Increased buying power in the global marketplace and the desire of millennials for natural, convenient, and sustainable foods offer opportunities for U.S. peanuts.
Stephanie Grunenfelder, senior vice president, American Peanut Council, and Bob Parker, president and CEO, National Peanut Board, opened the 2017 Southern Peanut Growers Conference with a look at marketing opportunities for peanuts.
The annual conference, held at the Sandestin Golf and Beach Resort, Miramar Beach, Fla., focused on “Navigating the Marketplace,” a timely theme, said Grunenfelder, with a “global market in a state of flux. The U.S. market is also in a state of flux,” she added, “and we have been producing bigger crops. The industry is growing and more changes are coming.”
She says U.S. producers export about 29 percent of the peanuts they grow with exports up 46 percent in recent years, growth tied to a significant decline in Chinese exports and a big surge in Chinese imports.
“India has increased production significantly,” Grunenfelder said, “but the quality is not close to U.S. peanuts.” She came back to the quality advantage later in her remarks.
The positive news for peanuts includes a growing world population with more people who can afford to buy better food. “People who were already able to afford food are now looking for healthier options,” she said. Peanuts qualify.
“People outside the U.S. think peanuts are great,” Grunenfelder said. So do people inside the U.S.. “That’s good, because we produce a lot of them.”
The big markets, however, are outside our borders. China and India represent 37 percent of the world population. Other developing nations are also increasing population numbers and the need for food. Their ability to buy is also better. Grunenfelder said 37 percent of the world was considered to be in extreme poverty in 1990. By 1999 that figure had declined to 29 percent and to 12.8 percent by 2012. In 2015, the percentage of the world population in extreme poverty was 9.6 percent. “A lot more people can afford to buy better food,” she said.
Wealth distribution also favors improved diets, she added. The U.S. median income is now $50,000 per capita. “China and Russia are also moving up,” along with some Middle Eastern and other developing nations.
Food buying trends are changing, Grunenfelder said. Consumers look for natural, nutritious foods. “They even want specialty waters, with no additives. They want ‘back-to-the-land’ products with a trail from the farm to the table. They want stories about how the food was grown and transported. They also see food as an experience.”
She says eating trends have changed with more fragmented meals—several smaller meals or snacks during the day—instead of regular meals at set times. “People are buying ‘on-the-go’ meals, home to restaurant or store to home. Eat at home meals need to be quick.”
She said eating alone, at home or in a restaurant, is more common, partly because of the fragmentation of daily mealtimes.
Global consumers appreciate the contribution peanuts make to their diets, she said. A survey shows 95 percent of Chinese consumers consider peanuts healthy and nutritious; 99 percent say they eat peanuts and 86 percent eat peanuts once a week or more often.
Surveys in Canada and Mexico offered similar results.
The increased population, additional buying power, and the preference for peanuts add to the changeable nature of the global peanut market. China, India, Argentina, and the U.S. are the primary producers. “China is a huge peanut producer,” Grunenfelder said. “India is second and the U.S. is No. 3. The export market has grown significantly since Chinese exports declined (around 2013).”
That opened up export opportunities for the remaining three top producers. “India increased production significantly,” Grunenfelder said, “but the quality is not as good as U.S. peanuts. Most of India’s peanuts are crushed.”
She said the American Peanut Council looks for new customers. “We bring buyers into the U.S.,” she said. Recently, a group from Mexico toured the Texas peanut industry. Groups from Japan and China have toured Georgia production and processing facilities.
“We show potential buyers the highest quality peanuts in the world.”
Grunenfelder said U.S. peanut exports are down “a little in the first five months of 2017. China is not buying as many from us, so far. But Japan imports are up. Canada and Mexico are buying more U.S. peanuts. It will be a good peanut export year.”
Shelled peanuts make up the largest segment for export, she said.
Grunenfelder responded to an audience question regarding recent European Union regulations limiting peanuts treated with certain fungicides.
“It will be hard for the EU to get peanuts from anywhere because of their own regulations,” she said. “They will have a hard time filling their demand. We are working with EU representatives to try to resolve this issue.”
In the meantime, she said, the U.S. produces and promotes “the highest quality peanuts in the world. We want to keep that standard.”
DOMESTIC MARKET OPPORTUNITIES
Bob Parker said expanding the U.S. market is a priority for the National Peanut Board (NPB). “We are looking for opportunities in the domestic market.”
A search for new customer, he said, has to include millennials. “The peanut is the most consumed nut in the U.S.—by far,” he said. But to maintain that edge and grow it, “we have a lot of work to do.”
Peanut consumption for millennials, the 18 to 34 age group, had declined, Parker said. Their generation was not raised on peanut butter and they came along when the fear of peanut allergies was heating up. “But we are turning the tide. Consumption of peanuts has increased—the only nut to do so in recent years. Parker said recent studies showing the health advantages of the “good fats” in peanuts helped. And new health guidelines showing that early introduction of peanuts into children’s diets decreases the chance of developing peanut allergies helped get peanuts back into diets.
The millennial market is too big to ignore, Parker said. They number 77.5 million, with $2.26 trillion at their disposal and a median household income of $65,000. About 60 percent of millennials are either married or with a partner.
But, as Grunenfelder noted, their eating habits and food choices are different from past generations. “They look for transparency in their food,” Parker said. “They want to know how it was grown and where it was grown; they want it to be convenient but healthy; they want it to be sustainably and responsibly grown.
“They also want an eating experience, with different flavors. They are interested in wellness and perceived value. They will pay more for extra benefit from the product.
“Millennials have tremendous influence,” Parker added. “Businesses cater to millennials.”
He reiterated some of Grunenfelder's points. Millennials eat on the go with a lot of snacks instead of full meals. They want healthy food and they want eating to be an experience. “They live to eat, they do not eat to live. Millennials are digital natives. They grew up with smart phones. Now, 70 percent use smartphones as aids while shopping.”
Parker said gaining market share and maintaining it in the millennial market will require a new approach, including developing new products that fit into their “on-the-go” lifestyles.
“They love ethnic foods,” Parker said. “They are also looking at frozen foods as healthier than processed products. They see frozen foods as more natural, with fewer additives.”
He said food manufacturers with a social awareness appeals to millennials. A candy bar, Kutoa, offers a promise on the label: “You buy, we give.” For every bar bought, the company makes a donation to help feed children.
Parker hopes to see the peanut industry respond to changing eating habits and social awareness. Pre-packaged peanut products or packs for recipes would appeal to this age group, he said.
“We want to celebrate the naturalness of peanuts. It is a unique food. We want to look at including peanuts into frozen food products. And we want to tell a story on the package about where the product originated, who grew it.”
Parker said peanut is the most sustainable nut grown. “It is one of the most sustainable foods.”
Celebrating that aspect of peanut production and promoting the high quality of U.S. grown peanuts, Parker and Grunenfelder said, will help the industry handle the market flux and increase global and domestic demand for the “Perfectly Powerful Peanut.”