Retailer and Consumer Views of CEA Explored at OPS Session

At the recently held Organic Produce Summit in Monterey, CA, a panel of industry leaders representing the views of both retailers and consumers embraced the innovation of CEA (controlled environment agriculture) but differed in their opinions of its impact on driving produce sales.

The panel, moderated by former Whole Foods Co-CEO Walter Robb, with presenters Caitlin Tierney of Sprouts, Victor Savanello of SpartanNash, and Frances Dillard of Driscoll’s, had a spirited debate as to how consumers would react to CEA if it were marketed as such. The two retailers said they believe the sustainable nature of indoor farming and its advantages could be explained to consumers and would lead to greater sales. Driscoll’s Dillard, however, said she has her doubts and argued consumer produce purchases are driven by taste, and marketers of fresh produce can do better by sticking to that message.

Panelists Caitlin Tierney, Frances Dillard, and Victor Savanello, with moderator Walter Robb

Tierney, who recently joined Phoenix, AZ-based Sprouts as senior director of innovation, noted that she was expressing her own views as her tenure with the retailer was barely a few days old. Of the three panelists, she was the most optimistic in her predictions about the future of CEA-produced fruits and vegetables, saying they could represent as much as 25-40 percent of produce department volume within 10 years.

CEA, Tierney said, has several inherent advantages, including a local component and a great food safety story to tell. Prior to joining Sprouts, Tierney was with Mastronardi Produce, a veteran producer of greenhouse tomatoes and other crops. Mastronardi has foodservice customers that will pay an enormous premium for hydroponic tomatoes because of the expectation that hydroponic growing greatly reduces food safety concerns.

Caitlin Tierney, Senior Director of Innovation, Sprouts Farmers Market

Indoor and controlled-environment growing allows for production facilities to be located all over the country, thereby significantly reducing the miles from the farm to the consumer. While explaining this to consumers might be a bit complicated, Tierney believes it is the industry’s responsibility to educate them.

Indoor and controlled-environment growing allows for production facilities to be located all over the country, thereby significantly reducing the miles from the farm to the consumer.

“Our job as retailers, marketers, and farmers is to make [consumers] care, because they should care how their food is grown, where it is grown, and above all, how it tastes,” Tierney said.

Panelists Caitlin Tierney, Frances Dillard, and Victor Savanello

Tierney said it is her mission as a member of the produce industry to increase consumption of fruits and vegetables, and she firmly believes CEA will do this by offering products that get to the market quicker, are healthier, and taste better. Using romaine as an example, she said when you sample it right from the field, “it tastes amazing … is more nutritious, more flavorful, and so, so fresh” and then you truck it across the country, which causes it to lose some of its flavor and freshness. CEA offers a solution to that problem, she believes.

“Our job as retailers, marketers, and farmers is to make [consumers] care, because they should care how their food is grown, where it is grown, and above all, how it tastes.” – Caitlin Tierney

Savanello of Spartan Nash also believes CEA has a bright future as it has a great story to tell. As an example, he said greenhouse-grown snacking tomatoes have had a tremendous increase in sales because the greenhouse growing method has improved their flavor and freshness.

Victor Savanello, Vice President of Produce and Floral Merchandising, SpartanNash

At the same time, Savanello believes the impact of CEA is very much crop dependent. Some products, he believes, will get a big boost and others will not. The berry category, for example, may be one of the bigger beneficiaries from the flavor and freshness enhancement that can come with CEA production, he said. 

Speaking of his own challenges with the supply chain, Savanello said he likes the consistency of production that CEA appears to offer. For example, he said the issues he had during the pandemic in keeping produce shelves stocked could be mitigated with more CEA production. He added that CEA facilities should also reduce his costs as production would be closer to the warehouse. Savenello listed longer shelf life and less shrink as two more advantages of CEA from a retailer perspective.

SpartanNash, Savanello said, is exploring and has participated in partnerships with CEA producers. Each producer appears to have a different approach. For the future, Savanello likes the competitive edge CEA could give SpartanNash in terms of allowing the retailer to have supplies when competitors do not.

He added that CEA facilities should also reduce his costs, as production would be closer to the warehouse. Savenello listed longer shelf life and less shrink as two more advantages of CEA from a retailer perspective.

About a year ago, Driscoll’s and Plenty, an indoor, vertical-farming tech company, formed a partnership to grow strawberries indoors, which gave Dillard credibility when she assured the audience that the strawberry giant has “embraced CEA” and “embraces disruption” in the production end of the business. However, as the company’s vice president of brand and product marketing, Dillard does not believe touting CEA as a growing method will connect with consumers and drive sales. “CEA – what does it mean to the consumer? Absolutely nothing,” she said.

Frances Dillard, Vice President of Brand and Produce Marketing, Driscoll's

Driscoll’s believes “its secret sauce” to increase strawberry sales is the superior flavor it delivers using its proprietary varieties, Dillard said. Throughout the hour-long seminar, she resisted painting CEA as a potential driver of sales. She said price and freshness play a role, but flavor is the determining factor when it comes to sales and will remain the major focus of Driscoll’s marketing efforts.

However, as the company’s vice president of brand and product marketing, Dillard does not believe touting CEA as a growing method will connect with consumers and drive sales. “CEA – what does it mean to the consumer? Absolutely nothing,” she said.

Dillard did allow that CEA techniques could play into the freshness argument, but she said “it’s a complex idea to communicate to consumers,” indicating it would not be a marketing path Driscoll’s would take.

In response to persistent questioning from Robb, Dillard did agree that some consumer segments, such as Gen Z, do care how their food is grown, and the concept could resonate with them. But she noted that “millennial moms” are Driscoll’s target audience, and they just don’t have time for lengthy decision making when it comes to buying their fresh produce. She argued that these shoppers are juggling many balls in the air and may only have three minutes on a particular day to fill out their Instacart order. They aren’t looking for time-consuming explanations on a particular production technique, she said.

Dillard did jokingly take issue with the title of the session that questioned whether CEA was reality or hype. As a marketer, she said, “I love hype!” She went on to say no one in the CEA space is trying to mislead consumers by advocating for the growing method. Dillard, in fact, is excited about the idea of the disruptive force of CEA and how it can lead to increased consumption. She said Driscoll’s has embraced the concept to leverage its variety work with the freshness promise of local production. In closing, she opined that she hopes CEA helps the produce industry take on the plant-based meat category and “grow our industry. We have to figure out how to grow our industry," she said.