Baby Carrots: Model Product for a New Economy?

Under what circumstances can the interests of companies and consumer health coincide? Can food companies make a profit promoting healthier food? To find answers to these questions, this month CHW examines a single product—baby carrots. An analysis of the industry and consumer practices contributing to the rise in popularity of baby carrots offer an opportunity to examine how healthy food can mean big profits for food companies.

 Under what circumstances can the interests of companies and consumer health coincide? Can food companies make a profit promoting healthier food? To find answers to these questions, this month Corporations and Health Watch examines a single product—baby carrots. In his classic The Wealth of Nations, Adam Smith analyzed a pin factory to understand the workings of the newly emerging capitalism. He claimed that by understanding this “trifling manufacture” his readers could appreciate deeper economic dynamics. Here, our more modest goal is to gain insights into the connections between profitability and population health.

Baby carrots are in fact not babies at all. They are specially grown carrot varieties that are cut and peeled into a standard size, so they can be packed and eaten without peeling or any other preparation. Baby carrots were introduced in the late 1980s and a decade later, per capita carrot consumption had more than doubled, with nearly all the growth coming from fresh carrots. According to Ken Hodge, communications director for the International Fresh-Cut Produce Association, the rise in carrot consumption is “one of the biggest success stories in produce.”


Health benefits of carrots

Why is increased carrot consumption important? First, carrots are an important source of Vitamin A and the beta-carotene in carrots is available for synthesis into A with little waste or health risk. According to the U.S Department of Agriculture, Americans get 30% of their Vitamin A from carrots. Second, most nutritionists believe that increasing fruit and vegetable consumption brings a plethora of health benefits: reduced rates of heart disease, cancer, diabetes and other conditions and reductions in obesity, an important contributor to the socioeconomic and racial/ethnic health disparities that characterize the United States. Most Americans fail to eat the suggested 5-10 daily servings of fresh fruits and vegetables so finding products that can lead to increases in consumption is an important priority. Baby carrots are convenient and versatile. They can be part of school lunches, snacks, party food or airline fare; sold in bodegas and grocery stores as well as super markets; or served in day care and after school programs. Carrots can be stored in refrigerators for several days, making them attractive to institutional food programs, small stores and ordinary eaters. Easy to serve and store, baby carrots, sticks, and other types of peeled and cut carrots accounted for 69 percent of U.S. households’ expenditures for fresh carrots in 2003.

Baby carrots: a new profit center?

For producers, baby carrots also have attractions. Baby carrots sell for more than regular carrots and many chains now market their own brands of baby carrots. Baby carrots sell for two or more times the price of their full-sized cousins, making them a profitable value-added product. Overall, according to the United States Department of Agriculture, in 2004, the average wholesale price for fresh carrots (in 2000 dollars) was $18.76 per hundred pounds, down from the 20-year high of $21.28 in 1984. Thus, for consumers prices went down while the shift to baby carrots allowed producers to earn more. Since the late 1990s, however, per capita consumption of carrots began to decline, perhaps revealing the fickle tastes of the American consumer or the very modest investments in carrot advertising. (Have you ever seen a television ad for baby carrots?)


Designer carrots

Like so much of the produce we now eat, baby carrots are designer products, literally shaped by growers to make them more marketable. Not only did growers change the shape and texture of the carrot varieties used for baby carrots—they are longer and narrower so they can be cut into four rather than three segments and peeled more easily, resulting in less waste. Growers also selected for taste and texture. Baby carrots are sweeter than other varieties, part of their appeal for children. Some food activists prefer the taste of other carrot varieties such as the purple carrot or less sweet varieties.

Big Carrot Industry dominates baby carrot market

Baby carrots are not a Mom-and-Pop product from the local family farm. According to the USDA, carrot production is highly mechanized and highly concentrated. Carrots used for processing and fresh carrots use mechanical harvesting techniques and two major California firms account for the majority of all carrot products sold. Grimmway, the largest company, planted about 35,000 acres of carrots a few years ago and grows carrots around the year in Southern California. Grimmway markets more than 40 brands of carrots, segmenting its market into multiple slices. Bolthouse Farms, the other big carrot producer, also sells health drinks. Together these two companies produce 90% of the carrots sold in California.

Lessons for health

So what can we learn from the story of baby carrots? First, baby carrots suggest that there are products than can improve health and make money for the food industry. Selling more baby carrots is good for public health and for the bottom line of some companies. Identifying other similar products and developing strategies to promote their use is an important priority for the nutrition and public health communities. Baby carrots also show that consumers will choose healthy, convenient products when they are readily available and that consumption of healthy products can increase rapidly in certain circumstances.

However, baby carrots also illustrate the some of the dilemmas our current food system faces. Promoting baby carrots, arguably good for health, now supports big growers, encourages energy-consuming food transportation patterns, and discourages locally grown produce. Several characteristics of baby carrots make them an ideal mass market product—dependent on mechanized agriculture, convenient packaging, efficiencies of scale for processing, and highly concentrated production that allows a few growers to make money promoting and expanding baby carrot production. These characteristics give baby carrots the potential to get into enough stores, kitchens and mouths to actually change national patterns of vegetable consumption—an important health priority. Yet these same characteristics may undermine other important goals such as sustainability, wider taste variability, a less concentrated food system and more locally grown food.

In addition, although baby carrots are more profitable than uncut carrots, they still constitute a tiny portion of the food market. No one advertises baby carrots, no websites or Internet games encourage children to use them (please contradict me, readers, if you can), and the profit margins on baby carrots or similar products are unlikely to change the dynamics of California agribusiness. Only a publicly subsidized promotion campaign could change this. The experience of the federal Five a Day Fruit and Vegetable Campaign provides a sobering example of the challenges. Its total budget was one third what Lays and Doritos alone spent marketing their chips.

Finally, baby carrots present both a risk and an opportunity for reducing disparities in access to healthy food and improved health for the socioeconomic and racial/ethnic groups disproportionately burdened by our current food system and economy. On the one hand, like so many other upscale products that promote health, baby carrots could become yet another yuppie food—more available to better off communities and more educated individuals and thus exacerbating the already large differences in fruit and vegetable consumption among the poor and the better off. On the other hand, baby carrots are a product that could be part of every school lunch program, served in child care programs, senior citizens centers, jails and homeless shelters, providing healthier, fresher and tastier options to disadvantaged populations. Already many food programs have introduced baby carrots.

For such an approach to yield public health benefits, however, might require subsidies to keep the market growing and prices affordable. Activists working on the Farm Bill have proposed decreasing public subsidies for unhealthy crops like corn, soy and tobacco and increasing them for healthier foods. Baby carrots might make a good test case for the potential of this strategy to yield sustainable changes in the American diet.

In sum, baby carrots help us to understand the potential and limits of the market forces that currently shape our food system. As food and nutrition advocates chart a healthier future food system, it will help to analyze other products and to consider the micro and macro educational, political and economic strategies that can better align market forces with public health. More broadly, concrete empirical analyses of other products that influence health will help public health professionals and advocates to develop new approaches to health promotion and disease prevention. To advance this consideration,Corporation and Health Watch invites its readers to submit ideas or reports on other products in other sectors.

Nicholas Freudenberg is Distinguished Professor of Public Health at Hunter College and Founder and Director ofCorporations and Health Watch.

Sources

Bonne J. Convenient carrot charms consumers. MSNBC.com July 23,2003. Available at:http://www.msnbc.msn.com/id/3072775/

Brunke H. Commodity Profile: Carrots. Agricultural Marketing Resource Center. Updated and Revised January 2006. Available at: http://aic.ucdavis.edu/profiles/Carrots-2006.pdf

Kuchler F, Stewart H. Price Trends Are Similar for Fruits, Vegetables, and Snack Foods / ERR-55Economic Research Service/USDA, 2008. Available at: http://www.ers.usda.gov/Publications/ERR55/ERR55c.pdf

Nunez J. Off-Colored Vegetables Are Good For You – No Joke. Bakersfield.com, October 10, 2007. Available at:http://people.bakersfield.com/home/ViewPost/33464

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2. amanky