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News and Research from Localize

Heather Watson By Heather Watson • March 27, 2017

Decoding Demand for Local Food

Trends in consumer preferences come and go, so it is fitting that food makers and retailers that attach their brand to trends that have longevity are able to gain loyal customers and drive sales.

There is something particularly compelling about consumer preferences for local food. “Local” has a different meaning to each shopper, whether it is based on his or her personal definition of local (grown in state, in country, within 100 miles, 400 miles etc.), or based on his or her reasons for buying local (environmental impact, supporting the local economy, or freshness and quality). In fact, local can be tied to most major past, present, and future trends in consumer food preferences. The combination of these two factors present a huge challenge for retailers in how they present ‘local’, and creates difficultly in measuring and analysing consumer preferences for local.

Let's explore some of the underlying drivers behind local food preferences  and the characteristics of local food that are grabbing the attention -- and dollars -- of consumers.

Consumers want local, what more is there to know?

According to industry expert, Phil Lempert, local food is “one of the biggest trends in supermarketing in decades.” [1] There are many reasons why it is critical for retailers to understand the underlying preferences behind demand for local food. The most basic of which is,

how can retailers give consumers what they want when there is no single definition of ‘local’?

Unfortunately, surveying federal and state definitions of local food products provides little clarity on the issue. The U.S. Congress in the 2008 Food, Conservation, and Energy Act (2008 Farm Act) describes that 400 miles from origin, or within the State in which it is produced is the limit for which something can be considered a “locally or regionally produced agricultural food product”[2].  Individual states have defined local in a multitude of different ways, including: within 30 miles; within 100 miles; within 150 miles; within 400 miles; within the state; within a certain defined region; within a certain distance with exceptions for border areas; and numerous others.

Consumers are just as varied as policy makers in defining local. Consumer research from A.T. Kearney shows “no uniform definition or understanding” of local food, with general agreement that production within 100 miles, supporting the local economy, and in state production, are factors indicating a local product for most consumers[3].

This lack of consensus means that retailers have some room to make their own definition of local. Here are some examples of what it means to select large U.S. retailers:

  • Whole Foods: varies, but generally State-made [4]
  • Giant Eagle: Within 150 miles [5]
  • Safeway: 8 hour drive or less [6]
  • Wegman’s: Within 100 miles [7]
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An issue that arises with the lack of consensus on what geographic limit qualifies a food to be local: if a consumer does not agree that the cut-off is ‘150 miles’, or ‘in-state’ then they may discredit any local claims made in retail aisles.

One solution to the definition-dilemma is to avoid imposing a definition on local, and instead share sufficient information with consumers for them to make their own value-based decision on whether they consider a product to be local. Information such as the distance to the production location, or web-enabled-labels will allow consumers to discover information about production, ingredient origins, and ownership.

Another alternative for retailers is to ignore ‘local’ preferences all together and understand the characteristics that consumers attach to local, and to address those directly. Read on to take a closer look at attributes tied to local products and how to capitalize on local food demand without defining ‘local.’

Labeling local across categories

Fresh and floral. In the summer months when retailers across much of North America are bringing in more local produce, they are often sourcing from different wholesale suppliers or farmers within a short time period. This makes keeping labels accurate and up-to-date extremely challenging. In addition, suppliers may be combining produce from multiple sources, further complicating the traceability of the supply chain, and reducing the available verifiable and transparent information that can be provided to shoppers.In both fresh categories and centre-store, additional challenges arise is making ‘local’ claims based on certain factors within a supply chain.

Local3.jpg When it comes to labeling locality for fresh produce, a solution must involve increasing traceability across the supply chain. With food hubs and CSAs creating a means to pool the production and create reliable, consistent sources for retailers and consumers, a solution may be to develop strong brands for these intermediaries. For example, if a food hub supplying a large grocery retailer has clear and transparent branding and sourcing, then labeling in store can be simplified, rather than tracing back to the original producer.


Advances in technology are also moving food supply chains closer to transparency, even for non-packaged fresh products such as meat and produce. As technologies such as blockchain solve the problem of tracking data related to supply chains, methods for tagging fresh food products will likely keep apace.

In centre store, consumer packaged products present their own challenges with labeling local. For example, imagine that a multinational conglomerate beer producer has a production facility in a particular city. Because there is a production facility nearby, grocer stores in that area may label all products from that company as local. With no additional context on in-store labels, consumer trust may be harmed when claims are characterized as misleading.

For verifiable claims such as organic or gluten free, consumers could be quick to discredit any certification or claim that was found to be false. Rebuilding trust after a breach would be nearly impossible. Similarly, if consumers have personal definitions of local, and a claim or label is shown to go against their definition, the entire program could be discredited for that shopper. This presents an enormous risk to retailers in how they approach local food labeling. It also exemplifies the challenges in satisfying demand for local food.

The key to successfully capturing consumer demand for local is transparent, verifiable information to support local claims, and flexibility to allow consumers to make value based purchase decisions. This means focussing on the underlying attributes that shoppers at a particular banner are looking for, and providing enough information and verification to build trust in the claim.

Geographic Indicators – Is Local C.O.O.L. Outside of Europe?

We have previously examined the challenges of relying on policy definitions of ‘local food.’ In particular, in the United States and Canada there is a lack of standard definition. Some industry participants and researchers have explored a regulated blanket definition of local[9], including suggesting that a blanket definition would protect consumers. However, using geographic borders or distance to define local may not provide the solution we are looking for - it will do little to help bridge the gap between consumer demand for their own definition of local food, and challenges that retailers face in satisfying that demand.

In Europe, Geographic Indicators (GI) are tools central to the origin identification of food products[10]. GIs are a type of intellectual property claim to the geographic origin, qualities, and often production method for food products. The definition entails that the unique characteristics or reputation of the product are due to the place of origin, which is often referred to as ‘terroir’. As many traditionally produced food products and production methods were brought to North America with immigrants – their names often came with them as well. This has led to some controversy in applying food product names that are covered under GIs in Europe and was an important part of negotiations for a Canada – European Union free trade agreement[11].

Implementing a system of GIs in North America would result in significant challenges. Traditional foods in particular locations, tied to cultural practices and production methods are the foundation of GIs – a concept that is extremely challenging to apply to food production in North America, that has a much shorter history of production, and draws upon the traditions and cultural practices of a diverse number of groups. Combined with the massive geographic area, there would be many challenges finding products and production methods that would be suitable for classification under a distinct geographic indication.

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Underlying attributes of local food preferences

Local food preferences are not a signal that consumers believe products in one locality are necessarily better than others (with the exception, perhaps, of some geographic indicators). To understand the drivers of local and global food systems, we must instead break down the different components and attributes of local food preferences.

For example, when researchers began publishing findings that the food miles in local products may in fact be more carbon emitting than long-shipment food supply chains[12], some believed this would hamper demand for local food. The prediction assumed that most people looking for local products were doing so because of environmental impacts of shipping food products long distances. In fact, the findings did not have a marked impact on local product demand. To understand consumer behavior and willingness-to-pay, we must have a thorough understanding of the many attributes that play a part in overall consumer demand for local food products. 

In this series we’ll explore the following drivers of consumer demand for local food products and methods for identifying which factors are driving demand. Check back as we cover:

Health

Environmental impact

Supporting local economies

Freshness

Quality