May 14, 2008 —
Perishable Pundit Overview:

Will Wal-Mart’s Energy Efficient/Hispanic Store Make A Real Contribution?

United Fresh Looks To Foodservice For Future Success

Produce For Kids Research Shows Opportunity For More Fresh Produce Marketing

Sainsbury's Bribery Probe And US Buyer’s Bad Behavior Point To Need For Discussion

Pundit’s Mailbag – Flavor Consistency

Will Wal-Mart’s Energy
Efficient/Hispanic Store
Make A Real Contribution?

Earlier this month, Wal-Mart opened a new HE.2 (High Efficiency – 2nd version) Supercenter in Garland, Texas. The company’s decision to introduce energy-efficient stores and its first “Hispanic Community” store opens the door to many possibilities.

Wal-Mart promotes the new store this way:

GARLAND SUPERCENTER FOCUSES ON LOCAL PREFERENCES
INNOVATIVE ENERGY-EFFICIENT STORE
ANCHORS NEIGHBORHOOD REVITALIZATION

Distinctive elements and special features abound throughout the new Wal-Mart Supercenter … in Garland. Customers at the newly relocated store will find a merchandise mix created with their preferences in mind, including family-oriented departments, bold colors and popular foods. The store is also built to minimize its impact on the environment as the latest of Wal-Mart’s High-Efficiency stores to open.

The Garland store is the latest High-Efficiency Wal-Mart Supercenter to open. The HE.2 store is designed to greatly reduce greenhouse gas emissions and use 25 percent less energy than a typical Wal-Mart Supercenter. By incorporating some of the most innovative products in building today, the HE.2 prototype uses many of the energy improvements from the first generation High-Efficiency (HE.1) stores, such as the one in nearby Highland Village. HE.2 stores feature industry-leading advancements such as integrated heating, cooling and refrigeration systems, and lighting innovations to conserve energy.

Store Designed for Local Tastes

Wal-Mart paid attention to the shopping patterns and preferences of its customers and designed the store to reflect the local community. As a result, the store will make fresh corn and flour tortillas and chips daily. The deli will also offer fresh-baked bolillo and pandulce, and the produce department will include an expanded selection of bananas, plantains, chilies and spices. Customers can pick up bulk packages of specially marinated meat, rice and beans. Near the entrance, shoppers will find a La Micha juice bar and a special shop with merchandise for the latest holiday or upcoming sporting event.

Customers will enjoy shopping with their families throughout the store, including its new youth-oriented department that displays children’s furniture, bedding and home décor together. Bold colors, popular brands and the latest fashions fill the store’s apparel and home décor sections. The store also has expanded its selection of children’s and infant apparel and accessories. In addition to the latest electronics, the store offers a wide variety of Spanish-language music, movies, games and other entertainment choices.

The new Supercenter will have a Wal-Mart MoneyCenter to assist customers who are outside of mainstream banking with convenient access to low-cost money services, including check cashing, money orders, bill payment and money transfers.

Ribbon-cutting Celebration 7:30 a.m., May 7

Community and business leaders will join Wal-Mart associates for a brief ribbon-cutting ceremony at 7:30 a.m., Wednesday, May 7, and doors to the new store will open at 8 a.m. Throughout the day, activities will include numerous product samples, character appearances and giveaways.

STORE FACT SHEET
Garland Wal-Mart Supercenter

Store facts

• Location: 1801 Marketplace Dr., Garland, Texas
• Originally opened in 1987 at 3159 Garland Ave.
• 195,912-square-foot Wal-Mart Supercenter
• Store opens at 8 a.m., Wednesday, May 7, after a 7:30 a.m. ribbon-cutting ceremony
• Store manager: Daryl Scoggins

Store features

• Full line of groceries, bakery goods, deli foods, frozen foods, meat and dairy products, fresh produce, beer and wine section.
• Merchandise departments include apparel and accessories, fine jewelry, lawn and garden center, health and beauty aids and a full line of electronics.
• Convenience services include a money center, vision center, digital photo processing center, Wal-Mart Connect Center and a pharmacy with two drive-through lanes.
• Leased areas and services include a La Micha juice bar, SmartStyle Family Hair Salon, DaVi Nail salon, a Subway restaurant and a branch of First Convenience Bank.
• Open 24 hours a day, seven days a week
• Twenty full-service and 10 express check-out lanes

Employment

• The Supercenter plans to employ approximately 650 associates upon its opening. Due to its relocation, the store has added more than 175 associates.
• Fifty-two of the store’s associates have worked for Wal-Mart for more than 10 years
• Store Manager Daryl Scoggins was born and raised in Garland. He started his Wal-Mart career in 1994 as an hourly associate, working as a cart pusher at a store in Benton, Ark.
• The average wage at Wal-Mart for full-time hourly associates in Texas is approximately $10.55 per hour.*
• Wal-Mart benefits — available to eligible full- and part-time associates — include healthcare insurance with no lifetime maximum. Wal-Mart also offers a 401(k) plan and profit sharing contributions, whether an associate contributes or not, store discount cards, company performance-based bonuses, stock purchase program and life insurance.

* Average wage taken April 2008. See www.walmartstores.com for details.

HIGH-EFFICIENCY STORE INFORMATION

Garland Wal-Mart Supercenter

The Garland, Texas, store is the fourth Wal-Mart Supercenter classified as an HE.2 energy-efficient prototype. The stores are located in a variety of climate zones to evaluate how the systems perform and expected to use 20 percent less energy than a typical Supercenter. The stores feature industry-leading advancements such as integrated heating, cooling and refrigeration systems, and lighting innovations to conserve energy.

In July 2005, Wal-Mart opened the first of its experimental stores in nearby McKinney, Texas, followed by the opening of a similar store in Aurora, Colo., in November 2005, with the hope that successful experiments could someday be incorporated into new store prototypes. The Garland High-Efficiency store brings many of these experiments to life.

• To achieve a 25 percent overall energy reduction, the Garland store uses a 100 percent integrated water-source format heating, cooling and refrigeration system, where water is harnessed to heat and cool the building.
• The store also introduces a number of new and improved technologies, such as a state-of-the-art secondary loop refrigeration system, to gain a 5 percent improvement in energy efficiency over an HE.1 store. This improvement comes from a streamlined design of the water-source heating, cooling and refrigeration system, coupled with the new secondary refrigeration loop. This is the first time secondary loop technology has been paired with a water-source system.

Additional Energy-Efficient Store components include:

• Motion-activated light-emitting diodes (LEDs) in refrigerated and freezer cases, plus additional glass doors on deli and dairy cases
• Optimized pump package that is 50 percent smaller than the HE.1 store and uses even less copper piping
• Industry-leading daylight harvesting technology
• Reflective white membrane roof
• Recycled construction materials such as fly-ash, slag, integrally colored concrete floors, and plastic baseboards and chair rails
• A state-of-the-art Munters Dehumidification system is expected to increase overall store energy-efficiency by roughly two percent.
• Restroom sinks use sensor-activated, low-flow faucets. The low-flow faucets reduce water flow by 84 percent, while the sensors save approximately 20 percent in water usage over similar, manually-operated systems.

In 2007, Wal-Mart opened a series of HE.1 stores in Kansas City, Mo.; Rockton, Ill.; and Highland Village, Texas. In January 2008, the first HE.2 prototype store opened in Romeoville, Ill. Others have since opened in Bernalillo, N.M., and Wichita, Kan.

Wal-Mart is now introducing its next generation of energy-efficient U.S. stores, the HE.5 prototype. The first HE.5 prototype opened in Las Vegas in March 2008.. These stores use up to 45 percent less energy than the baseline Supercenter. Building upon learnings from previous high efficiency stores Wal-Mart opened in 2007 and 2008, the HE.5 begins a new series of prototypes designed for specific climates..

The retailer’s high efficiency series of HE.1, HE.2 and HE.5 stores build upon many years of research, experiments, partnerships and pilots, and will ultimately help Wal-Mart reach its goal to design and open a viable store prototype that is 25-30 percent more energy efficient by 2009.

Wal-Mart customers are increasingly becoming familiar with the company’s energy-saving innovations as they are introduced in stores opening across the country. Many new stores now feature daylight-harvesting systems that minimize electricity usage during periods of bright sunlight, motion sensor-driven LED refrigerated and freezer case lighting and polished concrete floors that reduce the need for harsh chemical cleaning products.

The energy efficiency is part of Wal-Mart’s sustainability campaign, which is heavily focused on initiatives that can potentially pay off in the form of lower costs.

The Hispanic community store is a good idea but may not go far enough to make a real contribution to Wal-Mart’s growth.

In a sense, a Wal-Mart focus on Hispanics and, specifically, Mexican immigrants is a no-brainer. In fact, for at least ten years, executives at Wal-Mart have told us that it would be an easy win for Wal-Mart. After all, Wal-Mart has a dominant position in Mexico, with its Wal-Mex subsidiary. The lower incomes of recent Hispanic immigrants play to its demographic, and going back years, Hispanic Americans have been telling surveyors that Wal-Mart is their favorite store.

The problem is that merely tweaking a supercenter by adding a few Hispanic brands, buying a tortilla machine and opening up a money-wiring and check-cashing store is more in the vein of micro-marketing than a new concept store.

Presumably, Wal-Mart been exploring all these options for almost 20 years under its “store of the community” initiative — and if it didn’t put tortilliarias in every store in Hispanic neighborhoods, it is probably because the machine didn’t pay for itself and caused troubles in other ways.

For example, how many tortillas per hour will the in-store machine produce? And is that anywhere near what Wal-Mart can sell at peak hours? On the other hand, will Wal-Mart staff that tortilla machine 24 hours a day? Or will customers drawn by the prospect of warm, just-cooked tortillas be disappointed most of the time? And what is the back-up when the machine breaks?

We usually find that Wal-Mart does better focusing on things done in high volume and that these seemingly appealing things turn out not to work on Wal-Mart’s scale. This isn’t to say they shouldn’t be done, but not within the operating constraints of a Wal-Mart Supercenter.

If Wal-Mart wants a break-out concept for truly appealing to the Hispanic shoppers, it needs to start with a blank sheet of paper.

Wal-Mart is taking this blank-sheet-of-paper approach right now as it prepares to launch its new small footprint store. Very little information has been given out so far, but we are guardedly optimistic about Wal-Mart's new concept.

Why? Well first, as we discussed here, it is a 20,000-square-foot concept — not 10,000 — and this strikes us as the size needed to offer sufficient assortment to appease American consumers. It also may allow for more service in the fresh departments — which is probably crucial if the stores are going to be perceived as fresh.

One of Tesco’s biggest problems has been a failure to deliver on its “fresh” promise. To American’s, sandwiches wrapped up in plastic and cardboard are what one gets from a vending machine. Why buy that if every Subway offers a fresher alternative?

We are also encouraged by what we are not hearing about Wal-Mart’s small format stores. By now, we would have heard the moans and groans of vendors if they were all being asked to do a lot of private labeling for the small format stores. That we haven’t leads us to surmise that the concept will be mostly branded — and that, if combined with aggressive pricing, is a dagger pointed at Tesco’s heart.

Tesco may spend the next 30 years building brand equity while Wal-Mart sells the best recognized and admired brands far cheaper than others and rides that branded equity into households across America.

Mostly, though, our guarded optimism is due to the fact that when Wal-Mart brought David Wild to the US as Senior Vice President of New Business Development, it allowed the team that is designing this new small store concept to locate in the Bay Area in California. Not only is this far from Bentonville but it is far from any Wal-Mart stores at all. (By the way, Wild is a former Tesco executive who had been working for Wal-Mart in Germany.)

This isolation from Wal-Mart’s headquarters and stores might give the small format team the freedom to explore niche marketing without the encumbrances of Wal-Mart’s real estate concerns or corporate dictates.

The Hispanic community supercenter may help Wal-Mart a little, but it can’t help much because it was fundamentally designed under the auspices of a team mostly concerned with not alienating any supercenter customers. Yet the very first strategic planning question is often not “who is your customer?” but, rather, “who is not your customer?”

If you complained to Whole Foods because you can’t get Ring Dings or Devil Dogs in their stores, that would not disturb them. You are not their customer.

If you wrote to Aldi and complained that the produce was out of place late in the day, that wouldn’t bother Aldi management either. If you have such rarified sensibilities as to be turned off by a misplaced bell pepper, you are not their customer.

It is easy for a company such as Wal-Mart to declare the addition of assortment or services to attract Hispanics. However, it is culturally almost impossible to get Wal-Mart to say that it is willing to alienate another group — say Anglos — to win those Hispanics to that store.

Even mighty Tesco has to some extent been laid low by its refusal to focus its stores. It refuses to choose between, for example, organic-lovers willing to pay for what they want and budget stressed bargin-hunters willing to trade down to feed the family. Fresh & Easy is not just a 10,000 square foot store, but a 10,000 square foot store that is somehow supposed to serve everyone.

The key to the success of the new Wal-Mart small footprint concept will be if management knows who is not a customer for the new banner. We will see soon enough if Bentonville has allowed the California team the autonomy to think this way.

The new supercenter in Garland, Texas, symbolizes an end of an era. The store this new supercenter replaces was the very first Hypermarket USA, which Wal-Mart opened in a joint venture with the Cullum Cos., operators of Tom Thumb supermarkets. It was a new era in retailing, worthy of coverage in Time.

In retrospect, and in contrast to the opening of the Wal-Mart Supercenter with Tesco’s Fresh & Easy rollout, Wal-Mart opened one Hypermarket, then a second, then the first supercenter. It opened slowly so it could change its concept as it received input, and it made many changes, including changing the box size and getting rid of roller-skate-wearing clerks.

Wal-Mart worked with a partner so it didn’t have to invest in distribution centers and related costs before it had the volume to support it. It took almost two years for the Hypermarket USA to evolve into the Wal-Mart Supercenter.

What confidence Sam Walton had! He didn’t worry that Kroger or Safeway would copy him. He felt he could out-execute them no matter what they did. One wonders if David Wild, who watched Wal-Mart fail in Germany, has Sam Walton’s confidence of old on the new small format Wal-Mart concept.

United Fresh Looks
To Foodservice For Future Success

The United Fresh convention in Las Vegas was quite successful. The fresh produce portion of the show was not as large as some were looking for, but the combination of United’s FreshTech show -- which is a vestige of the International Fresh-cut Produce Association merger -- and the larger FMI show certainly made the overall exhibit hall more than large enough.

Many people don’t take advantage of workshops and programming, but there was substantive value there for those so inclined. The Sustainability workshop the Pundit moderated was standing room only and it was a large room. Several others had the same situation.

Retail consolidation is increasingly problematic for all retail shows. For well established firms, United was a very successful venue to have important meetings and business reviews with retailers. Many important ones were there. We saw Wal-Mart, HEB, Costco, Kroger, Food Lion, Tesco, Hannaford, Save Mart, Sav-A-Lot… and we probably missed a bunch.

But the retailers there seemed mostly very busy with their existing relationships. If you didn’t already know these people and bought a booth in hope of meeting them, you might wind up disappointed.

In any case we are expecting still more consolidation at retail.  By next year Tesco, for example, might have taken our advice to buy Meijer. And, in any case, without FMI, United has to draw retailers all on its own.

The math is daunting, and so United is turning to foodservice in an effort to boost buyer numbers. It is a smart strategy in that Las Vegas is now in many ways the restaurant capital of the USA, and the buyers for these giant casino/hotels are significant players.

To kick off this foodservice effort, United Fresh began a foodservice award competition that Pro*Act sponsored:

TOP CHEFS HONORED FOR
USE OF FRESH PRODUCE IN THE CULINARY ARTS

United Fresh 2008 Produce Excellence in Foodservice Award Winners Recognized at Annual Awards Banquet in Las Vegas

United Fresh Produce Association last week honored the winners of its 2008 Produce Excellence in Foodservice Award at it annual Awards Banquet Tuesday night in Las Vegas:

Fine Dining Category:
Chef Tony J. Baker, Montrio Bistro, Monterey, CA

Casual & Family Dining Category:
Chef Reinhard Dorfhuber, Elephant Bar Restaurant, La Mirada, CA

Quick Service Category:
Chef Dan Coudreaut, McDonald’s USA, Oak Brook, IL

Business in Industry & Colleges Category:
Chef Jonathan Davey, Brigham Young University, Provo, UT

Hotels & Healthcare:
Executive Chef Jean-Paul Hascoat, Peconic Landing, Greenport, NY

A panel of produce industry representatives focused on the foodservice sector scored the winners based on submissions that described how each nominee incorporates fresh produce into menu development, uses protocols for correct storage and handling of produce, and builds an overall positive dining experience featuring fresh produce. All winners, and their corporate directors, received complimentary registration, travel and hotel accommodations to the Fresh Marketplace show, May 4-7.

The chefs also shared their views on produce trends in foodservice in the “Produce Marketing Track - Foodservice Trends to Explode Produce Sales” on Tuesday, May 6.

Winners were selected from competitive nominations submitted by foodservice establishments and produce companies across the country. “All of the nominees are to be commended for their outstanding work,” said Amy Philpott, vice president marketing and industry relations, United Fresh Produce Association.  “There were so many excellent nominations among the nearly 100 nominations that we received; the review committee had a tough job of selecting only a few winners.  The level of creativity that chefs across the country are using to promote produce is truly incredible,” she said.

The 2008 Produce Excellence in Foodservice Award is sponsored by Pro*Act, LLC to honor chefs and their companies for the use of produce in the culinary arts. “Pro*Act is proud to sponsor this award, and we thank all of the nominees and all of the chefs who make it a point to incorporate fresh produce into their menu items,” said Steve Grinstead, president and CEO of Pro*Act.

“The response to this first-year program was really exciting.  We received so many excellent nominations from chefs around the country and from very diverse foodservice operations,” said Philpott. “We encourage chefs and companies around the country to begin thinking about next year’s nominations.” Nominations for the 2009 Produce Excellence in Foodservice Award program will be accepted next fall.

The 2008 Produce Excellence in Foodservice Award Winners:

Fine Dining Category:
CHEF TONY J. BAKER
Montrio Bistro
Monterey, CA

Tony Baker, chef at Montrio Bistro in California, believes there has never been a better time to bring produce closer to the center of the plate.  Using produce to drive many of his menu offerings, his appetizers include whole grilled artichoke, and he pairs grilled asparagus and mushrooms to add value to a protein such as Natural Pork Tenderloin.  Chef Tony sees sustainability as not so much a trend but something that is here to stay.  “Our guests expect us to take a certain amount of environmental responsibility,” he says. “Although we are not a completely green restaurant, we do our part by recycling food oil, plastic, foil, glass and paper cardboard.” 

Chef Tony buys local produce when available, and he manages inventory carefully by ordering frequently and using proper storage, handling and sanitation procedures.  Chef Tony also supports his local charities and even helped raise money for Katrina victims. He is now working with Marina High School to create a hospitality program for high school students.

Casual & Family Dining Category:
CHEF REINHARD DORFHUBER
Elephant Bar Restaurant
La Mirada, CA

Chef Reinhard Dorhuber oversees menu planning for Elephant Bar Restaurant, a chain of more than 45 casual and family dining restaurants located in eleven states. Chef Reinhard creates quarterly menu promotions that highlight seasonal produce and generates fantastic flavor layering.  These produce offerings give his culinary creations the “bite factor” or “texture” that he is looking for.  Chef Reinhard is always concerned with serving healthy food, so fresh produce is at the top of his ingredient list.  Salads and fresh side dishes are weighted heavily on his menu. The vegetable side dishes are always cooked to order so that their nutritional benefits are not lost due to over cooking.  Chef Reinhard also uses a combination of pastes and glazes to compliment the fresh produce he serves.

Food Safety is paramount to Elephant Bar Restaurants and Chef Reinhard, so the produce cold chain is maintained and all produce is washed with an antimicrobial sanitation product before it is prepared. Waste control is important for any restaurant, but Chef Reinhard combats it by using seasonal and value-added produce with 100 percent yields. Chef Reinhard understands the advantages of long-term business commitments, and he embraces the partnership concept in today’s food service industry.  Chef Reinhard began his culinary career as an apprentice in Germany and continued to hone his craft at the exclusive Hotel & Restaurant School in Lucerne, Switzerland.  He has also worked and studied at the finest hotels and restaurants in Asia, Europe, and Canada.

Quick Service Category:
CHEF DAN COUDREAUT
Director of Culinary Innovation
McDonald’s USA
Oak Brook, IL

Chef Daniel Coudreaut, director of culinary innovation at McDonald’s USA, is committed to developing products customers can enjoy.  Since joining McDonald’s in August 2004, he has overseen the development of menu items that include produce such as edamame, show peas, mandarin oranges and 16 different greens.  The Asian Premium Salad is just one example of Chef Dan’s talent for combining fresh, quality ingredients with bold flavors and zesty ingredients. 

The latest of his innovative offerings is the Southwest Salad with unique flavors that compliment a premium blend of lettuces.  This zesty salad exemplifies Chef Dan’s vision to deliver cultural, contemporary and fashionable ingredients to McDonald’s customers. Through his work at McDonald’s, Chef Dan has helped people to think of salads as a meal and not just a side dish.

Chef Dan shares the McDonald’s commitment to food safety and quality. Strict standards ensure that menu items are properly stored, prepared and served fresh.  From managing relationships with McDonald’s suppliers to working with a creative team to develop high-quality menu items, Chef Dan has proven to be “a cut above the rest.”  Chef Dan’s understanding for taste, quality, and cost efficiency provides true value to the McDonald’s menu. 

Chef Dan has also initiated numerous groups internal to McDonald’s, including Global Chefs Round Table, the Supplier Chefs Summit, and the Collaborative Work Session Process, designed to encourage development for the future menu and fresh produce offerings of McDonald’s USA.

Business in Industry & Colleges Category:
CHEF JONATHAN DAVEY
Brigham Young University
Provo, UT

Creativity is a must for Chef Jonathan Davey at Brigham Young University because he oversees the menu development for campus foodservice operations that together serve thousands of meals a day.  He develops an array of menus that cater to a diverse group of customers, including professionals, visitors, students and faculty. This kind of menu variety takes innovation and Jonathan is a true innovator when it comes to produce.  From fried basil, lotus root chips and micro green salads to mouth-watering combinations such as spinach and roasted shallot stuffed chicken breasts and tropical fruit stuffed pork tenderloin, Chef Jonathan redefines campus cuisine. 

One of Chef Jonathan’s specialties is his Vegan Menu:  Pine nut polenta “tournado” wrapped in grilled zucchini strips with mushroom and bean ragout, steamed asparagus and rosemary tomato sauce is just one example of his culinary creativity.  Other examples from his vegetarian menu are:  Apple risotto with parsley and thyme, pecan spinach phyllo purse, baby carrots and balsamic reduction - Black bean, corn and pepita stuffed zucchini over wild rice and a bed of roasted red and yellow peppers with a tomatillo sauce. 

Despite his ever-changing menus and customer demands, Chef Jonathan is well organized and plans ahead.  Of course, he also follows strict storage and handling requirements - maintaining the cold chain and using proper first-in-first-out inventory procedures and proper storage practices to maximize freshness.

Hotels & Healthcare Category:
EXECUTIVE CHEF
JEAN-PAUL HASCOAT
Peconic Landing
Greenport, NY

Executive Chef Jean-Paul (JP) Hascoat uses only fresh produce in his recipes at Peconic Landing, an upscale assisted living community on eastern Long Island. Executive Chef JP has a revolving five week menu and serves 450 meals everyday. Healthy eating is important to the residents of Peconic Landing, so he goes out of his way to include lots of fresh fruits and vegetables in his menus.  Everyday, he offers two soups that include local produce, and residents often enjoy freshly prepared salads. He also searches out nutritional information and develops healthy menu offerings that are trans-fat free and nutritious. 

Executive Chef JP controls waste by controlling inventory and placing smaller orders frequently.  He believes a kitchen can never be too clean, so he stresses upon this staff that constant and proper sanitation processes are critical.  Executive Chef JP demonstrates professionalism in everything he does.  He is a truly an outstanding team leader.

We extend congratulations to the winners and a tip of the hat to both Pro*Act and United for launching the program. We see a vibrant foodservice attendance as crucial to the success of the United show in 2009 and the years to come.

Produce For Kids Research
Shows Opportunity For
More Fresh Produce Marketing

It is said that in the early days following the European discovery of a primitive tribe, an English shoe company sent two separate salespeople to study the tribe and do a market analysis.

It is said that the first salesperson arrived, did a quick inspection and turned around and got back on the boat. He wrote a report on his assessment and announced that there was no point in staying as the tribesmen didn’t wear shoes.

The second salesperson arrived and quickly assessed the situation. He wrote a quick report and sent it on with the boat. His report said: “What a fantastic opportunity. Nobody here has any shoes. I’m staying and setting up our office. Send samples.”

Which is a good segue to the latest consumer research from Produce for Kids – because, depending on one’s attitude, it articulates either an extremely depressing state of affairs or a fantastic opportunity to boost consumption. Here is how Produce for Kids explains the results:

PRODUCE FOR KIDS^® STUDY: ONLY 18 PERCENT OF KIDS ARE EATING THREE SERVINGS OF FRESH FRUITS AND VEGETABLES

Consumers spend just $103 each year on fresh fruit, with bananas topping the list; creative marketing of fruits and vegetables can rebalance kids’ diets.

Only 18 percent of America’s children are eating three or more servings of fresh fruits and vegetables each day, according to a study commissioned by Produce for Kids^® (PFK), an organization that promotes the benefits of healthy eating and supports worthy causes for children such as Children’s Miracle Network (CMN) hospitals and educational media content from PBS KIDS^®.  The survey identified the fresh fruits and vegetables that parents – usually moms – are buying each week and explored the factors that motivate kids to eat fresh produce.

According to the study, 38 percent of parents say their children eat two servings of fresh fruit and vegetables per day, and 43 percent state that their children have one or less daily serving. 

“The increased consumption of fruits and vegetables can help kids to achieve a healthy weight and improve their overall health,” said Dr. Keith-Thomas Ayoob, pediatric nutritionist and associate professor, Albert Einstein College of Medicine.

The United States Department of Agriculture estimates that approximately 25 million children, or one-in-three kids, are overweight or are at risk of becoming overweight. 

John Shuman, president of Produce for Kids, noted: “This survey highlights the extent of the challenge facing the produce and retail industries, but also offers hope: we can make healthy foods attractive to kids if we market them creatively.”  

Bananas: the pick of the bunch

The study revealed that the most-purchased fruits – and the most popular with kids – are those that lend themselves to easy snacking.  Bananas, purchased by 85 percent of households, rank number one, followed by apples (84 percent), grapes (75 percent), strawberries/berries (48 percent) and citrus fruits (34 percent).  Potatoes are the top-ranked vegetable, purchased by 86 percent of households, followed by baby carrots (60 percent), tomatoes (54 percent), lettuce/salad (53 percent) and corn (44 percent). 

The broccoli disconnect

The study also revealed that parents may be missing an opportunity to add more greenery to their kids’ meals: children voted broccoli among their top-three favorite vegetables, yet parents did not rank it in their top-five most-purchased items.

“Kids need to actually touch and taste fruits and vegetables so they can become interested and attached to them,” continued Ayoob.  “Parents can encourage more trial through fun and family-bonding experiences at home involving produce.”

Two dollars per week spent on fruit – but cause for hope

The study showed that consumers make, on average, 27 shopping trips per year to buy fruit, spending $103 per year – or just $2 per week.  They also make an average of 29 trips per year to purchase vegetables, spending $114.62.

Yet while the survey demonstrates that kids are not eating a lot of fresh fruits and vegetables, there is reason for optimism: 49 percent of parents said that their children eat salad on a regular basis.  Moreover, kids want their fresh fruits: 70 percent of respondents who purchase fruit do so because their kids ask for it.

The keys to marketing success: more dips, more fun and more guidance

Parents said that they purchase fresh-cut fruit and vegetables because these products enable kids to help themselves, are convenient, and offer a healthy alternative to other, less nutritious snacks. 

The addition of dips and dressings may increase the appeal of fresh produce to kids: two-thirds of respondents said their children eat fresh fruits and vegetables with dips.  Ranch dressing was cited as the favorite accompaniment for vegetables, while caramel dip, peanut butter and cream cheese were most popular with fruits.  Underscoring the potential of complementary products, expenditure on dips increased 5.1 percent year-on-year between 2006 and 2007.

Creative promotions also help to increase the appeal of fresh produce, according to the survey.  Eighty-five percent of respondents suggested that kids would respond to an interactive in-store game that educates their children about the benefits of a healthy diet, with a coloring or activity book the most popular suggestion (34 percent), followed by an online game with popular cartoon characters (26 percent).

Parents also said that in-store demos featuring healthy, kid-friendly recipes, health-oriented kids’ clubs, and sweepstakes drawings would most influence them to purchase more fresh fruits and vegetables.   In addition, fifty-five percent said that they would welcome information in the produce department about fun, kid-friendly recipes that families could make together, while 46 percent said that they would appreciate tips on how to encourage picky eaters to eat more vegetables. 

Cartoon characters cautioned

Half of parents said that cartoon characters on packaging – a staple of produce marketing – would not affect their purchase decision, and 27 percent said that they “probably” or “definitely” would not buy produce featuring them.  All eight kid-friendly baby carrot and sliced apple products featuring cartoon characters that were examined in the survey showed sales increases when first introduced – likely because of a high level of promotion – then longer term declines.  Indeed, these items showed sales dollar declines ranging from 8 percent to 67 percent year-on-year from 2006 to 2007.

However, the targeted and responsible use of cartoon characters can play a positive role in the promotion of fruits and vegetables.  The proportion of parents who said they would buy produce items with cartoon characters on the packaging rose from 21 percent to 28 percent if those characters were promoting healthy eating. Of parents with children aged nine and under, 30 percent said that they would buy characters featuring characters on the packaging.  Cartoon characters from Nickelodeon, Disney and PBS KIDS were considered most attractive to parents.

 About the study

The Perishables Group, an independent consulting firm specializing in the fresh food business, conducted the study on behalf of four sponsors: Dole, National Mango Board, Paramount Citrus and T. Marzetti.  This comprehensive study combined multiple research tools including Nielsen point-of-sale scan data; Spectra consumer lifestyle analysis; an online survey of 1,000 parents, primarily moms and 500 shopper intercepts of mothers and children.

 About Produce for Kids

Produce for Kids^® promotes healthy lifestyles for children by educating kids and parents about the benefits of eating fresh fruits and vegetables while also supporting worthy children’s causes.  Since its creation in 2002 by Shuman Produce Inc., Produce for Kids has raised more than $1.2 million for local Children’s Miracle Network hospitals.  Produce for Kids also partners with PBS KIDS^® to educate parents on healthy eating and raise funds for PBS.  For additional information on Produce for Kids, visit www.produceforkids.org.

We have often saluted the Produce for Kids effort, including pieces such as Kudos To All Involved In Produce For Kids and Produce For Kids Hits Big time With PBS Kids Alliance . We also have explored issues such as the use of cartoon characters to market produce to kids, with pieces that including these:

The Bitter Truth About Promoting Produce To Children

Is It A License To Print Money?

Pundit’s mailbag – Characters And Marketing

Disney Default

Grape “Character” Analysis

Pundit’s Mailbag – Imagination Farms

Who Has Marketing Fortitude?

We’ve worked with broader consumer media to further discuss these issues, including The Washington Post here  and The Associated Press here.

Our pages have also been filled with countless articles on the Produce for Better Health Foundation, including Pundit’s Mailbag – ‘More Matters’ Can Be A Rallying Cry For The Industry, which featured an important letter from Paul Klutes of C.H. Robinson Worldwide.

We have also looked at utilizing vending machines to increase consumption here, here and here.

We have seen what state-based public health programs can do with our interview with Sue Foerster here. And we have gone overseas and studied the Food Dudes program carefully with these pieces:

Food Dudes Beat Junk Punks And Kids Eat More Produce

Pundit Pulse Of The Industry: Fyffes’ Dr. Laurence Swan

We have discussed United’s efforts to push the snack program in schools through an interview with Lorelei DiSogra here.

And looked at PMA’s efforts to use the Scholastic program to build consumption, which we focused on here and here.

The Pundit and Bryan Silbermann of PMA have also discussed childhood produce consumption in the context of relevant PMA consumer research in Pundit sister publication, PRODUCE BUSINESS, which you can read here and here.

We even made the Jr. Pundit Primo, aka William, the king of the lunchroom so he could influence the situation.

Yet, despite all this and much more attention to this issue, it is easy to despair.

Kids don’t eat enough produce. And things such as cartoon marketing, which many thought held out real prospects for building consumption, seem to have little long-term effect.

Although there are some sweet spots in the survey -- a fantastic opportunity to promote fresh broccoli, for example -- the solutions to some of the problems, though not surprising, aren’t exactly health-oriented either.

When Wendy’s decided to discontinue its fresh-cut fruit salad, we wrote a column in Pundit sister publication PRODUCE BUSINESS that said this was a mistake. Our suggestion? Just as McDonald’s sells its fresh-cut apple slices with caramel, Wendy’s should have added a chocolate dip and sales would boom.

We were reminded of this advice when we read that dips are an excellent way to entice children to consume more fresh produce. Getting kids to eat more fruit by dipping it in caramel, chocolate, peanut butter or cream cheese still can be a step forward in healthful eating if it can take the place of junk food. This is especially true if a little ranch dressing is sufficient bait to entice children to eat vegetables.

The PFK survey touches on a few things that the industry might do to boost consumption, including kid-friendly recipes, information on how to encourage picky eaters to eat fruits and vegetables and interactive in-store and on-line games.

This can only help, but much of it has been tried and seems unlikely to provide dramatic boosts in consumption.

One silver lining from a health and an industry perspective is that the survey only covered fresh product. This is rare. Most of the studies done incorporate all forms of produce, so this research will add significantly to the stock of industry knowledge.

There are no quick fixes. Problems of childhood obesity certainly are influenced by dietary changes but, we suspect, technological and social changes from children playing Gameboys rather than delivering papers, or parents insisting children play indoors instead of playing outside when Mom is at work probably influence the situation more.

A seemingly unrelated change -- say the development of central air conditioning and the subsequent move of population to the sunbelt, or a move from cities where one walks to suburbs where one drives -- may affect the caloric expenditure of children, and adults, in substantial ways.

The problem is vexing and the solutions elusive, but this much is certain: Our ability to help the children of America is limited by our ability to understand the problem.

Research is an important element in finding a workable plan, so Produce for Kids gets one more notch on the belt. Already helping the Children’s Miracle Network do good work, it now also begins a research component that will help us help children in ways yet unknown and unpredicted.

Kudos to all involved.

Sainsbury's Bribery Probe
And US Buyer’s Bad Behavior
Point To Need For Discussion

The talk of the produce trade in the UK for the past two months has revolved around a very large and public corruption investigation whirling around Britain’s second largest supermarket chain.

The Daily Mail explained it this way:

Sainsbury’s potato buyer arrested in £3m corruption probe

A Sainsbury’s executive is being investigated over claims he received £3million in bribes from a potato supplier.

Buyer John Maylam was questioned by police following raids on homes and businesses in Cambridgeshire and Shropshire.

The inquiry surrounds payments allegedly made by staff at the potato producer, Greenvale, to Mr Maylam over many years.

A second man, Greenvale operations director David Baxter, has also been arrested and questioned.

The allegations raise questions about the murky world of contract negotiations between the all-powerful buyers at the big four supermarkets and their suppliers.

The fact that Sainsbury’s, Tesco, Asda and Morrisons control 70 per cent of grocery spending in the UK means suppliers are desperate to keep the buyers happy.

In the past this has routinely included wining and dining buyers, offering presents and occasional all-expenses paid trips abroad.

However, there have also long been suspicions of under-the-table payments.

Farming industry insiders indicated the investigation at Sainsbury’s could be just the tip of the iceberg.

Mr Maylam had a key role in deciding which firm would be awarded lucrative contracts to supply Sainsbury’s with 190million kilograms of potatoes a year, worth around £130million.

In 2005, he was instrumental in cutting the number of potato suppliers from four to three.

This involved axing MBM of Cambridgeshire and handing extra business to Greenvale, which had to take on 130 new staff to cope. At the time, Mr Maylam said the move would “improve efficiencies” and ultimately help the store to better serve customers.

In 2006, Greenvale, which also supplies Tesco, was awarded the Queen’s Award for Innovation.

At the time, Mr Maylam joined the chorus of approval saying: “I am thrilled…the news comes as no surprise as we have always found them to be particularly progressive in innovation.”

The City of London police are leading the investigation. Sources suggested the £3million figure relates to one year.

If the payments have been made over many years, the final sum involved could be far higher. It appears payments may have been directed through a number of intermediaries.

A police spokesman said: “Police executed and completed search warrants at two residential addresses in Cambridgeshire and Shropshire and two business premises in Shropshire.

“Two men were arrested on suspicion of corruption and money laundering and were subsequently bailed.”

The investigation began after irregular payments were discovered by accountants at Produce Investments, which is Greenvale’s parent company.

The company, which has operations in Shropshire, Cambridgeshire and in Berwickshire, Scotland, is understood to supply about 45 per cent of Sainsbury’s potatoes. Greenvale has suspended a number of staff.

A Sainsbury’s spokesman said: “We can confirm that allegations have been made concerning certain payments and benefits by a supplier to an individual employed by us.

“Following inquiries, we have passed our findings to the police for further investigation.”

Mr Maylam has been a highly influential and respected figure at Sainsbury’s.

The company has often used him to front news of any fresh produce innovations

The allegations are striking. This news report sheds light on the allegation that a potato buyer for Sainsbury’s received the equivalent of almost $6 million in US currency for steering a year’s worth of business to a potato producer known as Greenvale.

We, of course, have no knowledge at all as to whether any of this is true, but we can say that we found few people in the British produce industry even feigning surprise. In fact, most told us that bribery was endemic. Although many characterized it as extortion rather than bribery in the sense that vendors felt they had no alternative but to acquiesce to the demands of powerful buyers.

One senses in Britain a feeling of unease as if everyone is waiting for the other shoe to drop. Wondering if this investigation will lead to others.

We are keeping watch and will let you know.

Bribery was common in the US produce industry a few decades ago. The impact of the problem has been reduced by a number of factors, including the large scale of the industry, the growth of centralized procurement, the development of set metrics that vendors are required to meet, and increases in buyer pay.

Most in the industry do not want to go back.

A little over a month ago, we got some heat for running a piece entitled Tale of Tesco’s Disrespectful Dinner Guest, in which we obliquely profiled an act of abuse by a buyer for a company that supplies Tesco in the US.

Out of respect for our readers, it is perhaps worth explaining why we ran such a piece. The short answer is … because we were asked to write it. Executives from several leading companies, people who are recognized leaders of the industry by virtue of their service on important boards such as those of PMA, United and WGA, approached us.

On the buy side, industry leaders were horrified at such activities, thinking that the very existence of such behavior, especially in a public venue, made every buyer in the industry look bad.

On the sell side, people felt abused. And that a message had to be sent.

But where were such motivated industry executives to turn? The trade associations would find it very difficult to deal with such an issue. In many cases, appealing to the buyer’s employer was either inappropriate or very risky.

So important industry executives turned to us here at the Pundit hoping we would elevate the issue both so that this particular abuse could be reversed and so that the larger issue could be addressed more forthrightly.

We tried to write narrowly to achieve this purpose, which we thought helpful in advancing the interests of the trade. We mentioned the name of no individual, nor did we identify who was sponsoring the dinner. We didn’t even identify what company this buyer worked for. We didn’t define if this involved produce, deli, prepared foods, meat, bakery, dairy or another department.

To those who knew every detail, the article may have appeared scandalous; to most it simply raised the issue of buyer abuse – which is troubling.

Did raising the issue help? Well, it is still unclear how it will ultimately play out. In some small ways, we think so. The vendors who paid for the wine were reimbursed by the buyer. Perhaps that would have happened anyway – we doubt it though. Score one for the good guys.

We received a number of phone calls after the piece ran from vendors who claimed that they had previous experiences with this particular buyer – and they were thankful it was out in the open because next time it would be easier to resist.

To the best of our knowledge, nobody has been fired. But that doesn’t mean much. Accusing an employee of something this serious is a delicate matter, and companies sometimes decide to handle something like this over time. So we will see. Besides, we live in hope and, perhaps, the alleged transgressor has seen the light.

It is not exactly our “regularly scheduled programming,” and we hope to focus on issues that will help build the industry up, not practices that tear it down.

Still, sometimes uniquely, the Pundit can be a catalyst where one is needed, and we won’t shrink from that responsibility.

The United Kingdom is far, but not that far… and this investigation of this Sainsbury’s buyer is a reminder that just beneath a placid sea can swim all matter of threatening creatures.

And if we wait until the consumer papers are filled with stories about $6 million a year bribe payoffs, we will have waited too long.

Pundit’s Mailbag – Flavor Consistency

We’ve clearly touched a nerve in the industry as we have tried to wrestle with issues surrounding flavor. We have run many pieces on the subject and most recently these four pieces:

• Lousy Fruit Undermines Consumption
• Pundit’s Mailbag — More On Lousy Fruit: Where’s The Management?
• Ripening Workshop Set For May 20
• Pundit’s Mailbag — Ripening Lessons From The Trenches

Now a grower reminds us of the difference between theory and practice on this subject:

If you randomly pick out some people and ask them about what they eat for snacks (give to kids), most will reply potato chips, candy, pop corn, etc., and what these items have in common is consistent taste from one day to the next and most are always unhealthy for you.

Fruits on the other hand have to deal with Mother Nature, which can cause inconsistency with taste.

What does the industry want the farmer to do when weather all of a sudden causes sugar content of strawberries or other fruits to drop and change the taste?

Should a farmer be expected to dump everything he picked for 3 days until the sugar content rises?

As a grower, we are constantly experimenting with new varieties for taste and the ability to make a profit, but Mother Nature constantly throws us a curve.

We have had strawberry varieties that ate like candy but only gave 1-2 days shelf life, but when I brought flats home the kids would eat every one of them.

I want the day to come soon that when you mention snacks to parents, they say berries, apples, oranges, melons etc., and then think how fit and trim we would all be.

— Tom O’Brien
C&D Fruit and Vegetable
Bradenton, Florida

Tom has contributed to other discussions we’ve held here at the Pundit, including letters we published here, here and here, and he always does a good job of crystallizing how an issue affects a grower.

On this issue, though, we wonder if there isn’t another way of looking at the subject.

Tom points out that it would not be economically viable for farmers to just throw out their crop because weather or another variable makes the taste temporarily unsatisfactory.

Fair enough. But that may speak to an error in our procurement systems. When a supermarket buys, say, private label cookies from a manufacturer, it has to pay a high enough price to cover the cookies that won’t pass quality control — perhaps the cookies are broken or misshapen or burnt, etc.

Equally, if we insist on consistent product quality, we need a mechanism for paying growers enough on the good stuff so that they can cover the waste intrinsic in having product that sometimes won’t pass “quality control.”

Obviously it is in everyone’s interest to develop varieties that will yield consistently good tasting fruit and will meet the needs of the marketing chain in terms of shelf life, so effort in this area is very important.

We also think that on many crops, the problem is less random weather than a predictable problem that comes at the start of the season. The growers want to get top dollar for their crop; the supermarkets want to be first in their market with the item — and both unwittingly conspire to sell fruit that will disenchant consumers with poor flavor.

There are many things that lead consumers to choose junk food over produce. Its ubiquity contrasts with a very limited produce supply chain. We just were at the United Fresh convention, and to get from the elevator to our hotel room at Bally’s we had to pass two vending machines they had on the floor. One had soda and water, and the other cookies, chips, etc. — no produce in sight.

These types of distribution problems won’t be solved by enhancing flavor consistency in fresh fruit, so it is not a cure-all.

We have written about the impact of food price inflation many times, including here, here, here, here and here, with the rising cost of transportation and inputs such as fertilizer, we are going to have to ask consumers to pay more for fresh produce. This will be far easier to make happen if we can offer a more compelling value proposition — such as consistently good tasting fruit.

Many thanks to Tom for helping us think through such an important issue.