Defining the local Ontario fresh grape market

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3 Defining the local Ontario fresh grape market November 2017 Dr. Amy Bowen, Elena Kotsaki and Jessica Tureček

4 Introduction The local fresh grape production currently spans from August to November. New grape varieties from the Arkansas breeding program are currently planted at the Vineland Research and Innovation Centre (Vineland) farm for evaluation and may offer exciting opportunities for the fresh grape growers in Ontario to both expand the production period and to diversify the fresh grape offerings available to Canadian consumers. To understand consumer liking and acceptance of the new fresh grape varieties, we considered two approaches: An online survey of over 500 people in Ontario and Quebec to understand consumer preferences based on visual appeal and overall fresh grape purchase and consumption behaviour Focus groups, which allowed consumers the opportunity to evaluate the new grape varieties and to help in identifying those sensory characteristics that consumers seek. The study was conducted from June to October, 2017 and included the evaluation of eight fresh grape varieties. The eight varieties evaluated were divided into: Blue/Red grapes: Jupiter, Joy, Faith, Canadice and Sovereign Coronation (commercial benchmark) Green grapes: Hope, Gratitude and Neptune Objectives The objective of this project was to conduct consumer studies focusing on Ontario and Quebec residents to address the following research questions: Consumer preference drivers, perceptions and acceptance of the local Ontario fresh grapes as compared to Sovereign Coronation (commercial benchmark). Consumer segmentation of the preferred grapes based on demographics, attitudes, and purchase behaviour. Inform market expansion opportunities. Approach A two-step approach was undertaken to identify consumer segments most interested in existing and new fresh grape varieties grown in Ontario. Table 1: Project overview Approach Total number of consumers Visual appeal of the new varieties Tasting of new varieties Online Survey 518 Focus groups 46

5 Online survey of Ontario and Quebec consumers Five hundred eighteen (518) consumers from Ontario and Quebec were invited to participate in an online survey, which was offered both in English and French. Initially, consumers completed a short screening questionnaire to qualify for further participation. Qualified participants were an equal split of males and females, primary grocery shoppers or shared equally, representative age groups from years old, and had purchased fresh grapes in the past 6 months. The survey questionnaire was designed to address overall interest in new varieties, as well as familiarity to Sovereign Coronation and other Ontario grapes. The questionnaire was divided as follows: 1. Consumers were presented with images to evaluate: Visual appeal of the eight new fresh grape varieties (most likely and least likely to purchase and consume based on visual appeal) Bunch characteristics (incl. berry size, cluster size, berry colour) 2. Fresh grape profile and traits Ideal characteristics in terms of: o Flavour (e.g. sweet, acidic) o Colour (green, blue and red colour) o Juiciness o Skin friability (i.e., crispiness) o Flesh firmness Consumer detractors (i.e. attributes that discourage consumers from selecting grapes) o Seeds o Skin thickness 3. Hypothetical shopping scenarios about Jupiter Willingness to purchase the new variety based on sensory characteristics, local production Willingness to pay a premium price 4. Consumer tolerance for blemishes and grape shatter 5. Fresh grape purchase behaviour and consumption Attention to origin Grape satisfaction based on quality and availability Local grape appetite and support Packaging preferrences Fresh grape consumption frequency Parents purchasing for children 6. Fruit purchase behaviour and consumption 7. Demographics (e.g. age, gender, income, region) for market segmetation

6 Focus Groups The focus groups took place in Toronto on two different days, September 21 st and October 4 th, to account for harvest timelines of the blue and green grapes to ensure that consumers were tasting the grapes at their prime ripeness. Three focus groups evaluated the blue grapes and two focus groups the green grapes, respectively. Each focus group has approximately ten consumers, which were divided into three segmentations: Parents with kids at home (determine whether any of the new varieties would be considered a lunchbox grape) (2 focus group sessions, blue and green) Young consumers (i.e. Millennials) (2 focus group sessions, blue and green) Mixed demographic group (1 focus group session, blue only) A discussion guide was followed to ensure similar conversation threads amongst the different sessions and to capture consumer feedback. Consumer were first asked about their overall fruit purchase and consumption habits, then the conversation switched to grapes and then specifically to the new varieties. Consumers were asked the rate the new varieties first on appearance and then on taste, texture and flavour. The top variety for blue or green was identified by voting and the top variety, blue or green, were then discussed in more detail. Detailed results of the focus groups are summarized in a separate report that has been provided to the OFGG. Statistical Analysis Online Survey The questionnaire was completed online using EyeQuestion software (Logic8, NL) and were analyzed with XLStat (Addinsoft, France) and SPSS (IBM, USA). An alpha of 0.05 was used to determine significance unless otherwise stated. TURF (Total Unduplicated Reach and Frequency) was applied to product ratings where consumers were asked to rate their most and least liked product based on visual preference of the varieties. This test establishes which product(s) will appeal to the greatest number of consumers. Subsequently, agglomerative hierarchical cluster analysis (AHC) was conducted according to dissimilarities in Euclidean distance and using the Ward s method to segment consumers based on their most and least preferred grape varieties noted for the TURF analysis. The number of clusters was determined automatically in XLStat. Chi-square was conducted on the consumer groups established through the AHC and the demographic data to determine defining characteristics of each group.

7 Main Findings Online questionnaire of Ontario and Quebec residents Consumer responses to the survey questionnaire are provided in form of tables in an appendix. The appendices provide the detail demographic breakdown overall and by province, Ontario and Quebec respectively. The demographic breakdown of the consumers can be summarized as follows: Province of residence: 51% Ontario and 49% Quebec Ages: 25% from each age category (18-35, 35-50, and over 65 years old) Gender: 60% female to 40% male 81% identified as the primary grocery shopper 40% spend over $350 on groceries in a typical month 30% had children living at home under 18 years old Overall, no difference in behaviour, purchase or consumption habits was observed among the Ontario and Quebec consumers. Examination of the demographic questionnaire revealed that key demographic variables, which were not different between the groups, included the following: Age Gender Marital status Education Income Whether they identify as Canadian Ethnic heritage Whether they were born in Canada Employment status Ontario or Quebec resident Grape consumption frequency Primary grocery shopper Number of adults over 18 years old Willingness to pay for grapes with in household blemishes Grape shatter influencing the purchase decision Grape spending habits/ shopping trip Seasonality Overall purchase and consumption habits showed that: The reasons they chose a variety as most likely to purchase and consume 65% of consumers purchase grapes at least once per week Average price they pay for grapes is $1.99 per pound 74% of consumers have very low tolerance for blemishes or imperfections, will not buy if do not look perfect. Overall, acceptance for blemishes was quite low at maximum 25% of the cluster Seedless, juicy, sweet and fresh are top characteristics an ideal grape should possess Taste, texture, skin colour, sweetness, price, seedless and visual appeal are important grapes characteritics rated by consumers as very to extremely important. Only 50% of consumers pay attention to packaging, and of those 45% prefer their grapes pre-packaged in a bag Consumers buy grapes by colour with almost 77% saying usually only buy green, red or a combination of green and red grapes.

8 50% of consumer said region of origin matters, order of preference 1) Ontario, 2) USA and 3) Canada 80% of consumers said fresh grapes produced in Ontario are regarded as of high quality Consumers were willing to try and purchase a newly introduced to the market grape variety, especially after sampling it at the store. When presented with different buying scenarios about a new blue skin grape variety, 27% of consumers were very likely to purchase the new variety. This percentage increase by providing additional information related to the flavour profile, up to 34%, local and instore sampling, up to 48% of consumers were very likely to purchases. Unfortunately, they are not willing to pay a price premium for a new varieity with 45% of consumer only paying $1.99 per pound for this new variety. Grape variety recogtion by name was low, 63% of consumers were not familiar with the Sovereign Coronation variety. The highest variety recognition were Red Globe and Thomson Seedless with 65% and 60%, respectively. Since fresh grapes are often purchasd by on appearance and colour, it was important to understand if consumer choice drivers could be identified from this information. Consumers were presented with pictures of the eight fresh grape varieties. The varieties were represented the colour spectrum of blue, red and green grapes. Blue grapes: Jupiter, Joy, Faith, and Sovereign Coronation Red grapes: Canadice Green grapes: Hope, Gratitude and Neptune. Using these images, consumers were asked to select one variety they were most likely to purchase and consume, and one variety they were least likely to purchase and consume based on the overall appearance. Their selection was used to cluster consumers based on visual characteristics of the grapes, three consumer groups were identified; Group 1 (36%), Group 2 (44%) and Group 3 (20%). TURF analysis determined consumer reach by product for each group, respectively. Reach indicates the proportion (%) of consumers who are interested in a product. A high reach indicates a greater proportion of consumers are likely to be satisfied with the product. A low reach indicates that very few (or no) consumers prefer the product. The following section will address overall trends ( Global ), as well as note the reach of each product and the distinguishing characteristics for each consumer group. Green grapes will be marked with (g), red grape with (r), and blue grapes with (b).

9 Table 2: TURF Reach for each product by consumer group (%) Product Global (100%) Group 1 (36%) Group 2 (44%) Group 3 (20%) Canadice (r) S.Coronation (b) Faith (b) Joy (b) Jupiter (b) Gratitude (g) Hope (g) Neptune (g) Overall Preference Drivers: Colour is the primary positive and negative driver affecting consumers decision. Generally, consumers prefer green grapes and do not prefer blue grapes. With the exception of Joy and Faith (both blue varieties), all other varieties had higher consumer acceptance than Sovereign Coronation based on visual appearance. Table 3: Reasons why consumers chose grape varieties as their most and least likely to purchase. Most likely to purchase reasons Least likely to purchase reasons Colour 34 % Colour 43% Berry size 18% Berry size 15% Tight cluster 14% Cluster shape 15% Berry shape 13% Berry shape 11% Cluster size 11% Cluster size 8% Cluster shape 10% Loose cluster 8% Consumer Group 1 (36%) Defining features of the group: 1. Top variety by appearance is Neptune (g) 2. This group is less likely to purchase green grapes (compare to groups 2 and 3), but conversely also they greatly prefer one Neptune (g) over the others, which indicates that this group is most likely colour sensitive, and is inclined to prefer only a specific shade of green grapes. 3. Prefers the berry size of Neptune (g), Jupiter (b), and Joy (b). 4. Does not prefer the berry size or cluster size of Hope (g).

10 5. Prefers the berry colour of Neptune (g), Jupiter (b) and Joy (b). Does not prefer the berry colour of Hope (g), Gratitude (g) and Canadice (r). Consumer Group 2 (44%) Defining features of the group: 1. Top varieties based on appearance are the green varieties, Hope (g) and Gratitude (g) 2. More likely than the other groups to focus on berry size and shape when choosing which product they are least likely to prefer. 3. More likely than the other groups to purchase green grapes. Less likely to purchase both green and red grapes. 4. Prefers the berry size of Gratitude (g). Does not prefer the berry size of Jupiter (b) and Joy (b). 5. Prefers the cluster size of Sovereign Coronation (b). Does not prefer cluster size of Jupiter (b). 6. Prefers the colour of Gratitude (g) and Sovereign Coronation (b). Does not prefer the colour of Neptune (g), Canadice (r) and Jupiter (b). 7. Group 2 is the only group with some reach for the commercial benchmark, Sovereign Coronation (12%). Consumer Group 3 (20%) Defining features of the group: 1. Top variety based on appearance is Neptune (g) 2. More likely than the other groups to focus only on colour when choosing which product they are least likely to purchase. 3. Less likely than the other groups to purchase blue grapes. 4. Prefers the berry size of Hope (g) and Canadice (r). Does not prefer the berry size of Sovereign Coronation (b). 5. Prefers the cluster size of Canadice. Does not prefer the cluster size of Neptune (g) and Sovereign Coronation (b). 6. Only prefers the berry colour of Hope (g) and Canadice (r). Interpretation of the above data showed be taken with some caution as it is based on appearance alone from images and, therefore, does not represent the retail buying experience when other factors such as touch, taste and price will have an impact on consumer choice. Focus groups - new varieties evaluation When consumers were asked to provide their opinion on fresh grapes in conjunction with other fruit (for comparison purposes), fresh grapes appeared quite high in their personal as well as their family s preferences. When asked about their perception of the local fresh grape market, young consumers (i.e. Millennials) were more aware of the local produce, are seeking local in their purchasing habits and would pay a premium for localy produced fruit. In general, very low familiarity with fresh grape varieties was observed. Overall, consumers exhibited a diversity in terms of their preferrences, perceptions and behaviours. For parents with kids, the strongest drivers for fruit purchase included the price,

11 convenience, quality, and most importantly the kids request and consumption behaviours. Grapes are generally included in kids lunches and snacks and green grapes are preferred. An overall preference for sweeter fruit was also observed in the parents group. For young consumers (i.e. Millennials), a variety of factors is contributing into their purchase decisions. Those factors include organic and local, seasonality, visual appeal of firmness and grape colour, along with health attributes, sustainable practices and marketing. Consumers exhibited an overall low tolerance for blemishes that signify to consumers that the grapes are old and will not last long. A small portion of the Millennials indicated that blemishes resonate that these grapes would be more naturally/organically produced. When grape shatter was discussed in the groups, no concesus was reached. It is important for consumers to to have the opportunity to try new varieties and not just select them based on appearance. For both blue and green grapes, the preference based on appearance did not match their preference once eaten. In most cases, the tasting experience was better than anticipated and that the appearance did not correlate with the flavour expectations. Jupiter was the preferred variety in the Blue/Red group with its unique and complex tasting profile and Neptune was the preferred grape in the Green group with its sweet/acidic balance and juiciness. Consumers in all groups were excited to learn about new Ontario grape varieties and wondered when/where they could be purchased. There was a strong consensus towards giving the new grape varieties a name and brand that would make it recognizable at retail. They felt that the varieties should be marketed as local, tell the homegrown story on packaging and chose a name that reflects sensory properties of the variety. Conclusions and Recommendations This study provided a wealth of information about consumer interest in the fresh grape market and highlights that with a high quality new variety there is considerable interest from consumers. Some key takeaways for this research include: 1. Grapes are included in consumers weekly grocery trip and are among the most popular fruit for snacks, lunches, and they were appraised for their portability. Among the grape weaknesses were the limited versatility and diversity of varieties. 2. Consumers are price sensitive for grapes and are willing to pay $1-$2.99/lb. (~50%); limited willingness to pay more than $4-$5/lb even for locally produced grapes. 3. The online survey identified three consumer groups based on their visual preference of eight grape varieties. Consumer groups were not defined by key demographic factors or purchase behaviour; they were only defined by their individual preference of various visual grape attributes. a. Group 1 (36%) Green colour sensitive. Prefer specific shade of green. Prefer Neptune even though they are less likely to purchase green grapes overall. b. Group 2 (44%) Most likely of the groups to purchase green grapes. Only group where Sovereign Coronation had reach (12%), most likely due only to its cluster size.

12 c. Group 3 (20%) Most likely to focus on colour overall when deciding the product they are least likely to purchase, and to not prefer blue varieties. Only 2 products have reach: Neptune (65%) and Canadice (35%). 4. The primary positive and negative driver of preference was colour, followed by visual appeal, seedless, freshness, and crispness. 5. Based on appearance in the online survey, Sovereign Coronation and Faith had the lowest consumer acceptance. 6. Focus groups showed that there is great enthusiam for new local grape varieties, if they meet the quality expectation consumer desire. Try before you buy will be important to attract consumer to blue varieties along with a memorable brand name that consumers can remember and associate with their favourite varities. Jupiter is the first variety for commercialization from this program and is recommended based on positive consumer and retailer feedback. Next steps will be to create a marketing plan for Jupiter to create a brand to distinguish and create value for this variety on the market. Introduction of Jupiter to retail will require in-store sampling to create consumer pull for the blue skin colour and appearance. Proper messaging will also be critical and should focus on its unique, appealing flavour profile and that it is locally grown. To ensure that grapes meet consumer quality expectation for appearance and flavour, more research is recommended in the vineyard to identify cultural practices best suited to this varietiy. The consumer insights generated from the online survey and focus groups should form the basis of a brand development (including a name) and marketing plan for Jupiter.

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