Will surplus, low prices, food processor pressures force farmers to change crops, how they grow?
August 15, 2014 | 12:00 PM
The Agriculture Department’s forecasts this week of record crops and low commodity prices plus reports that packaged food sales are flat and that more companies have committed to Oxfam’s sustainability goals are raising the questions of whether farmers will have to change some of their crop choices and practices in order to satisfy their customers and make a profit.
It is too early to ask farmers in this busy harvest season about their future plans, but the pressures were visible this week.
After The Wall Street Journal reported that food companies are using clear wrap on some packages of processed food to make them seem more appealing to consumers, New York University Professor Marion Nestle said in her blog that a report on consumer tastes provided more credible analysis of why traditional packaged foods are not selling so well.
The report, “A Recipe for Packaged Growth In Packaged Goods in 2014,” by The Hartman Group of Seattle said that in 2012 and 2013 “half of the top 14 branded food and beverage companies grew their U.S. retail revenue slower than 1 percent inflation.”
The report’s conclusion: Consumer tastes have changed more than the packaged food industry is willing to admit or address — and companies need to modernize their product lines, including changes to their supply chains, meaning the farmers and others from which they get their ingredients.
Harvey Hartman, the founder of the group, and James Richardson, a Hartman senior vice president for strategy, wrote, that after a three-day food industry conference in Orlando this year they were shocked to find executives focused on macroeconomics and marketing strategies rather than the food itself.
“It’s about the food,” Hartman and Richardson wrote. “The biggest long-term challenge facing the U.S. food industry is that taste preferences are changing.”
“This is most apparent among highly urbane and educated consumers, where the arbitrary boundaries of ‘too sweet’ and ‘too fatty’ are altering in ways inimical to the core food science paradigm of the U.S. food and beverage industry,” they said.
In a damning statement on traditional food suppliers, Hartman added, “The U.S. food industry routinely serves crude flavor profiles associated with the unsophisticated farm cuisine of Middle America: heavy on salt, dairy and animal fat and, in the past half century, sugar … For years, there was growing demand for these flavors in all sorts of foods, primarily because U.S. preferences were not changing.”
“Now they are,” the report continued. “The increasing multiculturalism of the U.S. population plus the globally well-traveled, savvy upper-middle class have created a large population of consumers intentionally seeking complex flavor profiles imported from much more sophisticated food cultures.”
In a statement that could have implications for farmers, Hartman and Richardson said that food company executives should “let go of yesterday’s cash cows” and focus on new products.
“Tapping into evolving food preferences upmarket cannot avoid radical supply chain issues. Some of the biggest hurdles are getting organizations to aggressively pursue economical sources of super-premium ingredients that often drive the growth of new categories (e.g., hummus, non-GMO),” they wrote.
Kellogg has joined General Mills in signing on to Oxfam America’s campaign to cut greenhouse gas emissions in its agricultural supply chain.
In its statement, Kellogg said it will require “key suppliers to measure and publicly disclose their emissions and reduction targets.” General Mills made similar commitments last month.
The Hartman “white paper” and others can be downloaded from the company’s website free, but the company also produces other reports for which there is a charge. A report on the buying habits of millennial consumers is listed at $15,000.
▪ Food Politics — Sales of packaged, processed foods are declining: Three reasons why
▪ The Hartman Group — A Recipe for Growth in Packaged Foods: Breaking Away from Legacy Behaviors
▪ — Food and Beverage White Papers
▪ — Executive Summary: Outlook on the Millennial Consumer 2014
▪ Kellogg Company Climate Policy
▪ General Mills Policy on Climate
▪ Behind the Brands: Food Companies Scorecard
It is too early to ask farmers in this busy harvest season about their future plans, but the pressures were visible this week.
After The Wall Street Journal reported that food companies are using clear wrap on some packages of processed food to make them seem more appealing to consumers, New York University Professor Marion Nestle said in her blog that a report on consumer tastes provided more credible analysis of why traditional packaged foods are not selling so well.
The report, “A Recipe for Packaged Growth In Packaged Goods in 2014,” by The Hartman Group of Seattle said that in 2012 and 2013 “half of the top 14 branded food and beverage companies grew their U.S. retail revenue slower than 1 percent inflation.”
The report’s conclusion: Consumer tastes have changed more than the packaged food industry is willing to admit or address — and companies need to modernize their product lines, including changes to their supply chains, meaning the farmers and others from which they get their ingredients.
Harvey Hartman, the founder of the group, and James Richardson, a Hartman senior vice president for strategy, wrote, that after a three-day food industry conference in Orlando this year they were shocked to find executives focused on macroeconomics and marketing strategies rather than the food itself.
“It’s about the food,” Hartman and Richardson wrote. “The biggest long-term challenge facing the U.S. food industry is that taste preferences are changing.”
“This is most apparent among highly urbane and educated consumers, where the arbitrary boundaries of ‘too sweet’ and ‘too fatty’ are altering in ways inimical to the core food science paradigm of the U.S. food and beverage industry,” they said.
In a damning statement on traditional food suppliers, Hartman added, “The U.S. food industry routinely serves crude flavor profiles associated with the unsophisticated farm cuisine of Middle America: heavy on salt, dairy and animal fat and, in the past half century, sugar … For years, there was growing demand for these flavors in all sorts of foods, primarily because U.S. preferences were not changing.”
“Now they are,” the report continued. “The increasing multiculturalism of the U.S. population plus the globally well-traveled, savvy upper-middle class have created a large population of consumers intentionally seeking complex flavor profiles imported from much more sophisticated food cultures.”
In a statement that could have implications for farmers, Hartman and Richardson said that food company executives should “let go of yesterday’s cash cows” and focus on new products.
“Tapping into evolving food preferences upmarket cannot avoid radical supply chain issues. Some of the biggest hurdles are getting organizations to aggressively pursue economical sources of super-premium ingredients that often drive the growth of new categories (e.g., hummus, non-GMO),” they wrote.
Kellogg has joined General Mills in signing on to Oxfam America’s campaign to cut greenhouse gas emissions in its agricultural supply chain.
In its statement, Kellogg said it will require “key suppliers to measure and publicly disclose their emissions and reduction targets.” General Mills made similar commitments last month.
The Hartman “white paper” and others can be downloaded from the company’s website free, but the company also produces other reports for which there is a charge. A report on the buying habits of millennial consumers is listed at $15,000.
▪ Food Politics — Sales of packaged, processed foods are declining: Three reasons why
▪ The Hartman Group — A Recipe for Growth in Packaged Foods: Breaking Away from Legacy Behaviors
▪ — Food and Beverage White Papers
▪ — Executive Summary: Outlook on the Millennial Consumer 2014
▪ Kellogg Company Climate Policy
▪ General Mills Policy on Climate
▪ Behind the Brands: Food Companies Scorecard
