salads — has been flat or down since the spinach crisis of 2006. If we don’t find a way to make this category hot again with consumers, it will make plans to increase overall produce consumption very difficult to achieve.
Dole is, of course, the largest marketer of fresh produce, but in bagged salads it is number two — and by a substantial margin. Yet, as Avis taught us, sometimes #2 “tries harder” and we received word that Dole was setting its sights on jumpstarting growth in the packaged salad category by innovating to meet consumer needs.
When we learned that a focus of this effort was to address a Pundit Peeve, the tendency of bagged salads to “explode” while being pulled open or to require scissors to open, we were intrigued and asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
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Ronda Reed Marketing Director Dole Fresh Vegetables Salinas, CA |
Q: Tell us about your new easy-open packaging, its evolution and how it fits into your overall marketing strategies.
A: Basically what we’ve been doing over the past year and half is a tremendous amount of research through our strong new technology and marketing team, keenly studying the category and consumers, delving into their lifestyles, learning what frustrates and delights them to jumpstart the category.
We did a lot of packaging research as well. The biggest complaint voiced by half of bagged salad customers surveyed was frustration at not being able to open the bag.
Q: Do you have a copy of the report we could share with our readers? How many people were surveyed, who did you target, what was the methodology, etc.?
A: We don’t want to publish the internal research report. Market pools were conducted in June 2008. It was a quantitative study involving 1,196 people, over 18. We focused on the primary grocery shopper, and participants had to have used pre-washed packaged green salads from the produce section of grocery stores.
Half of the people found frequent problems when opening the package, and it happened again and again, making it very bothersome. When looking at the users, there is a tremendous percentage of heavy users. When heavy users are frustrated again and again, it presents a serous problem with the category.
Q: In addressing logistical problems with opening the bag, how did you resolve the technological challenges associated with maintaining product freshness? Does the new packaging impact lettuce quality and shelf life?
A: We’ve worked with our suppliers over the past year to implement the change. This is a complex technology issue because of the breathability factor and scientific characteristics of the film. Our team finally made a breakthrough to develop a new pinch-and-pull technology that allows one to easily and effortlessly open the bag. It doesn’t impact shelf life at all.
Q: How complicated is it to change over to the new bag? Is it a similar manufacturing process?
A: It took a lot of retooling in our factories to run the new line because it is a different type of bag. It has involved a large investment in equipment changes and process overall.
Q: From what you describe, it sounds like the project is well beyond the pilot stages. Has Dole made the commitment to a full-scale launch? How many different products in the bagged salad category will house the new packaging? When will the first products hit retail shelves, and do you have a scheduled roll-out plan?
A: We’re now rolling the technology across all our lines in the packaged salad category, covering four plants!
Q: Wow. Could you provide some numbers for perspective? How many varieties, what is the scope of your production?
A: We have about 45 different types of bagged salad products. Right now they’re going to be rolled out starting on the blends and kits. We’re still working on our classic iceberg-based salads, which have a different film and therefore additional challenges to overcome.
Q: Do you envision this technological advancement could transform a mature category or at least drive a substantial lift in category sales?
A: It’s a big problem when people can’t open the packages. We followed consumers in their homes to observe them interacting with products and building salads. Watching them try to open the bag, some would pull and pull and then explode it sending lettuce flying everywhere. People would open the film with their teeth, while others became aggravated as they searched for a pair of scissors. Clearly this exercise identified a window of opportunity.
Q: Has the bagged salad category become staid? If so, what factors have come into play? Did you glean any answers through your consumer research?
A: The category has been declining very slightly over the past four years, which is not good. Consumers say they are eating more packaged salads by far — 55 percent of consumers think they are eating more bagged salads, 37 percent about the same, and 7 percent less often. That is coming from our September 2008 consumer attitudes and usage study, focusing on added-value products. It was conducted by a specialized independent research company.
Consumers only fantasize that they’re eating a lot more salads in line with the trends toward nutrition and health. However, if you look at IRI trends, excluding Wal-Mart and the Clubs, the bagged salad category was down 4 percent in 2006, flat in 2007, down 3 percent in 2008, and down 3 percent year-to-date. Someone needs to step in and turn this category around, and this is one of many initiatives at Dole to do that. We are definitely well aware of the trends in this category.
Q: How does this packaging invention fit within Dole Fresh Vegetables’ strategic goals; and in a broader sense, owner David Murdoch’s health and nutrition initiatives and company vision?
A: About a year ago, we brought in a whole new management team; many with ConAgra Foods backgrounds and a welcomed consumer-centric mindset. The team is skilled in discovering what consumers really want. This has been lacking for quite some time; the category has been treated as a commodity for too long. We are trying to change our whole positioning to the consumer, almost like a re-launch of our brand. It’s beyond a salad-packaging change.
Dole overall promotes Mr. Murdoch’s vision. We are definitely listening to what he has to say and constantly working on ways to satisfy his vision. He wants people to eat healthy, and everything we do reflects this goal. This means we must really connect with our consumers again and become a more meaningful partner in their lives.
Q: In this quest, how will you market and merchandise the new packaging? What types of customers are you targeting? Are you primarily looking to invigorate the disheartened heavy-user base, generate new bagged salad-eaters, develop a few niches… what is the strategy?
A: Our marketing efforts stem from taking a good look at consumers and segmentation studies. In this way we’ve identified the group we’re going to be targeting the pinch-and-pull, easy-open concept. This group tends to be very creative and enjoys the interactive experience of building an imaginative salad by adding a variety of ingredients.
They come home at night, pour a glass of wine and are ready to play with the salad category. The one thing they don’t want to be is frustrated at the start of this process. Marketing efforts coming out later in the year focus on helping consumers to play and create and have fun with this category.
Q: It’s interesting that you describe the bagged salad consumer as a gourmand. I imagine true food connoisseurs as shying away from the prepackaged bags in favor of picking their own bunches of fresh misted greens. I thought bagged salads catered more to harried mothers relishing in the convenience, or younger generations that never learned how to cook!
A: It depends on the segment. We find bagged salad customers are very sophisticated on what they do, pretty much almost gourmet. They do appreciate the convenience, but what drives them are the blends they can’t easily put together by themselves. They don’t want to have to buy seven different lettuces. They view the lettuces as a base to start their creativity, rather than spend time buying all the lettuce varieties. They find the creative aspect more about the things they can add to the salad, like the crumbled blue cheese — the visual, the smell and the taste of it is the big deal.
Q: So there’s excellent cross-merchandising potential in this scenario…
A: Yes. Our marketing strategy can also boost the rest of the produce department. When people buy a salad, they purchase mushrooms, carrots, croutons, dressing, etc. If we can stimulate people to increase frequency and tap into this creative drive, it will boost produce sales throughout the department. Increasing produce consumption also helps Mr. Murdoch’s vision come to life.
Q: It’s nice that you’re injecting new life into the category. Could the economic downturn be impacting value-added items such as bagged salads? The industry certainly has taken its punches in the food safety arena, exemplified most acutely by the spinach E. coli crisis, yet the category does seems to rebound after an outbreak subsides. Have you considered these issues when developing your direction?
A: In 2006, food safety issues took a devastating toll on the industry, but now in research people don’t bring that up anymore, probably because there are so many food safety issues across so many categories. Consumers seem to focus on the most recent, whether it’s peanut butter or pistachios.
As far as the economic decline, a lot of categories are down as people pull back. They are forced to make choices. Some things are just very important to consumers, and even when economic troubles arise, they will continue to buy certain items.
Q: Does that apply to Dole’s creative bagged salad customers?
A: People we are focused on are very committed to this category. It’s not a penetration problem; percentage of households buying is not the issue. It’s the frequency with which they’re buying. People generally know when they open the bag they need to use it in the next few days. We are looking at ways to extend shelf life. At the same time, we must increase frequency of use.
Sixty percent of volume comes from people who buy the category every two weeks or more frequently. We have a huge number of heavy users; that is why only 23 percent of the people buy 60 percent of the salads, according to IRI Panel Data. When you have a hardcore consumer group, you want to alleviate the major problem they have with your product. Just as they’re getting ready to start a wonderful experience creating a salad after they’ve had a hard day, they can’t get the stupid bag open!
Q: When can your hardcore customers begin to get relief?!
A: It’s a new complex technology and the process has taken a lot of resources. The first couple of varieties will be coming out in July, and we’ll start rolling out the rest of the line from there. We’ll have everything out by third quarter of this year.
Q: You and the new management team certainly have ambitious goals, but this sounds like an exciting time at Dole… Could you share your perspective on the changes that are taking place?
A: I’ve been at the company 14 years, having spent time in all of the divisions. I started my career with packaged foods, did some foodservice work for a few years, then moved into the fresh fruit division and now I’m in fresh vegetables. It’s a fun time to be at Dole right now. I know everyone in the different divisions, and we are pulling everyone together to share in the same vision, bringing Mr. Murdoch’s vision to life. I don’t know of another company more positioned to help consumers make better choices and eat right while making it fun and tasty. We want to step up and help consumers. People don’t want to be preached to.
Communication at Dole is all about health, but that isn’t our overall message to consumers.
The new management team came in with vast expertise in different food categories. They have taken their knowledge and applied it to produce with new eyes. They jumped in and challenged people to think differently. They brought fresh perspective into operations, research and development, logistics, and helped all the functions to work in tandem. I was brought in permanently after consulting with this division for a year. We’ve built marketing from two people to 35 and initiated extensive consumer research to learn what we can do to stimulate produce consumption.
Q: Will you be extrapolating this packaging concept to other product categories? What other projects do you have in the pipeline that could pique our readers’ interest?
A: It’s too early to discuss other projects underway, but I can assure you this packaging innovation is just the start of many exciting things to come.
If the industry is going to succeed in creating products and shopping experiences that delight consumers, our producers and retailers will have to be focused on consumers, so it’s a positive thing for the industry to see that its largest company is focused on gaining insight into consumer behavior and attitudes and then utilizing this information for product development.
Of course, no amount of research is the same as having a product out on sale, so doubtless the industry — including retailers and Dole’s competitors on packaged salads — will wait anxiously to see precisely how consumers respond to this “pinch and pull” technology. Wouldn’t it be great though if Dole has identified a real barrier to consumer satisfaction, and making bags easier to open leads to the first real growth in the category in almost half a decade?
We were drawn to a few key points Ronda Reed made in her interview:
“Consumers say they are eating more packaged salads by far — 55 percent of consumers think they are eating more bagged salads, 37 percent about the same, and 7 percent less often. That is coming from our September 2008 consumer attitudes and usage study, focusing on added-value products. It was conducted by a specialized independent research company.
Consumers only fantasize that they’re eating a lot more salads in line with the trends toward nutrition and health. However, if you look at IRI trends, excluding Wal-Mart and the Clubs, the bagged salad category was down 4 percent in 2006, flat in 2007, down 3 percent in 2008, and down 3 percent year-to-date. Someone needs to step in and turn this category around, and this is one of many initiatives at Dole to do that.”
Note the disconnect between what consumers say and what they do! It shows that consumer research really needs to be tied to real life activity in sales and consumption. Reports of what consumers say are often useful not in and of themselves but because they lead us to ask this important question: “Why would consumers say that, since it is not true?”
“…the category has been treated as a commodity for too long. We are trying to change our whole positioning to the consumer, almost like a re-launch of our brand. It’s beyond a salad-packaging change.”
There was a moment, at the dawn of fresh-cut age, in which it looked liked bagged salads would be the produce industry’s portal out of the commodity trap. It didn’t happen, partly because innovations in the category were so quickly copied. And that is to some extent the question raised by this innovation. We suspect the research is correct and that consumers will prefer the easy-open bag. So Dole will have an advantage. But for how long?
Of course, from an industry perspective if a consumer-friendly innovation is copied it can lead to greater consumer satisfaction and higher sales, so it is an overall industry win. Yet if we are to have continuing innovation, which is what we really need, companies have to be able to profit from their investments in research and development. Commodity pricing just isn’t sufficient to fund either the marketing or the R & D we need to really grow this business. So we wish Dole luck in trying to break out of the commodity trap.
The key to breaking out of this commodity trap is always to look closer at the consumer:
“Our marketing efforts stem from taking a good look at consumers and segmentation studies. In this way we’ve identified the group we’re going to be targeting the pinch-and-pull, easy-open concept. This group tends to be very creative and enjoys the interactive experience of building an imaginative salad by adding a variety of ingredients.
They come home at night, pour a glass of wine and are ready to play with the salad category. The one thing they don’t want to be is frustrated at the start of this process. Marketing efforts coming out later in the year focus on helping consumers to play and create and have fun with this category.
Q: It’s interesting that you describe the bagged salad consumer as a gourmand. I imagine true food connoisseurs as shying away from the prepackaged bags in favor of picking their own bunches of fresh misted greens. I thought bagged salads catered more to harried mothers relishing in the convenience, or younger generations that never learned how to cook!
A: It depends on the segment. We find bagged salad customers are very sophisticated on what they do, pretty much almost gourmet. They do appreciate the convenience, but what drives them are the blends they can’t easily put together by themselves. They don’t want to have to buy seven different lettuces. They view the lettuces as a base to start their creativity, rather than spend time buying all the lettuce varieties. They find the creative aspect more about the things they can add to the salad, like the crumbled blue cheese — the visual, the smell and the taste of it is the big deal.”
Dole is sharing with the industry a different vision of the bagged salad customer. The image of the harried housewife throwing together dinner or the time-pressed office worker keeping a bag in the office for a quick lunch is being superseded by a more sophisticated consumer. It is not so much doing it for the consumer as enabling the consumer to do something special for him or herself. How many retailers are really marketing bagged salads to this consumer?
“Our marketing strategy can also boost the rest of the produce department. When people buy a salad, they purchase mushrooms, carrots, croutons, dressing, etc. If we can stimulate people to increase frequency and tap into this creative drive, it will boost produce sales throughout the department.”
You bet. As we’ve done a better job with fresh-cut cases, we have also isolated fresh-cuts from the bulk produce. One of the insights of this research is that it is not a war between bagged salads and bulk items. Our challenge is to cross market and find ways to make consumers reach for the celery and the cucumbers and the bell peppers and the mandarins — jarred or fresh — plus to intelligently market blue cheese crumbles, dressings and what not.
“It’s not a penetration problem; percentage of households buying is not the issue, it’s the frequency in which they’re buying. People generally know when they open the bag they need to use it in the next few days. We are looking at ways to extend shelf life. At the same time, we must increase frequency of use.
Sixty percent of volume comes from people who buy the category every two weeks or more frequently. We have a huge number of heavy users; that is why only 23 percent of the people buy 60 percent of the salads, according to IRI Panel Data. When you have a hardcore consumer group, you want to alleviate the major problem they have with your product. Just as they’re getting ready to start a wonderful experience creating a salad after they’ve had a hard day, they can’t get the stupid bag open!”
We applaud Dole for this consumer-centric approach. These types of questions — are we trying to increase penetration or frequency? — are the core of all efforts to develop and market products. Yet the questions are all too often neglected by produce marketers.
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We don’t often write about individual new products, but the revival of growth in the bagged salad category is vital to the health of the industry. Dole’s new packaging is not available yet, but we got a hold of a prototype and made a shortvideo so you could see the concept. This prototype is a little harder to open than the final bag will be, but you can see how the “pinch and pull” system works. Take a look here:
We thank Ronda Reed and Dole for sharing not only their new product but the thinking and research that went into the launch. By electing not to hoard this information, Dole has made a real contribution to the development of a consumer-centric produce culture.
