Sustainability In Season

The hottest ticket in produce is good for the environment and supermarket sales, but naturally, this category presents challenges.

From mega-merchant Wal-Mart Stores Inc. to traditional supermarket chains to independent natural food retailers and everyone in between, sustainability is more than a trend — it's a bold strategy for building stronger businesses.

Leading this movement in-store are produce departments bursting with locally sourced, organic and sustainable fresh food. While produce, in many cases, is setting the sustainability stage for the entire supermarket, it's no easy task.

When it comes to sustainability, "the challenges are unprecedented. So are the opportunities," notes The Sustainability Consortium (TSC), a global organization whose mission is to design and implement transparent, science-based measurement and reporting systems for producers, retailers and users of consumer products.

TSC, which has been working with Walmart since 2009 to develop reporting systems for product sustainability, with the goal of establishing a global retail standard, has a number of supermarket chains in its membership stable, including Ahold, Marks & Spencer and Tesco.

The organization, jointly administered by Arizona State University and the University of Arkansas, develops key parameters for sustainability in a variety of sectors, from home and personal care to electronics, creating a kind of scorecard that retailers can use when working with suppliers.

The food, beverage and agriculture sector is TSC's largest, with produce representing an important component. As a result, the organization has developed what it calls "knowledge products" for tomatoes, potatoes, leafy vegetables, cucumbers and prepared salads. It is currently working on bananas, citrus, berries and apples.

"The retailers in TSC are interested in addressing all produce," says Sarah Lewis, TSC working group director at the University of Arkansas. "The products that we've covered have high sale volumes and are produced/grown in a variety of ways, thus enabling us to address a wide range of production practices."

Consumer Demand at Hand

The need for transparency has never been greater, as consumers will undoubtedly drive the demand to know more about how and where their food is grown.

Consider the Lapka, a recently launched "personal environment monitor" that allows people to measure "the hidden qualities of [their] surroundings," including the organicity of fruits and vegetables, using a stainless-steel probe plugged into their smartphones. Lapka sold out of its initial stock, and the device is now on back-order.

Sustainability is here to stay; the question that remains is how all of the players in the supply chain will collaborate to achieve a common goal.

"We foresee more measuring and reporting of product sustainability, and doing it in a way that is consistent and transparent," Lewis asserts. "A way that levels the playing field, and a way that enables users to make progress towards addressing impacts that occur across the supply chain of the products they make and sell."

What's certain, says TSC Marketing Coordinator Elizabeth Kessler, is that success depends on industry-wide collaboration. "What our retailers are really focused on is getting buy-in from buyers and suppliers. This needs to be progressive on all sides," Kessler urges. "Retailers don't want to tell people what to do."

Closing the Loop

The all-in approach to implementing a sustainability program is how Minneapolis-based Supervalu Inc. established and met a full slate of environmental goals in its produce departments and stores.

"You have to get leadership to buy in," says Rick Crandall, director of environmental stewardship for Supervalu's Southern California division. "The upper-level management needs to be engaged, and so does everyone all the way down to the front-line clerks. For us, it became a business proposition. Sustainability really is about making good business sense."

Supervalu set a goal to reduce its carbon emissions by 10 percent and its landfill waste by 50 percent by the end of 2012. Both goals were achieved, says Crandall, adding that 100 of the grocer's Southern California and Nevada Albertsons locations reduced waste by more than 70 percent in a five-year period.

Those 100 Albertsons stores are considered zero-waste stores, says Crandall. "We're talking about both landfill and incineration diversion," he clarifies.

One of the most important achievements in Supervalu's produce departments came from recycling all of its cardboard boxes, including waxed boxes. Supervalu sells the cardboard to a Gridley, Calif.-based company called Clean Flame. "They take it and make it into an environmental log that we sell on our shelves. That's called closing the loop," explains Crandall. "That's over 2 million pounds of waxed cardboard that we got out of landfill."

Another important step taken by Supervalu's produce departments was donating fresh product to people who are food-insecure. The grocer partners with Chicago-based Feeding America and its local affiliates through the "Fresh Rescue" initiative to donate fresh produce and meat each week. Last year, Supervalu donated 60 million pounds of food through the program.

Fruits and vegetables that are past their prime and not suitable for donation may soon become another "loop-closing" profit center for the produce department. Crandall points to a composting program in 150 Southern California and Nevada Albertsons stores. "Our produce department recycles an incredible amount of organic waste," he says, noting that this organic material is now being sent to a vendor that turns it into compost, which could be sold in the grocer's stores by April.

In the retailer's greenest flagship stores, like its Albertsons in Carpinteria, Calif., the produce department features a variety of the latest environmentally friendly elements, from LED lighting to night curtains that seal in cool air and reduce spoilage and energy costs by up to 25 percent. The Carpinteria store is also the first grocery store in North America to use a natural ammonia refrigeration system that boasts zero direct greenhouse gas emissions.

While sustainability is undoubtedly good business, it isn't a panacea. Last month, debt-embattled Supervalu said it would sell five of its largest chains, including Albertsons, to New York-based private investment firm Cerberus Capital Management LP.

Whether the chain's considerable sustainability efforts will continue under the new ownership will be revealed in time. "We can't talk to that process," says Crandall. "We're still Supervalu. We just have to wait and see."

Sustainability in the Bag

The aptly named Market of Choice, an eight-store upscale grocery chain based in Eugene, Ore., offers customers a bounty of both organic and conventional products. "We're a hybrid," explains Gene Versteeg, produce buyer and merchandiser. "Half of the store is organic and half is conventional."

Versteeg, who oversees produce buying and merchandising for all eight stores, sources hundreds of organic and local items for the departments, which typically account for 10 percent to 15 percent of the total square footage of the 20,000- to 40,000-square-foot stores.

For a grocer that places a strong emphasis on sustainability, packaging is an important consideration. In 2008, Market of Choice eliminated plastic bags from its checkstands, in favor of reusable sacks sold at a nominal price, along with free Sustainable Forestry Initiative-certified paper bags. The market uses biodegradable bags in its produce departments.

"We promote the use of reusable bags in a big way," Versteeg says. "We sell them at a greatly reduced price, basically below cost, and that comes back to us and the environment."

With regard to packaged produce, Versteeg says, "Most suppliers we deal with, like Earthbound Farm, have their own initiatives." San Juan Bautista, Calif.-based Earthbound makes its clamshells from PET because it's the most recycled plastic material, explains Earthbound sustainability expert Chad Smith.

"We believe that using and creating a market for post-consumer recycled materials like PET is one of the best sustainability options available today, and this belief is validated not just by our internal analysis, but by numerous outside studies that show how using recycled content dramatically reduces all environmental impact factors for a product," Smith writes on Earthbound's website.

Supply Anxiety

Joe Hardiman, produce merchandiser for Seattle-based Puget Consumer Co-op (PCC) Natural Markets has been in the produce business for 20 years. Last month, he participated in Organicology, an interactive educational format created by four organic trade organizations (Oregon Tilth, the Organic Seed Alliance, the Sustainable Food Trade Association and Organically Grown Co.) to address the rapidly expanding demands of organic trade.

At the conference in Portland, Ore., Hardiman was part of an intensive produce merchandising roundtable attended by retailers, suppliers and farmers. The group shared best practices on organic produce merchandising, including product quality and signage. The latter issue "is huge. There needs to be clear signage, so there is no confusion, especially around organics," Hardiman says, adding that mini grower profiles can also be compelling on produce signs.

PCC employs "reminders about the people we buy from" throughout the produce department, says Hardiman. For example, the co-op uses signage to tell the story of PCC Farmland Trust. Founded in 1999 by PCC Natural Markets as a separate, nonprofit organization, the trust, which is dedicated exclusively to organic farmland preservation, is the only one of its kind in the United States.

"The message of preserving farmland resonates throughout our stores. "It's a big effort at PCC, with a lot of cachet," notes Hardiman, who believes that we all benefit when produce departments promote farmers and farmland. "Have that message resonate so that everyone understands how important farmland is — it's a highly valuable resource. Once it's asphalt, it's gone."

But for this produce merchandiser of the country's largest consumer-owned natural food retail co-operative, the most significant takeaway from the Organicology conference had to do with supply.

"Where are we going to go for organic?" Hardiman asks. "When you look at the growth of natural food sales, you see why we're challenged by supply." According to the Brattleboro, Vt.-based Organic Trade Association, U.S. sales of organic food and beverages have grown from $1 billion in 1990 to $26.7 billion in 2010. Sales of organic fruits and vegetables have experienced the most significant growth, up 11.8 percent in 2010 over the previous year.

Consumer demand, coupled with the increasing number of traditional supermarkets and superstores selling organic produce, "really pulls on availability," notes Hardiman, who anticipates such challenges as PCC prepares to open two additional stores in the next two years.

The Season of Sustainability

"Every part of our focus and our values are sustainable," Hardiman asserts of PCC Markets. As evidence of this, 95 percent of the co-op's produce is organic. "Our programs have a high degree of transparency in terms of the people we buy from, and our relationships with growers. We buy local everywhere we can."

One of the key components of sustainability, and one that often gets overlooked, Hardiman says, is the importance of seasonality. "People should be able to tell the season by walking into your produce department," he says. "You can light up someone's life by building a strawberry display at the right time — by creating a sense of impulse to buy and being cutting-edge for the season." But, he cautions, avoid the urge to build displays of produce that won't build in volume, given the time of year.

"Right now," notes Hardiman, "we're moving toward asparagus and strawberries, and those two items alone can make people sing, and they'll buy."

"What our retailers are really focused on is getting buy-in from buyers and suppliers."

—Elizabeth Kessler, The Sustainability Consortium