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a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



‘Professor’ Bruce Knobeloch
Is Bullish On Industry Opportunities

Jim Prevor’s Perishable Pundit, February 19, 2009

This year’s United Fresh/Cornell University Produce Executive Development Program is coming up in March and there is a new element to the program. Since its founding, the program has provided an unusual combination of a sort of compressed MBA curriculum, taught within a prism of the realities of the fresh produce industry. The Pundit was a founding member of the faculty and will be back teaching this year working with luminaries such Ed McLaughlin, who we wrote about here, and a roster of outstanding Cornell faculty members to bring a unique educational experience to the industry.

Held Far Above Cayuga’s Waters on the beautiful Cornell University campus, the program provides a unique networking experience and unusual opportunity for reflection and strategic thinking about business … and about life. If you haven’t signed up for the program yet or would like to send someone from your organization, it is not too late. You can still register right here. We strongly encourage you do so.

The new element this year was the decision to incorporate a presentation from Bruce Peterson and Bruce Knobeloch. Because both of these gentlemen have worked on both the buy and sell sides of the industry, we can count on an unusual perspective on how decisions get made in the produce trade.

To give us all a kind of “head’s up” as to what these gentlemen are thinking, we asked Pundit Investigator and Special Projects Editor Mira Slott to speak with both of the Bruces. We ran her first discussion under the title, ‘Professor’ Bruce Peterson Talks About Traceability, Immigration, Transportation and Water Utilization. Today Mira speaks with Bruce Knobeloch.

Bruce Knobeloch
Former Vice President of Marketing
for River Ranch Fresh Foods,
and Director of Produce at
Schnuck Markets, Inc.

Q: What inspired you to get involved in the United Fresh/Cornell University Produce Executive Development Program?

A: There are several reasons why I was attracted to the opportunity to participate in the program. When Ed McLaughlin called me, his perspective was to instill something fresh into the program. I was very lucky to be a part of the program in the first year, and really excited to come back. I was pleased to learn I’d be participating with Bruce Peterson, who I’ve known for a long time and consider a friend. And also to work alongside Ed, who I’ve known since my Schnuck days. I have tremendous respect for him and the impact he’s had on the industry.

Q: What insight could you invoke at the conference that might stir up dynamic conversation?

A: Bruce Peterson and I will be able to provide unique perspective to participants, since we each have navigated the business as both a retailer and a supplier. I’ve been lucky to see the good, the bad and the ugly from both sides of the fence, as director of produce at Schnuck’s, and in the experiences I’ve gone through the last 10 years in California. The value is really in being able to dissect that a little bit with a small dedicated group in an intense educational setting. And in looking at the business, I hope to get the perspective of attendees on how they view things as well.

Q: You also can impart your perspective as an attendee yourself during the launch of the program…

A: I vividly recall from the class two years ago the great interaction and networking that happened from start to finish of that week. A number of people I met for the first time at that conference, I regularly communicate with now. This was one of the best programs I’ve ever attended.

Q: That’s quite a glowing recommendation. Could you provide more specifics on why the program was so important to you? Is it most helpful from an educational and business-improvement standpoint, or is the benefit more intangible, based on the close-knit dynamic?

A: People really want to go. I’m not trying to offend anyone, but to participate in a week-long class takes a major commitment of personal and professional time, so to go, you have to be devoted to getting a lot out of it. Like other leadership programs, you have to make a conscious decision to immerse yourself in it. You get out what you put in.

I’m really interested in exchanging ideas on ways to maximize opportunities in our industry.

Q: What are some of those opportunities as the industry confronts this global economic crisis?

A: You can’t talk about any industry now without talking about the economic environment we’re in. It’s the 800-pound guerilla in the room. Brilliant economists don’t have the answers on how to fix the crisis we’re in, or its impact on the future. Give us five minutes at the conference, Bruce and I will figure it out!

Seriously, it hasn’t been a rosy economic picture for the industry for a number of years, whether you’re growing spinach in Salinas, tomatoes in the East, or sweet corn in the Midwest. It’s been tough, with technology investments, the increased input costs, the demands on margins, etc.

Q: Hasn’t the produce industry always faced tough margins, a competitive environment and economic challenges?

A: Yes, all this is proper and correct, but the expectations of buyers today are higher, and the disciplines are much different. Take just one component, of food safety — as a grower, shipper, or processor, the effort just in documentation and audits is 10-fold what it was 10 years ago. Take that thread and start pulling it. What that means in overall costs, in terms of investing in more complex food safety measures, additional manpower, internal and external communication measures, and that’s just one component of their economic reality.

Q: In economic downturns, isn’t the produce industry in some ways insulated since food is a basic need, whereas consumers will hold off on more luxury, discretionary purchases and big ticket items like cars?

A: To a degree, economics is a drain on the industry. Unemployment in the country has hit a level we haven’t seen for 16 years. 0verall, people face cost-of-living increases while the average wage is flat or slightly declined. At the same time, the health industry is focused on everyone eating fruits and vegetables, yet overall consumption hasn’t been growing significantly in the last decade.

Q: Why is that? With the obesity epidemic and childhood health and nutrition issues top of mind, you’d think the produce industry could generate a boost in sales. As Vice President of Marketing for River Ranch Fresh Foods, you were involved first hand in clever promotional efforts. Why is it so challenging to increase produce consumption?

A: Some of the best efforts whether mine or others in marketing face obstacles. I can speak to the programs that are most successful, which involve working with the buyer/seller in a coordinated effort. The concept may or may not have been driven by the seller, but both parties bought into it because of the soundness of the idea. It’s tough to accomplish this because on both sides, everyone is time-constrained, and economically constrained.

It’s difficult to get the dollars in budgets to drive some of these programs. Whether it’s a one-on-one promotion, direct mail, out of a customer club card, a new product introduction utilizing demos, or whatever it may be, dollars are more difficult to obtain. Margins the last few years have been compressed. I can’t imagine any part of the industry that hasn’t experienced margin compression and cost increases.

Q: What is your view of the Fruits & Veggies More Matters campaign in promoting a consumption lift?

A: From a global perspective, More Matters is a phenomenal education and outreach tool. Combined with what’s been happening in schools with the fresh fruit and vegetable program, we all hope this will drive consumption and nutritional awareness in the long term. The industry has done an outstanding job of pushing the government for more funding.

Q: Everything’s relative though. It seems the produce industry is forever the underdog in battling the big food corporations flush with mega advertising budgets to inundate the airwaves. What’s the solution?

A: I don’t mean to make this simplistic, but it’s all about dollars. Look at other industries that have driven consumption… dairy and meat are prime examples of multi-million dollar marketing campaigns. Even with issues some have faced in food safety, they still have been able to drive consumption.

The produce industry has a hard time supporting promotional programs. This really is a dollar-and-cents issue. Consumption is driven by awareness, and communication costs a lot of money. With that said, what the industry has done on a shoestring has been phenomenal. To a great extent, the money going into school lunch programs today comes from our industry just being bull dogs and going after the money. Even so, if you look at the school lunch program, I would bet the money spent on fruits and vegetables is but a miniscule fraction of what is spent on other meal components. I truly do applaud a large number of people in our industry for what they have accomplished with such limited resources. It makes you ponder what we could do with more resources.

Whether it’s food safety, input costs, labor, workman’s comp or water shortages, we are all facing these problems as an industry. Demand for water in urban areas is a mounting problem. In California we have one of the biggest needs and one of biggest budget shortfalls of any state in the union. But this is not just a California problem; it’s a global one. All Bruce Peterson’s comments in your Pundit interview are dead on.

Q: Bruce Peterson pulls no punches in blasting a powerful wakeup call to the industry to drive forward on key issues that could impact our livelihood. You paint a grim picture of economic hardships the industry must overcome. How can companies turn these challenges into opportunities?

A: Our industry always faces challenges; growing food is not an easy thing to do. Mother Nature gives us the good, the bad and in-between, and because of that, there is always opportunity as well as risk.

What I think is most intriguing is good companies can become great companies. The one thing I valued most at the Produce Executive Development Program was the ability to think strategically; not necessarily about my business but more strategically about the industry. Attendees can walk away from this week at Cornell with optimism. People need food, a place to live, certain basic human needs, and we fill one of the most necessary. I can work in this industry with my head held high, providing families with healthy, nutritious food.

We’re a collection of industries within an all-encompassing industry. I don’t have a tremendous amount of experience growing, processing, and shipping some things, but what I do know well is closely related to other segments of our industry. The growth opportunities are out there because of the entrepreneurial spirit of our industry.

Just because of the nature of the beast, our industry is still very much a regional, passion-filled business. It kills me when I read or see doomsday scenarios about big business agriculture, and it’s the end of the family farm. My comment to that: I would welcome anyone to come spend a day with me and I’ll introduce you to the evolution of the family farm. One hundred years ago, all they could farm was a small amount of acreage. Technology in many forms such as improved water delivery systems enabled good, conscientious growers the luxury of expanding their base of operations.

Just because the family is farming on 5,000 acres, doesn’t mean it’s still not a family business. This is lost by the media. Just because a produce company has a professional farming business, it’s not like growing wheat in the Midwest within the agribusiness umbrella. It’s still a matter of a family getting together and making plans for next season or the next planting cycle.

Bruce Peterson and I hold this industry in very high esteem. This industry has provided a lot of blessings to both him and me, although it sounds like we worry about our industry’s future, we’re energized about the opportunities ahead.

Q: Have you given thought to what you will do next in your own career, following your successful tenure at River Ranch?

A: I’ve been fortunate that my career path has enabled me to work on both retail and supply sides. In whatever I’m focused on over time, the experience has helped me to make good decisions. River Ranch has been restructuring to solidify the company’s position. I have nothing but great comments for the team at River Ranch and wish them the best. I’ve been looking at a number of paths. I’ve been one of luckiest guys in produce, met an unbelievable group of people with great minds and even greater hearts. I’m truly excited about the future. And I can’t wait until the middle of March when I head to Cornell!

We’ve written more than a little bit about the financial crisis and will speak more about it while lecturing at Cornell. Yet we would see two things as especially relevant to a course such as this that is focused on strategic thinking:

First, preparing for fluctuations in the economy is part and parcel of long-term planning. Statistics are a challenging issue because people have to wrap their arms around this insight: Just because something is a once-every-hundred-years event doesn’t mean it won’t happen twice this week.

Many of the companies that have failed or been bailed out were consciously managed in the hope to increase returns by increasing risk. Even a mighty company such as General Electric was managed to be at risk to a freeze-up in the commercial paper market for no better reason than to improve profitability.

Second, despair is an unusually useless emotion and mostly blinds one to opportunities. We can’t say we know when the recession shall end and, indeed, we fear that bad policy first by the Bush administration and now being continued during the Obama administration will extend the recession. Yet we are confident that none of these policies — good, bad or indifferent — are enough to either save or destroy America. So we are reminded of a piece we wrote in Pundit sister publication PRODUCE BUSINESS titled Despair Overstated? — the piece recounted a story told by J.P. Morgan, most famous banker in the world:

“My father told me,” Mr. Morgan was quoted as saying, “to follow my own bent in business, but whatever that business, to work hard. One thing he said I shall always remember. . . not to discount the future of America. ‘Remember, my son,’ he said, ‘that any man who is a bear on the future of this country will go broke. There may be times when things are dark and cloudy in America, when uncertainty will cause some to distrust and others to think there is too much production, too much building of railroads, and too much development in other enterprises. In such times, and at all times, remember that the great growth of that vast country will take care of all.”

In our article, we applied the thought to the United States today:

Housing prices may fall as we have a surplus right now, and that may bring down banks and Wall Street institutions. Yet long term, this country will fill with people who yearn to breathe the freedom of America and we will need more houses built yet. In moments when many counsel despair, this is a bet as certain as any the world has to offer.

So as we contemplate heading off to the Ivy League we ought not focus on the momentary disruptions, we ought to focus on building businesses strong enough to withstand the vicissitudes of life because surviving is a necessary condition for achieving success.

Yet it is not a sufficient condition. We stand along with J.P.Morgan’s father in believing that, in this country, long-term success shall belong to the optimists.

We hope you are optimistic enough to invest in yourself and your company by joining us at the United Fresh/Cornell University Produce Executive Development Program. You can register right here.

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