What Others Are Saying: 'Central Valley Business Times': California's Farmers' Markets Are Booming on 'Buy Local' Trend

From: Central Valley Business Times

SACRAMENTO
May 27, 2008

Farmers markets in California are increasing in popularity. Coordinators say there has been a big jump in consumer numbers in the last 18 months, as more people decide to buy food locally.

“We’re seeing an influx of new consumers coming to our markets. Even in May, we’re doing mid-August numbers in terms of customers,” says Dan Best, coordinator of the certified farmers markets of Sacramento. “I think it’s largely because of the ‘buy local’ concept. It used to be organic. Now, local trumps organic.”

In addition, more people would like to know who grows the food they eat, and they want it as fresh as it can be, Mr. Best says.

Farmers like the markets as it provides them the cash flow to keep their businesses operating.

“It’s kind of a rough way to try to sell your crop but yet it’s cash money and it’s right now, there’s no waiting for it. So a lot of growers have found it’s a good way to make their farm viable,” says Mr. Best.

The problem now is finding new locations with space for new markets.

For more information about California's Certified Farmers' Markets click here.

Upcoming New Markets Special Report: Raley's Increasing 'Local Foods' Efforts in Sacramento and Northern California Market Regions

Sacramento, California-based family-owned regional supermarket retailing powerhouse Raley's is expanding it's already aggressive local foods merchandising and marketing programs in a number of ways, clearly visible in its stores and in it's multi-media advertising.

Among the increased local foods merchandising and marketing efforts the 129 store regional supermarket chain is making include:

>Labeling all foods grown or produced within a few hundred miles from its Sacramento, California base with eye-catching "locally-grown" and "locally-produced" shelf signs. This includes fresh produce, meats, perishables and dry grocery items, including natural, organic and specialty foods offerings.

>Labeling foods grown and produced in California, but farther than a few hundred miles away from its Sacramento base, with "Grown in California" shelf signage.

>Increasing the number of exclusive deals it signs with local farmers, buying the local growers' entire fresh produce crops, and touting the locally-grown fresh fruits and vegetables by building massive displays in store produce departments, running large front page ads for the local items in the retailer's weekly newspaper advertising circular, and often running full-page color ads in the major daily newspapers in the grocer's market regions featuring such local produce such as corn on the cob, strawberries, melons and other fruits and vegetables grown by local farmers.

Raley's contracts for the entire crop of a given grower (which can be expensive), which are grown by top-quality farmers, because locally-grown produce is now so popular in California that it gives the retailer a major competitive advantage to do so. It touts not only the local aspect of the fresh produce items, but the exclusivity to Raley's as well.

>Working closer with local natural, organic and specialty foods' producers and vendors by authorizing their local food and grocery products in the stores, promoting the local items more extensively, and partnering with the local producers at special events like community food fairs and charitable events designed to increase awareness and sales of locally-grown and produced food products.

>Creating more "local foods" in-store displays and cross merchandising the local items both by meal complementary merchandising techniques and by local region.

>Offering locally-grown fresh produce at reasonable prices rather than doing what some food retailers do and selling them for a premium.

>Conducting more frequent in-store local foods sampling events, often having numerous local foods producers, including farmers, do the tastings in the stores at the same time.

Raley's, which is the food and grocery sales market share leader in the Sacramento region market, and has stores under the Raley's, Bel-Air Markets, Nob Hill Foods and Food Source banners elsewhere in Central and San Joaquin Valley, north of Sacramento, in the San Francisco Bay Area and in Nevada, has long positioned itself--and is--as the local grocer, even though the chain has grown to 129 stores and nearly $4 billion in annual sales.

Along with its extensive--and increased--local foods merchandising and marketing commitment, the supermarket chain has a charitable foundation that gives millions of dollars to charities in Sacramento and the other Northern California regions where it operates stores.

In addition to the foundation, the corporation itself donates millions of dollars in cash and in-kind food donations to non-profit groups, charitable organizations and food banks and pantries throughout Northern California and Nevada.

The grocer also has a program in which customers can select a card in either $5, $10, or $20 amounts at each checkout lane as a way to make a donation to local food banks. Shoppers select the card while waiting to get checked out, give it to the store clerk as she rings up their purchases, the clerk scans the card, and the amount goes into a special account, 100% of which is donated to programs to feed the hungry. Raley's matches a portion of the total funds donated by customers each year.

Raley's also funded Sacramento's fairly new state-of-the-art baseball stadium for the city's super-popular Sacramento Rivercats minor league baseball team. The baseball stadium, called Raley Field, is packed every night during the season with families who as far as they are concerned believe the local minor league team is every bit as enjoyable to watch as a major league baseball team is.

Raley's runs all sorts of promotions in conjunction with the team and stadium. The grocer also gives out hundreds of tickets during the season to lower income families and children. To say the River Cats are a hot ticket is the understatement of baseball season. They draw more fans on many nights than a lot of major league baseball teams in parts of the U.S. do.

Raley's was a first-mover in California and national food retailing in terms of getting into local foods merchandising and marketing in a serious and major way. The added efforts and programs started by the grocer a few months ago and increasing even more recently are positioning the chain as one of the foremost local foods food retailers in the U.S.

It's paying dividends for the supermarket chain as well; that's why Raley's continues to add more elements and aspects to its local foods program.

Others like Safeway Stores, Inc. Whole Foods Market, and numerous regional chains, multi-store independents, single-store independent grocers and natural foods retailers also are into local foods merchandising in a big way in California.

In fact, those few food retailers who aren't "going local" are really at a big disadvantage, as most grocers and California market observers will tell you the local foods movement is growing much faster than the organic foods movement is in the Golden State.

In part that's because the organic foods movement is more mature, and still is growing considerably. But that's really only a small part of the equation. the major reasons the "buy local" is growing faster than the organic consumer movement right now in California is because it hits on so many hot buttons important to the state's consumers. These include freshness of product, price, environmental concerns, food safety concerns, desire to support local agriculture, and many more.

Raley's own research identified this growing movement some time ago, and that along with the best indicator, sales of locally-grown and produced food products in the grocers stores, is encouraging the family-owned supermarket chain to grow its local foods merchandising and marketing programs even more.

Feature & Analysis: Tesco is Launching A Major 'Local Foods' Program in the United Kingdom; Why Not Do the Same At Fresh & Easy USA?

Tesco, the world's number three retailer and the number one food and grocery sales market share leader in its home country of the United Kingdom with about 32% of the nation's total retail food sales, is launching what appears to be the biggest local foods sourcing and merchandising program in the UK.

Last year, Tesco opened five new local foods' regional buying and marketing offices in the UK cities of York, Leicester, Plymouth, Peterborough and Horsham, making it the first supermarket chain in the UK to develop such an extensive regionally-based structure designed to procure and market locally-based food and grocery products.

Each of the five local offices has a buyer and marketing person who's jobs are to find and procure high-quality, locally-produced products to sell in Tesco's UK stores.

As part of its local foods procurement and marketing program, Tesco also has started holding "Meet the Farmer" local foods events in its UK supermarkets.

Since Tesco launched the program, called "Local Sourcing", last year, the retailer says it's five regional UK offices have thus far launched over 1,00 new, local food and grocery product lines in its stores, bringing the total number of locally-produced products the retailers sells currently to about 3,000. Tesco also says it's added 90 new local suppliers to its vendor list.

Tesco UK also has an executive in charge of the local sourcing program, Emily Shamma. Ms. Shamma says UK consumers want to buy quality local food and to support local producers by doing so.

Tesco customers also want to buy more local foods to cut down on food miles and the resulting carbon emissions, Shamma says.

Further, UK consumers see locally-produced foods as having overall superior quality to food products imported from elsewhere, as well as liking the idea they can know more about how the local products are produced (because the goods are local) compared to imported food and grocery products.

Tesco plans to further grow its local foods' sourcing and marketing program, according to Ms. Shamma. She says the retailer's goal is to sell more locally-produced food and grocery product lines than any other UK food retailer.

To further this aim, Tesco also has set up a fund designed to help small, local farmers expand their businesses. This is similar to what U.S.-based natural foods' retailer Whole Foods Market, Inc. is doing for small farmers in the United States as a way to promote small-scale agriculture and local food production.

Tesco has put ~1 million-p ($1.95 billion U.S.) in the fund to use to help give local farmers and producers a leg up in expanding their operations.

The British retailer also has created a local technical team in each of the five regional offices. The team offers and provides free help to the local producers in the areas of manufacturing, packaging, quality assurance and marketing. part of the reason for creating these dedicated technical teams is so Tesco can make sure the local producers have the means available to meet the retailer's overall product quality control standards for the goods it sells in its UK stores.

Samma also says Tesco doesn't just want to make local foods available in its stores to wealthy consumers. Rather, the goal is to make local fresh produce for example more affordable so that it's available for UK consumers of all income levels, she says.

Tesco's current goal is to sell ~400 million-p ($780 million U.S.) worth of locally-produced food and grocery products in its stores this year, with a longer-term goal of selling ~1 billion-p ($1.95 billion U.S.) worth of the locally-produced bounty by 2011.

Tesco PLC had gross sales internationally of about $84 billion U.S. in 2007.

The locally-produced products Tesco has introduced in its stores just since last year when it opened the five new regional buying offices range from fresh produce like Yorkshire cucumbers and locally-raised fresh meat, pork and poultry products, to locally-produced ice cream and beer. The local foods initiative is across all store product categories, from fresh and frozen, to refrigerated and shelf-stable.

Tesco's main competitors in the UK--Wal-Mart-owned Asda, Sainsbury's, Morrisons, Waitrose, the Co-op and a couple others--also are to various degrees involved in local foods sourcing and marketing programs. Besides Tesco, probably Waitrose and Sainsbury's, followed by the Co-op, are the second, third and fourth most aggressive in local foods procurement and selling in their respective stores in the UK.

None of these competitors however has created as aggressive and as comprehensive local foods program as Tesco has with its five fully-staffed regional offices. And perhaps they don't need to. There are many ways to procure and sell locally-produced foods in their stores.

However, based on the fact Tesco has added 1,000 new locally-produced products in its stores, and 90 new local vendors to its roster in less than a year, it seems the regional buying office concept complete with the in-house technical teams is working well for the retailer--and for the local farmers and food producers who thus far have been able to get their goods into Tesco's UK supermarkets, which exist in nearly every city and town in the nation.

Tesco's Fresh & Easy USA and local foods

As regular Fresh & Easy Buzz readers are aware, we've argued regularly that one of the weaknesses--both from merchandising and sales aspects--of Tesco's current 61 small-format, convenience-oriented grocery stores in the Western U.S., is that the stores are not localized in terms of their features on a community and neighborhood basis and in their product mixes.

For example, we've suggested that on top of the basic Fresh & Easy store format, the grocery chain add some custom features based on where the store is located.

For example, some Southwestern-oriented and Latin-oriented flair for the Arizona stores as well as custom features in the Southern California stores to reflect the history, culture and demographics of the different regions and communities the stores are located in, rather than taking a cookie-cutter store design approach, which currently is the case.

We've also suggested strongly the Fresh & Easy stores need to sell more locally-produced food and grocery products--foods from California in the Southern California stores, more foods produced in Arizona in those stores.

There are thousands of fresh and shelf-stable locally-produced products available in both states that aren't currently for sale in the Fresh & Easy stores.

We aren't suggesting Tesco bring in thousands of these local products--the Fresh & Easy stores are limited assortment grocery stores after all. Rather, the retailer just needs to add a solid variety of locally-produced food and grocery items throughout store categories--from fresh produce, meats and dairy, to dry grocery, on top of its core fresh & easy store brand and limited number of national brands product mix.

The stores already have some locally-produced products, especially in the fresh produce category by virtue of the fact much fresh market produce is grown in the west. However, the selection is minimal and spotty, especially outside the produce category.

If Fresh & Easy Neighborhood Market begins a localization program like we suggest--and like Tesco is doing in the UK--it will find itself creating stronger bonds--and more business--with the consumers in its market regions.

All of the reasons given by Tesco's UK local foods sourcing chief Emily Shamma as to why the retailer is going big with local foods sourcing and marketing in the UK exist equally among U.S. consumers, especially in the Western U.S. where Tesco has its Fresh & Easy grocery stores.

California, Arizona and to a lessor degree Nevada are top U.S. farming states. Further, California's Central Valley is the world's number one agricultural producing region. Residents in these three states love locally-produced foods, and will even purchase them at a slight premium over foods from other parts of the U.S.

California also is the home of the local foods movement and has many food retailers like Whole Foods Market, Raley's, Safeway Stores, Bristol Farms, Gelson's and numerous others who are focusing extensively on procuring and selling locally-produced foods in their stores.

Both California and Arizona also are top specialty, natural and organic food and grocery product producing states in the U.S. Local producers in these two states produce everything from scores of types and varieties of fresh produce and locally-raised beef, poultry and pork, to nuts, milk, cheese, wine, breads, oils, shelf-staple grocery products of every kind and more.

Tesco could have an absolute field day procuring and selling locally-produced foods in California and Arizona for its Fresh & Easy grocery stores. And, it wouldn't take all that much too succeed at it if done right.

A careful and thoughtful addition of a few locally-produced food and grocery products in every category of products in the Fresh & Easy stores would have the overall effect of making a big difference in terms of achieving that "localization" formula we discussed earlier. The category-wide local foods product mix needs to be selected carefully however.

Doing so also builds consumer loyalty. As Tesco's local foods guru Emily Shamma said about UK consumers wanting to buy locally-produced foods and support local farmers, so too do U.S. consumers want to do--and are doing--the same thing. This is particularly true among Western USA consumers in California, Nevada and Arizona, who count numerous local farmers and local food producers among their family members, friends, relatives and business associates.

Local foods procuring and advertising "locally-grown" on the menu also is big with mid-range to higher-end restaurants in the Western USA. These restaurants, especially the higher-end ones, are major food trend setters, and their local foods' initiatives have made buying and eating local even stronger among consumers in the region.

U.S. consumers also want to buy local foods for environmental, as well as for product quality and local farmer-producer-support reasons. And they're doing so. That's why local farmers' markets are so popular in the U.S., especially in the Western U.S. These local fresh fruit and vegetable farmers' markets, which also sell all sorts of other local food and grocery products, have grown by 50% in number and customer counts in just the last decade.

In California, a state with nearly 40 million people, nearly every city and small town has a farmers' market which starts in early spring and runs into the fall. Most big and medium cities even have farmers' markets that operate year-round. Further, most larger cities in the Western US have at least two or three--and often more--farmers markets, many of which operate every day of the week.

Americans also are buying local foods in significant numbers at grocery stores, as evidenced by the fast-growing trend among numerous supermarket chains, independent grocers and natural foods' retailers to stock as much of the locally-produced products as they can in their stores.

Many of these food retailers have created "local foods" shelf signs, which they put on every locally-produced product sold in their stores. These grocers also label all the local foods' items in their weekly advertising circulars with bright-colored flags which identify the advertised item as "Local."

Many of the supermarket chains, such as Whole Foods, Safeway, Raley's and others also are partnering with local farmers and local food producers directly, guaranteeing them the retailer will buy the farmers' entire crop of say sweet corn or melons in return for the exclusive marketing and selling of the local crop or products.

If you pay attention to weekly supermarket advertising circulars like we do, you'll notice in just the last year how many more chains and independents have started advertising and promoting locally-produced products every week, as well as how such major food retailers like Safeway Stores, Whole Foods Market and even mid-range chains have increased the number of local items they promote each and every week in their ads as well as in-store.

Local is big. In the Western USA, its rapidly becoming as big as organic.

The opportunity certainly exists for Tesco's Fresh & Easy Neighborhood market USA to launch a local foods initiative. After all, its stores are located in the heart of America's local foods-producing region, the Western USA. The Western U.S. also arguably is home to the most "local foods loyal" consumers in America.

Additionally, Fresh & Easy has the infrastructure and commitment to local foods' procurement and marketing from parent company Tesco's UK local initiative. All Fresh & Easy needs is a few American-bred, experienced local foods procurement and marketing experts to manage the program.

Going local is even going to be more imperative for Fresh & Easy next year when it enters the Northern and Central California markets of Bakersfield, Sacramento and the San Francisco Bay Area with about 43 or so stores, which will start opening in early 2009. Central and Northern California consumers are even more fiercely local foods-oriented than their Southern California, Nevada and Arizona neighbors.

Additionally, the economies of Central and Northern California are still heavily-based on agriculture, including small, local farmers and food producers.

Further, the "foodie" culture, especially in the 7-million resident-strong San Francisco Bay Area is increasingly demanding quality, locally-produced foods, and even in today's bad economic times a high percentage of Bay Area consumers are willing to pay a premium for foods produced locally in the region. Of course, these shoppers would love--and buy even more of--affordable local foods.

We believe an affordable local foods initiative done well, just like an affordable organic foods program executed well, could go a long way towards creating a strong identity and better positioning for Tesco's Fresh & Easy Neighborhood Market USA's small-format grocery stores and the Fresh & Easy brand in general.

There currently isn't a major food retailer of note in California, Arizona and Nevada offering organic and local foods at truly affordable retail prices, except Trader Joe's to a certain extent in the organic space, on a regular basis.

We believe based on our analysis if Tesco's Fresh & Easy could accomplish those two goals--creating and sustaining solid affordable organic foods and local foods' marketing and merchandising programs--the grocery chain would be helped greatly in its goal to succeed in the highly competitive Western U.S. retail food and grocery market.

F&E Buzz Reader and Food and Beverage Industry Entrepreneur Offers Her Suggestions to Tesco's Fresh & Easy About 'Sense of Place' and 'Localism'

Editor's Note: Beverage industry entrepreneur and former consumer packaged goods marketer Lucy Leahy has been reading Fresh & Easy Buzz and focusing particularly on our analysis and prescriptive suggestions that Tesco's Fresh & Easy grocery stores are lacking a "sense of place" and need to "localize" the store's themselves and their product mixes far more to the communities and neighborhoods the grocery markets are located in.

Armed with a Harvard MBA, a number of years' experience as a consumer packaged goods marketer and, perhaps most important of all being a new mother, Ms. Leahy in 2007 founded Glow Mama, a low-calorie, vitamin and nutrient-packed healthy beverage for pregnant woman, which is endorsed by the American Pregnancy Association.

Lucy Leahy grew up on a small Kiwi Fruit orchard in New Zealand and now lives in Oakland, California, where her beverage company is based. As such, her life seems to suggest she knows a little about importing concepts from home--the idea to use Kiwi's in the Glow Mama drinks for example--but keeping things local--which her marketing efforts for the beverages clearly are. (we aren't saying the Kiwi's come from New Zealand by the way, but rather the concept does.)

Read Fresh & Easy Buzz reader and food and beverage industry entrepreneur Lucy Leahy's suggestions to Tesco and its Fresh & Easy management group regarding what she thinks might make the stores more popular and thus more successful below:

Dear Fresh and Easy,
I can empathize with your startup struggles here with your new stores and wish you all the best success – sounds like you’re listening to lots of good business, PR and marketing advice on how to turn things around. One thing that would give your stores more of a “sense of place” would be supporting local small vendors more and linking your customers meals back to their neighboring farms, growers and business people. Take a lesson from Gordon Ramsey’s book and try and teach Americans to care where their food comes from and to take interest in the new blossoming categories of nutrition and wellness. If you make a point of supporting your local vendors (as opposed to being “arrogant” as reported recently), you’ll find the vendors much more proactive in helping you reach your communities and neighborhoods and your customers more willing to venture in and support your local green grocer format.

Thanks,
Yours sincerely,
Lucy Leahy – CEO and founder
Glow Beverages
The new startup lifestyle beverage company
http://www.drinktoglow.com/

Editor's Note II: As far as we know, Lucy Leahy isn't related to Tesco CEO Sir Terry Leahy. However, since U.S.Vice President Dick Cheney's wife Lynne recently announced she discovered (through a geneological search she had done) Democratic candidate for President Barack Obama and her husband the VP are distant cousins, (which has become part of Obama's stump speech humor) one never knows :)

Tesco's 1,000 Mile 'Local' Scottish Chickens

Why did the chicken cross the road? To get into the truck for its 1,000-mile round trip of course.

Retail giant Tesco, parent company of Fresh & Easy Neighborhood Market in the USA and the UK's largest supermarket chain, is coming under fire from environmentalists and shoppers today in the United Kingdom (UK) for labeling chickens sold in it's stores as "local" despite the fact the birds' actually have taken a 1,000-mile round trip to be slaughtered, packaged and then transported to the grocer's stores in Scotland.

The thrust of the matter regarding the "local" labeled but well-traveled birds is that the grocery retailer is currently selling chickens in its Scotland stores that have been raised at a chicken farm in North-East Scotland, then sent 499 miles to Essex to be processed, before then being shipped back to the Scotland stores to be sold. Perhaps Tesco should change the label to "locally raised for now?

But, that seems to be the crux of the problem. According to the UK industry trade publication Meat Trades Journal, the chickens killed at the Grampian Country Foods slaughterhouse in Perthshire, Scotland (local so far) are being shipped (at least until today perhaps) to Witham in South-East Essex (499 miles away) for packaging because the regular packaging plant in Banff, Abberdeenshire (which is close to Perthshire) shut down last year. So much for outsourcing locally and then not finding another local packaging plant right away.

UK environmental groups such as Sustain, the alliance for better food and farming, are accusing Tesco of a lack of full-disclosure by still labeling the birds as "local." The green groups also are saying the chickens' 1,000-mile round trip--from near the Scotland stores to 499 miles away and back again--is creating unneeded extra food miles and adding to the country's already growing carbon emissions. Sounds logical to us.

Another UK environmental group, Friends of the Earth, also issued a statement today about the non-local, "local chickens." Vicki Hird (rhymes with bird), a Friends of the Earth spokesperson, said: "Consumers thinking they are buying 'greener,' local and Scottish are actually buying pretty travel-sick chicken." Chickens travel far more than 1,000 miles to get to market and are still tasty. However, we get the thrust of Ms. Hird's point.

Tesco, the world's third-largest retailer, defended its travel itinerary plan for the birds in a statement saying basically it didn't have any option because the local packaging plant closed and they needed to get the chickens packaged for sale at the stores. A Tesco spokesperson didn't comment on how many chickens are being sent on the 1,000-mile roundtrip journey. However, the retailer said it hopes to have the situation solved very soon

The local Grampian Country Foods' packaging plant closed last year (about six months ago), according to Max Tooley, Tesco's technical meat manager for poultry. Tooley added that although the situation has been going on for about six months (then why still label the birds as local we wonder?) it should "hopefully be solved in about two weeks," with the pending approval of a new packaging plant at a new site nearby where the chickens are slaughtered. We're glad it will be solved in two weeks. But that could be a long two weeks if Tesco doesn't take the local label off the chickens' packaging or the shelf.

Tesco shoppers weren't very happy today upon hearing the news that the "local" birds aren't really all that local because of their travels. Consumers buy "local" foods not just because they are raised locally, but also because they are processed and packaged locally as well. In other words, one of the keys to "locally grown" is that the products don't have to travel excessive food miles to get to the stores where shoppers buy them. Local equals a lower carbon footprint.

The locavore (local foods) movement defines a locally-produced food product as one that generally comes from no more than 100 miles from where it is sold at retail and purchased at the grocery store, or elsewhere, by a consumer. This local definition includes the food product being grown, processed, packaged and distributed within that 100-mile distance. Obviously, in the case of the 1,000 mile chickens, they don't quality under that definition.

Meanwhile, the revelation about the well-traveled "local" chickens is a serious hit for Tesco. It's CEO, Sir Terry Leahy, has been arguably the most outspoken of all UK retailers on the need for the supermarket industry to reduce its carbon footprint. In fact, under a plan of Leahy's, Tesco plans to eventually label all of the food and grocery products it sells in its stores with a "carbon footprint" label. The label, similar to nutritional labels on packaged foods, will inform the consumer where the product was produced, processed and warehoused, and how many food miles it traveled to get to the Tesco store.

Tesco in the UK also has been a major proponent among UK food retailers of buying and selling locally-grown foods in its stores, including beef, pork, poultry and other food and grocery products. Local foods is a major issue among UK consumers, not only as part of the nation's p[opular and fast-growing green movement, but also as a way of preserving it's shrinking farming industry.

To the latter point, the Tesco chickens are raised locally. However, to the former point, the 1,000- mile journey--to the packaging plant and back again--violates the green aspects of the "buy local" movement.

It seems that even without their wings, these particular Scottish Tesco chickens are still well-traveled birds.