Tariffs and the Rising Cost of ‘Fresh’: Tactics for the Tomato Wars

tomato tariffs battle

THE HUMBLE TOMATO has become a high-profile emblem of the tariffs controversy, and grocers are faced with delivering dual bad news to shoppers: Prices are likely to rise; quality and availability could suffer.

With the announced imposition by the White House of a 17 percent tariff on Mexican tomato imports beginning July 14, the food industry was thrust further into pricing and operational uncertainty. Tomatoes have been the stars of recent media attention, but the broader issue of tariffs on food imports presents a complex set of challenges for retailers, growers, distributors and packaged food manufacturers.

Politics aside, sweeping food import levies would create a cascade of market effects. Price increases may be expected to depress demand. Transportation from southern border ports of entry would decrease proportionately. Domestically-farmed substitutes, such as those in Florida and California, may travel greater distances to the points of consumption and remain in cold storage for longer periods. The demand for seasonal farm workers could rise. Dependent manufacturing sectors, like the $7 billion U.S. frozen pizza industry, may need to absorb or pass along increased ingredient costs.

That’s just tomatoes. Thanks to its favorable soil, climate and proximity, Mexico has also become an important supplier of avocados, bell peppers, eggplant, spring table grapes and citrus fruits to American consumers, a circumstance initially made possible by the favorable rules of the 1994 NAFTA agreement, later superseded by the 2018 United States-Mexico-Canada Agreement (USMCA).

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Is Category Management Ready for AI?

AI Category Management

WITH THE ADVENT of Artificial Intelligence, Category Management is poised to get faster, more frequent, more connected and more accurate.

At least those are the promises we keep hearing from advocates of AI-powered decision tools: Your AI agent will access more and better data sources… Its decision tools will slash the duration of planning cycles… It will recommend actions in minutes that presently occupy countless hours for human merchants… It will plan and track personalized promotions with greater granularity… It will free human experts to focus more on strategy and less poring over spreadsheets.

If even some of this turns out to be true, CPGs could be facing some foundational changes in the way they collaborate with retailers to bring their products to market.

For Dr. Brian Harris, widely credited as the developer of the eight-step framework that solidified Category Management in 1997, AI holds the potential to re-animate a widely-used business process that has become a rote (plodding) exercise for many.

“Six months to develop a plan is no longer good enough. You need it within six weeks or even six days,” he said.

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As Retail Media Evolves, Brands Face Tough Challenges

Shopper media experience

AMONG THE MANY CHALLENGES facing CPGs in their efforts to make sense of retail media networks has been a pervasive storytelling bias.

On daily basis, we encounter widespread published commentary and reports celebrating retail media’s headlong growth, along with advice on tech, measurement, and monetization for retailers. Much of it comes from solution providers, consultancies and ad agencies vying to cash in on the burgeoning media sales opportunity. Wall Street analysts have been a megaphone for this side of the story too.

This article is part of a series. Republished here by permission from CPGmatters.

The bandwagon effect has been so powerful, the lure of “new” digital revenue so enticing, that critical thinking is too often abandoned by analysts and bloggers. Spending forecasts are frequently represented with “hockey stick” charts. With each new quarterly release, it seems as if proponents keep expanding the definition of “commerce media” to help drive the forecasts to new heights.

Meanwhile, for brand marketers (the lion’s share of all that juicy ad spending) pragmatic guidance about RMN strategy and practices seems relatively hard to come by.

Balancing the retail media story

As we have been documenting here in recent months, retail media is just now emerging from its nascent state. The digital network side has been dominated by early adopters who pioneered search and sponsored product advertising – Amazon Ads, Google Ads, Walmart Connect, Albertsons Media Collective, Kroger Precision Marketing, Instacart Carrot Ads, and a few others.

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Shopper Media Reality: Why It’s Time to Rethink In-Store Networks

Execs Negotiating Shopper Media

THE RETAIL MEDIA NETWORK frenzy may be approaching the end of the beginning, as Shopper Media bring more In-store retail media options to CPG Brands. Now, the hard work starts.

For CPG brands, the story-within-the-story revolves around a growing number of in-store networks designed to reach shoppers where the vast majority of final purchase decisions are still being made. Call it “shopper media.”

In the food-drug-mass channels, 84% of transactions are still taking place in physical stores, while FMI The Food Industry Association estimates that just 6% of grocery items were sold online in the full year 2023.

This is the fourth part in a series. Republished here by permission from CPGmatters.

As we have been reporting here in recent months, that reality compels brands to consider where their newly-repurposed retail media budgets will best be spent. So far, a handful of very large, primarily digital networks have soaked up the lion’s share of the ad investment.

CPGs have a long history of providing marketing support for their brands across the broad physical retail landscape, not only at the largest chain accounts. Distribution power is brand power.

For this reason, although the big numbers and hype have surrounded digital retail media sales, shopper media retain a significant value-creation opportunity for brands that has barely been tapped:

  1. Frequency of visits. Four out of five shopping trips are still in-person. Even for regional retailers, this can add up to millions of monthly opportunities to present messaging from brands, on screens, via audio and on personal digital devices.
  2. Loyalty penetration. Retail media works best when messages and offers are finely personalized. As frequent shopper participation approaches the saturation point, they present a superb mechanism for brands. With appropriate access, they can leverage first-party and zero-party data to efficiently present offers that motivate repeat consumers and influence potential ones.
  3. Aligned with product distribution. Half or more of all CPG product is distributed across numerous regional and independent retailers. Brands intuitively recognize that physical distribution power is the foundation of lasting success. So far, their retail media messaging has not matched that level of coverage.

Not surprisingly, retail media networks remained top-of-mind at last month’s Shoptalk conference in Las Vegas, both on the presentation stages and in the aisles of the exhibit floor. CPG and grocery attendance was light, and the presentation topics focused on the large retail media and commerce media networks, with little to no mention of the fast-moving consumer goods sector.

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