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Party platters
As we continue the journey in 2021, we will be challenged by COVID-19 and uncertainty with sales forecasts and how consumers will react. By listening to consumers and customers we will find solutions and continue to produce food and beverage for the marketplace.
As difficult as 2020 was for many people, one positive was that the consumer’s perception of the value of food has changed. When people experienced stores with no product and read stories about employees in the food industry going to work in a pandemic, many paused to think about food. I would guess many had taken it for granted in the past.
As a person who has worked in this industry for many years it has always been a frustration for me that consumers placed more value in a phone or clothes, than they did for food. Food is essential to life and we have been more focused on de-valuing it than getting the right price. My message is not to arbitrarily increase prices but to get the right price.
There are a few reasons for the value of food changing.
First, for many producers and processors the cost of producing food and beverage has increased. Input costs are rising, packaging costs are increasing and there are examples everywhere illustrating that processing costs are increasing. Efficiencies are not there in production due to physical distancing and other limitations from the pandemic. Some companies have had to increase pay to maintain their workforce. As we look forward to the 2021 growing season there will be increased labour costs in Canada.
Second, supply and demand are a determining factor in produce as much as any other department. With limited supplies and higher demand, it is natural in our economy for prices to increase. Production and packing facilities cannot produce as much and consumers have shifted from food service to retail so there are increased sales across the store. In one virtual Nielsen presentation, the presenter stated: “it’s close to Christmas sales every week.”
We also see disruptions in supply from around the world. We know many countries are struggling with the pandemic. Lead times are usually longer on imported product so the holes on the shelf might not be right away but they are showing up.
Third, consumers are thinking about food. The empty shelves and stories of people risking their own health to produce food have had an impact. It is impossible to quantify this but the awareness around food has changed. Consumers want to know and they need the reassurance the our food supply system will be there for them.
Given these changes producers and processors do have an opportunity.
You have an opportunity to ensure you understand your cost of goods and achieve a fair price for your product. Customers and consumers want your products so make sure you know your numbers and negotiate a fair price. This is not a license to just take an increase or charge too much. Use the facts and stay close to market pricing. You can also check Statistics Canada for inflation and the Dalhousie Food Analytics Lab for their forecasts. These can be helpful tools to ensure you are close to the market.
Given an increased focus on what we are doing in the food industry it is also the time to improve relationships with customers and consumers. Share your story and the benefits of your products. People are more interested now in how local food is produced than they were this time last year. Grow your online community and enhance the consumer’s relationship with your brand. Now is the time to have conversations with retailers about your plans. Make sure you are on the same page for volume and share your proactive initiatives to ensure delivery of your products. This is not bragging -- it is building relationships.
There will be challenges in 2021, as there were in 2020. The successful producers and processors will focus on the opportunities and benefit from an improved perception of the value of food from consumers and customers.
WHAT’S IN STORE
We are seeing more products catering to groups of people getting together at home as gathering sizes and visits to restaurants are limited. These were holiday items where we would expect to see some different shopping habits.
This is also a chance to put different items together and change the price point at the same time.
Note that retailers are bundling fruit or vegetable boxes for both in-store and on-line purchasing. Grocery Gateway, for instance, has a winter fruit box designed for four people that contains the following: one bunch of fairtrade bananas, one 454 gram package of strawberries, one 236 gram package of blueberries, one bag of red seedless grapes, one three pound bag of L’il Gala apples, one bag of Longo’s clementines, one bag of avocadoes. Price: $30.
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