INNOVATION AS A BUSINESS DRIVER:
A Global Produce Industry Perspective Part II
Tali Grapes From Israel Speaks On A Panel With Sun World And Marks And Spencer At Global Trade Symposium. Big Innovation In A Small Country Helps Creates A Vital Supply Chain
Jim Prevor’s Perishable Pundit, November 27, 2012
The other day, we pointed out an important supply chain program being held at The Global Trade Symposium, co-located with The New York Produce Show and Conference:
INNOVATION AS A BUSINESS DRIVER: A Global Produce Industry Perspective Part I — Sun World, Tali Grapes And Marks and Spencer Explore A Globally Aligned Supply Chain At The Global Trade Symposium During The New York Produce Show And Conference
It was an important piece because it combined so many of the keys to business success in the years to come: global connections, non-commodity proprietary varieties, cutting edge innovation, supply chain cooperation… so much more.
That interview was conducted with David Marguleas, Executive Vice President at Sun World. He will be appearing on the panel with DuDu Ivri of Tali Grapes and Zeina Orfali of Marks & Spencer, so we most anxiously wanted to extend this conversation.
We asked Pundit Investigator and Special Projects Editor Mira Slott to see if she could find out more:
Dudu (David) Ivri
Moshav Lachish, Israel
Q: Your participation on the Global Trade Symposium panel with David Marguleas of Sun World and Zeina Orfali of Marks & Spencer sounds intriguing. Could you share Tali Grapes’ history, rooted in an ancient grape-growing region traced back 3,000 years through archaeological discoveries, and how it has become the biggest table grape producer, marketer and exporter in Israel?
A: We are a cooperative of table grape growers in Israel. While each farmer has his own business, we work together to maximize the things that can be done best together or only can be done together, such as buying packing materials and all marketing and branding.
Lachish is a village that was established in 1955 for running the cooperative, and Tali Grapes is the brand name of this cooperative. Originally we were 66 growers, but we are serving some other growers from all over the country, mainly in grapes but also in other things.
A few numbers to understand; we are located in the mid-South part of Israel, in the old city of Lachish. This place has always been advantageous for growing table grapes because it is 300 meters below sea level, relatively dry, with light chill, so we can keep the grapes very nicely on the vines.
There were originally Jews here growing grapes. We can see depictions in the sculptures when the king of Syria conquered the city of Lachish. There is art on an historic stone now in the British museum, and in the background you can see vines. We can see this place was very good for growing grapes 3,000 years ago.
Q: With that fascinating historical context, could you discuss today’s market dynamics in Israel?
A: Tali Grapes is growing 550 hectors of grapes — all the varieties. And we are producing about 18,000 tons of table grapes each year. Although not big in American numbers, we are the biggest group of growers and also marketers and exporters, and we do it by ourselves. We also grow flowers and grain and non-irrigated products. We are doing that in common.
To get an idea of the market in Israel, it’s dominated by supermarkets and big retailers similar to the U.S., but we still have a big amount of private shops selling fruits and vegetables, about 20 percent of the market. Retailers make up 50 to 60 percent, and the balance is mainly farmers markets.
The climate here is between that of Bakersfield and Coachella, California. The growing area is about a two-hour drive from cities. So, there is no problem to come to the city and have farmers’ markets two or three times a week. There is still a slice of the market working like that.
What we are doing as one big organization a lot of growers couldn’t do by themselves, which gives us an advantage in technology, high-end marketing opportunities, etc. We have a grading system, and we give growers all the support to produce the best varieties and quality grapes.
Q: Could you elaborate on how you capitalize on this advantage?
A: When it comes to the market, we have a unique grading and tracking system, which is all computerized. The growers come to our facility with grapes, where we do the quality control and barcodes and check the grapes independently in our isolated lab to insure they meet sugar-level specifications, are uniform in color and berry size, etc.
Our parameters are determined through our research and focus groups, mainly by what is important for the consumer. Immediately, the growers can access on the web pertinent information to monitor exactly what is being done with the crop, and they can get feedback and fix any problems throughout the process, as well as improving their harvesting techniques and packaging. From that point, we take the grapes to market, and customers can verify the value of grapes they got from us in this strict race for quality.
We do a lot of R&D on grapes in Israel, where we work with other researchers, in conjunction with the agricultural ministry.
Q: What are some of the key study results you’ve incorporated?
A: We are using all these technologies to reduce the use of pesticides and to eliminate the spraying of undesirable materials. All the fields are controlled. Harvesting is all monitored on geographic information systems (GIS), and we also do independent laboratory testing for our growers throughout the harvesting stages. We know exactly the levels of residues, and have a good idea of how to get residues to go down.
We also have training programs and give seminars to help the growers with their soil, fertilizers and land use, sharing the results of our research and giving them the analysis. For example, using nets over grapes so growing is very controlled to improve uniformity of grapes, and also using plastic coverings to put grapes out earlier and another covering for later varieties.
Other research allows us to store Red Globes up to five months and also Scarlotta grapes. We start harvesting in May and stop in December, but we are still able to market grapes up to February. We have GlobalGAP, and also strict accreditation requirements for growers that are consistently checked by the outside, including Field to Fork accreditation from Marks and Spencer.
Q: How recognizable is the Tali brand name?
A: We have strong brand name in Israel with Tali Grapes. We’re supporting the brand with a big promotional campaign every summer to kick off the season, including jingles on radio stations, TV spots, and also communicating with consumers through brochures that contain a promotional code, where they connect for three weeks on the Internet to win sport bicycles. It moves the grapes very nicely. We have over 120,000 entries on our Internet site in those three weeks. Out of that activity at Point of Sale, we get good recognition of our brand. In studies, 8 to 10 people in Israel recognize the name.
Q: Is your brand associated with innovative varieties? Are you ever concerned that taking a risk on a new variety could impact your brand reputation?
A: That’s a good question. It’s difficult to put new varieties on the shelf. It’s a very difficult mission. For us, we are running with quality and innovation, new varieties and packaging. What I’m going to try to emphasize at The Global Trade Symposium is how this strategy and service wins in the long term.
We believe we have a brand market share, the classical brand market share. But we believe we also have the perceived market share that gives you the extra value and leadership in the industry. We’re told that people believe we are the only ones growing grapes in Israel.
To serve that reputation for quality, innovative packaging and, above all, new varieties, we are licensing some varieties in Israel and we have most of the commercial varieties.
We established a Tali Boutique line with special bar codes and distinctive packaging. This line includes varieties like Scarlotta, Midnight Beauty, and Sable, which we market under the brand name of Tali Grapes. There will always be the new varieties coming, and we want a way for consumers to easily identify them.
When we get consumer awareness to test varieties, the second thing is sorting out the good varieties, all with very good flavor and eating quality and the best chance for consumption, weighing the cost and value. We conduct both growing and marketing tests. Not only what is selling well, but what is good for growers in terms of enough incoming fruit during production; is it labor-saving and things like that. The new varieties are one of the key tools in creating a leadership role.
Q: How do your partnerships drive this strategy?
A: The UK is our biggest export market now. The supermarkets have their own packaging and preferences for how they want to sell grapes, and we work closely with them to fulfill their needs.
We found very good partners in terms of breeders in the market. Sun World is very serious in their business. They come to you with important information; what are the plusses and minuses, the best ways to arrive at solutions, what are the chances for success… They have to know the growers, and the milestones and junctions to get the very good retailers.
Q: Is Sun World notable in this respect?
A: In this business, there are marketers and there are breeders. Sometimes as a breeder, you’ll have a nice variety but it will be very difficult to grow and you’ll never make money out of it. It may be a sexy, chic one, but will produce a quarter of the boxes you have from another variety.
When dealing with Sun World, you’re dealing with a breeder, marketer and exporter and the company is testing it all. We consider that a strong point of Sun World. We are able to see varieties all over the world and are open to meet growers in South Africa or Chile… If we trial a variety before other growers, people come here to Israel and we are sharing the knowledge and experience we are having with growing.
In this way, we establish a worldwide club of growers and share feedback with each other. Sun World is putting meetings together in Berlin at Fruit Logistica and at PMA. Sun World is coordinating all this. Also they manage good connections between growers.
We’ve worked with Marks & Spencer since the 1980s. We find a lot of similarities in their ways of doing business. It’s not the biggest supermarket in the UK, but it’s fast in running with quality and introducing new produce, being brave on the shelf, taking produce to the point of maturity so it will be best for the consumer. And also being sure that the consumer understands the product is coming matured and ripened for you like it should be.
Marks and Spencer is also known for its innovative packaging and point of sale. They have their classic supermarkets and their on-the-go formats in train stations and also small point-of-sale in gas stations. When consumers come to Marks and Spencer, they are buying more than produce. They are also buying confidence; consumers say, ‘It’s been monitored, and Marks and Spencer is also sorting out the best for me.’
Q: While you’ve developed a brand leadership position in Israel, don’t you face widespread competition when exporting?
A: We are exporting to the UK where there are grapes from all over Europe, Italy, Spain, Greece… We are coming from much further away, by sea taking 10 days and we’re paying duty as well. We are competing with grapes transported within three days timeframes. The only way to have a premium in that market is with new varieties and new packaging.
We found a home in Marks & Spencer for years because they are looking for the new varieties, and of course they’ve been tested. They’re not just bridging gaps. They have a competitive advantage by replacing grapes that are a little bit tired, refreshing the shelves and always doing something new. It’s like a glove to a hand.
The UK is a very big market, well, big in our terms. Our brand name is recognized with distributors and importers. All those in the industry dealing in this market know Tali Grapes. Usually in establishing a brand name it starts with the industry.
But we’re speaking about a window of weeks from the end of August to Mid-September where we supply fine Thompson grapes, which we specialize in. We started with Sable and now supply Scarlotta.
During the Global Trade Symposium panel, we are going to demonstrate the whole issue of innovation as a business driver; how do you promote your business with market share and perceived market share, what is needed on the shelf, and what are the chances that a consumer doesn’t know a hidden demand…
What is the retailer looking at, and what is the breeder doing and the grower doing, and what is demanded of the coordination and cooperation between us? It’s a very nice thing.
I’m reminded of Friedman’s book, The World is Flat. There’s a beautiful saying of how the wings of a butterfly move something around the world. I like to say how the wings of a butterfly shake the leaves of the vineyards and the grapes blow to the shelves in the UK.
Q: You’re very poetic and inspiring…
A: Looking at my presentation, I would say, of course there are difficulties, but I believe we should all the time be thinking like that. We decided years ago we are not just grape growers; we are part of an industry differentiating and branding — each has its sparkle and target market segment.
No one wants to be in a commodity business, because there is only one way to improve — more efficiency and less costs. You’re not just a producer but you’re producing value. When branding yourself and creating marketing values, the people you work with and the partnerships you form give you opportunity, and that very good synergy allows everyone to prosper.
There are some people who are important because of their position and some people who are important because of their ideas, still others because of their passion. Dudu is one of the rare birds who combines all three attributes.
Among the joys that come from doing The New York Produce Show and Conference is the opportunity — the privilege really — to learn from and shake hands with passionate, knowledgeable and important people such as Dudu Ivri.
Of course, anyone can have that opportunity. You just have to commit to learning all you can and becoming all you can become.
Come to New York, come learn about how you can make innovation a driver in your business. Come hear new ideas and make new friends and associates.
You can register for The Global Trade Symposium and The New York Produce Show and Conference right here.
If you are already registered and want to add The Global Trade Symposium, just let us know here.
â— Travel discounts here.
â— Hotel info here.
â— Spouse/Companion Program here.
â— Tours can be signed up for here.
â— “IDEATION FRESH” Foodservice Forum here
And if you would like to help sponsor The Global Trade Symposium or exhibit and sponsor at The New York Produce Show and Conference, please let us know here.