Pundit Interviews

Pundit Letters





Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Tesco, Whole Foods And Wal-Mart Concepts Tested On Both Sides Of The Pond

With all the attention being paid as Tesco Comes to America, it is worth noting that ever since Safeway sold its U.K. operation in 1987, the trend has actually been the other way, with U.K. retailers bailing out of America and U.S. retailers making inroads in the U.K.

Marks & Spencer sold the New Jersey-based Kings to a private equity group. J Sainsbury was Britain’s largest food retailer — the position Tesco holds today — when it purchased Shaw’s in 1983. It traded for two decades and bought up competitors and additional stores. Then in 2004, J Sainsbury abandoned America and sold Shaw’s to Albertson’s.

In contrast, Wal-Mart acquired ASDA in 1999 — a major buy of the third largest supermarket chain in the U.K. This entry in the U.K. market followed Costco’s opening of its first U.K. warehouse in late 1993 — it now has 20 warehouses in the U.K., including a new one in Chester.

Now Whole Foods is preparing for its launch in the United Kingdom and the International Herald Tribune reports on the subject with a piece entitled, Whole Foods Hopes Its Organic Chic Will Sprout In London.

There is both a macro and a micro question that will play out in this launch.

The macro question is whether the U.K.’s more intense focus on environmental and human rights issues will play in Whole Food’s favor or not? Although intuitively it seems that consumers who focus on these issues will be consumers attracted to the Whole Foods’ offer, the greater saliency of these issues with the consuming public means that mainstream retailers in the U.K. have addressed these issues to a far greater extent than mainstream U.S. retailers.

There is also some question as to whether, inherently, Whole Foods won’t represent to the “green” consumer a hostile “big organic” approach that is really counter to the trends in the U.K. that include highly local buying and ecologically diverse box schemes.

Whole Foods is, of course, well aware of all this. They purchased a chain of organic-oriented stores called Fresh & Wild back in 2004.

In fact if you look at the brochure they have put out for the first U.K. store under the Whole Foods name, you will see — as in the front cover we reproduce, at left, with the banner across the bottom of the page — the phrase “Supporting UK Growers & Producers,” which is an interesting twist on locally grown because parts of France are closer than parts of the U.K. It lends some credence to those who see the promotion of the locally grown movement as a form of protectionism.

Much like politics, though, all retailing is local. And the success of this particular new store is likely to depend on its location and execution. At 80,000 square feet, the store is the largest food store in London. Whole Foods has both an organic/environmental/ethical side and an epicurean side. It would be surprising if the store wasn’t a feast for the senses. One presumes it will be a larger version of the Whole Foods store in Columbus Circle in New York City, with the added advantage of not being located in a basement.

One sign that it will be done right, the International Herald Tribune piece indicates that Whole Foods is interpreting North Atlantic quite broadly and has sent over David Doctorow, Vice President of Whole Foods’ North Atlantic region, to help get the store going. David Doctorow is one of the most experienced experts in the retailing of organics, and we go way back with David, as PRODUCE BUSINESS, a sister publication of the Pundit, ran a profile of Bread & Circus back in 1991.

David was the Produce Coordinator of this Boston-based natural food retailer, which was famous for a red, yellow, green merchandising approach with green meaning organically grown, yellow, transitional and red, conventionally grown produce. Eventually Bread & Circus was acquired by Whole Foods and, not least among the assets acquired in that acquisition was David Doctorow.

The International Herald Tribune article questions the viability of such a large store in congested Central London, especially without parking. But these urban stores are almost better thought of as restaurants with a store attached than as supermarkets. The money is going to be made in the prepared foods section, in the cafes and coffee bars. The fresh produce, fish, fowl and meat are as valuable for the halo effect of freshness they impart to the prepared foods offer and the in-store restaurants as for the sales they generate themselves.

Which all sets up a rather unusual situation. Tesco is coming to America to bring British-style prepared foods — broad array and good quality, but mostly merchandised in small, conveniently located stores — at virtually the same moment Whole Foods is bringing to London American-style high-end prepared foods sold against an expansive backdrop of specialized food and drink bars — coffee, sushi, etc. — and colorful fresh produce.

Who will be right? Tesco or Whole Foods? Or are both right, Tesco for more mainstream places and Whole Foods for densely packed urban venues? In the end, success or failure may come down to details. Can Whole Foods get the right Indian seasoning in its High Street Kensington store? Can Tesco get just the right ribs going in those Arizona locations?

If Wal-Mart’s problems teach us anything, it is that retailing is, to paraphrase Edison, 1% inspiration and 99% execution. Best of luck to Whole Foods and Tesco and Wal-Mart too, as they try to execute their best laid plans.




PMA Broadens Reach In Chile

On May 15, at 9:00am at the Sheraton Hotel (the hip spot in town for this type of event) in Santiago, Chile, the Produce Marketing Association will be holding a seminar. About 130 industry members are confirmed for attendance and the keynote speaker will be Thomas Reardon, Professor, Department of Agricultural Economics at Michigan State.

Dr. Reardon will draw on new research he has recently conducted to speak on the subject of “Supermarkets: Opportunities and Challenges for Chilean Fruit in Emerging Economies.”

The Giumarra Companies, as well as Pundit sister publication, PRODUCE BUSINESS, serve as the General First Level Sponsors for the event.

An Honor Roll of Second Level Sponsors consists of Araya y Cia, ARS Corredores de Seguros, Cartones san Fernando, Fruittoday Euromagazine, The Packer and Wenco. In addition, PMA donated a sponsonsorship to the local 5-a-Day program, 5 al Dia (surmedia), in order to help build up the local program.

In addition the program received a wide range of endorsements from important “seal of approval” type national institutions. They are referred to as Patrocinadores:

  • Prochile (A Public/private organization supporting Chilean exports and the enhancement of Chile’s image around the world.)
  • ASOEX (Chilean Exporters Association)
  • FEDEFRUTA (Chilean Growers Association)
  • ASACH (Chilean National Supermarket Association)

This particular event is an outgrowth of many things. First, decades of strategic planning that led PMA to seek to build connections throughout the world. Second, a unique driver in the form of Nancy Tucker, PMA’s Vice President For Global Business Development, whose methodical commitment to building PMA’s international focus has been simply crucial.

We did a Q&A with Nancy in Pundit sister publication, PRODUCE BUSINESS, that you can see right here.

Most recently, PMA has been expanding its network of international representatives as it explained in an announcement:

PMA OPENS NEW OFFICE IN CHILE
The organization’s third branch office abroad

As part of the expansion plan of Produce Marketing Association (PMA), and after the recent opening of branches in Australia and México, PMA is proud to announce the launching of its Chilean office.

This new branch aims at increasing the number of members of the whole-supply chain and to add value to the Produce and Floral export industry throughout all markets.

The prestigious PMA will now be operating in Chile through Yentzen Consulting. This company will also work the Peruvian market.

Chile thus becomes the third foreign branch of the PMA, after the recent establishment of offices in Australia and México. This South American country plays a significant role in the North American market. Indeed, almost 40% of the fresh fruit exported from Chile are sent to the US.

As per Nancy Tucker, Vice President of PMA, “Chile is located in a strategic place in the Southern Cone region. It has such advantages as political and economical stability, a solid export industry, reliable growth projections, good weather, technology applied to processing, and superb fruit, vegetable and flower production. All these key factors have determined the choice of the new branch”.

PMA’s office in Chile is headed up by Gustavo Yentzen. He is universally recognized as a good guy, is smart and knows the industry and so, quickly, has gotten activities such as this seminar running.

In the scale of an organization such as PMA, it is a small event, but its importance should not be underestimated as the very future of produce trade associations in the United States may hinge on the question of how such events and the people who attend them could or should be reconciled to the Washington-oriented needs of an association driven by government relations.

With one of the major issues confronting the industry being how our national trade associations should be positioned and, particularly, if PMA and United Fresh ought to merge, we see the conflict in a nutshell.

PMA is doing this event in Chile to build up its Chilean membership base, to boost Chilean attendance at its convention and other events and, more broadly, to build a network of involvement between PMA and the Chilean industry. It has similar efforts ongoing in Australia and in Mexico.

Yet why should an Ohio grower who pays dues to a national association to gain representation in Washington want to fund these types of efforts? And why should a Chilean producer want to be a member of an association that is focused on U.S. legislative initiatives?

PMA’s effort in Chile is part of a broader recognition that trade has become global, that consolidation in the U.S. compels us to seek out more industry participants and that there is real value in both learning and networking to come from being a member of the association.

How do we, as an industry, organize our affairs so that we can take advantage of all this, yet still handle necessary domestic tasks such as lobbying Congress? On this question much depends.




Look Beyond Vegas For United 2008 Success

In the aftermath of the United Fresh show in Chicago, all too much focus has been placed on whether next year’s venue in Las Vegas will be more successful.

We suspect it will be. It is a venue the produce industry hasn’t gone to in recent memory, so you will have that novelty going for the show. It is also closer to the big produce-producing and importing areas in California and Arizona — which means you will probably see a bump in attendance.

The rap against gambling destinations — especially those, such as Las Vegas, that have hotels where the lobby is the casino — is that though registration is often very high because of the appeal of the destination, attendance at workshops, seminars and on the show floor is often low, because people stay up too late and are distracted on the way to meetings and events.

A conventioneer who sits down for a couple hands of blackjack before heading off to the floor is likely to find himself either up or down when the time comes to go and either circumstance provides lots of motivation for staying at the table rather than going to the workshop or the trade show floor.

In fairness, it should be pointed out that the Las Vegas Convention and Visitor Authority goes ballistic when people say things like this. They claim that because Las Vegas is a 24-hour destination, everyone can go to all their business events all day and then engage in all matter of recreation all night.

Of course, this seems to imply that registration and attendance will be good but many of the attendees will be nodding off.

It is also true that many corporations view employee requests to travel to venues such as Vegas skeptically. If an employee says that going to a conference in the downtown of an industrial city is important, he is probably motivated by business. A request to go to Vegas can be motivated by a lot of things. After all, this is a city that promotes itself by proposing that things best kept secret happen here.

This is all rather silly though. Strong shows do not depend on the city to attract exhibitors and attendees. In over 20 years of attending produce industry trade shows as an adult, we have yet to meet the person who loves Anaheim, yet Anaheim is in the PMA rotation and shows there consistently break attendance records.

We once heard of a company that trained its sales people by dropping them off in a strange city with a box of bibles. They took from the salespeople all their money, credit cards, I.D., etc., and made them sell enough bibles to earn Greyhound bus fare home.

One could argue that you should hold a seminar and trade show program in a very undesirable venue for a few years. This would compel you to produce fantastic programming and, otherwise, provide incredible value to attract attendees. Then you could move to a nice venue and, like an athlete who trained with ankle weights, the strong show would really take off.




CPMA Provides Opportunity To Increase Business Up North

In many ways the Canadian Produce Marketing Association show is the Pundit’s favorite. What makes it special is that although it is large and important enough to attract big players, it still has an intimate scale. You attend two years in a row and you already know a big chunk of people. Many people who are simply booked every second at PMA can hang out and talk till the wee hours of the morning.

Although we had intended to attend this year, the Pundit got called away before his intended trip from Chicago to Montreal. The Pundit Poppa had to have his gall bladder removed.

It was a relic of a procedure we had done last year when we went to Houston, Texas, to do a stem cell transplant from the Poppa Pundit’s identical twin brother to fight a life threatening leukemia. We wrote about that experience right here.

Chemotherapy had led to sludge and infection in the gall bladder, but the Poppa Pundit wasn’t strong enough to handle such an operation at that time. So it was delayed until he was strong again.

Today most gall bladder operations are done laparoscopically, this one required a full incision and a delicate operation to separate organs that had become compressed. Still, he came through it with flying colors and was just released from the hospital to go home today.

Next year’s CPMA is in Calgary. That is where the first Canadian convention — then called the Canadian Fruit Wholesalers Association — the Pundit ever attended was held, back in 1986. We still have a bandana and cowboy hat they gave out that year.

Don’t think the Pundit parents have ever made it to Alberta, so maybe we will take them next year. Poppa Pundit has always liked to see new places and, for Momma Pundit, it is 171 miles from Calgary to the world’s largest shopping mall in Edmonton.

And only another 240 miles and we can visit a deposit of oil that dwarfs Saudi Arabia: The Alberta oil sands.

One odd thing about the CPMA is that many Americans have had a bad taste in their mouths from dealing with Canadian firms that are not bound under PACA. So many Americans go to Canada only looking to sell three big retailers.

Now there is another alternative. The Fruit and Vegetable Dispute Resolution Corporation is a membership organization designed to create a PACA-like structure to facilitate trade between the NAFTA partners. We had a nice piece about the DRC in Pundit sister publication, PRODUCE BUSINESS, which you can read right here.

It is worth thorough investigation. The CPMA is always fun but too many Americans enjoy it because they get the opportunity to speak to their American friends and associates in a low key atmosphere. Working with the Fruit and Vegetable Dispute Resolution Corporation, Americans could also feel more comfortable picking up some business up north.




Organic Show Has Most To Lose By Breakup

Without a doubt the most successful and exciting of all the shows in Chicago was the All Things Organic show. The crowds were thickest, the interest most intense… it was certainly a big winner.

Yet, ironically, it is also the show that has the most to lose by the breakup of the FMI/Power of Five show consortium and also the show most vulnerable in the long term.

The basic dilemma of a show such as All Things Organic is captured in its name — the “all things” part, not the “organic” part. You wind up with a show selling everything from soap and baby clothes to baby food and beef, canned goods, frozen foods and fresh produce, to name just a fraction of the items sold at the show.

Yet retail is not generally organized this way. A Wal-Mart produce buyer has nothing to do with buying baby clothes, nor does the Wal-Mart baby food buyer have anything to do with deli meat, nor does the Wal-Mart poultry buyer get involved in frozen foods, and the guy who buys soap for Wal-Mart is a different person entirely. Obviously, if you are talking chain stores, you would need dozens of buyers, merchandisers and category managers to attend one show.

Because of the co-location with FMI and the other shows, many of these buyers were in the house. It was no big deal to go downstairs to another show. And with organics being hot and often in short supply, it was well worth the visit.

In fresh produce many companies really want to push their organic lines. Sometimes this is because companies already well known for their conventional product want the world to know they do organics as well. In other cases, it is just a function of pushing their most profitable product lines.

This came across vividly in a category like apples. If you were an apple buyer, you would find not one major apple shipper in the United Fresh show… not one. But you had several down in the organic show.

One suspects it will be different next year. All Things Organic will be co-locating with the Fancy Food Show, and the Fancy Food Show attracts mostly smaller buyers who might buy all the products for a small gourmet shop or gift basket company. These buyers are, in fact, perfectly aligned with the All Things Organic show since they can decide to buy a full range of organic products for their stores and operations. They are small-scale buyers and are unlikely to interest big apple shippers.

Add to this the fact that exhibitors at All Things Organic could be available in Chicago for additional meetings with buyers at United and FMI, it was a reasonable decision for a fresh produce company to buy a booth at All Things Organic.

Without the buyers drawn by United and FMI, it will no longer be as simple a decision.

In the short term, organics are still so hot and, in many cases, produce buyers are spending disproportionate amounts of time procuring organics that they may send buyers to an organic show. Long term, however, it is highly likely that companies that sell organic baby clothes, for example, will leave All Things Organic and exhibit at the baby clothes convention to reach the chain store buyers.

In other words, trade shows are defined by the buyer they attract, so a show that promotes “All Things Organic’ will have a tough time because Wal-Mart won’t want to send 50 buyers so each can visit 10 booths.

Large chains will probably start to use the organic show the same way they have long used the big Fancy Food Shows held in New York and San Francisco — as an early warning system for what is hot and up-and-coming.

But those produce vendors looking to sell commercial quantities of apples will probably find their way to shows that attract produce buyers.




Pundit’s Mailbag — Food Safety For Private Label Versus Branded Product/One Nation Versus Another

Our piece, Pundit’s Pulse Of The Industry — OneHarvest’s Rob Robson And His Food Safety Team, which reviewed the food safety operations of Australia’s largest fresh-cut processor, brought this trenchant commentary:

Nice interview with the folks from One Harvest.

Certainly there are differences in the degree of review that buyers implement over their supply chains. Even within a traditional American grocery retailer the level of oversight that they provide their own private branded product is different from generic or national brands. Those firms where displayed product is limited to their private branded products do develop a more aggressive review but the “focus” is not the same among the various firms.

The “focus” is reflective of the corporate culture, the firm’s targeted demographic and to those topics currently critical to the general population. This helps explain the plethora of auditing schemes originating from the buyers.

The value of comparing the success or failure of various national or regional auditing schemes is questionable. No foreign regulatory agency is working with a system as sophisticated or efficient as the CDC’s PulseNet.

What will be identified as an “outbreak” (two or more individuals infected by a common source) in the US will more than likely go undetected in other nations. We’re not being measured using the same tools. And certainly under the current US tort system the ramifications of failure are not the same.

— Robert F. Stovicek, PhD.
President
Primus Group

Bob operates at the confluence of many of the trade’s food safety issues as his company, a leading third party auditor, hears from everyone what, particularly, they want to see audited.

He astutely identifies several important areas to think about. We want to draw attention to two key points for the industry to consider:

  1. The distinction between private label and branded product has been significant — and not just with retailers. Many foodservice buying cooperatives had a rigorous set of standards for their private label program and were much more lax on other product. Many broker/distributor/marketers maintained one set of standards for their branded programs and another, lower standard, for other product they procured and sold.

    Part of this is motivated by the reputational risk that is evident if one’s own brand is implicated in killing someone.

    To a large extent, though, this dynamic is a reflection of the way we procure in the produce industry. If someone is going to do a private label item, they will have to secure year-round supplies, and this means that will probably enter into contracts. So a private label item typically has a closely aligned supply chain just to make sure the product is always available in the proper grade, quality, quantity, etc.

    It is actually relatively easy to talk with the company you are contracting with about food safety. It is another item on the list. Yet if you are just buying an item on the free market, from five states and three countries, working with 20 different suppliers during the course of a year, well, how, exactly do you ensure food safety?

    Obviously one can’t be flying all over the world at the last minute auditing and inspecting. There are two obvious answers: One is the industry could change so that no matter who you might buy from, the standard is acceptable. This is what the industry has attempted to do with the California Marketing Agreement. The alternative approach is that buyers simply cannot buy from anyone at any time but must, instead, constrain their supply chain to vendors that have been pre-approved.

    The problem with this approach is that, often, non-vetted vendors will be less expensive. Perhaps on a branded program, customers might be persuaded to stick with the program and pay a higher price, but on a non-branded program, it will be very difficult to convince the client to pay more for what, to him, is just another trade brand.

    We were told by one of the retailers that maintains franchise-type stores that even a small price differential leads the franchisees to buy from a local wholesaler or broker.

    There has been some positive changes in this area. A number of companies have elected to apply the private label standards to all their product. This is logical. Unfortunately, there is some question as to the long term sustainability of these efforts since if the product won’t sell because it is not market-priced, one suspects there will be a bending of standards after a while.
  2. In food safety circles, standards such as those followed by Woolworth’s in Australia and the British Retail Consortium are considered more rigorous than most of those followed by U.S. firms. In fact in our piece Would British Retail Consortium Standards Have Prevented The Spinach Crisis?, Jo McDonald, Technical Services Manager, British Retail Consortium, answers that question by saying: “I believe that if all companies had adopted BRC standards, the spinach E. coli outbreak very well could have been avoided.”

    This is a very strong statement and, as Bob Stovicek points out, one that involves many different questions. Not least of which is how safe is the food supply in other places under these different systems.

    We don’t really know, we don’t even have very good data to compare one state against another, as we pointed out in Many States Are Weak At Reporting Foodborne Illnesses. We certainly don’t have an easy way to compare relative efficacy of foodborne illness prevention efforts on a global scale. Bob points out that PulseNet is something exceptional, but even if PulseNet covered the globe we would have no way of knowing if differences in the incidence of foodborne illness were due to different growing areas, different food safety regimens, different cooking practices, different genetic propensity to illness or hundreds of other variables.

    Yet, we are capitalists and it strikes us as reasonable to think that a system in which buyers demand higher levels of food safety — due to increased utilization of private label or for any other reason — is likely to produce higher levels of food safety. We hope one day we will have sufficient data to be able to draw global comparisons. Until then we have to make reasonable assessments, and the notion that buyers can drive enhanced safety is a reasonable, if unverifiable, assumption.

    As they say, the race is not always to the swift, nor the battle to the strong, but that is the way to bet.

Many thank to Bob and to Primus for this thoughtful letter.

Mail to a Friend

© 2017 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us