Food Co-ops Untapped Potential to Touch the Consumer’s Heart

Blog Post The Strategic Frame

As a consumer, are you sometimes-if not all the time wondering where your food comes from? How was it produced? And who were the people who produced it? If they sold their products at a fair price? If the animals were well treated before heading to the slaughterhouse?

There is more data available now to get some answers to these questions than ever before: labels, brand and marketing claims, certifications, studies, TV programs, podcasts, books, etc. All are trying to steer us in our day-to-day choices and yet most consumers are left uncertain. What is true and what is green-washing in this fury of messages? Since the answer is as complex as food production, consumers will make their choice based on a frequently-changing mix of data and approximate science.

This expectation for transparency, fair trade, naturalness, traceability is becoming one of the key purchase drivers, especially for the Z-generation who have been raised with a concern for sustainability since daycare. The food industry that has built brands for decades on other drivers is now struggling to respond. They cannot cheat on the sourcing of their raw food ingredients in the age of big-data. Marketing claims have to be grounded or the brand equity may actually suffer. The reason to believe in the brand might well turn into long-term skepticism for this new generation of consumers.

Have you ever heard of Food Co-ops? Can you name one?

If you have not or cannot name any one of them, you are fine. They were not founded to become well-known names on the market but to respond to the need and opportunity for producers of the same food product (think milk, cereals, beef, vegetables, etc.) to regroup and benefit from mutualized efforts, such as grouped purchasing, joint negotiation with retail and access to markets. While many coops have launched their own brands, a large amount of their production is still sold to the food industry, to retail under private labels and on the raw products spot markets. And up to now, none of the coops has developed world-class love brands.

The strategic choices made by the co-ops are guided by values such as fair treatment of the producers: this is one of their raison d’être, sustainability as in fair treatment of the natural resources and the animals: this is what makes the producers’ heart warm, quality and traceability: peer-pressure and peer-support among the producers push for transparency and constant improvement. These values are harmonics of what the consumers expect even if they do not use the same words, what sometimes lead to misunderstandings. Mentioning one example, consumers want organic products while producers know that organic food is not necessarily the best answer to provide the best mix of quality, naturalness, food-safety and low-waste-generating production. In the end, they both want the same but co-ops fail to communicate clearly.

Has time come for the Food Co-ops to claim who they are on the markets?

More and more consumers behaviors show the growing interest in sourcing one’s food directly from the producers: farms delivering shared points of sales in large cities, online ordering platforms, fresh food markets. Yet co-ops keep fighting on the modern trade front with timid marketing strategies while some big names of the food industry keep adjusting their marketing claims to the new expectations.

Why aren’t the co-ops seizing the opportunity? Their strategy is run by boards of elected representatives of the producers. Their primary concern remains to ensure market access opportunities to the producers, not building global brands. As far as their existing brands are concerned, they are hesitant to brag about their inherent values on the market thinking they have to compete against the big brands with the same weapons and none of them has the financial power to muscle out the big firms in the food industry. This is pointless. Co-ops are different and offer a distinct total-value proposition to the consumers and should distinguish themselves clearly in the landscape of the food industry.

Managers of the co-ops have the challenge to build the bridge between producers and consumers while shifting their boards’ point of focus: from coops exist to serve producers to coops exist to serve the producer-to-consumer relationship. They have to lead a cultural transformation of their organization and embark both producers and employees in the project.

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