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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Wal-Mart Takes On Tesco
With 20,000-Square-Foot Stores

The name is supposedly “Marketside,” but maybe people will just call it Small-Mart. The Financial Times reports that Wal-Mart will open four new stores in Arizona under the Marketside banner. Each store is about 20,000 square feet and the logo — green lettering, a stylized tomato, egg and grape — all topped by a Wal-Mart blue star, seems to suggest an emphasis on fresh foods:

Wal-Mart goes small to take on UK’s Tesco

Wal-Mart will open small-format grocery stores in Arizona this year under the trade name, “Marketside”, going head to head with the new Fresh & Easy markets being rolled out in the US by Tesco, the UK grocer.

The new pilot stores are about 20,000 sq ft, a 10th of the size of the Supercenters that have been driving Wal-Mart’s growth over the past two decades.

The retailer has secured leases on four properties south-east of Phoenix, some of them only a mile from locations where Tesco is setting up its 10,000 sq ft discount grocery stores.

The stores, likely to be open by the summer, are the first new concept launched by the retailer in the US for a decade, and are being developed as the company slows its planned growth of Supercenters.

Unlike the giant stores, the planning process for the new Marketside stores does not require public consultation, potentially creating a way for Wal-Mart to grow into cities and states where its Supercenter expansion has been slowed by union-backed political opposition.

In addition to its 2,435 US Supercenters, Wal-Mart also sells food at 128 Neighborhood Markets, a grocery format the company launched in 1998.

Wal-Mart declined to give details of the new stores, but the company characterized them as comparable with its existing Neighborhood Markets, which it uses to “fill in” between Supercenters. At about 35,000 sq ft, the Neighborhood Markets are roughly the size of a traditional US supermarket.

“We trial and test lots of different new formats and this would be an example of that,” the company said.

But its new logo, filed in planning documents in Arizona and consisting of green lettering with a stylized tomato, egg and grape topped by a Wal-Mart blue star, suggests the format will — like Tesco’s Fresh & Easy — have a far stronger stress on fresh foods.

The retailer has also registered a number of new trade names in recent months, such as City Thyme and Field & Vine, which some industry analysts believe could be used for new private-label fresh-food offerings.

Wal-Mart recently hired Jack Sinclair, a veteran of the UK grocery industry, to head its supermarket business.

Operating the smaller stores is likely to require a significant shift in an operation developed to serve the Supercenter.

All the stores are in street-corner properties that were formerly occupied by drug stores. The company has applied for wine and beer licenses for stores in the fast-growing cities of Gilbert, Tempe and Mesa, and has additional leases in the city of Chandler.

There are already 12 Supercenters and five Neighborhood Markets in the area southeast of Phoenix. All the buildings were previously drug stores that were acquired and then sold off by CVS, the pharmacy group, as part of the break-up of the old Albertson’s supermarket group in 2006.

The four stores are located at:

Mesa: 7561 E Baseline Road
Gilbert: 910 E Elliott Road
Chandler: 950 N McQueen Road
Tempe: 838 W Elliott Road.

We are not sure how much this means. We ran a piece, Clash of Corporate Cultures Seen In Contrast Between Wal-Mart/ASDA Essentials And Tesco/Fresh & Easy, in which we pointed out that in the United Kingdom, Wal-Mart’s wholly owned subsidiary ASDA opened two small format stores called ASDA Essentials, which were designed to compete with Tesco’s Express brand stores — then promptly abandoned the rollout and closed one of the two prototypes.

Tesco is having plenty of problems in the U.S., but by investing so substantially in the Fresh & Easy concept, it created an enormous corporate imperative to get things right.

So the best bet is that despite many problems, Tesco will fix them and come to be a major player in the U.S. market.

In contrast, ASDA opened Essentials in response to a corporate recognition, articulated by Lee Scott, Wal-Mart’s CEO, that “a lot of Tesco’s growth has come from the small convenience chain. Andy [Bond, the CEO of ASDA] and his team have got to look and see where the opportunity is for us with that kind of space.”

Perhaps the test in the U.S. is Lee Scott’s expression that he is not going to let Tesco in the U.S. do what it did in Britain… gain substantial market share through the small store route.

Yet, without a major investment, it is also possible that Wal-Mart won’t have the commitment to overcome problems and will abandon the concept if it isn’t quickly successful.

The concept itself, at 20,000 square feet, is interesting. It could be seen as bloat onto the Tesco concept. Wal-Mart looked at each thing Tesco is doing and vowed to offer a little better and a little more. This is the kind of bloat we sometimes see with automobiles, where a car keeps getting a little bigger and a little heavier with each model year as the designers try to make it “better”.

Another possibility is that Wal-Mart’s Marketside at 20,000 square feet is more in tune with real estate availability than Tesco’s 10,000-square-foot format.

All four of the Marketside stores are being put in old CVS stores — there are a lot of sites like that available. In fact, Tesco has gotten caught with extra square footage on several sites. It rented the space available — say an old drug store — but only used enough space for its Fresh & Easy Stores and is trying to sublet the extra space. So far the extra space is just sitting, and Tesco is paying rent on the extra square footage.

One doesn’t have to be an expert in retail to know that Wal-Mart could use a profitable small store format. Small stores don’t require the kind of public process that getting a supercenter requires. It also would create an access route in dense urban areas where supercenter-scale real estate is not available.

In fact, it could help Supercenter expansion. It is easy now for, say, New York City politicians to oppose Wal-Mart. Let Wal-Mart open a bunch of little stores in town and it starts building its own political constituency. Local workers can get promoted to better jobs when a supercenter opens, local vendors can boost sales, local landlords urge the politicians to cooperate, and local charities become beneficiaries of Wal-Mart’s local operations — it becomes much tougher to simply object to Wal-Mart coming into the market.

However…you need a lot of little stores to equal one Supercenter and, as of yet, there is no evidence that consumers want this format. Wal-Mart has only inchingly rolled out its Neighborhood Market concept because its return on investment has never matched the Supercenter. It will be quite surprising if this 20,000-square-foot box does either.




United Fresh Fills Board Seats With Dole And Chiquita Executives

United Fresh recently announced two new Board Members:

Two New Directors Appointed to Fill Open Board Positions

Washington, D.C. — United Fresh Produce Association Chairman of the Board Emanuel Lazopoulos has announced the appointment of two industry leaders to the Board of Directors of the Association to fill open seats formerly held by colleagues within their companies.

Mike Cavallero is President, North American Tropical Fresh Fruit, Dole Fresh Fruit Company, a position he has held since 2001. His responsibilities include overseeing Dole’s fresh fruit and vegetables marketing departments, as well as the North American banana, tropical fruit, deciduous and vegetable sales divisions. He began his career with Dole in 1974 as a technical services representative. Cavallero will be serving his second term on the United Fresh Board, having first served from 1996 to 2000. Cavallero is replacing former Dole executive Richard Dahl.

Brian Kocher is President, North America, Chiquita Brands International, Inc., where he is responsible for all aspects of the company’s operations in the region, including value-added salads, bananas and other produce. Kocher joined Chiquita in 2005 and served most recently as Vice President, Controller and Chief Accounting Officer. Prior to joining Chiquita, he worked for three years at Hill-Rom, a leading provider of medical equipment and integrated caregiver solutions. He previously held a number of positions with General Electric Co. in the financial and information technology areas. He began his career as an auditor at Price Waterhouse. Kocher has served on a number of boards in several banking institutions in the United Kingdom and France, as well as the Health Industry Group Purchasing Association, a leading medical industry trade association. He replaces Bob Kistinger, who left Chiquita at the end of 2007.

“We are honored to have Mike and Brian joining the Board of Directors at this time,” Lazopoulos said. “Both Mike and Brian bring significant personal expertise to the Board, and their companies represent important leaders in our industry.” The new directors will take office at the next United Fresh Board meeting, January 24-26, in San Jose, Costa Rica.

The Pundit wishes both gentleman good luck in their new positions. United Fresh does important industry work and their judgment and influence will surely be of value.

It is, of course, important that large organizations such as Dole and Chiquita be represented on industry boards. These companies have the money and organizational sway in the business to make things happen.

But smaller players should not feel there is no place for them in the national associations. The real strength of these groups depends on volunteer leadership, and there is a lot of opportunity for smaller players to get involved.

In fact the associations depend on those who typically work their way up the ranks of divisions and committees. These are the people who develop a passion for their organizations and, very often, assume leadership roles.

It is typically very rewarding, intellectually stimulating and beneficial in terms of networking. So you get to do well for yourself and your company while doing good for the trade.

If you are interested in getting involved on a division or committee, just call up the association of your choice and let them know — they are all looking for people who are looking to contribute.

If you don’t know who to call, feel free to let me know here and we’ll be happy to make the introduction.

Congratulations again to Mike, Brian and United Fresh.




Dole Expands
Marketing Team

We have been covering the transition in Dole’s marketing department. First we ran Dole Transitions Marketing Heads, pointing out that Rick Utchell, Dole’s Vice President of Marketing, would be retiring and that Ronda Reed would be assuming a new position as Vice President of Marketing for Fresh Fruits and Vegetables.

We followed this piece with an article entitled, Dole Marketing Team Strengthens, Pushes Plush Toy Promotion, which explained that David Bright would be the new Director of Marketing for Dole Fresh Fruit.

Now Dole sends word that the team is being expanded:

DOLE ANNOUNCES LATEST CHANGES TO
FRUIT & VEGETABLES MARKETING TEAMS

Dole Fresh Fruit and Dole Fresh Vegetables, subsidiaries of Dole Food Company, Inc., announced further enhancements to their marketing operations.

Ms. Yvonne Rentmeester has been promoted to the position of Marketing Services Manager for Dole Fresh Fruit.

In this position, Ms. Rentmeester will expand her role currently managing the Technical Services department to encompass banana ripening and product handling from warehouse all the way through the retail store. She will assume direct responsibility for Dole Fresh Fruit’s Marketing Representatives and the merchandising program.

“This move integrates the activities of the Technical Service and Merchandising departments,” says Mr. David Bright, Marketing Director for Dole Fresh Fruit. “Yvonne’s experience, management style, and attention to detail will greatly leverage the resources of two departments into a strong program that troubleshoots potential problems, identifies opportunities and communicates Dole Fresh messages down to the retail store level.”

Ms. Rentmeester began her career with Dole Fresh Fruit as a Technical Service Representative in November 1997 and has managed the department since January 2000. She holds a BS in Agricultural Business Management from Cal Poly Pomona with an emphasis in citrus and avocado production.

Also joining the Fresh Fruit marketing team is Odalis Hawit-Rivera, in the position of Brand Manager.

Ms. Hawit-Rivera will leverage market research and lead Dole’s marketing efforts to deliver value for customers and drive long-term sales through message positioning, new product development.

Prior to joining Dole Ms. Hawit-Rivera held various positions of escalating responsibility at Pharmavite, LLC, most recently as Associate Brand Manager, where she successfully led her cross-functional team in launching a five-sku line of products in record time and which exceeded sales expectations.

“Odalis brings extensive experience in trade and consumer marketing to Dole. She has the strong background in the development and commercialization of new products that we have been seeking,” says Bright

In the Dole Fresh Vegetables group, Mr. Keith Kelley has been hired as Marketing Manager, New Products and will be responsible for leading the group’s efforts in new product development planning, specifically focusing the company’s cross-functional resources against top priority new product segments and co-managing the innovation process to drive long-term sales and profit growth for Dole Fresh Value-Added Business.

Mr. Kelley possesses extensive packaged consumer goods experience in the areas of brand outreach, product development, strategic planning, sales support and forecasting analysis, for products including Columbia Crest Winery and Eight O’Clock Coffee.

“Keith brings direct, hands-on experience in areas relevant to Dole Fresh Vegetable’s business — market segmentation, merchandising and sales modeling,” states Ms. Michelle Gonsalves, Marketing Director for Dole Fresh Vegetables. “He has a successful track record in building brands and delivering results across multiple consumer categories.”

Mr. Kelley received his MBA in both Marketing and Organizational Development form Indiana University.

Dole is unique in the industry in that between fruit, vegetables and packaged goods, it has a product in every supermarket every day. That opens up the possibility for promotions and tie-ins that would be difficult for others to execute. Done well, those programs can really drive fresh produce consumption.

Best of luck to the new Dole marketing team in making that happen.




Setting The Record Straight
On Vertical Farming In
Las Vegas

You have to be careful of the information you get over the web. The contemporary dynamic of reputable organizations redistributing content that they haven’t vetted could lead you to think you are getting valid information when you are really being fed a hoax.

Here at the Pundit, we take pride in bringing things to the attention of the trade that might otherwise remain obscured. So many times, in pieces, such as Pundit’s Mailbag — Greenhouses And Vertical Farming, we have discussed the Vertical Farms Project.

It is a fantastic thing. Operated out of Columbia University by Dickson Despommier at the Department of Environmental Health Sciences, if they ever get the Vertical Farms Project to work, it will transform the world.

You can read the key essay on the project here.

Check out the website here.

Look at some of the designs here.

We picked up some of the photos below:

Now, all the sudden, word comes out on blogs and gets redistributed by publications and trade associations that, supposedly, they are going to build one of these vertical farms in Las Vegas.

Most of these sources picked up a story from something called Next Energy News:

Las Vegas to Build World’s First 30 Story Vertical Farm

Las Vegas, the tourist mecca of the world, is set to begin development of the world’s first vertical farm. The $200 million dollar project is designed to be a functional and profitable working farm growing enough food to feed 72,000 people for a year and provide another tourist attraction to the city that does everything in a larger than life way.

The world currently uses about 80% of the available farm land and 60% of the earth’s population lives near or in an urban environment so the logical choice for farming is to go up for land where the environment can be controlled and where distribution is local. Las Vegas is seen as the perfect location for this project by Nevada State officials who would like to demonstrate their sustainability and environmental awareness instead of projecting an image of waste and excess.

Although the project initial cost is high at $200 million, with annual revenue of $25 million from produce and another $15 million from tourists the 30 story vertical farm would be about as profitable as a casino with operating expenses only being about $6 million a year.

There would be about 100 different crops grown ranging from strawberries to lettuce even miniature banana trees could be grown from each floors specially controlled environment. The products would go straight to the casinos and hotel properties and be a very visible and desirable addition to the overall Las Vegas experience. Design details should be worked out in 2008 and the project could open its doors by the middle of 2010.

When we received the story, as is our practice here at the Pundit, we called for confirmation. Nobody seems to have heard of the project.

The Las Vegas Sun quotes Professor Despommier from Columbia as saying it is probably a hoax:

The Vegas Building Rumor Watch: A Skyscraper Farm?

If you’re a city that has already built a faux Eiffel Tower rising out of a casino and a giant lake with explosive fountains that dance to Frank Sinatra songs, perhaps it’s only inevitable that Internet rumormongers will be only so happy to believe you’ll do just about anything.

How else to explain the latest wacky building rumor pinned to Las Vegas: a skyscraper farm.

The so-called “fact” that Las Vegas is building a giant skyscraper that will feed 72,000 people in the city — and serve as a tourist attraction — has been floating around for about a week now on “green business” web sites, Las Vegas building sites, and, of course, Wikipedia. Most of the reports reference a story in something called Next Energy News that cites “Nevada state officials” as saying that Las Vegas is building the $200 million 30-story building, the world’s first skyscraper farm.

Unbelievable? Uh, yeah. But a little too fantastic to totally ignore.

Turns out, the enticing and actually very serious-minded concept of a “vertical farm” was dreamed up by Dr. Dickson Despommier, a professor of public health at Columbia University. Despommier has spent the last ten years developing extensive plans and studies that explore the feasibility, necessity, and practicality of a giant tower that would feed city folks.

Web sites that “report” the building of the vertical farm in Las Vegas don’t mention Despommier by name, but include renderings and language lifted straight out of his vertical farm web site.

Problem is… Despommier doesn’t know anything about Las Vegas plans.

“I have absolutely nothing to do with it,” said Despommier, in an email. “My own opinion is that it’s just a hoax.”

It wouldn’t be the first time someone tried to prematurely tie a somewhat whimsical-sounding building project to Las Vegas. I enjoy the “dreams” page of the blog Vegas Today and Tomorrow for my fix of never-weres (sample: an Addams Family Resort and Casino!).

It is a very interesting concept, and they are continuing to develop it. Maybe the first one will be built in Las Vegas one day. The future of controlled atmosphere agriculture is vitally important for the future of the industry.

A more immediate lesson, though, is that the web is filled with false information. That problem is magnified because many reputable publications and organizations just pick up news feeds and redistribute them.

We just want to assure you that if it is on the Pundit, we checked it out. Sure we could make a mistake, maybe even be hoodwinked, but a real effort has gone into making sure you get information both interesting and accurate.




Avian Flu Reminder

A woman in Indonesia died from avian flu. This would make her the 270th death from the disease since 2003.

The disease is typically contracted via contact with live birds. As long as the disease can only be contracted by humans after contact with fowl, it poses only a small threat to humans.

The fear, however, is that the disease will mutate and the mutation will allow the Avian flu to pass directly from person to person. It is believed this would be a catastrophe as around two-thirds of those infected have died from the disease.

Now we have a new study indicating that on the first voyage of Christopher Columbus to the New World, the sailors brought Syphilis to Europe.

This theory has been around for awhile. But there is a new twist:

But in a new wrinkle, the research suggests the disease may not have been transmitted through sex until it adapted to the environment in Europe.

“It evolved this whole new transmission mode, and it didn’t take very many genetic changes,” said study lead author Kristin Harper, a graduate student at Emory University. “What this tells us is that new transmission modes may evolve pretty rapidly. This is important to us today, because we’re worried about things like avian influenza going from human to human.”

We’ve run a number of pieces related to avian flu, including Bird Flu Warnings Demand Attention. We ran that piece in the second Pundit we ever produced — at the time everyone was talking about the need to take action, doing webinars, posting websites and what not. But it is difficult to sustain interest when the outbreak doesn’t come.

But that doesn’t mean it won’t. Since the disease hasn’t been spread among humans, few have any immunity to it; thus it is enormous danger.

What would your business do if there was a global pandemic of Avian Flu?

The CDC keeps a page on the issue here.




A Favor For The Jr. Pundit

We highlighted the efforts of the Jr. Pundit Primo, aka William, to improve the healthfulness of his school menu in Prince William’s Produce Requests and King Of The Lunchroom.

Maybe his efforts helped a bit as his school foodservice program just won an award:

Don Janezic, Food Service Director, Pine Crest School, Boca Raton, Florida, standing before a tapas display in the Mazer Family Dining Hall at the school.

Everyone has heard the clichéd horror stories about school cafeteria food. Everyone, that is, except for the students at our Boca Raton campus. Campus Food Service Director Don Janezic and his staff were recently presented with the Best Program Award from their employer, SAGE Dining Services, for continually offering the best of all the SAGE programs and exemplifying the company’s vision of superior service and delicious cuisine. This award is given to only three teams (one in each region) out of the company’s 158 food service operations nationwide.

We are going to be bidding hard at the annual auction to win William the King of the Lunchroom spot again so he can continue to press for healthy meal options.

In the meantime, though, we have a favor to ask for six-year-old William. His kindergarten class is studying geography and would like to receive postcards from around the world — preferably containing some information about local activities and landmarks.

We were thinking that it would be great if the industry used this opportunity to teach the class where different items are grown, so if you are willing to send a postcard to help the class learn what is produced where, please be so kind as to send it to:

Will Prevor c/o Mrs. Jan Mehl
Pine Crest School
2700 St. Andrews Blvd
Boca Raton, FL 33434

If we get a good assortment, we’ll take a photo of the montage and report back later. Many thanks in advance for helping the Jr. Pundit and advancing produce literacy.

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