Local Food Market Demand
Study of O‘ahu Shoppers
December 2011
Goals of Ulupono Initiative
Double the production of local food by 2015.
• Obtain 45 percent of energy from clean sources
by 2020, and 70 percent by 2030.
• Reduce, recycle, or divert waste.
• Investing in a more sustainable Hawai‘i
•
2
Why conduct a local food market
demand study?
When it comes to buying local food, what are consumers thinking and why?
• We found no publicly available quantitative analysis, so we commissioned a
detailed consumer preference survey to drill down through consumer needs and
wants on six local foods
• We hope these findings can serve as a resource for local businesses, officials,
and consumers to help determine the best opportunities for producing more
local food
•
3
Key study findings
Survey showed: Consumers across O‘ahu strongly believe local food is important,
they don’t think there’s enough available; and they are willing to pay more for
local food.
• Price is important but not the only thing. Freshness as well as trust in local
businesses are also important.
• Being locally grown was most often the second or third most important quality
that consumers mentioned.
•
4
An informed buyer is willing to pay more for local
Local Product
Uninformed Buyer
Price
Informed Buyer
Price
Price Premium for
“Grown in Hawai‘i”
Rib Eye Steak (per
pound)
Never Reach Parity
+$2.13
>$2.13 per pound
Milk (per quart)
-$0.50
+$1.25
$1.75 per quart
Tomatoes (per
pound)
+$0.86
+$2.55
$1.69 per pound
Eggs (per dozen)
+$0.31
+$1.75
$1.44 per dozen
Apple Bananas (per
pound)
+$0.63
+$1.75
$1.12 per pound
Williams Bananas
(per pound)
+$0.00
+$0.98
$0.98 per pound
Romaine Lettuce
(per pound)
+$0.67
+$1.60
$0.93 per pound
5
Methodology and sample
•
Ulupono hired OmniTrak Group Inc. to conduct a detailed consumer preference study, which
began with focus groups who helped refine the online survey
•
Six food products were selected as a representative sample of local foods
•
Nearly 1,200 respondents took the online survey from March 14, 2011 to May 31, 2011, a
sample size comparable to a United States presidential poll
•
Residents were targeted to accurately reflect regional population distribution
•
Survey participant requirements: primary shopper in the household, an adult resident of O‘ahu
for at least six months, and not employed by a market research company, advertising agency, or
a public relations company
REGION
SAMPLE SIZE
SAMPLING ERROR
GREATER HONOLULU
412
+/-6%
CENTRAL/NORTH SHORE
201
+/-7%
WAI‘ANAE COAST/GREATER KAPOLEI
141
+/-8%
LEEWARD
237
+/-6%
WINDWARD
205
+/-7%
1,196
+/-3%
TOTAL
6
3 of 4 residents believe it is very important that Hawai‘i
grow its own local food
Question: If 10 is extremely important and 1 is not
important at all, how important is it that Hawai‘i grow its
own local foods?
61%
0%
0%
0%
1%
2%
1
2
3
4
5
3%
6%
6
7
14%
13%
8
9
10
RATING
Not Important
At All
Mean: 9.1
Extremely
Important
7
Sample Size: 1,196
Strong support for local food in every region of O‘ahu
REGION
Greater
Honolulu
Central/
North Shore
Leeward
Wai‘anae /
Greater Kapolei
Windward
Extremely Important
72%
72%
76%
79%
72%
Important
26%
25%
20%
18%
23%
Not Important
2%
3%
4%
3%
5%
Mean
9.1
9.1
9.1
9.3
9.1
Q: If 10 is extremely important and 1 is
not important at all, how important is it
that Hawai‘i grow its own local foods?
= Statistically Significant
8
Sample Size: 1,196
Strong support regardless of income and education
Q: If 10 is extremely important and 1 is not important at all, how important is it that
Hawai‘i grow its own local foods?
INCOME
<$35K
$35-$50K
$50-$75K
$75K+
Extremely
Important
81%
79%
73%
73%
Important
17%
18%
25%
24%
Not Important
2%
3%
2%
3%
Mean
9.3
9.2
9.2
9.1
EDUCATION
Up to High School
Some College /
Training
College / Post Grad
Extremely
Important
77%
78%
70%
Important
19%
19%
27%
Not Important
4%
3%
3%
Mean
9.1
9.2
9.2
= Statistically Significant
9
Sample Size: 1,196
Strong support regardless of ethnicity and age
Q: If 10 is extremely important and 1 is not important at all, how important is it that Hawai‘i
grow its own local foods? Other ethnicities include Chinese, Korean, Mixed, and Other
ETHNICITY
Caucasian
Japanese
Hawaiian
Filipino
Other
Extremely
Important
70%
72%
83%
74%
74%
Important
25%
25%
16%
23%
24%
Not Important
5%
3%
1%
3%
2%
Mean
8.9
9.1
9.5
9.1
9.1
YEARS OF AGE
18-34
35-54
55+
Extremely
Important
72%
73%
74%
Important
25%
23%
23%
Not Important
3%
4%
3%
Mean
9.1
9.2
9.2
= Statistically Significant
10
Sample Size: 1,196
4 of 5 Hawai‘i residents believe there is not enough local food
Q: Do you feel that the amount of food grown in Hawai‘i is…?
About right
18%
Too much
1%
Too little
81%
11
Sample Size: 1,196
Where do people buy their food?
•
•
•
Shoppers prefer supermarkets due to convenience, availability of desired brands, and “one-stop
shopping”
Big-box stores are second in popularity for food shoppers
Farmers markets are a significant source for produce purchases
Big-Box Store
100%
Supermarket Chain (Safeway, Times, Foodland, etc.)
Farmers Market
Never Buy
80%
60%
40%
59%
61%
58%
35%
32%
60%
58%
55%
31%
24%
20%
15%
6%
8%
0%
0%
3%
23%
16%
12%
8%
2%
23%
5%
6%
0%
BEEF
EGGS
MILK
BANANAS
TOMATOES
Q: Do you usually buy the following food products [INSERT ITEM]
for cooking at a [INSERT STORE]?
ROMAINE
LETTUCE
= Statistically Significant
12
Sample Size: 1,195
Food retail preferences
Foodland
22%
Safeway
21%
Costco
17%
Times
16%
Military Commissary
9%
Tamura's
5%
Don Quijote
5%
Sam's Club
3%
Down to Earth
1%
Whole Foods
1%
Q: Thinking about grocery shopping, where do you most often buy your groceries?
13
Sample Size: 1,183
Stores with local products have customers who value local
Q: If 10 is extremely important and 1 is not important at all, how important is it that
Hawai‘i grow its own local foods? AND Thinking about grocery shopping, where do you
most often buy your groceries?
100%
Important
Not So Important
Unimportant
89%
80%
78%
74%
74%
71%
69%
60%
40%
27%
23%
23%
21%
23%
20%
11%
3%
1%
4%
5%
3%
0%
0%
Total
Foodland
Safeway
Costco
Times
= Statistically Significant
Tamura's
14
Sample Size: 1,196
Stores not emphasizing local might be losing sales
Q: Is general, how satisfied are you with the availability of foods grown locally in Hawai‘i?
AND Thinking about grocery shopping, where do you most often buy your groceries?
Satisfied (9 - 10 ratings)
Dissatisfied (1 - 5 ratings)
40%
37%
38%
37%
29%
27%
25%
20%
21%
21%
19%
20%
16%
13%
0%
Total
Foodland
Safeway
Costco
Times
= Statistically Significant
Tamura's
15
Sample Size: 1,196
What if anything would encourage you to buy more locally grown
food products for your own consumption?
•
“Variety, quality, price, consistency (of vegetables and fruits)”
•
“Make it available in all supermarkets and big wholesale stores like Costco”
•
“I would buy more if it was available at the supermarket for convenience-and not too much
more expensive than the ones shipped from the mainland”
•
“Better labeling so I know it is local and which farm it come from. Sometimes I can’t tell”
•
“Special area with all produce together and marked”
•
“Clear identification as being Hawai‘i grown, and availability where I shop”
•
“Freshness, taste, price, and availability”
•
“A little better reputation for quality and perhaps, a greater selection”
•
“Little or no pesticides. Fresh, clean and of course, price needs to be right (produce).”
•
“Freshness, no antibiotics and hormones added and grass-fed (beef)”
•
“Wide availability and competitive pricing. No hormones or antibiotics (beef)”
16
Key findings: milk
•
Consumers say they buy milk often and they buy a lot of it
•
Price is 2.5 times more important than any other factor when buying milk
•
Labeling can be confusing
•
Supermarket distribution is most important but big-box stores are also critical
17
Potential opportunities for local milk
Local milk can emphasize:
•
Freshness: Number of days from milking cows to
stocking shelves at Hawai‘i’s markets: average
Hawai‘i milk 4 days vs. Mainland milk 24-30 days
•
Health: Consumers want milk without antibiotics
and hormones
•
Quality: Consumers do not know mainland milk
sold in Hawai‘i is pasteurized twice and this
practice is not permitted in other states
•
Farm Location: Local Hawai‘i farmer preferred
over Mainland producer
•
Convenience: Supermarket distribution is critical
•
Price Premium: If they understood the
difference, consumers would pay $1.25 more per
quart for local milk
18
Ka Lei Eggs ranked the best known brand
Q: Please check the brands of eggs that you’ve seen or heard of, if any?
0%
100%
Ka Lei
88%
Lucerne
Hawaiian
Maid
66%
60%
19
Sample Size: 1,196
Key findings: eggs
•
Price ranks as most important, but other Hawai‘i-related qualities such as place of
origin and chicken-to-shelf time-frame together outweigh price
•
Supermarket distribution is most important but big-box stores are also critical
•
Ka Lei Eggs has strong brand awareness and market penetration, uses simple
consistent messaging as well as wide distribution. Other local brands could learn
from their success.
20
Potential opportunities for local eggs
Local eggs can emphasize:
•
Freshness: Number of days from chicken to shelf:
average Hawai‘i 3-4 days vs. Mainland 2-3 weeks
•
Quality: Local eggs are usually bigger, have
brighter yolks, and hold their texture compared to
mainland imports. Hawai‘i receives the less
desirable mainland eggs.
•
Farm Location: Local Hawai‘i farmer preferred
over Mainland producer
•
Convenience: Ease of availability to consumer is
critical
•
Price Premium: If they understood the difference,
consumers were willing to pay over a $1.50 more
per dozen for local eggs
21
Key findings: bananas
•
Local Hawaiʻi-grown apple bananas have established a distinct and appealing product
identity – residents understand the difference and are willing to pay a premium for
local Hawaiʻi-grown apple bananas over Mainland Williams bananas
•
Grown in Hawai‘i is the second most important factor, right behind price
•
Locally grown Williams bananas are also favored by consumers
•
Supermarket distribution is most important but farmers markets are also critical
22
Potential opportunities for local bananas
Local bananas can emphasize:
•
Freshness: Number of days from picking to
shelf
•
Variety: Potential expanded market for local
Williams bananas
•
Apple Bananas: Consumers already express
strong loyalty and taste preference, could
develop stronger brands to build market
share
•
Farm Location: Local Hawai‘i farmer
preferred over a Mainland producer
•
Convenience: Supermarket and farmers
market distribution are both critical
•
Price Premium: If they understood the
difference, consumers were willing to pay
over a $1 more per pound for local bananas
23
Key findings: tomatoes
•
Price is two times more important than any other factor
•
Majority of tomatoes sold are local
•
Strong name-brand recognition among local farms – Kamuela, Hamakua Springs, and
Sugarland – while Mainland brands are not well-known
•
Supermarket distribution is most important but farmers markets are also critical
24
Potential opportunities for local tomatoes
Local tomatoes can emphasize:
•
Farm Location: Local Hawai‘i farmer preferred over Mainland producer
•
Convenience: Ease of availability to consumer is critical
•
Price Premium: If they understood the difference, consumers were willing to
pay over a $2.50 more per pound for local tomatoes
•
Quality: Local tomatoes usually have a shinier and brighter red outside, thinner
skin, redder and juicer inside, and taste sweeter than Mainland tomatoes
•
Freshness: Local tomatoes are picked vine-ripened while Mainland tomatoes
are usually picked before they are ripe due to distance they must travel
25
Key findings: romaine lettuce
•
Price is almost two times more important than any other factor
•
Supermarket distribution is most important but farmers markets are also critical
•
Consumers purchase both local and mainland lettuce
•
Women are the most likely to purchase local lettuce
26
Potential opportunities for local lettuce
Local lettuce can emphasize:
•
Farm Location: Local Hawai‘i farmer preferred over Mainland producer
•
Convenience: Ease of availability to consumer is critical
•
Price Premium: If they understood the difference, consumers were willing to
pay over a $1.50 more per pound for local lettuce
•
Quality: Local lettuce is usually a brighter and shinier green plus has a crisp,
sweeter taste than Mainland lettuce
•
Freshness: Number of days from harvest to shelf
27
Key findings: beef
•
Price ranks as most important, but no hormones and no antibiotics are just as
important to many shoppers
•
Majority of beef sold is from the Mainland. Higher educated, wealthier, older, men,
and Caucasians are more likely demographics to buy Mainland beef
•
Costco Kirkland and Times Sterling Silver have the strongest name brands
•
Supermarket distribution is most important but big-box stores are also critical
28
Potential opportunities for local beef
Local beef can emphasize:
•
Natural: Local beef, especially grass-fed, has no hormones and no antibiotics
•
Farm Location: Local Hawai‘i farmer preferred over Mainland producer
•
Convenience: Ease of availability to consumer is critical
•
Price Premium: If they understood the difference, consumers were willing to
pay over a $2.13 more per pound for local rib-eye steak
•
Freshness: Fewer days from processing to shelf for local beef
29
Most important qualities for each product surveyed
Beef
Egg
Milk
Tomato
Banana
Romaine
Lettuce
Price
23.53 %
31.30 %
43.50 %
37.24 %
30.89 %
35.90 %
Place of Origin
10.48 %
18.78 %
13.50 %
18.29 %
21.93 %
21.30 %
Availability
Growing/Production
Conditions
17.01 %
17.84 %
17.80 %
13.39 %
14.08 %
16.76 %
4.38 %
5.40 %
3.80 %
2.37 %
3.13 %
3.91 %
Taste
4.21 %
7.60 %
6.10 %
9.14 %
11.53 %
13.80 %
6.94 %
Length of Time
15.65 %
Appearance
3.95 %
Texture
16.08 %
Natural
20.36 %
Color
Variety
3.11 %
11.04 %
4.09 %
9.35 %
3.21 %
10.60 %
16.75 %
Quality Key
Hawai‘i benefit
30
Hawai‘i-based qualities nearly as important as price
50
45
43.50
39.83
40
37.24
35.90
Importance of Product Feature
35
31.30
31.10
30
30.89
27.60
25.06
25
25.21
23.53
Price
Hawai‘i
20
15
14.86
10
5
0
Beef
Egg
Milk
Tomato
Food Product
Banana
Romaine Lettuce
31
To increase revenue, educate consumers and adjust prices
Revenue Stream (Per 100 People)
$600
Best Price to
Rib-Eye
Maximize
Steak
Revenue
$516
$500
New Price
(Uninformed $ 9.00
Buyer of Local)
New Price
(Informed
$ 9.00
Buyer of Local)
Revenue
$300
Tomato
$ 3.80
$ 2.70
$ 1.60
$ 1.29
$ 2.25
$ 2.40
$ 2.50
$ 1.50
$ 2.00
$ 0.60
$ 1.50
$ 2.40
$ 3.00
$ 3.00
$ 2.00
$ 1.50
$ 2.00
Revenue = Price x Implied Market Share
$219
$200
$183
$170
$147
$116
$153
$151
$122
$112
$86
$74
Apple Williams Romaine
Bananas Bananas Lettuce
Eggs
Current Price $ 10.00 $ 3.20
$400
$100
Milk
$83
New Revenue (Uninformed)
$102
$82
New Revenue (Informed)
$68
$55
$23
Current Revenue
$22
$10
$0
Rib-Eye Steak
Milk
Eggs
Tomatoes
Local Food Product
Apple Bananas Williams Bananas Romaine Lettuce
*Data for the current local
Williams bananas market
share is unavailable
32
Investing in local agriculture can help Hawai‘i’s economy
Local Product
Local Market
Share Increase
Direct Sales
Increase from
% Market
Share
Increase*
Beef (per
pound)
5% → 44%
(+39%, 8.84x)
$43,992,000
$83,584,800
$22,435,920
$2,771,496
1,065
Milk (per
quart)
4% → 30%
(+26%, 7.75x)
$47,806,200
$90,831,780
$24,381,162
$3,011,791
1,157
Eggs (per
dozen)
20% → 58%
(+38%, 2.94x)
$17,062,000
$32,417,800
$8,701,620
$1,074,906
413
Tomatoes (per
pound)
33% → 58%
(+25%, 1.73x)
$4,487,650
$8,750,918
$2,602,837
$336,574
140
Apple Bananas
(per pound)
37% → 61%
(+24%, 1.65x)
$2,919,960
$5,693,922
$1,693,577
$218,997
91
Williams
Bananas (per
pound)
Romaine
Lettuce (per
pound)
Total: (for the
6 products)
4% → 45%
(+41%, 11x)
33% → 58%
(+25%, 1.73x)
Direct,
Indirect, and
Secondary
Sales *
Earnings
(Farmer’s Slice
of Proceeds)*
State Tax
Collections*
Jobs Created
(per $1M in
Sales)*
Data for Williams Bananas combined with Apple Bananas
$4,087,525
$8,420,302
$2,207,264
$318,827
108
$120,355,335
$229,699,521
$62,022,379
$7,732,590
2,973
*CTAHR Economic Impacts of Increasing Hawai‘i’s Food Self-Sufficiency (2005), USDA Economic Research Service (2008)
Hawai‘i currently has
6,500 agriculture jobs
Increase availability of local food through greater distribution
•
Supermarkets still dominate retail distribution of food in Hawaiʻi, therefore supermarkets play a
critical role in all strategies to increase local food
•
The study indicates that consumers strongly want local products and are willing to pay a premium
for them, therefore retailers could have an incentive to source from more local farms and ranches
•
Locally owned retailers and those who emphasize their local products have higher satisfaction
ratings from customers who want local
•
Foodland has survived significant Mainland competition by branding themselves as local and
consistently providing local products
•
Residents often buy produce at farmers markets and items such as beef, milk, and eggs from bigbox stores
34
Strengthen local brands by building customer awareness
•
Residents often complained that they cannot distinguish between locally grown food and
Mainland / foreign grown
•
Local producers who develop their product brands can charge higher prices with distributors and
retailers
•
Clear labeling and strategic displays in supermarkets can be critical. The message can include the
benefits of locally grown food.
•
Ka Lei Eggs is a great example of a successful local brand. Their strong brand recognition results
from consistent advertising and wide distribution in supermarkets and restaurants (Zippy’s). Their
eggs are sold in Safeway, Foodland, Times, and Tamura’s. The message is simple: We are local and
our eggs are fresh.
35
Hawai‘i brand sells / strengthening the Hawai‘i brand
•
Residents place a high value on “grown in Hawai‘i.” In some cases, Hawai‘i-related qualities were
just as important as price. Sellers need to communicate when an item is local.
•
Whether through legislation, industry agreements on labeling, unified marketing, or other
regulations, it could be valuable to protect the “grown in Hawaiʻi” brand
36
Everyone can play a role
•
Farmers and ranchers could increase their profitability by producing more cost-effectively as well
as by adopting marketing and branding strategies
•
Distributors and retailers can make it easier for customers to identify local products
•
Even with financial and workforce constraints, government may consider developing a state-wide
marketing strategy and enforcing labeling criteria. Partnering with other stakeholders and
organizations could increase impact and reduce costs by pooling resources.
•
Consumers highly value local food but need to communicate their wants and needs to
distributors, retailers, restaurants, government, and other key stakeholders to encourage the
market to grow. Consumers have power through their wallets.
•
When the many stakeholders communicate and work together, local agriculture can maximize
effectiveness
37
LOCAL FOOD MARKET DEMAND STUDY VALUE CHAIN
LANDOWNERS
RETAIL CHANNELS
(Supermarkets, BigBox, & Chinatown)
Provide More Ag Land
due to Higher Demand
Influence Farmers and
Ranchers to Produce
More Local Food
DISTRIBUTORS
GOVERNMENT &
AGRICULTURAL
GROUPS
Buy More Local Food
FARMERS &
RANCHERS
Increase Production of
Food
Advertise they Carry
More Local Foods
Buy More Local Food
Clearly Label Local
Section in Stores
Advertise they Carry
More Local Foods
Encourage Better
Branding and Marketing
Identify Business
Opportunities
Identify Business
Opportunities
Identify Business
Opportunities
2
Influence Farmers and
Ranchers to Produce
More Local Food
1
4
2
3
FARMERS MARKETS
TRANSPORTATION
RESTAURANTS &
FAST FOOD
Provide cheaper / bulk
shipping
1
STRATEGIC RECOMMENDATIONS
1.
2.
3.
4.
Increase Availability
Increase Branding
Protect Hawai‘i’s Brand
Gain Allies
Influence Other
Stakeholders through
Funding and Regulations
Influence Farmers and
Ranchers to Produce
More Local Food
More Stringent Labeling
Laws with Enforcement
Influence General Public
to Purchase and Eat
More Local Food
Protect the Hawai‘i
Brand
Expand Access to Local
Food Island-Wide
INFLUENTIAL
CONSUMERS
(Foodies, Chefs,
Celebrities, Kanu
Hawai‘i, Slow Food
Hawai‘i, Media
Outlets)
2
3
4
Increase Funding for
Agriculture
Increase Farmers Market
Access
See What Could Be Done
to Allow for EBT Cards to
be used at Farmers
Markets and CSAs
2
GENERAL PUBLIC
CONSUMERS
Influence Retailers and
Government to Enact
Easier Identification of
Local
Keep Demand for Local
Food Purchases High
INSTITUTIONS
(Hotels, Schools,
Hospitals, Airlines,
Military, NonProfits)
Requires Education on
Local Food Benefits
3
4
Public Support of
Farmers and Ranchers
1
3
4
Request a free copy of a more detailed report of this
Local Food Market Demand Study of O‘ahu Shoppers
at
www.uluponoinitiative.com
Simulate the Consumer Preference Survey Yourself…
www.OmniTrakgroup.com/solutions/
highlights.html
39