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John Pandol Raises A Question:
Are Proprietary Varieties Truly The Future?
Is Retail Frustration Something To Be Avoided?

Jim Prevor’s Perishable Pundit, October 11, 2016

John Pandol is a good friend of the Pundit and sister publication PRODUCE BUSINESS, contributing many pieces including these:

PUNDIT

Pundit’s Mailbag — Univeg, Ready Pac, Sunkist And The Lord Mayor Of Dublin

PMA's EAT BRIGHTER Campaign Trumpets Success But The Data Tells Us Nothing About Any Consumption Boost

Pundit’s Mailbag — Tesco Gets Reviews From Industry Members


PRODUCE BUSINESS

Truce Confessions Of A Conference Junkie

Communications Technology – The Flintstone’s Task With The Jetson’s Tools

Farmers Are The New Rock Stars: You Have Permission To Trash Your Hotel Room

On The Future Of Trade Shows

An Insider’s Search For Cool

Trade Shows: Public, Private or Both?

Recently he wrote a piece for FreshFruitPortal.com that was headlined, Limited supply of club grape varieties ‘angering retailers’, says Pandol Bros:

A leading California table grape grower believes the industry focus on proprietary varieties is beginning to fade, as retailers become increasingly frustrated by the limited supply availability.

Pandol Bros special projects director John Pandol also said the current season had seen good demand, yields and prices, and expected volumes to dwindle earlier than in the last two years. 

According to the representative, many retailers are still ‘trying to figure out what to do’ with the plethora of new varieties and are struggling to adapt to the industry changes experienced over recent years.

“Up until 10 years ago, two varieties [Thompson Seedless and Red Globe] were half of our volumes, and now our biggest variety is probably 15%,” he told www.freshfruitportal.com.

He criticized the ‘club approach’ in the table grape industry, saying a variety name was ‘no magic’ and at the end of the day it was the characteristics like color, texture and flavor that mattered.

“They’re focusing on the characteristics, and often they find out that a traditional variety is better than a new variety and the public varieties are better than the proprietary varieties,” he said.

“I think that the limited varieties are really starting to anger a lot of retailers. I’ve been out on shows and if a variety is good, there’s never enough of it.”

“If it has good characteristics then it doesn’t matter if it’s new or old, public or proprietary.”

Pandol also explained how it was likely that many exclusive cultivars produced by a limited number of growers would fail in the end.

“We have a variety called Sugar Crunch and really it had been overlooked and abandoned in a variety block, and my brother asked for three cuttings of it and actually made it quite successful,” he said.

“It’s been identified as a defect in the club system that a variety, especially a proprietary one, goes out to one or a very small group of growers, and so what sometimes happens is they don’t figure out how to make that variety successful.

“It’s not like the days of the Flame Seedless that went out to hundreds of growers, and so best practices kind of emerged. If a variety is not in the hands of many growers, they don’t reach their full potential.”…

John’s key points are as follows:

1)   That retailers are frustrated by limited supply availability of many proprietary or club variety grapes

2)   That a variety name has “no magic” and that what is most important is variety characteristics, such as color, texture and flavor that most matter.

3)   That traditional and public varieties are often better than proprietary varieties.

4)   That if a variety is not in the hands of many growers, it will not reach its full potential.

John is always insightful and we think he is, in fact, identifying how many retailers and growers of non-proprietary varieties feel, but he is not painting the picture of how the industry will evolve.

Let us look at John’s cri de guerre point by point:

1)  That retailers are frustrated by limited supply availability of many proprietary or club variety grapes.

It is a little unclear what John is trying to say here. One perspective would be that retailers love exciting new varieties and want to feature them and so are frustrated when in the early years these grapes are not grown in sufficient quantities to meet the needs of major chains.

It is quite common for proprietary varieties to give exclusives to smaller chains, such as Waitrose or Marks & Spencer in the UK, for a few years until volume levels rise. Of course, it is also possible that John was saying something entirely different. He could have been claiming that retailers are frustrated because A) They want to buy from their favored vendors, but those vendors may not be able to supply them with the varieties they want, or B) That they want to buy certain varieties and are frustrated at the price they have to pay to secure supplies from one of the limited numbers of shippers able to sell the variety they want.

Of course, getting retailers frustrated is precisely and exactly what proprietary varieties are supposed to do.

If Driscoll’s has varieties of berries that can only be secured by buying Driscoll’s, then retailers will be frustrated. They will be frustrated at the price they need to pay, at their inability to switch vendors if they don’t like the service, etc., etc.

Same would be true of apple varieties. Retailers who want Jazz apples find their supplies constrained as only licensed growers can plant this apple.

If you think about the optimal situation for a retailer, you realize that this is not optimal for producers.

So a retailer would ideally like to be able to buy the variety it wants from a large array of suppliers — this way it could play one against another to secure the lowest price.

The various organizations, such as Sun World, The Grapery and many apple marketers that promote proprietary genetics, do so with different degrees of restriction.

Driscoll’s, however, has the tightest control and it is much to the benefit of its growers. If a retailer wants, say, a variety of blackberry that Driscoll’s uniquely has, it has to buy from Driscoll’s and cannot play multiple suppliers against each other in the way retailers have traditionally done in fresh produce.

What John is hearing is frustration from retailers about a power shift in produce — a power shift in which producers are calling the shots.

2)  That a variety name has “no magic” and that what is most important is variety characteristics such as color, texture and flavor that most matter.

The name on the product is starting to have real power in the produce department. Look at something like Pink Lady apples. This is not a genetically proprietary variety; it is a trademarked name with a quality assurance scheme. Cripps Pink apples are the same variety and are available for sale less expensively. Yet you look at a market such as the UK and you see the phenomenal success the Pink Lady branding effort has had.

Increasingly, brands have value because they represent a call on shelf space in supermarkets and other food stores. It turns out consumers can prefer Halos or Cuties over just some Clementines.

It has been said that if you invent a better mouse trap, the world will beat a path to your door. But, today, it is fair to say that “it ain’t necessarily so” — you need to market.

The Jr. Pundits see Sun World’s Midnight Beauty or Sable Seedless and demand their purchase — otherwise they don’t want black grapes at all.

In the local diner across from Pundit headquarters, waitresses report gladly paying $9,99 and $12.99 a pound for The Grapery’s Cotton Candy grapes, explaining how they love to freeze them and then eat them.

Although, theoretically, it is true that it is a quality-and-characteristics matter more than a name, if the characteristics cannot be identified by consumers, they won’t pay $12.99 a lb! In other words, if the name represents particular quality and characteristics, then it allows for consumer preference.

3)  That traditional and public varieties are often better than proprietary varieties.

There is no reason to think that public varieties can’t often be of great quality and offer fantastic characteristics.

Still there are three problems and one broader issue:

First, without branding, consumers may not recognize these great characteristics.

Second, without good controls, the great variety can be grown in non-optimal locations, by bad growers, etc., and this will result in inconsistent taste and flavor.

Third, without volume controls, the great grapes will be overproduced and thus won’t ever deliver premium margins to the growers.

The broader point is that it is not clear whether the issue is “better” or “worse.” It may just be a question of different. This is a revolution in produce.

People who buy chocolate chip cookies don’t necessarily think they are “better” than Vanilla Wafers or Oreos. They are different, and people are capable of enjoying all different cookies at different times and for different reasons.

So if a consumer looks at The Grapery’s products such as Witch Finger, Teardrop and Cotton Candy grapes – it is not obvious that the consumer is saying these are “better” than black seedless grapes. They are just different and, for some eating occasions, more fun.

Who is to say that the grape section in a hundred years won’t be like the cookie aisle of today, with dozens of specialized varieties both competing for consumer purchase and inspiring consumers to spend more?

4)  That if a variety is not in the hands of many growers, it will not reach its full potential.

This is certainly possible, in much the way beta testing of software with limited users always leaves bugs undetected, but mass consumer usage discovers them — so, the more acres planted by the more growers in more places, the more likely we are to discover different growing techniques.

The problem is that indiscriminate planting by anybody also will produce lots of sub-standard fruit, which will tend to ruin the reputation of the variety in the marketplace.

The inconsistent nature of the available fruit will depress returns for everyone.

So there is a powerful argument for the idea that someone with a vested interest in the reputation of the fruit, who will restrict its planting to growers known to be quality growers, restrict its planting to soil conditions and climates believed to be optimal for that variety and restrict its volume to less than demand so prices will produce premiums for growers may be on a path to a more successful and prosperous produce industry.

*********

Whenever there is a shift in power in a relationship, there is bound to be discomfort. So a party getting “angry” or being “frustrated” is to be expected. The question is not whether everyone will like change. It is whether the change proposed will be a positive or a negative impact.

Retailers have plenty of power. Even major brands such as Coca-Cola have to vie for the best display, the largest space etc. Yet, if in some small way, proprietary varieties give producers a bit of the upper hand, that is for good. A prosperous farming sector encourages reinvestment in the land and agricultural eco-system and rewards the people who, after all, do yeoman’s work in keeping society fed.

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