Increasing the Demand for Fresh Potatoes

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Increasing the Demand for Fresh Potatoes

• Fresh Demand Working Group
• Monte Vista, Colorado
• February 2009

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What is the Fresh Demand Working Group?

• Group of fresh market growers and grower/shippers
  concerned about
• Declining trends of in-home fresh potato
  consumption.
• Short-term and long-term grower returns.
• Lack of short term demand building programs.

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FDWG Structure

• 501 c6 non-profit
• Executive Board, Lee Frankel, Jim Knutzon, Cary
  Hoffman
• Finance committee/ Jim Knutzon, Cary Hoffman,
  Russ Wysocki, Alan Floyd, Bart Connors, Bill
  Brewer, Bob Meeks, Danny Johns, Jim Ehrlich, Dave
  Warsh, Keith Barrett , Keith Masser, Mike Haddad,
  Steve Tweeten , Ted Kries , Todd Micheals ,Tom
  Francone
• Tactics committee Mac Johnson, Larry Noedel, Pat
  Goolsby, Marty Myer, Tim OConnor ,Kathleen Triou

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• Why are so many growers concerned?

Supermarket sales were down 86 million pounds in
the first 9 months of 2008----and continue to be
soft.
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Why are so many growers concerned?

• Grower return changes since 10/01/08
• Idaho 10/01 13.49 02/04
  7.76(5.73), 50.2 Million
• Colorado 10/01 18.63 02/04.
  11.53(7.10), 22.7 Million
• Basin 10/01 13.24 02/04
  9.30(4.24), 11.2 Million
• Wisconsin 10/01 16.24 02/04
  12.54(3.70), 7.6 Million

Opportunity loss of 91.7 Million in grower
returns since October 1!!
Source Bruce Huffaker
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Why are so many growers concerned?

• Currently supply is keeping up with demand,
  grower returns are reasonable but headed down.
• Do we wait to test a demand building program?
• NO - Estimates indicate that substantially more
  acres will be planted next year.
• - If yields are average we will have more
  supply than demand and grower returns will go
  down.
• If demand falls another 6 next year ( Likely)
  and if we plant 6 to 10 more ( historical
  average) we will have a grower return of about
  3.50 to 4.00/cwt

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Economics/ Pay me now or lose it later

• Pay .25 to .50/cwt now gives a chance to impact
  the outcome
• If demand does not change than you could lose
  3.00 to 4.00 a cwt next season
• Now is a perfect time to do this
• 1) Ad rates are going down
• 2) We can interact with a whole bunch of
  customers who are looking to save money and we
  can communicate the Value concept.

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What is the Fresh Demand Working Group?

• Misconceptions
• The group is just another group of United
  growers.
• Not true, of those who have been regularly
  attending the meetings, its split almost 50-50
  United and non-United members.

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What is the Fresh Demand Working Group?

• Misconceptions
• Growing the demand for potatoes thats why I
  pay the USPB.
• True, but the USPB programs are long term demand
  building, and we have some short term issues.
  Additionally, the USPB funds domestic and
  international programs, and in all sectors of the
  industry. There isnt enough money to effectively
  accomplish retail demand building.

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What is the Fresh Demand Working Group?

• Misconceptions
• I also pay my state organizations to grow sales.
• True, but with the exception of Idaho Potato
  Commission which has done a very effective job of
  advertising Idaho potatoes and conveying a
  nutritional message, most commissions/boards do
  not have sufficient funds to mount a demand
  building advertising or promotional program.

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What is the Fresh Demand Working Group?

• Misconceptions
• In a poor economy, as more people are eating at
  home, consumers will turn to potatoes, and sales
  will improve.
• ???, History would indicate this is true.
  However, through the first 9 months of 2008 pound
  sales were down -8.7. While some of this was
  driven by supply, and record high prices,
  shipments remain soft in the 4th. quarter.

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What is the group trying to accomplish?

• Increase the sale / demand of fresh potatoes
  pounds and dollars.
• Industry has demonstrated we can raise prices
  with short supply, but volume suffered.
• Goal is to increase pound sales 5-10, with good
  returns to the grower, while meeting retailer
  margin expectations.

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What is the group trying to accomplish?

• Phase 1 Collect sufficient funds to test and
  prove that a strategy / program can be put in
  place now that will drive sales --- pounds and
  dollars.
• Needed 1 to 2 million.

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What is the group trying to accomplish?

• Phase 2 With success in phase 1, proving that we
  can effectively drive sales, seek additional
  funding to implement the program nationally.
• Needed - 8 to 10 million.

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How does this get funded?

• As a voluntary trade group, we would ask growers
  for .25 CWT on every CWT of fresh potatoes sold
  to fund the test.
• We would also seek funding support from USPB and
  State Groups.
• We would also seek industry supplier support.

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• We would also seek support from sales
  organizations and packing sheds based on their
  volume.
• Packers with gross sales of 100 million or higher
  would contribute 75,000,
• Sales of 75 to 100 million would contribute
  50,000,
• 25 million to 50 million in sales 35,000
• 10 to 25 million 25,000
• Less than 10 million 10,000

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What are you going to test?

• All elements will have a consumer focus.
• Details are being worked on, but include
• Creative new promotional programs, not Buy 1
  get 1, or .50 off a bag.
• Pursue partners (Tyson, Hormel, Purdue,
  Smithfield, Breakstone as examples)
• This could potentially provide significant
  funding support
• In-store merchandising, radio
• Radio
• Cable TV
• Others as identified
• What we test must be scalable, sustainable and
  deliver results.

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How will you interface with other organizations?

• FDWG has held numerous meetings, all in concert
  with the USPB, and attended by most of the state
  groups.
• Very involved with campaign signature
  development.
• Involved with USPB print campaign development.
• Open dialogs with state groups, who have attended
  most meetings.

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How will you interface with other organizations?

• This is not a them or us program, its for the
  industry.

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How will you interface with other organizations?

• Wont there be free loaders?
• Whether you talk about United, or NPC, or many of
  the voluntary state organizations there will
  always be those that benefit from the monies
  others have spent. Fact of life, but weve got
  to protect and grow our volume.

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We need to start today to protect our future.
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Questions?

• Fresh Demand Working Group
• Monte Vista, Colorado
• February 2009

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Increasing the Demand for Fresh Potatoes

• Fresh Demand Working Group
• Monte Vista, Colorado
• February 2009