Redefining Your Marketing Methods
We haven’t heard much about the 1% issue lately, but have you ever heard of the 4 percenters? Give or take a half a point or so, that’s the number that keeps coming up the more I look into popular niches of the produce industry.
Folks love to tout the phenomenal growth of their particular segments of the produce business — CSAs, local, organic, direct-to-whomever sales all seem to be growing so fast that they must be taking over the industry, right? Double-digit annual increases are interpreted as some amazing pent-up consumer demand. Why then do these same groups lament when “big industrial ag” jumps into their niche?
For the many farmers taking advantage of these sales outlets, direct marketing may be their most significant or only option, but is that growth really indicating a sudden shift or boom in consumer demand? Statistics thrown around during National Farmers’ Market Week (Aug. 5-11) showed a 9.6% increase in listings on USDA’s National Farmers’ Market Directory. There are now more than 7,850 community farmers’ markets operating in the U.S.
Hype Not Supported
But work at USDA’s Economic Research Service (ERS) doesn’t exactly support the hype. Description of the U.S. fresh produce market channels published in 2003 showed that while the value of farmer-to-consumer direct marketing sales nearly doubled between 1987 and 1997, as a percentage of the total sales, it actually dropped by a tenth of a percent.
Has recent growth in farmers markets over the past decade reversed that trend? Dr. Roberta Cook from the University of California-Davis updated those figures with 2010 data, indicating that direct market sales of fresh produce continued to grow ($1.8 billion) but also continued to drop as a percentage of overall sales ($122.2 billion) to consumers.
Just to keep that in perspective, the Food Marketing Institute’s Supermarket Facts website (www.fmi.org/research-resources/supermarket-facts) indicates there are 36,569 retail grocery stores grossing more than $2 million annually. Coupling those with all the mom and pop stores, convenience stores, and other specialized outlets, researchers at ERS (www.ers.usda.gov/topics/food-markets-prices/retailing-wholesaling/retail-trends.aspx) in another report tallied 210,000 traditional food stores in 2009.
Those specialty stores, including produce outlets and other single commodity retailers, account for just 4% of the total number of stores. I suspect a loose definition of “farmers’ market,” a little duplication, and continued listing of a few operations that are no longer in business may account for some inflation in the total, but if there are really more than 7,800 community farmers’ markets today, they’re probably another 4% of the retail market that hasn’t been accounted for in the Census data used for the ERS report. Either way, that is still a small niche in the grand scheme of the fresh produce industry.
By its very nature, specialty crop farming means creating and catering to a small niche. If the big guys are checking out these supposedly lucrative market opportunities, what do you do to remain competitive?
It may be time to recreate/redefine or change your niche. Direct marketers fear their home-spun, down-on-the-farm country atmosphere is being copied in every supermarket produce department. When challenged to keep attracting consumers to the farm, experiential activities — agritourism, pick-your-own, CSAs, festivals — or a unique service, be it home-delivery, Internet sales, or outstanding customer relations at the market, are the ways to redefine and stand out in your niche. Get creative.