Background
Operations

Retail Fresh
Sector

Grow and differentiate through innovation and communication

Growth and Differentiation through Innovation and Communication

At HZPC we look beyond the next link in the value chain. This year the Retail Fresh sector has a prominent position in our annual report. The Retail Fresh team operates in a rapidly developing, highly diverse, multicultural world market. Continuously gaining better knowledge and understanding of the clients of our customers is a vital part of HZPC’s Retail Fresh strategy. A strategy that aims to grow our sales, marketing, and earnings based on an increasingly wide offering. We will achieve this by wide-ranging innovations and collaborations throughout the value chain, from potato breeding right through to the consumer’s plate. In other words, our Retail Fresh team vision is about achieving ‘Growth and Differentiation through Innovation and Communication’.

As Retail Fresh, we want to know the customers of global supermarket chains better and better. This is both a strategic goal in itself as well as a means to achieving our strategic goals. We want to grow with distinctive products that meet customers’ needs, and we want to achieve this by providing added value through product innovation and communication.

By understanding what motivates consumers, we can add more value for our customers in our role as a partner to packers and retailers. We will also use this international consumer knowledge to sharpen our varieties portfolios towards the potato characteristics that consumers desire. We develop knowledge about the role of the potato on the consumer’s plate, about potato shelves in the supermarket, about packers, and about the distributors who transport potatoes in bags or crates. At the same time we focus on the challenges that ware potato growers face today. HZPC is a player on a number of different fields simultaneously, which means we see things from the perspectives of the various HZPC domains of seed potato trade, distribution, growing and breeding, as well as product introduction and support. Every activity we undertake as Retail Fresh must contribute to at least one of the four strategic priorities: growth, differentiation, innovation and communication.

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Differentiation

For us as HZPC Retail Fresh, differentiation means a wide offering of potato varieties in the best quality seed potato. HZPC supplies potato varieties to growers in more than 80 countries. In 41 of these, HZPC Retail Fresh varieties are grown, with the crop destined for supermarkets. From its differentiation strategy, the Retail Fresh sector offers a wide range of the highest quality, connecting to each individual market. In each of those countries the HZPC seed potatoes for the Retail Fresh sector are closely linked to consumer behaviour, preferred shapes and sizes, local agronomic conditions and other requirements as determined by consumers, retailers, packers and growers. This generates many variations for each market. A salad potato in Germany, for example, is round with a strong mouthfeel and dark yellow flesh. In France, the preference is for an elongated, firm cooking tuber that provides a creamy sensation. In the UK, it is round, white-fleshed and slightly mealy. To channel the preferences, we have distinguished 20 product profiles for the HZPC Retail Fresh market, all of which meet the desired agronomic characteristics and crop performance. These profiles allow us to offer our customers the variety, convenience, enjoyment and consistency they want.

Especially because the market wants it, it is particularly important that we can also offer our customers organic varieties. We do this through our participation in Bonna Terra. In the Netherlands, for example, it is a requirement of organic labels that the seed potatoes are also grown organically. HZPC is working on expanding the existing number of varieties. In HZPC’s quest for efficient, resistant varieties that are in harmony with a healthy soil, the objectives of conventional and organic potato growers are converging.

Our ultimate goal would be to set a market standard as we did, for example, in Germany with Annabelle, in Spain with Monalisa and in Portugal with Asterix. Another example is the Italian market, where consumers are strongly opinionated about the taste of pasta, but not about potatoes. This led to supermarkets offering potatoes with superb looks in terms of shape, size and skin; but with little flavour. HZPC focuses on consistency in quality and flavour in all its varieties. A number of Italian buyers have now taken the initiative to develop a Crisps4all-Holland proposition. This frying potato, ‘patata da friggere’ has its own packaging, displays and promotional material, and allows the Italian consumers to enjoy tasty home fires of professional quality. The concept offers consumers an exceptionally high quality potato, excellent cooking characteristics and great taste. And it’s working!

Video Crisps4all

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Growth

We have structured growth in our Retail Fresh sector into three different types of markets:

  • 80 percent of the marketing of seed potatoes for Retail Fresh takes place in 12 of the 41 countries, of which the top 5 are traditional potato countries: Belgium, Netherlands, France, Germany and the UK. Mature markets where development occurs on the one hand through, for example, an exclusive range of coloured Perupas and baby potatoes in small, slightly more expensive packaging; and on the other through larger, more economical packaging with retail varieties. In these 12, mostly European countries, gradually fewer potatoes are eaten per capita and the potato is under pressure from world cuisine alternatives such as pasta and rice. Here our focus is on stabilising our market.
  • Outside Western Europe, we see growth. The Central European Retail Fresh market is growing by 10 percent a year, thanks to the rise of supermarket chains.
  • Emerging markets such as China and India will probably only be ready for Retail Fresh about a decade from now. Currently, servicing supermarkets is primarily a logistics operation with prepacked traditional varieties.

New varieties have to tap into new market segments and should not cannibalise existing varieties within their segments. Last year saw a challenging market, but we managed to achieve additional growth with new varieties. For example in Germany, Italy and Spain with Colomba; in Poland with Gioconda and Orlena; in Slovakia with Sunita; and across the whole of Europe with Noblesse. Good indicators that we have here planted the seed for future growth.

Product and concept introductions can occur with both the packager and the supermarket chain. In Finland, we have introduced several initiatives with our partners. Another example is our collaboration with the Portuguese supermarket chain, Sonae Continente.

 

Video Sonae Portugal

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Innovations

At HZPC, innovation in breeding means we delve deep into our gene bank to uncover innovations that the market will really want. To ensure these are then well-received in the market, HZPC works on building trusted long-term relationships. Through collaboration with these partners we can come up with better solutions for the market. Good interaction and open communication with distributors, packers and supermarket chains provide valuable input that leads to clear product profiles. This way, differentiation and innovation come together at HZPC’s R&D team in Metslawier.

An example of this is the development of the US market. The breakthrough into the attractive American supermarket world, dominated by white-fleshed potato varieties, was the introduction of tasty, yellow-fleshed HZPC potatoes. In the US and Canada, HZPC has in just 11 years built a 7 percent Retail Fresh market share with our yellow-fleshed varieties. Our market position has opened the door for new white-fleshed HZPC varieties with good taste and consistent quality. Retail Fresh supplies the potato varieties that meet the product profile preferences of these regions.

You will find innovation throughout our entire Retail Fresh sector. The process begins at R&D with research and techniques to assess, understand and describe our varieties. This enables us to translate variety characteristics such as taste, carbohydrate content, and fibre and antioxidants levels into new market concepts. Innovation can also lead to the development of a completely new potato family, such as the colourful Perupas, calling for an entirely different market approach. The interest in Perupas from customers and countries is large, and illustrates just what we can expect by developing and marketing new varieties.

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Communication

Because we build long-term relationships with our customers, everything revolves around communication in the broadest sense of the word. Every step in our business cycle requires the appropriate precise communications, from trial fields results, variety performance and characteristics to growing instruction, marketing and sales. And because the consumer is our ultimate point of focus, we develop product concepts.

We also initiate promotional campaigns together with other market players. For example, with 28 other parties we contribute to the potato promotion campaign of the Nederlandse Aardappel Organisatie (Dutch Potato Organisation, the representative body of the potato trade). This three-year-long campaign promotes the tag line ‘Power to the Pieper’ (‘pieper’ being the Dutch equivalent of ‘spud’). Together we have a clear message: the potato is a solid classic that has much more to offer than trendy superfoods. Examples of campaign elements are videos, recipes, and website www.powertothepieper.aardappelen.nl. A number of packers are promoting the ‘spud’ with sticker campaigns, and have also raised the potato’s profile with 450 billboards in Holland’s the densely-populated Randstad area of the Netherlands. We designed signs for our growers to display in prominent points.

Power to the pieper
Our world is changing. People are changing. Even our relationship with food is changing. And our food becomes more and more complicated. Luckily, some things stayed delightfully normal. Power to the Pieper!

Super market, super world

The supermarket is the field of play for Retail Fresh. In Western European countries, more than 80 percent of ware potatoes are sold through these fresh food chains. In Southern European countries this is more than 50 percent. We also see growth opportunities in Eastern Europe, where currently less than 35 percent of potatoes are sold through supermarkets. Over the longer term, we are targeting the growing number of emerging economies, where currently it’s mainly people in cities who buy potatoes in supermarkets.

Cities will eventually be the domain of the supermarkets and hence of Retail Fresh. It is expected the world population will grow to nine billion people, and that this growth will keep pace with global urbanisation: currently more than half the world’s population lives in cities. The urban middle class to be found in emerging economies and countries with growing populations, has its own preferences when it comes to nutrition. Retail Fresh wants to understand these preferences in order to be able to respond adequately.

Super varieties

In HZPC’s experience, promising Retail Fresh markets initially evolve to an intermediate phase where multipurpose potato varieties suitable for the Traditional market are prepacked and sold via Retail. After this, a market develops for typical Retail Fresh varieties, also prepacked. These varieties offer more benefits in terms of shape, attractiveness, user-friendliness, consistency and durability.

Our Retail Fresh varieties meet complex agronomic requirements. As a fresh product, the Retail Fresh potato needs to be grown locally. This is environmentally friendly, though it often takes place under challenging conditions such as a disease or abiotic stress from heat, drought or even salinisation. Retail Fresh customers expect the best growing performance of our varieties and an assured, consistent crop quality.

Super food

Potatoes are an excellent staple food and fit perfectly within the food matrix. The potato is also enjoying growing popularity as a gluten-free vegetable and a balanced product. It is now the world’s fifth food crop, with rapid production growth and more potential in Africa, China and India. Apart from sufficient energy of the right (healthy) nutritional value, potatoes also provide essential nutrients such as potassium, vitamins, amino acids, minerals, carotene and bioactive components such as antioxidants.

Our market vision is that the demand for both premium segment and affordable (volume) offerings is growing. We advise on the most suitable potatoes to meet that demand, ones that offer added value to both the customer and the chain.

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