Steve Lutz talks produce demand, changes ahead
Steve Lutz, senior vice president of insights and innovation for Category Partners, spoke with The Packer’s retail editor Ashley Nickle about the recent increases in fresh produce demand due to the coronavirus crisis and how that demand could change in the coming weeks and months.
Panic-buying across the country, prompted by government closures of schools and non-essential businesses, resulted in huge sales increases for many fruits and vegetables the week ending March 15 and the week ending March 22, according to IRI. Potatoes and onions saw some of the largest gains.
Even as the stock-up phenomenon subsides, people are buying more food than usual because they are cooking more meals at home and have their kids at home for all three meals per day. Activity on social media platforms shows that they are looking for practical tips on how to use it.
“The consumer response to Pinterest, where consumers are posting recipes and picking up recipes, it’s off the charts,” Lutz said. “Obviously, consumers, they’ve got more time on their hands, they’ve got more time to prep, they’ve obviously got a pantry full of food ... Consumers are definitely going to be looking for way to utilize the food they’ve purchased, at least based on the statistics we’re seeing from organizations like Pinterest.”
It remains to be seen what the new normal baseline for produce sales will be. While people eating more meals at home and having to cook for their whole families all the time will likely push the baseline up, there is another factor Lutz expects will play a significant role in purchase behavior: the overall economy.
He noted that the business disruption of efforts to limit the spread of COVID-19 will likely reduce the budgets and thus the weekly grocery spend for many people. Constance Hunter, chief economist at KPMG, told The Wall Street Journal she projects 20 million jobs will be lost.
“That economic impact has not yet settled into what we call our new normal ... That has yet to be reckoned with,” Lutz said. “We know by looking back at previous recessions how consumers respond when they’re economically stressed, and I think we have to anticipate that in the weeks ahead you’re going to see consumers be forced to make more difficult decisions relative to the products that they’ve put in their basket, and so you could expect to see the items that are specialty, the items that are considered to be more luxury, start to be hit as consumers are forced to retrench as a response to the economic conditions that they will face.”
Sales data for more recent weeks will give the industry a better understanding of the overall direction, but the roller-coaster ride is likely to continue.
“What we saw over the last two or three weeks is one thing,” Lutz said. “I think it’s going to change a lot over the next three or four weeks as the pantry-loading subsides and we get into now how do we deal with the impact of recessionary-type purchase behavior. I don’t think we’re at a point yet where we really understand what does it look like going forward.”