Research at wholesale HANOS
General research
The research discusses a major part of the local food spectrum. Initially, some general research was performed. In the following, the main conclusions from other reports that address the topic of supply and demand in local food are presented. When looking at the demand, customers experience barriers in buying regional products, the most important of which are:
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It takes a lot of time to pick up the products at a local farm
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Consumers have the perception that it is very expensive
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The products aren’t for sale at the usual stores and markets
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The regional products are not easy recognizable
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Some products can only be bought in certain periods in the year
Customers buy regional products, because:
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It is a form of social responsibility
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It supports the regional economy
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The quality of the product is better
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They are authentic
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The products make their restaurant/company stand out
When considering the supply side, in general, local entrepreneurs expect wholesalers to take the initiative in selling more regional products. To support the products as much as possible, a shop-in-shop principle would be a solution, where the selling of local produce is considered a shop within a wholesaler. This helps in removing the barriers experienced by entrepreneurs. To aid the development of short food chains, the added value of regional food should be underlined and a cooperative structure should be handled. Bottlenecks are mainly experienced in professionalism, problems with upscaling and efficient logistics.
Customer research
In the next phase, the research focused on the HANOS in Groningen. With the help of questionnaires, the demand of the customers of HANOS was researched. The aim was to see if the general research drew similarities with wholesalers in Groningen and to get further detailed information about the demand side for local food in Groningen. In the next pages, the main conclusions from this research are presented. A total of 103 responses were gathered, which is a response rate of 21%. Some 42% of the respondents are restaurants, 15% own a bar or café, 12% of the customers are hotels and 11% are caterers. The rest of them are cafeterias, B2B or other.
Results
The main conclusions from the results are the following:
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82% of the respondents is positive about regional products.
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Around 40% of the customers is willing to pay the same price for a regional product as for a normal product and around 50% is willing to pay 10% more.
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The customers believe that a regional product should come from a radius of 56 kilometres from the company.
What is experienced as the most important aspect of regional products was not researched.
Consumption
About 70% of the respondents already buys regional products. Most of the customers that buy regional products do so every week or even more often (63%). Some 75% of the clients would like to buy even more. The regional products that are currently purchased the most are beef, cheese, vegetables and beer. HANOS is offering several local products, but the diversity is limited. When asked what regional product groups would be interesting for customers and what they would buy more of, the answer was: cheese, vegetables, beef, pork and dairy produce. Linking this with the fact that a lot of the clients would be willing to buy more local produce if it was being offered at the wholesalers, it shows that there is quite a big market for offering more local food in different segments. When the respondents were given a choice between two comparable products of which one is a regional product, 75% of the respondents chose the regional one.
In line with the earlier studied literature, the two most important reasons for buying regional produce are:
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The products make the company distinctive from the rest
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Buying regional products is good for the local economy and farmers
Others reasons, such as quality, higher margins and freshness score relatively lower.
The most important negative experiences when buying regional products are:
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They are more expensive than regular products.
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Buying regional products is very time consuming.
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The products are very dependent on the seasons.
The respondents that buy regional products didn’t mention a better margin on selling the products and a possible lower quality of the food. The three experiences mentioned above show the opportunities that can be worked on in the future. By taking away these negative experiences or by letting people realize that one depends on seasons if one wants to produce in a natural, organic way, the local food chains can be developed further.
The most important reasons for customers for not buying regional food are:
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The price is too high
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It takes too much time to obtain them
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The products have a lower quality then the regular products.
Interviews
Together with the questionnaires, some of the respondents were asked if they were willing to have an interview with the researcher and discuss further details of the questionnaire. Four different respondents were picked out for an interview and the results are discussed below.
General
The catchment of the Northern part of the Netherlands is too small, so companies are turning to the rest of the county to sell their produce. The most important aspect of regional products right now is the traceability of the products and the story that goes along with it. This story is now the most important selling point for local food although it would be better to be less dependent on this story in the future.
Purchase
Because of the fragmentation of local suppliers, the purchasing of the products consumes a lot of time. Customers need to find the suppliers and also need to pick up the produce. Next to that the quality of the products fluctuates and also the reliability of the suppliers. For small buyers, such as small restaurants, it is not a big issue as they are able to switch fairly easy. Bigger parties can’t rely on the regional food market yet. Right now, a supplier is approached per product. This is also confusing for a lot of consumers as it is often difficult to recognise a regional product. By shortening the food chain the buyer has more influence on the producer. There are already some examples of strong collaboration to create added value for the customers.
Motivation
The reasons for using regional products vary per company. There are several perspectives for using them, such as sustainability, but also taste and the distinguishing factor of local food being local is important. This last reason is mainly important for the restaurants and caterers, as for them, it is a distinguishing factor to have regional food on the menu. The use of regional food has the consequence that the big buyers have less control on the product they are buying. This differs per product group; dairy and bread are examples of markets that can be organized fairly easy, due to the nature of the products. Insights in the accessibility of the local food market is getting better and also the common knowledge of these products grow. This makes it easier to gain access to it.
The demand
The demand for regional products varies per company/customer. Cafeterias aren’t ready for the purchase of regional products as the companies and customers are, in general, very conservative. In general they aren’t occupied with themes as sustainability and the regional economy. The cafeterias of healthcare facilities have stronger sustainability demands and are prepared to spend more money and time on purchasing and including the regional food market, although this is not very easy. The price is often a prevailing factor, which results in that the decision making is often in favour of the international market. The market also needs more professionalism and a more substantial contribution to the market for it to become more interesting for bigger purchasing parties. The same goes for caterers; the price of local produce is often too high to be purchased. Restaurants are ready for more implementation of regional food. These products become more and more important within this branch. It is also very suitable as they are often very flexible. The most important aspect of local food, for them, is the distinguishing factor.
Future
In the future, there should be a tipping point. The economy has to be growing and customers have to get used to seasonal food, if we want to work on a regional and sustainable food system. It could be reasonable to expect a growth in the market and the fact that regional food will have a bigger share in purchasing food. Currently, the biggest bottlenecks are:
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The fact that purchasing regional products consumes a lot of time, both for buying as well as processing.
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The regional market is very fragmented and confusing. There is often very little commercial know-how.
The wholesalers can play an important role in the further development of the regional food chains and is believed to have an important role as initiators. The most important aspects are:
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Logistically the wholesalers have a crucial role in purchasing and connecting more regional products to their company and efficiently distributing it to their customers in the city.
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This also creates a better overview of the regional food market and its involved parties.
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They also have the opportunity to tell the story behind the products and food chains, which can convince more people to buy.