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Leveraging the Local


There was a time when production and marketing mavens at every rung of the food and beverage industry wrote off the “shop and eat local” movements as passing fads, fuelled by next-wave hippies toting hemp shopping bags to the weekly farmers’ market.

But these days, “small” and “local” have become what multinational agrifinancing giant calls a “permanent and mainstream trend” that has “changed the competitive landscape” of the food industry.

From farmers to gardeners and shopkeepers to chefs, entrepreneurs have been maneuvering to cash in on the “locavore” movement, which the USDA defines loosely as buying “food produced near its point of consumption.” This geographic component to “local” foods — the acceptable distance from farm to table — can vary wildly, from produce grown within the same county according to the rules of some stickler farmers’ markets, to fare from up to 400 miles away, which is the federally defined upward boundary for marketing a food as either local or regional, according to the USDA’s 2010 report “Local Food Systems: Concepts, Impacts and Issues.”

In the direct-to-consumer arena, there are now nearly 8,000 farmers’ markets in the United States, with growth of nearly 350 percent between 1994 and 2012, including a 9.6 percent jump between 2011 and 2012 alone, according to a 2012 USDA marketing study.

Consumers are willing to pay more for local foods, studies show, because they perceive them to be fresher and better-tasting, and because these purchases are seen as supporting the regional economy.

Yet less than 1 percent of all U.S. food is sold directly from farmer to consumer, notes the USDA. Fortunately, the many sentiments driving the farmstand trend, such as the desire for connection with the origins of fresh and nutritious foods that are grown and transported safely and sustainably, represent valid and likely points of market entry for mid- to large-sized retailers and producers with national distribution chains that want to leverage local.

Beyond geography, the local cachet of a product extends to its “provenance,” a term that the USDA uses to encompass elements like the personality of the farmer, his or her growing or animal husbandry methods, and even intangibles like the beauty of the farm. These things help make up “the story behind the food,” as detailed in “Local Food Systems.”

That’s a concept Austin, Texas-based Whole Foods Market has understood since its inception. Farmers’ photos and stories have long been incorporated into the artistry that is the Whole Foods produce department, and the upscale chain now has an interactive map on its website, from which customers can get the origin story of their arugula or asparagus, for example.
But local has grown beyond niche, thanks to consumers’, manufacturers’ and retailers’ recognition of its benefits. Bentonville, Arkansas-based grocery giant Stores Inc, which had food sales of $150 billion in the last fiscal year and is the nation’s largest seller of fruits and vegetables, according to , committed to doubling its purchases of local produce by Dec 2015.

Fresh fruits and vegetables are still a relatively small part of our diets, with about 70 percent of the food in Americans’ shopping carts having been processed in some way, according to Marketplace.org. Less than ideal arability of local soils, availability of water, and other climatic factors can sometimes make local sites impractical for farming. National manufacturers have invested considerably in efficient infrastructure and transportation systems as well, and the notion of setting up regionalised plants is neither practical nor desirable.

Nevertheless, retailers and producers can learn from the local food movement and leverage it. Consumers seek out local produce because of its social and environmental good, in addition to great taste and quality. Likewise, with today’s available technologies and contemporary packaging formats, processed and packaged foods can deliver on fresh flavors, maintain ingredient quality and preserve food nutrients. National manufacturers can also fulfill consumers’ appreciation for the social and environmental benefits that local brings.

About the Author
Suley Muratoglu is VP for marketing and product management at Vernon Hills, Illinois-based Tetra Pak.