Understanding Consumer Perceptions of Healthy Grown Potatoes Final Summary of Findings

1. Understanding Consumer Perceptions of Healthy Grown PotatoesFinal Summary of Findings Report developed for:

2. Table of Contents • Program Overview • Consumer Research Objectives • Approach • Participating Chains • Findings Summary • Detailed Findings • Demographic Breakdown • Program Next Steps/Study Implications

3. Program Overview • In mid-2004, the Perishables Group began a multi-phase program designed to capture consumer attitudes and behaviors, then leverage this understanding with retailers through new sales tools and techniques this included: • Phase I: Research Program Development • Survey Wisconsin potato shippers to understand existing sales efforts and future goals/ideas • Phase II: Consumer Research • Conduct 500 consumer intercepts in key retail chains with and without the Healthy Grown product • Phase III: Performance Benchmarking • Quantify sales impact of Healthy Grown product at retail • Phase IV: Sales Toolkit Development and Training • Collect findings from all phases to develop new sales toolkit (presentation) and conduct training session on how to effectively utilize the new toolkit • Phase V: Program Evaluation • Conduct follow-up survey of shippers to measure any change in overall satisfaction

4. Survey Objectives • In-store intercepts of consumers were conducted to quantify the following: • Are consumers open to the Healthy Grown product? • What draws them to the product? • Would they be willing to pay a premium for Healthy Grown? • What about the concept of Healthy Grown is most appealing? • What about the current packaging is most appealing? • Why would they not purchase Healthy Grown? • Is certification of foods important?

5. Approach • In order to deliver against the objectives, the Perishables Group (PG): • Worked with the WPVGA and PH to develop a targeted interview questionnaire • Secured approval of key retailers to execute surveys in-store • Executed the surveys and collected the data • Analyzed the results to determine the implications for Healthy Grown sales and marketing strategy

6. Participants • A total of 500 consumers have completed the survey at the following retailers: • Dominick’s • Jennifer Street Markets (Madison, WI) • Surface Foods (Parkersburgh, WV)

7. Summary of Findings

8. Summary of Key Findings The survey generated feedback from a wide segment of the “typical” shopper: • All were primary shoppers for their households • 74% were women, 29% men • 68% had at least 1 child • 44% had completed college or graduate school • 55% had an annual household income of $50,000+ • Respondents were frequent potato purchasers with 68% purchasing several times per month or more • The majority of respondents were part of a very lucrative segment of consumers: moderate to affluent, educated with children

9. Summary of Key Findings Healthy Grown appeals to consumers • Of 500 consumers surveyed, 88% said they were somewhat to very likely to purchase Healthy Grown potatoes after only seeing the bag • More than 47% said they were very likely based on only briefly seeing the bag Purchase intent increased when shoppers heard about the Healthy Grown concept • 81% of consumers indicated they were more likely to purchase Healthy Grown after hearing it was certified environmentally-friendly, WWF endorsed and “good for you and the environment”

10. Summary of Key Findings Consumers will pay more for Healthy Grown • Of those who said they were likely to purchase Healthy Grown, 56% said they’d be willing to pay at least $1.00 more per bag than regular potatoes • 80% were at least somewhat likely to still purchase at $0.50 more • 93% were at least somewhat likely to still purchase at $0.25 more Those who were unlikely to purchase cited reasons unrelated to the Healthy Grown concept • Of the 36 consumers surveyed who said they were unlikely to purchase Healthy Grown, “I don’t buy potatoes in a bag” was the #1 reason why • All shoppers surveyed liked the concept and only 2 consumers said they did not care about the environment Consumers feel certification of claims made by food producers is important • 88% said certification of growing methods is important to them. Only 3% said they “did not know” if certification was important

11. Summary of Key Findings • Research shows consumers are looking for Healthy Grown potatoes • Both men and women had high percentages of those likely to purchase Healthy Grown • 59% of males were somewhat to very likely to pay $1 more per bag for Healthy Grown, compared to 44% of females • Nearly three-quarters of shoppers with children (74%) were likely or very likely to purchase, compared with only 58% of those w/o children • Caucasians had the highest percentage of shoppers “very likely” to purchase (52%), although African Americans (32%) and Asians (50%) also were “likely” to purchase • Hispanics and Asians were drawn to the “reduced pesticides” messaging, while Caucasians’ liked the name and African Americans’ first priority was the high quality of the potatoes • While all education levels had high interest in purchasing healthy grown, those with a HS education or less had the highest percentage of those “very likely” to purchase • All income levels were interested in Healthy Grown Consumer In-Store Survey 11/04 -1/05

12. Study Implications

13. Study Implications/Recommendations • Price Healthy Grown at a Premium • Results show that consumers are willing to pay at least a quarter more per bag, and more than half would pay up to $1 more. HG producers may be able to segment the potato market with this offering, based on consumer likelihood to purchase at a higher price • Incorporate feedback in key message adoption • We know what consumers liked about Healthy Grown and when they heard it, it increased their likelihood to purchase. Messages that resonated well with shoppers should be compiled into a clear, concise key statement used consistently across all communication • Support qualitative with quantitative • Consumer research shows how this product can succeed at retail in theory. Prove this point to retailers through a pilot program with analysis of sales impact of Healthy Grown. Support the product introduction with a “best practices” merchandising, price and promotion strategy. The end result will be a turn-key program with conclusive evidence of success. If budget does not support full Healthy Grown pilot, utilize opportunities like USPB Best in Class to gain distribution of Healthy Grown and analyze sales.

14. Study Implications/Recommendations • Champion the story • Draft a press release to the trade media alerting them of the research findings, especially considering the support of eco-friendly produce as a growing trend within retail • Provide new package options • The main detractor for consumer purchase of Healthy Grown was the 5 lb and 10lb size limitation. Consider expanding to a smaller size package (i.e. 3lb and tray-pack) to offer a total product solution

15. Detailed Findings

16. Detailed Findings • Potato Purchase Frequency • Participating consumers were frequent purchasers of potatoes, with 68% purchasing more than once per month

17. Detailed Findings • Planned Purchase • For nearly three-quarters of survey participants, potatoes were part of their shopping list

18. Detailed Findings • Purchase Drivers • Consumers look at the price (62%) of potatoes as well as appearance and quality (53%) over brand name, packaging or nutrition information. • Note: “Size” was the most popular open-ended “Other” answer

19. Detailed Findings • Purchase Likelihood Based on Appearance Only • After being shown the Healthy Grown bag, 88% of consumers said they were at least somewhat likely to purchase. • 68% said they were likely to very likely

20. Detailed Findings • Healthy Grown Purchase Drivers (Based on Appearance) • Quality and the name “Healthy Grown” resonated most with consumers each mentioned by 42% of respondents • The recipes were appealing to 35% of respondents and the “good for you and the environment” messaging were mentioned by nearly 30% • Popular “other” open-ended answers were: good size; attractive bag and the word “healthy”

21. Detailed Findings • Purchase Detractors • Preferring to purchase potatoes in bulk (not any particular attribute of the Healthy Grown product) was the most common reason respondents would not purchase • No consumers surveyed said they disliked the concept of Healthy Grown • The most popular “Other” answer was the quantity (too large); not being able to see the potatoes in the bag and fear of a higher price for Healthy Grown

22. Detailed Findings • Likelihood of Purchase After Product Knowledge • After hearing about the Healthy Grown concept, 81% indicated they were now at least somewhat more likely to purchase the product • Only 2% said they were somewhat to less likely to purchase

23. Detailed Findings • Likelihood of Purchase After Knowledge Cont. • After looking at the bag only, 58 consumers had stated they were not likely to purchase Healthy Grown • After hearing more about the product concept, 38% of those consumers were now more likely to purchase the product • Only 18% (10 consumers) said they were less likely to purchase

24. Detailed Findings • Concept Purchase Triggers • 35% consumers liked that Healthy Grown used fewer pesticides • Environmental benefits enticed nearly a third of respondents, which scored higher than the “good for me” message (28%) • In the open-ended “Other” category, the majority of respondents mentioned the product’s “Healthy” name appealing to them

25. Detailed Findings • Concept Purchase Detractors • The main reasons why consumers would purchase Healthy Grown was unrelated to the environmentally-friendly concept, only 2 respondents said they were not concerned about the environment

26. Detailed Findings • Healthy Grown Pricing • Of all consumers surveyed, 56% of consumers said they were “Very Likely” to purchase Healthy Grown in place of their typical potato purchase • Overall, only 9% said they were somewhat to unlikely to purchase Healthy Grown

27. Detailed Findings • Healthy Grown Pricing -- $0.25 Increase • 93% of respondents said they were somewhat likely to purchase Healthy Grown at a $0.25 premium • This number actually increased by 2% from those who were at least somewhat likely to purchase at the same price • As expected, the number of people who said they were “Very Likely” decreased, however 44% said they were very likely to purchase at the premium price

28. Detailed Findings • Healthy Grown Pricing -- $0.50 Increase • At a $0.50 premium, 80% of respondents said they were still at least somewhat likely to purchase • A third of consumers were still likely or very likely to pay $0.50 more for a bag of Healthy Grown • Only 20% of consumers were now somewhat unlikely or unlikely to purchase Healthy Grown at the higher premium rate • Note: Only consumers who said they were somewhat or more likely to pay a $0.25 premium were asked this question

29. Detailed Findings • Healthy Grown Pricing -- $1.00 Increase • More than half of consumers (56%) were still at least somewhat likely to pay a $1 more per bag for Healthy Grown potatoes • 31% were at least likely to very likely to pay a $1 premium

30. Detailed Findings • Healthy Grown Awareness • Only 6% of consumers had previously heard of Healthy Grown potatoes prior to the survey

31. Detailed Findings • Healthy Grown Awareness • Of the 6% who had heard of Healthy Grown, 46% had previously purchased the product • Only 1 respondent indicated they had seen the billboards • None of the respondents recalled any of the other marketing vehicles

32. Detailed Findings • Opinions on Certification • Just under 40% named a third-party responsible for certification • About a third felt the government was involved in certification • A quarter of respondents called certification a “guarantee of quality”

33. Detailed Findings • Opinions on Certification • 88% of consumers feel certification in important in food claims made by growers • Consumers were definitive about their opinion on this, only 3% said they “don’t know” about certification

34. Detailed Findings • Opinions on Certification • About 70% of consumers feel the government should be involved in certification of foods • 24% felt a non-profit independent organization should handle food certification

35. Detailed Findings • Terms for Certification • Respondents were fairly divided on the best description for food certified grown environmentally-friendly • “Certified Environmentally Friendly” scored highest (32%) • “Certified for Environmental Quality” was second most popular with 30% • “Certified Responsibly Grown” was the choice of 22% of consumers • “Certified by Protected Harvest” scored lowest (only 5%)

36. Key Findings by Demographic

37. Key Demographic Findings • Healthy Grown Purchase by Income • The lowest income group had the highest percentage who were “very likely” to purchase Healthy Grown

38. Key Demographic Findings • Purchase Likelihood by Income • At least 51% of all income groups said they were more likely to purchase Healthy Grown after hearing more about the concept • 76% of shoppers in the lowest income group were “more likely” to purchase

39. Key Demographic Findings • Purchase Likelihood by Education • All education level groups at least 59% of consumers who were at least somewhat likely to purchase • The highest percentage of “Very Likely” came from the High School graduates and less groups

40. Key Demographic Findings • Purchase Likelihood after Knowledge by Education • The percentage of respondents stating the Healthy Grown concept made them “more likely” to purchase was highest in the High School or less, Some College and Grad School or higher education levels

41. Key Demographic Findings • Healthy Grown Purchase by Ethnicity • More than half of Caucasians stated they were “very likely” to purchase Healthy Grown, compared with 28% of African Americans and 18% of Hispanics • African Americans had the highest percentage of “not very likely” at 14%

42. Key Demographic Findings • Purchase Drivers by Ethnicity • Different attributes of the Healthy Grown package appealed to the various ethnic groups • Caucasians were driven by the name and the quality • More than three-quarters of Hispanics cited the quality • Three-quarters of Asians noted the “good for you, good for the environment” statement

43. Key Demographic Findings • Purchase Likelihood by Ethnicity • Caucasians had the highest percentage of respondents say they were “more likely” to purchase after hearing the Healthy Grown concept (59%) • Hispanics had the highest percentage of respondents say they were somewhat or less likely to purchase (15%) after hearing more about Healthy Grown

44. Key Demographic Findings • Healthy Grown Purchase by Household Size • Only 9% of shoppers with children in the home stated they would be somewhat or unlikely to purchase Healthy Grown • Only 19% of those without children were unlikely to purchase • Nearly three-quarters of those with children (74%) were likely or very likely to purchase, compared with only 58% of those without children

45. Key Demographic Findings • Appealing Attributes of Healthy Grown by HH Size • Reasons for liking the Healthy Grown concept did not differ greatly between those with and those without children • Quality and the name were nearly equally important to both groups while “Good for the environment” had a slightly higher percentage of respondents who had children

46. Key Demographic Findings • Healthy Grown Pricing by Household Size • Households with and without children present would purchase Healthy Grown at 50 cents more per bag • At a $1 more per bag, those with children had a slightly higher percentage of those unlikely to purchase

47. Key Demographic Findings • Healthy Grown Purchase by Gender • A higher percentage of males (90%) than females (79%) indicated they were at least somewhat likely to purchase Healthy Grown • Males also had a higher percentage (52%) of say they were “very likely” to purchase compared to women (31%)

48. Key Demographic Findings • Purchase Likelihood by Gender • After learning more about the Healthy Grown concept, 57% of males said they were “more likely” to purchase, compared with only 39% of females

49. Key Demographic Findings • Healthy Grown Pricing by Gender • At both 50 cents and $1 more per bag, more males were willing to pay more for Healthy Grown than females • At $1 more per bag, 59% of males were at least somewhat likely to purchase Healthy Grown, compared with only 44% of females

50. Demographic Profile