Transformative Food Trends
Time has come for row-crop producers to monitor retail habits
For decades, a gap in understanding has separated row-crop farmers from most U.S. consumers. Buyers haven’t much noticed the journey grain takes from field to elevator. They didn’t ask questions about the grain’s transition into feed for cattle. They simply wanted a good hamburger.
Until, that is, millennials changed everything. For many members of this generation, it isn’t just the food that matters. It’s all of the decisions that happen from planting to plate, including water management, nutrient application and carbon emissions.
Food companies have noticed, and the resulting changes promise to reverberate through the supply chain and into every corner of rural America.
“It’s something farmers should keep their eyes on and evaluate the economic opportunity,” says Matt Kleinschmit, managing director of consumer and shopper practice at Maru/Matchbox. The international market research firm’s clients include retailers and manufacturers of food and farm equipment. “We’re definitely seeing a trend that suggests this is not something that’s going away. That younger interest is filtering up into older generations. There is greater awareness and interest in consumers to understand what it is they’re eating.”
Another study by market research firm Nielsen, projecting what the marketplace will look like in 2030, puts it this way: “Sustainability will move from buzzword to table stakes.”
Economic forces are driving the move toward sustainability. A February study by Kleinschmit’s team finds two out of every three millennials, a generation with more than 80 million U.S. residents of working age, is willing to pay more for sustainably sourced food. So are 56% of people ages 35 to 49 and 36% age 50 and older.
The trend is notable because it is spreading worldwide. In nations where a larger middle class is emerging for the first time, it is even more pronounced than in the U.S.
“The trend for purpose-led purchasing is greater among consumers in emerging economies than in developed markets,” says Stefani Millie Grant, senior manager of state external affairs and sustainability at Unilever, whose food brands include Ben and Jerry’s, Hellmann’s and Lipton. “While 53% of shoppers in the U.K. and 78% in the U.S. say they feel better when they buy products that are sustainably produced, that number rises to 88% in India and 85% in both Brazil and Turkey.”
In a similar vein, consumers, particularly younger ones, say they are willing to pay for features they expect. According to the Maru/Matchbox report, U.S. millennials say they will pay more for food that is organic (68%), locally sourced (65%), natural (63%), antibiotic-free (59%) and grass-fed (59%).
The financial opportunity is clear, but agreeing on what sustainability means and how to share that story with consumers remains complicated. To bridge the gap among producers, food companies and consumers, nonprofits such as Washington, D.C.-based Field to Market have formed to develop industry standards for adopting and scaling sustainable agricultural practices. Members include commodity groups such as the National Corn Growers Association, food companies such as Unilever and environmental groups such as The Nature Conservancy. Farmers can use its online Fieldprint Calculator to input field data on soil conservation and other indicators, then benchmark themselves against other producers.
“This tool enables farmers to translate management practices into language that the supply chain is asking about, largely because of questions consumers are asking them,” explains Betsy Hickman, vice president of stakeholder engagement and implementation with Field to Market. “Where are they outperforming their peers? How do they share that and shout it from the rooftops?”
Field to Market is part of a small but influential field of organizations dedicated to advancing sustainability along the agricultural supply chain. They include The Sustainability Consortium, with offices in Tempe, Ariz., and Fayetteville, Ark.; and Land O’Lakes Sustain in Arden Hills, Minn.
“I don’t think that sustainability is going to go away, especially when consumers conflate the health components of sustainability with the resource consumption components,” explains Amanda Raster, research associate and agricultural specialist with The Sustainability Consortium, which provides retailers with tools they need to access sustainability information from their suppliers. “For a consumer, it becomes one and the same. We’ve seen increased demand for better food in general, food that’s not only healthier, but food that’s also healthy for the planet.”
Food manufacturers are responding with investments in prospective new crops that address these kinds of consumer interests. General Mills has announced a $500,000 contribution for research into Kernza, a perennial organic grain for cereals and snacks.
Field to Market aims to take sustainability benchmarking to farmers. It seeks to expand its portfolio of sustainably managed land to 50 million acres by 2020.
As farmers manage margins, partnerships with supply chain stakeholders will help unlock profitability. In return, producers will need to adopt agronomic practices that conform to industry standards and to push aside the curtain of secrecy some consumers think separates them from farmers. Just as soil, water and air work together to produce a crop, farmers and food companies will need to collaborate to meet consumers’ food needs sustainably.
Young Buyers Seek Niche Food, Creating Opportunities for Startups
Small Manufacturers Step Up
One sign younger buyers are reshaping the food marketplace: Smaller companies command nearly half of all category growth among U.S. food and beverage manufacturers, according to Nielsen. A whopping 20,000
companies below the 100 largest drove $17 billion in annual sales in 2015 at an annual growth rate of 6% compared with the top 25 largest manufacturers, which contributed $35 billion in sales with no annual growth.
Big manufacturers are getting involved, too. General Mills bought organic food brand Annie’s Homegrown in 2014, while The Hershey Company bought all-natural Krave Jerky in 2015. “This idea of getting back to locally sourced ingredients that have the perception of being more natural and less processed, and also having a certain degree of exclusivity to them, is quite unique among the younger generation,” explains Matt Kleinschmit, managing director of consumer and shopper practice at Maru/Matchbox, a market research firm.