For canned tomatoes to compete with fresh they have to deal with the perceptual issues of freshness, convenience and value or they become a commodity product. Going the commodity route leads the branded canned version to compete with private label where value may be the only differentiator.
While consumers see tomatoes on a continuum of fresh to heavily processed, fresh and processed tomatoes are separate markets for processors. The Hunt's brand of ConAgra Foods set out to create a new, premium niche within canned tomatoes by sprinkling herbs and spices amidst the concepts of organic and premium … all the while keeping the product in a convenient canned package.
The result is Hunt's Organic Diced Tomatoes. We've focused on the Basil, Garlic and Oregano variety. Has Hunt's succeeded on all points, both flavor and texture, and are consumers ready to pay three times the cost of regular canned tomatoes?
Understanding the marketplace
Canned fruits and vegetables have an overall market size of $3.6 billion. However the category has experienced negative growth on the order of 5 percent from 2000 to 2005, according to Information Resources Inc. Causes apparently are the overall improvement in quality of private label goods, consumers cooking fewer foods from scratch and fresh produce from other countries being available in U.S. markets during off-season periods.
|Tomatoes (especially organic) have a "halo of healthfulness" and added seasonings save consumers time and pantry inventory. But are shoppers willing to pay a premium for those attributes?
Flavor varieties and packaging have been areas of innovation for canned fruits and vegetables. At retail in the canned tomato category, consumers see Hunt's, Del Monte, Contadina and many regional players.
Per capita consumption of processed tomatoes is on the order of 70.3 lbs. per capita, according to 2003 USDA Economic Research Service figures. This is a decrease of 5 lbs. per capita since 1990.
On the other hand, consumption of fresh tomatoes increased 3 lbs. per capita since 1990, according to USDA/ERS, reaching 18.4 lbs. per person. Drivers have been salads, sandwiches and subs along with ethnic foods and a general interest in healthier eating, especially Mediterranean diets.
Per capita consumption of fresh and processed tomatoes rises as household incomes increase. Households in the highest income bracket, with incomes at least 3.5 times the poverty level, represent 39 percent of the U.S. population but consume 44 percent of fresh and 43 percent of whole processed tomatoes. Men and women over the age of 39 represent 39 percent of the population and consume 50 percent of all fresh tomatoes, according to USDA/ERS facts from 2000.
So higher income households find the tomato of greater interest than those of more modest incomes. What might this mean for a processor/marketer?
Hunt's is trying to meet the needs of the consumer for the 76 percent of tomatoes that are eaten at home. The company is seeking to shift the premium paradigm from thinking that "fresh is the only premium option" to "shelf stable canned could be a reliable alternative." Hunt's is, in effect, defining a new space of shelf-stable fresh foods. This oxymoron is complex since it deals with consumer perceptions of what is freshness, a transitory concept, and how it links to value perceptions.
There are a lot of tomato choices and prices, from the traditional fresh tomato in the produce section that can be amazing at the peak of season or mealy and flavorless at nonpeak times to canned tomatoes. The top-of-mind reason for selecting one tomato type over another is usually the menu requirements, usage occasion and availability.
What is difficult for a premium item like Hunt's Organic Diced Tomatoes is the vast majority of consumers do not perceive that there are many situations where they could use the product right out of the can, but lots of occasions that use canned tomatoes during cooking in recipes. How would one really understand an improvement in fresh flavor when the tomatoes are dumped into a recipe then cooked?
From our Healthy You! studies, we learn the key attributes for canned products, in ranked order, are: taste, price and product appearance. With price as the second most important attribute, it's easy for canned tomatoes to become commodities.
When asked to trade off a variety of ideas about tomatoes, consumers say they are looking for: flavor, vine-ripened, herbs and spices, thick and chunky, all natural - no artificial flavors, colors or sweeteners - made with the freshest ingredients, a potential cancer fighter and healthy eating that tastes great. Canned products are a category where consumers are less likely to consider purchasing organic products.
Key ideas that can impact the category are convenience, flavor and healthfulness.
Convenience: Manufacturers are responding to consumers' hectic lifestyles by creating packaging that assists convenience. Having a fresh tomato requires the consumer to deal with shopping and storing tomatoes within a few days of expected usage. Canned tomatoes enable the consumer to pantry-stock the tomatoes so they are available when needed. Other innovations have included special seasoning blends and having the tomato products already cut (diced, cubed, pieces, etc.) for the particular use.
Flavors: Adding seasonings to canned tomatoes allows the consumer to save a step of seasoning and reduces the number of items in their pantries. This also makes them look like they can cook - and with a gourmet touch.
Healthfulness: Tomatoes have both the halo of health and reality of health. One medium, fresh tomato (about 5.2 ounces) has 35 calories and provides 40 percent of the recommended daily amount of vitamin C and 20 percent of the recommended vitamin A. Lycopene has been linked to reducing the risk of cancer. Organic tends to be of great interest to those who like the idea, but is not of strong interest to mainstream consumers, according to our own It! data from 2003.
Hunt's Organic Diced Tomatoes are available in a 14.5 oz can for about $1.39. "Organic" is on a green leafy strip right below the Hunt's name, and the USDA organic seal is on the front of the label. The flavor - in this case, Basil, Garlic and Oregano - is called out. The type of tomato (diced) is also right on the front. The image of the tomatoes is drawn as opposed to a photograph. This gets to the idea that consumers are looking for an ideal of organic tomatoes, not necessarily the reality.
Aroma, flavor and texture are critical to the perception of quality and freshness of tomatoes. This product initially surprises. The taste is that of a fresh tomato. How can this be, since it came from a can? The appearance is bright red, also a signal of summertime, field-fresh tomatoes. However, there is no aroma when smelling the product at room temperature. The dices are well formed and of a good size for salsa or bruschetta.
Up to this point, everyone on our consumer panel was in agreement. Then opinions varied. Some of our evaluators wanted and expected a fresh texture - similar to chopped tomatoes in the summer. Why? The flavor was so intense and fresh. The color so red. Nevertheless, some were disappointed in the soft mouthfeel of the dices.
There were others who loved the product as-is and felt they could use this in a number of products. The appearance and flavor drove them to want to use these tomatoes in fresh dishes; and the soft texture made us want to work them into cooking applications. However, once using it in cooked applications, we ran out of recipes in which we were willing to trade off price for the use.
Oddly, the product is manufactured in Israel.
Does the product deliver?
Hunt's Organic Diced Tomatoes are trying to provide a premium product in terms of benefit, color and taste to offset the higher price (about three times the price of a regular can). It does not compete with fresh tomatoes. Fresh tomatoes should have great flavor and a crispy texture. And people believe they get that at certain times of the year. These canned tomatoes have great flavor but a soft texture. So we had confusion. The dilemma is how to use these canned tomatoes as they are.
Our consumers loved the fresh flavor but, if these tomatoes are going to be relegated to cooking, some wanted an even stronger flavor. So some of our consumers wondered why they should pay more for this product for delivering a benefit (farmstand-like freshness) they were not going to use. We concluded the idea is not holding up to the reality.
Hunt's is a brand that has focused on convenient products from the field. Hunt's Organic Diced Tomatoes are convenient, but they also lead consumers to a new space. It does deliver the flavor but not the expected texture of this space. Canned products have a value orientation. The flavor of this product is premium. But not the texture. Hunt's is only part way there. Great innovation, but not enough for the everyday consumer.
How to make the idea bigger
We think Hunt's has done well going into this space with an interesting product and application. Figuring out what the organic premium buyer really wants and needs is required. We think this buyer is probably sophisticated and expects the entire tomato experience – aroma, color, flavor AND texture of fresh organic tomatoes. But do they?
If consumers do, then this product is only partially there. If they don't, then this new product is a good start.
Rating: Hunt's Organic Diced Tomatoes (Basil, Garlic and Oregano) does deliver a premium taste experience. But not premium texture. This is a product space that few have been to, but this product may not have enough benefits to compete with fresh or other canned tomato products.
Market potential: Consumers have said they want this kind of a product, but when they are given it, they really wanted more. This product will struggle to find repeat customers.
About the Authors
Hollis Ashman (firstname.lastname@example.org) is chief strategist and Jacqueline Beckley (email@example.com) is president of the Understanding and Insight Group, a strategy, business and product development firm. For more information, see www.theuandigroup.com.