What a great gathering this week to learn what's happening in progressive Orange County: the 21st annual Orange County Ag Summit.
The main take-away from the event for me is that Orange County is serious about supporting its small farmers and food businesses. It has given $400,000 in grants to 53 farms since 2015 (from a 1/4 cent sales tax). It supports the Breeze incubator farm and is making a $500,000 investment in rural broadband infrastructure. Grant funding, incubators and internet access are key avenues to grow the local food supply and get that food into the hands of retailers and thus more consumers. (Could supermarket companies help with some of this financial lift?)
The event featured CFSA staff doing their excellent training on the GAPs food safety certification, another key issue for wholesaling. CFSA has really learned the ins and outs of this process. Staff from Weaver Street Market gave an overview of selling to retailers, laying out the significant benefits of selling wholesale (and risks) and urging farmers to consider contacting retailers months before a desired sale. In that session, I had a chance to plug our work and brought up the coming impact of Wegman's. The event's keynote was Tom Warshauer from Charlotte City government, talking about their new $100,000 foodshed study. Although the study could use more attention to mainstream retailers and wholesalers, it gathered excellent baseline data on the regional foodshed and benchmarked Charlotte against ten other regions. This should be replicated across the state.
I had great chats with exhibitors. NC Driftwatch is protecting our organic farms and pollinators -- and has very enthusiastic staff. Piedmont Food & Ag Processing Center in Hillsborough is going strong; it has incubated growing companies like Seal the Season and many others who are selling in mainstream retailers, . (These are more projects that could use friendly funding from the deep pockets of the mainstream retail food industry [MRFI]. It would be great if MRFI staff attended these type events to learn more about the local food and ag scene.)
Kudos to Orange County for this event and for their continued commitment to good things for their farmers and foodies.
What a pleasure it was to see the many farmers, food entrepreneurs and advocates at last weekend’s Carolina Farm Stewardship Association conference. The local and organic food movement is alive and well, and efforts to expand it are exciting to see.
MEETING UP It was a special treat to stop by the wonderful Buyer-Grower meet-up organized by the good people at NC Growing Together. The format was excellent. Roughly twenty sellers sat at booths to show their products, while buyers (also about twenty strong) were invited to move around the room in speed dating fashion. Signs at the booths indicated GAPs and/or organic certification. Not surprisingly, representing supermarkets were buyers from Whole Foods Market, Lowes Foods and Wegmans. These companies have shown a consistent and long-standing interest in supporting local foods. Whole Foods Market and Lowes Foods have topped our “local friendliness” ratings for two years in a row. It was great to see robust conversations happening between our growers and these buyers.
Of course, the challenges remain: how to get more local supply, more aggregated supply, and more transparency and storytelling about our growers? How can we encourage more retailers, not just a select few, to pay attention to our local growers and to support local food infrastructure? And lest I forget, how to avoid inflated claims that confuse shoppers -- like when a store purchases a small amount from a farm and then forgets and leaves the farm sign up for months? Working together, we can meet these challenges and I hope we will.
AMAZON IN THE GROCERY CART In following the grocery industry since the release of our last report in the spring of 2018, one thing is clear. The acquisition of Whole Foods Market by Amazon is the bombshell development that continues to reverberate. Yes, some retailers are working to better meet the growing demand for organic, local and healthy foods, but this theme is completely overshadowed by the need to address e-commerce and home delivery. Amazon’s power in e-commerce and home delivery has the entire industry in near panic.
The good news is that as stores sell less center-of-store items (non-perishable cans, paper goods, etc) in their physical stores, the fresh, perishable products like produce, meat and dairy become even more important. In the not too distant future, these perishable products may be the only ways that bricks and mortar retailers can distinguish themselves from their competitors. If consumers demand high quality local produce, for example, retailers could be more motivated to listen and respond. This is an opening for authentic local foods.
There is no word yet on how the Whole Foods Market-Amazon marriage is going, from a financial standpoint. With Amazon’s incredibly deep pockets, it doesn’t really matter. Amazon is currently the largest online seller of food, easily outpacing Walmart and Kroger, and this will grow. But in overall grocery sales, they are in 8th place in the U.S. and sell one tenth of what Walmart does ($180B vs $18B). One can only imagine that Amazon aspires to be the biggest seller of groceries, period. This is what the industry fears. Yet, while they are using their newly acquired stores to learn more about food retailing – for example, Amazon Prime acts like a store loyalty card and is mining data – there is no stated plan to open new physical stores to compete with Walmart in bricks and mortar retail. Where does this all lead? No one in the industry seems to know.
Regarding local foods, Whole Foods Market-Amazon has a new team of what they call “local foragers” (three for the Southeast U.S.) They are on the ground, visiting smaller local farms and food businesses. One is based in Atlanta, one in Alabama and one in the Triangle. Store-by-store purchasing is declining. The widely-praised local foods loan program is still operating, although its funds are fully-committed. In stores, I am still seeing a good variety of local offerings, but weaker signage. Whole Foods is still sponsoring farm-related events. In short, Whole Foods Market as a part of Amazon continues to do more for “local” than most food retailers, but the trends are worrisome. Can consumer demand create sufficient pull for local foods, even if the retailer is not as mission-driven to push local foods out?
KROGER While the Amazon entrance into grocery is truly disruptive, much of the rest of the grocery industry is doing well financially and is responding aggressively to the new competition. Kroger (#2 in U.S. sales) is still considered a very viable and well-run company; it is investing sizably in e-commerce. Did Kroger buy NC-based Harris Teeter because it is a leader in “click and collect” (buy online and pick up at the store)? Some think so. Moreover, Kroger-Harris Teeter has new local foods programs and these could grow.
FOOD LION Food Lion, with the most stores in the Carolinas, has been busy investing in store remodels – 712 store upgrades out of 1,030 stores over the last four years. Food Lion is owned by Holland-based Ahold-Dehaize, the 4th largest U.S. grocery retailer. The parent company operates 6,700 stores worldwide and has plenty of cash, so don’t count it out. It also identifies local food as a key value. Could its European owners be leaders on local and organic?
PUBLIX Florida-based Publix, the 5th largest food retailer in the U.S., is another company considered strong enough to weather the storm. It is worker-owned, and as it expands into the Carolinas from the South, its reputation for customer excellence should serve it well. Publix is rolling out a smaller store format called GreenWise, which focuses on health and wellness and this might be an opportunity for local organic suppliers if the larger stores are not. The first GreenWise store in the Carolinas will be in Mount Pleasant, SC.
WEGMANS Smaller brands with loyal shoppers may also thrive amidst the turbulence, according to industry analysts. New York-based Wegmans, for example, is considered a strong brand going forward, based on its many loyal customers attracted to its great in-store experience. Wegmans will be opening stores soon in the Triangle, which is good news for local farms and food businesses. The owners of the family-run Wegmans have an affinity for organic and local, so their arrival in the Carolinas should a good thing. I visited one of their Virginia stores recently and it was huge -- like a mashup of a Costco, Trader Joes and Whole Foods Market.
TARGET & SPROUTS There are rumors that Target will buy Sprouts, in order to up its produce game. Target has been improving in the fresh department and wants to catch up with Walmart in grocery. Analysts believe that Sprouts is interested. Will Target make this happen? So far, despite its name, Sprouts Farmers Market has had little local food on offer.
LOWES, INGLES AND BI-LO Three NC-based retailers have a tough road ahead. Both Lowes Foods and Ingles have been strong supporters of local foods. Their business model will be tested with so much new competition. Will loyal shoppers help them navigate the treacherous waters ahead? BI-LO, on the other hand, has not invested in its stores or in local foods much. It has been in perpetual financial trouble and does not have the resources to pull itself out of its tailspin, according to most analysts.
ALDI & LIDL The two big German-based discount retailers, ALDI and LIDL, continue to be major factors in food retailing in the Carolinas, lowering average food prices in every market they enter. ALDI is the 10th largest grocery retailer in the country now and plans to expand from its current 1,800 store footprint to 2,500 stores by 2022. It explicitly wants to increase its sales of fresh and organic foods. It is spending a staggering $5.3 B on its U.S. expansion. LIDL’s rapid push into the U.S. did not go as well as expected, but it still has been able to open fifty stores in a very short time. Both companies have plenty of cash and are popular with younger shoppers. Do not underestimate these savvy retailers.
WALMART As mentioned earlier, Walmart is still the largest food retailer in the country and in the Carolinas. (They have 23% market share nationally.) The company continues to be a leader in corporate sustainability efforts, supply chain innovation and on-line selling. Walmart will continue to be a strong force, possibly the strongest force, in our national and local food economies. Walmart has the resources and the focus to be a friend to local growers and food businesses, but only if we can provide larger supplies and aggregated products, and work out fair contracting for those goods. In their stores, marketing of local foods is improving. Local products are on sale. Let’s work with Walmart to make good things happen.
PUT LOCAL IN YOUR SHOPPING CART These are hectic days in the supermarket industry. The Amazon-Whole Foods Market marriage and the rise of online shopping/home delivery have created great upheaval for many companies. As a food movement, let’s stay informed about what is happening in food retail. Let’s encourage good behavior and be understanding of the people working in an industry under a lot of stress. 2019 will surely bring more surprises and hopefully new successes in our quest for large-scale adoption of more local foods. And as we approach Thanksgiving and the Holidays, let’s be sure to buy lots of locally-grow organic food and encourage our retailers to give us those options. (To do list: Talk with your store managers!)
The Wednesday after Hurricane Florence I visited my local farmers market, where I found the usual array of wonderful, fresh vegetables. Nothing seemed out of whack at this midweek market. The farmers complained about too much rain and humidity, but nonetheless there was plenty of product. I stocked up on eggplant, peppers and greens, marveling at the robustness of our local food system, even during hurricane season.
Later that day, I visited three supermarkets, all within a few miles of our house. I won't name names, but what I found was surprising. One of the chains had virtually no produce at all -- the produce manager was busily arranging lemons, limes and bananas. The entire veggie section was empty. At another store I found plenty of produce, except that the entire organic section was empty. At the third store, things were business as usual. This produce section showed no signs of disruption at all. At all of these stores, the rest of the supermarket seemed well-stocked.
So, what are we to make of this state of affairs? Does the aftermath of Florence prove that decentralized, local food systems are better or more resilient than centralized ones? Why I might like to say that, I'm not sure.
Extreme weather events can harm our small local farms, either by damaging their crops and/or disrupting their routes to market. If that did happen, the farmers market would look like the empty supermarket. And, if that did happen, our region would be happy and fortunate to import food from a neighboring region or even further away. With Florence, our local farms fared well and that was good news for them and for farmers market shoppers.
What happened to the supermarkets was due to disruptions to warehouses and distribution. With both I-95 and I-40 shut down in places, one can imagine that trucks couldn't get through or got stranded in the wrong place. (I reached out to grocery officials to hear from them, but did not get a response -- maybe too busy with crisis management.)
In the end, the local food system we envision needs centralized distribution just as much as a nationalized system, but with fewer food miles, of course. To feed ten million North Carolinians, large centralized systems will be essential. And those systems will be vulnerable to hurricanes. So, rather than criticize supermarkets for a short term disruption, I am amazed that they had as little trouble as they did. Thanks go out to all those who bring us our food everyday. And, hopefully, some day these logistical magicians can use their talents to help to orchestrate a better system -- a robust local-regional food distribution system that offers local, organic, and tasty products to the average family -- in supermarkets.
It has been three years and some things are becoming clear. Local farmers are getting better and better at growing great produce year round. Farmers markets are offering amazing local variety. We can grow a lot of our food here. And mostly affluent farmers markets shoppers are getting access to it.
At the supermarket, where your average Joe and Jane shops, organic is growing strong, even at discount stores. But, as we should have predicted, supermarket organic and, for that matter, almost all supermarket produce, is still coming from far, far away. Supermarket interest in local seems to have faded to half-hearted at best (with a few exceptions.) Signage is becoming more haphazard and sparse. Investment in local food infrastructure has not happened -- yet.
So what to do? Why is this happening? There are two basic problems. The supply of local produce is still too small to make it into the mega-supply chains of supermarkets. It is still too hard for supermarkets to find, procure, transport and track the local product, or at least they think it is. At the same time, unlike with organic, shoppers are not demanding (which mostly means "buying") higher priced or less standard local products. These are the twin challenges.
This is all happening in the midst of intense competition in the grocery industry, including the arrival of discounter Lidl and the Amazon-Whole Foods deal. To make matters even more complicated for grocers, despite the food movement's popularity, home cooking is increasingly being pushed out by convenience foods and eating out. Grocery stores are becoming restaurants. No wonder they are struggling with the local sourcing challenge.