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Consumer Perceptions of Food Quality and Sustainability at Foodservice

Presented at Solutions 4 Conference Prepared by The Hartman Group

Hartman Group is a consumer culture consultancy serving consumer packaged goods companies, retailers, and organizations in foods and beverages, foodservice, personal care, pharmaceutical, shopper marketing and other businesses that comprise the consumer marketplace. Powered by primary qualitative, quantitative and trends research we know how consumers live, shop and use brands, products and services within the contexts of real life. We specialize in understanding how consumer attitudes, lifestyle and behaviors lead to purchase.

Hartman Group Overview

2012 The Hartman Group, Inc. 3

The Meaning of Food Quality is Evolving

UNIQUE, QUALITY‐DISTINGUISHED FOODS

NEW, EMERGENT AND DIVERSE EATING OCCASIONS

PREDICTABLE, UNIFORM, BRANDED FOOD

PRODUCTS

TRADITIONAL, STRUCTURED,

SIT‐DOWN MEALS

RECENT PAST PRESENT

SOMBER AND SERIOUS FUN AND EXPERIENTIAL

PRODUCTION DRIVES ECONOMY

CONSUMPTION DRIVES ECONOMY

Consumer Food Culture is Changing

5 2012 The Hartman Group, Inc.

Trends Tell the Story of the Search for Higher Quality Experiences

TRENDING OUT TRENDING IN

Margarine

Processed soy protein

Low sodium

Fat free

Artificial sweeteners

Chicken breast/white meat

Superfruits from afar

Egg whites

Mass produced cheese

Canola oil

The Other White Meat

Brown rice

Elimination diets ( carbs, sugar, wheat)

Treadmills

Ultra Lite beer

Baked potato chips

Drinking wheat grass shots

Real butter

Grass‐fed meat

Sea salt

Healthy fats

Stevia, palm sugar

Chicken thigh/dark meat

Local, seasonal superfruits

Whole eggs, cage free

Farmstead cheese

Coconut oil

Heirloom marbled pork

Farro

Portion control

Dance/Zumba

Craft beer

Kettle‐style potato chips

Eating dark leafy greens 2012 The Hartman Group, Inc.

6

The Meaning of Food Quality is Evolving

The trend toward fresh, real, less‐processed foods is a historical process

Now

Big brands delivered convenience, consistency, affordability and safety through mass produced food.

ReliabilityEfficiencyUniformityPredictability

Health & WellnessExperienceAuthenticityDistinction

Consumers were in pursuit of …

FACTORY‐MADE represented Quality

Cultu

ral

tren

dsQua

lity

expe

ctations

REAL and FRESH represents Quality

Consumers are in pursuit of …

1950s / 1960s

There is a cultural shift toward products that are not perceived as factory made.


Consumers are Increasingly Bucketing Food into One of Two Categories


Many consumers believe processed foods are closely linked to • Weight problems

• Various health conditions (e.g., diabetes)

• Behavioral problems (e.g., ADD, energy crashes)

• Food allergies

Consumers are Redefining Quality Food

Real food = Minimally processed food = Fresh food = Quality food


60%

59%

50%

44%

44%

That contain only ingredients I recognize

That are minimally processed

With the shortest list of ingredients on the label

No artificial ingredients

No preservatives

I look for foods and beverages …

Cues of Quality Food are Both Objective & Subjective

Some of these cues consumers look for around fresh, real and less processed are explicit (“no preservatives” is listed on the label) and some are subjective (“contains only ingredients I recognize”). In addition to the cues above, others include

• See through packaging• Close‐in expiration dates• Images of raw ingredients on the label• Placement in the perimeter of the grocery store

The following are important when I shop for healthy foods…..


Consumers are Now More Concerned With a Product’s Lifecycle


52%

37%

37%

36%

31%

27%

23%

It's important for me to buy locally grown food wheneverpossible.

It's important for me to know whether the milk I buy comesfrom cows that have been given growth hormones.

When I think of food quality, I only think of how the productlooks, tastes, and smells rather than where it is produced.

It's important for me to buy meat and poultry that have beenraised without routine use of antibiotics.

When I think of food quality, I only think of how the productlooks, tastes, and smells rather than how it is produced.

I trust the government to insure the safety of my food.

It's important for me to buy organically grown food wheneverpossible.

Origin and Production of Product Matter

The Hartman Group’s Sustainability Survey (n=1600). Shows respondents who “agree”. 2012 The Hartman Group, Inc. 12

Quality is Inclusive of Sustainable Foods

Includes connections to ingredients, origin narratives, processing, product use, etc.

Is understood differently across categories

Evaluations are a function of interaction with the product at retail, and expert opinion (both independent professional publications as well as peers’ “first hand” accounts)

Quality is increasingly differentiated by complex authenticity or design narratives spread among consumer social networks

IMPLICATION

Consumers are willing to pay more for products that are perceived to be higher quality and deliver an enhanced experience…This includes sustainable foods and beverages.


Quality = Higher Level Experiences

Consumer Perceptions of Sustainability

13%

35%

31%

21%

Consumer Participate in Sustainability with Varying Levels of Engagement

The segmentation reflects the intensity of consumer involvement in the World of Sustainability

Segmentation is based on respondent behavior regarding: animal testing, packaging, community issues, supporting companies helping the local community, recycling, and price. Base: n=1982.


Purchase Criteria Evolve with the Consumer


Sustainable Purchasing Has Continued in the Down Economy

How have recent economic conditions impacted your purchasing of sustainable products? Base: Significant shoppers inside the World of Sustainability n=1591-2008; 1691-2010.

25%

18%

13%

17%

How recent economic conditions have affected my purchasing of sustainable products. I buy…

FEWER sustainable products now

MORE sustainable products now

29%

21%

11%

11%

Core

Inner Mid‐level

Outer Mid‐level

Periphery

Who is buying MORE

2010

2008


The Impact of the RecessionWhat has changed:

More pronounced evidence of channel shifting

More orientation to promotional strategies

Dining out less often

What hasn’t changed:

Consumers are not radically changing their food and beverage preferences

They are making trade‐offs, but not leaving entire categories

Consumers are not abandoning their interest in high quality food experiences

For example, sustainable product attributes are currently a sign of product quality and are interpreted by many consumers as getting good “value” for their money


The New Value Paradigm

Price

Traditional(functional)

Current(functional + emotional)

Quantity

Price

ExperiencePriceConvenience

Quantity

Quantity

Convenience

Quality

Experience

Lack of Waste

Consumers are now transitioning to a more purposeful and emotional perspective on value, and are asking themselves the following types of questions:

• Is this item really necessary?

• Will my family actually use / consume / eat / drink this item?

• Will I be able to avoid throwing the item in question away unused?

• Will the item in question last a long time? Will I get a lot of use out of this item?

• Will I enjoy using/consuming this item?

• Will the item meet my taste/efficacy/quality standards? 2012 The Hartman Group, Inc. 19

Sustainability is Increasingly about Following the “Golden Rule”

In today’s uncertain economic climate, consumers are looking to brands that are “good guys” and “good neighbors”

Sustainability is more of a desire for “reciprocity”which is best captured in the concept of the “Golden Rule”

Treat others as you would like others to treat you!

“Sustainability” “Responsibility” “Reciprocity”


Personal Benefits are a Gateway into Sustainability

Personal Benefit ZoneSocial Zone

Environmental Zone Economic Zone

Sustainability is now conventionally expressed in terms of the environmental, social and economic impacts (the “three pillars”) that result from human action.

We also add a fourth zone of sustainability, personal benefit, because it is particularly helpful in explaining sustainability from the consumer viewpoint –especially in terms of an entry point.


Sustainability Attitudes are Typically Triggered by Health ConcernsHow individuals become aware of threats to their well‐being is a highly idiosyncratic experienceIt may start with a concern for some dimension in either the environmental zone, the economic, or social zone, or it may begin with perceptions of risk to the selfChildren bring ideas about sustainability home from school and begin to change household behaviorsThe majority of consumers first enter the world of sustainability through the personal safety/health dimension of the personal benefit zone (concern for things in, on and around the body)They buy sustainable products because they believe there is a lack of “bad” ingredients in the products, mitigating their risk in consumption or use of the product whether in food, personal care or household products


SUSTAINABILITY

Fresh

Organic

Local

Heritage / Heirloom

Seasonal

Artisanal

Wellness and Sustainability Share Many Attributes


HEALTH & WELLNESS

Key Dimensions of Sustainability for Consumers

Social Zone1. Employment practices2. Community involvement/local3. Fair trade4. Animal welfare

Environmental Zone1. Waste disposal2. Energy consumption 3. Resource preservation

Economic Zone1. Money circulation2. Ownership3. Scale

Personal Benefit Zone1. Quality2. Personal safety/health3. Household finances

Importance given to each zone and each dimension can vary by consumer segment, product category, brand, and consumer and industry idiosyncrasies


A Wealth of Meanings are Connected to Sustainability

authentichumane

healthy

care

provide

safe secure

just

return

pureempowered

supportivefactual

share

connectedness

biodegradable

cleanreduce

protectconserveefficient

maintain

preserve

proactive

cyclical

stewardshipinnovative

integrity

cooperation

valuessupport

honestyopenpartnership

growth

size prosperous

invest vibrant

reach

wholereal

freshclean

valuepureenthusiasm

passionsimple

pridewisecare

performance

taste

responsible


There is a Substantial Opportunity to Increase Awareness of Sustainable Companies

Are you familiar with the term 'sustainability'?I don’t know where to buy such products. I don't know which products are sustainable. – Bottom‐2 Box Disagree.I don't know which companies support sustainable values. – Bottom‐2 Box Disagree.Base n=1606‐2007; 1856‐2008; 1982‐2010.

54%56%

69%

12%

25%21%

5%

12% 12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2007 2008 2010

Familiar with term"sustainability"

Can identify asustainable product

Can identify asustainable company

Significant Gap


Sustainability is Multi‐Faceted

64%

50%

50%

44%

42%

40%

37%

31%

31%

31%

27%

26%

17%

15%

14%

13%

13%

13%

76%

44%

44%

55%

33%

35%

25%

32%

22%

23%

N/A

N/A

17%

11%

12%

12%

11%

12%

Ability to last over time

Recycle, reuse, reduce

Conserving natural resources

Ability to support oneself (self‐reliance)

Environmentally friendly

Responsibility

Responsible farming methods

Economic viability

Reducing carbon footprint

Green

Stewardship of land

Maintaining a clean water supply

High quality

All natural

Simple living

Fair trade

Organic

Humane treatment of animals

What does sustainability mean to you?

2010

2008

The word sustainability may mean different things to different people. What does it mean to you? Base: Consumers familiar with the term “sustainability” n=1151‐2008; 1352‐2010. *N/A: not tracked that year

Responsible farming methods has increased substantially over two years

Literal or dictionary definitions have declined


Personal and Social Sustainability Benefits are Top of Mind

82%

79%

74%

72%

72%

71%

71%

68%

66%

66%

65%

45%

45%

42%

Provides quality products

Provides safe working conditions for its employees

Sells products/services at low prices

Provides good wages and benefits to its workers

Reduces waste and pollution

Minimizes environmental impact of its production

Avoids inhumane treatment of animals

Is energy‐efficient

Is involved in the community

Reduces the use of non‐renewable resources

Avoids unnecessary packaging

Gives a percentage of its profits to charities I like

Is a local company

Ensures the best possible return to its shareholders

It’s important that the company…

When deciding which product/service to purchase, how important is it that THE COMPANY that produces the product/service…? – Top‐2 Box importance. Base: Significant shoppers inside the World of Sustainability n=1691‐2010.

SocialEnvironmentalEconomicPersonal benefit


Consumers Want to Hear About SustainabilityInitiatives by Companies

87%

97%

95%

96%

37%

97%

91%

88%

28%

84%

87%

81%

81%

57%

80%

67%

70%

38%

63%

54%

46%

44%

58%

35%

32%

27%

36%

59%

30%

20%

21%

78%

11%

13%

11%

47%

I would like to see companies' sustainable practices bemore visible to the public

I support companies that help my local community

I am an avid recycler

I am aware of local community issues

When shopping, the most important feature I consideris price

I avoid buying products from companies with poorlabor practices

I look for products that are not tested on animals

I avoid buying products with excessive packaging

When shopping, I primarily look for products thatpersonally benefit me and my family, regardless of its

social or environmental effects

Core

Inner Mid‐level

Outer Mid‐level

Periphery

Please indicate how strongly you agree or disagree with the following statements. – Top‐2 Box importance. Base: Significant shoppers inside the World of Sustainability n=294‐Core; 564‐Inner Mid‐level; 614‐ Outer Mid‐level; 219‐Periphery.


Sustainability at Foodservice

There is a Sustainable Food and Beverage Adoption Pathway

Tap/filtered water

Vegetables

Fruits

Meat

Milk

Seafood

Pasta sauces, canned tomatoes, salsa

Coffee

Tea*

Eggs

Bread*

Nuts

Cold cereal

Condiments

Butter

Frozen entrees

Chocolate*

Herbs and spices

Cheese

Wine

* Indicates categories that have recently moved up the pathway


Important Criteria When Dining Outside the Home

When deciding which RESTAURANT to eat at, are any of the following important to you?

# 1 Use of fresh foods 85%# 2 Maintains high product quality standards and quality control 83%# 3 Complies with all governmental hygiene regulations 82%# 4 Use local and seasonal foods whenever possible 74%# 5 Employees are treated very well with excellent healthcare benefits 64%# 6 Cruelty free meat sources 62%# 7 All paper, glass and plastic water is recycled 59%# 8 Sustainably caught seafood, certified by the Marine Stewardship Council 56%# 9 Employs disabled people 53%# 10 Free range meats and poultry 53%# 11 Grass fed beef 51%# 12 All food waste and scraps are composted 50%# 13 Uses only biodegradable and non‐toxic cleaning materials 50%# 14 Donates food to local school system 46%# 15 Wild vs. farm raised fish 44%# 16 All appliances are Energy Star approved 44%# 17 Use only energy efficient light bulbs 44%# 18 Specifies their green practices on their mission statement 43%# 19 Contributes to local farmland trust 41%# 20 Certified organic ingredients 40%

When deciding which RESTAURANT to purchase, are any of the following important to you? Base: Significant shoppers inside the World of Sustainability who ate at restaurants in Q21 n=1228.


“Buying Local” is about a Variety of Benefits

Think about the term 'Buy Local.' Among the following definitions 'Buy Local' means to me... Base: Significant shoppers inside the World of Sustainability n=294‐Core; 564‐Inner Mid‐level; 614‐ Outer Mid‐level; 219‐Periphery.

74%

65%

58%

40%

32%

Buying food products that are grown close to my homeand sold within my community

Buying products that support small businesses such asfarmers, artisans and crafts people in my community

Buying products that generate employment near me

Buying food products that are fresher

Buying products that are produced by individuals or smallcompanies rather than large conglomerates,

manufacturing plants, or multi‐national companies

Buying local means…


Local Has Both Objective and Symbolic Meanings

Objective: Geographic Symbolic: Locale

During in‐person interviews, when describing distinctions about local products, consumers also describe products using locale:

• Unique: Expressing the distinct geography of a region which implies quality attributes

• Distinctive: Specific tastes attributed to a locale

• Authentic: Cues a small producer

When asked in survey format which statement they think best defines a “local product” consumers defer to geographic definitions:

• 50% say “made or produced within 100 miles”

• 37% say “made or produced in my state”


People(Founder narrative)

Product (Varietal narrative)

Process (Production narrative)

Place(Geographic origin narrative)

Narratives must include three key elements:

• Transparency – the story must be true/verifiable

• Raison d’etre – there must be a compelling reason for why the product came to market

• Emotional hook – the story must resonate with consumers at an emotional level, not just a functional level

The main types of narrative genres focus on:

Narratives Matter in Food Service


Personal Benefits Outweigh Others When it Comes to Perceptions Regarding Dining Out of Home

The sustainability practices that have the strongest impact on consumers’ positive perceptions about dining outside the home are those related to Personal Benefits


Provides healthy/safe products

Provides quality products at reasonable prices

Includes organic/natural ingredients in its products

Provides easily accessible information about its process/practices

Avoids artificial ingredients in its products

Those sustainability practices related to the Environmental Zone tend to have less impact.

Contributes to environmental causes in my area

Uses alternative energy sources such as wind or solar power

Uses seafood caught in ways that preserve fisheries and protect marine life

Sustainable Choices are Highly Valued at Foodservice

Cafeterias are seen as the most important foodservice location for sustainable offerings.Locally owned independent coffee houses cue environmental, economic and social sustainability through the use of organic, Fair Trade, and/or shade grown offerings.Fine dining is seen by many as a way to be exposed to new types of sustainable products.Although fast food restaurants are near the bottom of the list in terms of importance, over half of consumers still believer there should be sustainable choices offered in these locations.

How important is it that sustainable food or beverage choices be offered at the following establishments? Base: Significant shoppers inside the World of Sustainability who visited selected establishment type in past 30 days n varies from 296‐Cafeteria at work, school, hospital etc. to 1232‐Fast food restaurants.

73%

71%

70%

68%

68%

67%

63%

61%

60%

52%

Cafeteria at work, school, hospitaletc.

Locally owned independentcoffee shops

Fine dining restaurants

National chain coffee shops

Hotels

Locally owned independentrestaurants

Casual dining establishments

Food court at mall, sportingevent, etc.

Fast food restaurants

Snack vending machines


70% of consumers would have a better impression of a fast food restaurant that served an organic item on the menu

When eating at a fast food restaurant, if you were to see a menu item labeled "ORGANIC," how would this change your impression of that restaurant, if at all? Source: Beyond Organic & Natural report, The Hartman Group, Inc. February 2010.

1%

32%

36%

32%

3%

27%

42%

28%

SOMEWHAT/MUCH WORSE impression of therestaurant

My impression wouldn't change

SOMEWHAT BETTER impression of the restaurant

MUCH BETTER impression of the restaurant

2010

2008

Over half of consumers

(52%) are willing to pay up to 10% more for organic when dining out


There is a “Halo” for Establishments that Offer Healthier Choices

Best Practices for Enhancing Food Quality Perceptions at Foodservice


Suggests freshness, connection to community

Positions you as a “good company” in the minds of consumers leading to increased product quality perceptions

Narratives demonstrate authenticity and desire for transparency

Supports growing food experimentation and broader interest in foodie culture

Drives freshness attributes

Gives consumers the sense that each restaurant/cafeteria is a unique, local experience customized for their region/needs

Local, SeasonalProducts

Communicate Sustainability

Authentic Product Narrative

Unique Flavor Profiles

Open ProductionSystem

Customized Layouts

Explore today’s consumer culture to understand the trends influencing the sustainability marketplace

Understand that consumers see sustainability as a driver of quality, not a detriment to it

Layer cues like fresh and less processed onto your sustainable product offerings

Communicate the link to health and wellness

Rethink the meaning of “value” to consumers

Emphasize personal benefits in your marketing to consumers

Tell the narratives behind your offerings and your company

Concluding Thoughts


THE HARTMAN GROUP, INC3150 RICHARDS ROAD, SUITE 200 BELLEVUE, WA 98005TEL (425) 452 0818 FAX (425) 452 9092

HARTMAN-GROUP.COM

All copyrightable text and graphics, the selection ......The Meaning of Food Quality is Evolving The trend toward fresh, real, less‐processed foods is a historical process Now Big

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