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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



Wal-Mart’s Current Behavior

We have long covered the changes transforming Wal-Mart.

Recently we’ve run a series of articles discussing the current impact of Wal-Mart on the industry:

Did Wal-Mart Have A Role In Ballantine’s Fall?

Pundit’s Mailbag — Mike Stuart Of FFVA Speaks Out On Ballantine And Buyer/Seller Relations

Another Sea Change At Wal-Mart

Pundit’s Mailbag — Response To Ballantine’s Fall: ‘Just Say No’

Special Buys, Wal-Mart And The Meaning Of Loyalty

Pundit’s Mailbag — Wal-Mart’s Nature

Now one Wal-Mart vendor sees a portent of the future… and a problem for both Wal-Mart and vendors in the Behemoth-of-Bentonville’s current behavior:

Very good stuff about Wal-Mart lately.

Although there are always at least two sides to every story, the story that I see happening is a systematic retracting by Wal-Mart of the tools that the vender co-managing firms use to streamline the process of getting product to the Wal-Mart DCs.

Taking back transportation duties, eliminating DC assignments and instead giving a total “dollar” amount of product and putting an emphasis on regional and global procurement all point to chasing price and wanting to go back to doing it themselves.

Taken together it all points to a Sea Change, as you put it, away from partnerships and toward something that must resemble grocery or maybe the toxic UK ASDA-type relationship with the produce vender community.

They are also putting on an inconsequential minimum of something like 50 cases to their contracts so they can purchase off the open market off contract… and of course when they blow through the max number on the contract, the vender gets no credit (usually below the market) and is threatened with replacement if they can’t come up with the product.

We hear about this kind of conduct from many top-tier vendors of Wal-Mart and it has us bracing for the storm.

What Wal-Mart may or may not understand is they have hundreds of free staff working for them that are well paid and motivated by their vendors.

What I do know is that Wal-Mart doesn’t understand their own replenishment system, and never will unless they bring in produce people and learn to listen and trust their own vendors, not chase the low price with buyers with only a few months of experience.

We appreciate the note. The change in Wal-Mart’s behavior has been inching forward for some time. It was 14 months ago when we did a piece titled Wal-Mart Continues To Change Its Buying Practices, on a presentation by Tom Holbert, Opportunity Buyer at Wal-Mart gave at the Southeast Produce Council, and then we ran a follow-up interview we titled, Ron McCormick of Wal-Mart Elaborates On Its Procurement Reorganization, where Ron, then VP Of Produce at Wal-Mart, unveiled many of the changes whose impact is really being felt now.

Now, in this letter, our correspondent insightfully deduces the logical implication of Wal-Mart’s intention to buy cheaply.

Anything one does to constrain one’s supply chain raises the cost of product. This is why retail chains are loath to restrict procurement to those with particular certifications — even, as our Tesco piece showed — when the certifications are their own proprietary ones.

Now logically, the biggest single restriction on its supply chain is that Wal-Mart depends on vendors for much more than product. The whole notion of vendor-managed replenishment depends on, well, vendors. So you can’t use just any old vendor but rather vendors vetted, trained and experienced in the technology, techniques and philosophy that Wal-Mart wishes to use.

This program derives from what Bruce Peterson was inspired by at Wal-Mart when he started the system. And back then Bruce would have claimed that the thing to look at was not just cost of product, it was a larger number that included everything from costs of maintaining buying staff, to the costs of out of stocks to the cost of having produce that may not delight consumers as much as the best product would.

Now, though surely people at Wal-Mart would say they still care about cost viewed in this larger sense, they no longer seem persuaded that it is worth paying more to attract and sustain the best vendors.

So, the logic follows: “If we do all the replenishment ourselves, then we can just get bids for product at the cheapest price.”

Of course, it is easy to forget how much work the vendors are doing and how hard it is to maintain a seamless supply chain.

If it continues down this pathway, Wal-Mart may yet find out. It is easy to imagine Wal-Mart taking all the replenishmentin-house or hiring a company to handle replenishment with product selected by Wal-Mart buyers. This model would open up more opportunities to buy cheaply.

Yet, if they find that they have made a mistake it will be difficult to go back. This is a cost that it is not clear Wal-Mart’s current executives fully appreciate.

There are thousands and thousands of people who work for produce vendors who believe in Wal-Mart, believe as one might in a religion. They drank the Kool-Aid and have spent years of their lives believing the work they did was not merely profitable but worthy.

Years ago when they would visit Bentonville, they felt like they were visiting the branch of the family that lived in Arkansas. They felt like part of a team.

Now when they visit Bentonville, they get the cold shoulder.

We don’t actually blame the individuals. Much like doctors at cancer institutes are trained not to get close to their patients emotionally because many will die, so “that family feeling” between the staffs of buyers and vendors was only possible when Wal-Mart CEOs believed, as they once did, that Wal-Mart needs its vendors more than the vendors need Wal-Mart.

Once the CEO stopped speaking that way, there were just a few old timers left protecting produce vendors. Now that they are gone, whatever the season, it is chilly for produce vendors when they arrive in Bentonville.




New York’s FreshDirect Succeeds
When Most Online Grocers Have Failed

Supervalu just announced that it is ending delivery of online orders. In most cities, consumers will still be able to order on line but will have to pick up the food at a store.

Many other retailers have abandoned computer ordering all together, such as Publix.

We thought we should talk to a computer ordering and delivery service that appears to be thriving. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Steve Druckman
Chief Marketing Officer
FreshDirect
Long Island City, New York

Q: Not long ago, the concept of web-based grocery for perishable products, and in particular fresh produce, seemed dead in the water. High profile Webvan went bankrupt, swept up in the dot.com bust, along with other failed attempts, including Home Grocer, ShopLink and Streamline. Many industry executives expressed cynicism on the viability of the medium. Could you discuss the evolution of the online supermarket, the environment when you started your first deliveries, and what has changed?

A: When we got into the business and launched FreshDirect in 2002, it was a pretty new phenomenon. Webvan was crashing and burning. We had to focus on doing things differently than others. We targeted the perishable side and realized a way to differentiate ourselves. The key was to come up with a convenient experience that combined consistent, top quality product to have a viable business.

Right now, we’ve developed an amazing produce department, as well as one for meat, seafood, cheeses, and a full kitchen where we do fresh, wholesome, high-end meals; that whole side of perishables is what distinguishes us.

We launched FreshDirect when people were getting a little more comfortable with the Internet. Everyone shops from the Internet in one way or another; they’re at ease with using their credit cards online. This wasn’t the case in the 1990’s.

Q: Skeptics questioned the concept for two main reasons: First, operational and distribution obstacles, unless supermarket chains used it pivotally in conjunction with brick-and-mortar infrastructure. Second, consumers would shun the intangible, virtual format, craving the aroma and tactile in-store shopping experience, as well as the vibrant, impulse-laden displays that draw shoppers into the produce department. How have you overcome these impediments?

A: Probably the biggest challenge is to get customers to give us a try, explore a different way to shop for groceries; instead of trips two to three times to the grocer each week, you can pick it up right here. There’s a leap of faith, but once hooked, we’ve got them. Our website is easy to use, playing to quality, mix and service.

The biggest adjustment for our customers is in buying produce — putting the trust in our hands. We try to convey the expertise of our staff and provide a personal touch. New customers realize after ordering once or twice, our product specialists are often better to select items because they’ve done this their entire career. It’s still a challenge to convey over the web.

Q: Rick Braddock [Chairman and CEO of FreshDirect] says loyal customers account for 59 percent of total sales. How would you describe these heavy users? Is your niche higher-income, techno-savvy, apartment dwellers… those juggling fast-paced urban lifestyles?

A: The big part of our business is in Manhattan, while we service the New York metropolitan area. Families are a predominate sweet spot, those with more income, and people with lots of mouths to feed. Our customers range in age, averaging between 30 to 55-years-old; 75 to 80 percent of our audience is female, and the moms are the core segment.

We maintain really good pricing, some of the best in the city. We do weekly pricing on major items and targeted specialties to stay competitive in our markets. We look at a selective list of products, and it’s our job every week to understand who’s out there doing what.

Q: Do you see a resurgence of the medium? Amazon is pilot-testing grocery delivery service in the Seattle marketplace, offering a variety of perishable foods, including fresh fruit and vegetables and value-added produce like Fresh Express packaged salads. MyWebGrocer is partnering with major retail chains, including a new venture with Peapod, to create more exciting and profitable online shopping.

A: We’re not worried about Amazon coming into this. It sheds more light on our business in a way. If billions upon billions more people get into on-line grocery shopping, the better for us. It’s a hard business, operationally difficult. We do 40,000 orders in a week, and half of those are perishable items. From buying to facilities to the customer, it’s not easy to replicate. Amazon has the brand name, but actually doing it well and being profitable is a whole different game. We consider our competition high end retailers and specialty chains like Whole Foods.

Q: How is FreshDirect positioning itself for future growth? With your New York City bent, is the format easily transferable to other markets? Is your customer base growing or changing? Are you looking to expand into new market areas?

A: We’re getting it right in New York, and we still have a lot of room in New York. At this point, we’re focusing on perfecting the website customer experience. If we branch out to neighboring states like Connecticut, we’re likely to go to places like Stamford and Greenwich. The truth is there is a lot of territory for us to do in New York. If we decided to expand really fast, we wouldn’t have built in infrastructure and tools for the best consumer experience. That is why Webvan blew up. It grew too fast. If they launched when we launched they would have failed. They didn’t start with the customer first.

Our strategy is customer-centric. We do weekly consumer studies, a monthly brand study, a web study every quarter. We’re always talking to customers asking, what can we do to improve? What are we doing wrong that we can fix? That is the culture at FreshDirect. It’s the service level, quality and pricing. We really listen, change, and adapt.

Q: Could you provide examples where consumer input jumpstarted or transformed ways of doing business?

A: At one point, our minimum order size was $50. We lowered it to $30 after learning that many of our customers want to place fill-in orders in the middle of the week.

Our produce rating system was a direct reaction to consumer feedback: “I can’t see, touch and smell the products. I have to rely on you.” It comes out as a negative. We’ve spun it into a positive.

Q: Tell us more about your star-rating system of evaluating produce. How does it work exactly? Are you finding people receptive to the concept?

A: We have experienced produce people, some in the business 50 years that rate produce items daily utilizing a five-star system. The rating is determined based on an assessment of various product characteristics. Five stars means it’s never better; it’s the best we’ve seen. We don’t give a lot of five stars because we reserve them for exceptional, premium items. Four stars means it’s delicious, and good right now to eat. If the customer surfs the store, we try to steer them to buy those four- and five-star products.

Q: Do most people pick the highest quality items? Could there be a backlash if people think FreshDirect’s product is not always top quality?

A: We try to give the best options available. Citrus is amazing in the winter, if you want to buy oranges in the summer, they’re not that great, so ratings might start at 2 or 3. We don’t want consumer expectations above what the truth is.

I’d rather tell them up front. If we get some berries this season and a batch of strawberries aren’t great but good or average, it won’t meet expectations. Maybe a customer wants the strawberries for a recipe and appreciates the value. The rating system takes away the need for the customer to taste and smell the product. I believe we’ll pick better than the average consumer. We have people who know the product. We actually taste it, whereas if you’re in the grocery store, you can’t taste for sugar content. We know where crops were grown; all the important information the regular customer wouldn’t be able to easily access.

Q: Have the ratings changed consumer buying patterns? Have you tracked and analyzed fluctuations in sales and profits since instituting the five-star rating system?

A: Our customers love it. Around 70 percent of customers have said they purchased something they wouldn’t have. “I’ll get my milk, paper towels, but what fruit will I order? I’ll shop from the top because I want the best produced.”

One hundred percent of customers changed buying patterns. The rating system works. If we put something out like black seedless grapes or golden pineapples with four stars, we’ll sell twice as many of those because of their rating than otherwise.

Q: I imagine you’ve gathered a highly refined database of individual customer purchasing and eating patterns in which to tailor strategy… How do you capitalize on this built-in consumer research platform? What have you learned?

A: We have a pretty sophisticated website that we try to customize to our base. We have some of the best data out there, down to the SKU level for all our customers. We help use that data to steer you to products at the bottom of your shopping cart. We show you things you normally purchase that are not in the cart right now; here are your favorites, did you forget anything? In one click you can add them to your cart. We also start to get more sophisticated and recommend other items people similar to you purchased.

Also, if you’re buying chips, we recommend guacamole or an easy recipe with all the ingredients to make it. We won’t just recommend any dressing for your salad items, but the ones you’ve purchased or meet your flavor or brand preferences. The strategy significantly increases sales by encouraging consumers to throw more items in their virtual shopping cart, while introducing them to new items and ideas to build on for next time.

Q: Do the systems allow one to specify, “I want one melon ripe for breakfast and another that will be ripe in four days when my dinner party is scheduled? I want my bananas grass green or all yellow/speckled brown?”

A: We have tried ripe and not ripe options in a few areas, but it is very difficult to do. We zoned in on avocados and order Hass regular, and packed and read- to-eat. They try to do this in some supermarkets, but ultimately consumers will squeeze the avocados anyway. We entertained the notion that we could do this with bananas, but it’s a challenge. We are focused on the stone fruit program this summer, getting shipments two or three times a week. Customers will get stone fruit with a ripening bag to put on their counter.

Q: Your core strategy in a discussion we had several years ago was to build a meals business, where consumers could create meals through accessing recipes and easily finding all the fresh ingredients needed, or buy the meals ready to cook or heat and serve in a few clicks. Has this concept taken off and met your expectations?

A: Recipe functionality is an important component of our site. Consumers can peruse through hundreds and hundreds of recipes if they’d like. You go to the recipe section and choose a category, a special occasion, a main ingredient, real simple recipes, themed, dietary, by course or by cuisine; say you click on Asian, Chinatown soy sauce chicken, you see the recipe source or cookbook, ingredients and prep, and below the main ingredients, it also lists ingredients that you may already have. We’ll suggest gingerroot, chicken or wine to add to your cart. A lot of our customers use it. It’s a point of conversation. For folks who are time-challenged, we have a kitchen right here where we cook high-quality, prepared meals to heat and eat. For most of our consumers, it’s actually a mix; for myself, there are times when I want to cook and some when I don’t.

Q: What have you done on the health and nutrition front?

A: We have a partnership with the American Cancer Society for a healthy eating program, and additionally offer sections for allergies, gluten-free products, carb conscious, etc., following trends of what customers want. The company actually has a nutritionist on staff, Eileen Vider. We offer kids meals, both lunches for schools, and kids’ dinners. They all come in containers they can take to school. There are perishables in there, but shelf life is at least a week. We look for alternatives to Oscar Mayer Luncheables. Ours is such a healthy version of that, it can’t even be compared.

Q: Could you share more information about your sourcing operation?

A: We have a team of buyers that work on different programs; a produce team, a meat and seafood team. They try to source perishables direct from the farm or dairy, going right to the source. Without the middleman, it cuts on costs. It also increases shelf life if the load comes direct. It can mean an extra five days to a week of shelf life for our customers.

Because we are servicing out of one place the size of 25 supermarkets, and our volume is so large, we are able to capitalize on economies of scale to bring in direct and turn so much faster than a typical grocery store. There is no waste. We have very closely monitored temperature-controlled areas. And we don’t have the real-estate costs of brick and mortar chains.

Q: How is procurement handled? How important is produce to your overall mix. What opportunities are there for produce companies to get involved with your business?

A: We are always open to new suppliers. At the same time we have a real focus on locally grown produce and long-standing partnerships with New York area farms like Satur Farms and Red Jacket Orchards. Customers love the local, hand-picked touch.

Q: Are you instituting any sustainability measures. Do you want your suppliers to provide special packaging? Does your home-delivery system require unique packaging needs?

A: Because we have a delivery component, there is a packaging system, where we’ll pick the product, it goes in a box to the truck to the customer. There are things we do to make sure the quality stays pure. For bananas, for example, we put a wrap around them to make sure they are not bruised when they come to you.

We are always looking at ways to cut back on packaging. It’s the Ying and Yang; first we must be sure quality holds up. We have huge projects underway to reduce packaging, and are currently rolling out a project to eliminate 1.5 million boxes a year, down from an average of 9 million. We’re trying to be as efficient as we can in getting products to our customers.

Q: How has the economic crisis impacted your business? Have you made adjustments in your pricing or value propositions? Rick Braddock says the firm is profitable and finished first quarter with a year-to-year growth rate of 15 percent, which is quite a feat in the current financial environment.

A: We’re actually doing really well in this environment; our customers travel a lot and go out to dinner a lot, and the economic crisis has made people stay at home more. We have restaurant-quality products people can cook at home. For us, the question is how we can maximize our business within the competitive marketplace.

We found this most intriguing. Many years ago, Ed McLaughlin of Cornell University and his team did a study on Internet shopping. We remember expecting to find that consumers would not be willing to order produce online because of doubts about ripeness, flavor and quality.

Yet Professor McLaughlin’s research said otherwise — it actually showed that what we thought would be online shopping’s biggest weakness could be its biggest strength.

The study indicated that consumers had very little confidence in their own ability to select a ripe melon, a sweet pineapple, an avocado ready to make guacamole with, etc. Consumers felt that a store was more likely to have experts to make these decisions correctly.

We have no idea if FreshDirect knew about the research or reproduced it on its own, but, very clearly, FreshDirect has fallen into the sweet spot identified so many years ago by Professor McLaughlin.

Maybe the reason so many shopping services have died is because they have been focused on dry grocery, when the consumer need is for help picking perishables.

Many thanks to Steve Druckman and FreshDirect for helping the industry to understand their important work.




Testing Sprout Seeds

We’ve been focusing recently on the food safety outbreak on alfalfa sprouts, running pieces such as these:

Insights On The Alfalfa Sprout Advisory

Recommendation For An ‘Appropriate’ Seed-screening Program Shows FDA Unwilling To Take Responsibility For Its Recommendations

Alfalfa Seed Company, FDA, USDA And Supporting Cast Comment On Seed Withdrawal

Testing Sprout Seed Before It Ships

Although some of these pieces have been rather technical, we consider it vital that the industry do something to reduce the frequency of these outbreaks substantially. So we have wanted to listen, and we will do a little more of that in this piece.

One issue is making sure that the sprouters follow FDA guidelines for testing. Another issue is getting seed that is grown with human consumption in mind. Still another issue is testing seed, and in our piece Testing Seed Before It Ships, a reader makes a strong point that International Specialty Supply, a seed supplier, has a strong testing program for seed destined for sprouting.

Several readers noted the same issue regarding the math, and frequent Pundit correspondent Bob Sanderson was among the most articulate:

The statement in your article “Testing Seed Before It Ships” contains an error that could have unfortunate consequences, since it gives the impression that a good pre-production seed-screening procedure can almost certainly detect any pathogens that might be in the seed. The figure given is a “99.9999% certainty (at 4 cfu/kg — which is extremely light contamination).”

Pre-production seed screening is a common-sense intervention that should be done on all seed lots, prior to use in sprouting. The bigger the sample, from the greatest number of locations in the lot, the better. Sampling on some seed lots that have been implicated in outbreaks has been able to isolate pathogens, which strongly suggests that if this sampling had been done beforehand, the seed would have been diverted to non-food uses, and the outbreak would not have occurred. However, making any claim of probabilities of detection based on certain sampling methods requires a knowledge of the distribution of pathogens in the particular seed lot. This distribution is not known except after-the-fact.

So “99.9999%” is an ideal case. The question is: Is distribution more likely to be close to this ideal case, on not? One can only guess. If the sprout producer is guessing and looking at maybe $100 to sample and test the seed prior to using it for sprouting, as opposed to perhaps $10,000 to sample and test every production batch as he uses the seed, it might be very tempting to assume even distribution. After all, if the grower believes that the initial seed sampling has reduced the likelihood of there being any pathogens in the seed lot by 99.9999%, then the grower could use 1,000,000 of these seed lots before running into a problem. That’s over a thousand lifetimes, proving that a little math can be a dangerous thing.

— Bob Sanderson
Jonathan’s Sprouts
Rochester, Massachusetts

We thought the mathematical question a trenchant one and so turned to ISS to get its take on the matter:

The model does not require even distribution. It does, however, require a certain percent of contamination. When we are talking about 4 contaminated seeds (CS not CFU) per kg, we could be talking about 100 CS per bag in each of the 880 bags, or 200 in half the bags or 400 in a quarter of the bags or 88,000 in one bag. The odds of capture are the same when you sample 1/1000th of the seeds in each and every bag.

However, if you are talking about 100 CS distributed evenly in just a few bags, odds of capture are very slim. Just because ISS Screened Seed has never been involved in an outbreak does not mean it won’t be. If there is little contamination in just a few bags, the odds are high that contaminated seed will not be captured for testing. And even if you do capture a pathogen for testing, labs do make errors and do occasionally get false negatives. This is why sprout growers cannot rely on it as their only safety procedure. It is just their first safety procedure.

This procedure is, of course, most effective when you have many bags with much contamination. So the larger the likelihood of a seed lot creating a large multi-state outbreak, the larger the likelihood that ISS Seed Screening will detect the contamination before that seed is sold to sprouters. Indeed, each time we have found contaminated seed lots and removed them from the market, ISS Seed Screening very likely prevented an outbreak.

It is hard to tell how many outbreaks ISS Seed Screening has prevented because much of the seed does not pass visual inspection, so there is no need to go to the expense of testing it. I’m guessing that we only prevented about a dozen or so outbreaks. But can you imagine the state of the sprout industry if you added another dozen outbreaks in the last ten years?

In the middle of the Seed Safety page on our website we have a section called “OK, What if the Seed Isn’t Evenly Distributed, and Pathogens are in Just a Few Bags?.” This might explain it better.

Thanks for the great work you folks do to promote food safety,

— Bob Rust
International Specialty Supply, LLC
Cookeville, Tennessee

So there we have it. The testing is a good idea; more testing is a better idea than less, but testing is not a guarantee.

That is why we go back to our three-step program: First, grow the seed under GAPs with an intention to use them for human consumption. Second, use a testing program as ISS does on seed before it is sold to sprouters, and third, the sprouter must use a testing program such as Jonathan’s Sprouts does.

It is not in any one of these programs but in the intersection of all three that we can at least hope to find an acceptable outcome when producing alfalfa sprouts.

Many thanks to both Bob Sanderson and Bob Rust for helping us think through such a crucial issue.




Pundit’s Mailbag — Fruit Patch Speaks Out

Our piece, Special Buys, Wal-Mart And The Meaning Of Loyalty, included a letter from a tree fruit industry participant who took a swipe at the model followed by tree fruit companies that are not, in our letter-writer’s opinion, sufficiently vertically integrated.

Specifically the letter named Ballantine and Fruit Patch.

Ballantine, as we pointed out here, is not in a position to respond, but in the letter below Fruit Patch responds on the record:

Since Fruit Patch’s name was mentioned as somehow having a potential negative influence to tree fruit grower returns, we must put a few points straight to the anonymous contributor from the California tree fruit industry.

First, any reference to ‘the early Wal-Mart days’ (or, for that matter, the early Kroger, Safeway or SuperValu days) is irrelevant. Everything has changed in our industry, especially the last 5 years.

The complexity in how retail forces have realigned in the recent past is all the difference. Safeway is also Von’s in California and Dominick’s in Chicago. Super Valu is also Albertson’s, and Kroger is Ralph’s, Fred Meyer, City Markets and King Soopers, just to name the obvious. Wal-Mart has also evolved, and become the largest retailer in the world, now controlling a great deal of shelf space and traffic flow, which provides the opportunity to move fruit and vegetables as well. All are good companies, competing in the marketplace as they see fit for their shareholders.

Fruit Patch is fortunate to have good commercial relationships with a number of important retail buyers, and each is unique and requires unique attention and service. Fruit Patch works hard to supply the ‘right product, in the right package, at the right time’ to each of them. We have literally, at the very least, ‘one hundred’ varieties of peaches, plums, nectarines, and pluots that are supplied to Fruit Patch by good, resourceful, and knowledgeable family farmers.

Fruit Patch packs the majority of our growers’ fruit in our own state-of-the-art packing facility near Dinuba, California, with orchards on all sides. Our post-harvest capabilities are many and diverse to meet any standard of food safety or security, while providing packing capability to “family farmers” who ‘choose’ to avail themselves of the services we provide and need the advantages our capital resources and post-harvest capabilities provide.

Fruit Patch also markets fruit for other family farmers who pack their own fruit in our company brands to the same characteristics and standards that we require through our own facilities. It is not a ‘bad thing’ to provide valuable services to our producers, just because they are not somehow vertically integrated.

Through our service agreements with our in-house packed fruit, and those who pack their own fruit in our brands, we are able to provide a large volume of tree fruit to a wide range of buyers.

The circumstances concerning Ballantine’s demise has nothing to do with Fruit Patch. To refer to any ‘weakened condition’ at Fruit Patch is not accurate, and borders on scurrilous and rumor-mongering. Fruit Patch is well capitalized and has sufficient resources to do ‘whatever’ it judges is best to support or improve its business structure.

True, Fruit Patch has ‘changed’ and will continue to evolve to become a better service-provider, not only to our committed grower ‘partners’ but with our ‘retail partners’ in a commercially appropriate manner. “Mud Slinging” is irresponsible and potentially damages the reputation of our whole industry.

The tree fruit industry, like the whole world is going through a ‘period of adjustment’. Fruit Patch is also adjusting and expects to continue to have a positive influence for all of our committed suppliers and buyers as well. Rather than spread rumors about others, we all need to continue to find more effective ways to pack the finest fruit and develop programs that provide sustainability for all stakeholders. That is our attitude and goal here at Fruit Patch.

By the way, we wish to extend many thanks to the Pundit for providing a mechanism to ‘shine a light’ on important issues in our industry.

— Rick Eastes
Vice President Sales & Marketing
Fruit Patch Sales
Dinuba, California

This whole situation comes across to us as a matter of those who elected not to align with Wal-Mart 20 years ago now spinning hard to justify a chunk of Wal-Mart business for themselves.

They may get some. Wal-Mart has become so big that it is almost inevitably going to take in some suppliers who weren’t interested in Wal-Mart 20 years ago.

Rick Eastes’ letter is, however, on target in pointing out that it is not just Wal-Mart that has changed. Everything has changed. The players have consolidated; the issues — food safety, sustainability, traceability, etc. — have increased the complexity of the business enormously.

A common comment we hear as we travel the industry and talk to suppliers is this: “We have the best facilities, the best team and are doing the best job we ever have done. Yet I feel less secure than I did 10 years ago.”

We’ve written a lot about aligned supply chains and have generally been favorably disposed to them as mechanisms for enhancing food safety. But an alignment can be arranged without outright ownership.

Besides, demanding complete vertical integration via ownership would basically end the small and midsize family farm. Is that a direction anyone really wants to go?

Many thanks to Rick Eastes and Fruit Patch for having the courage of their convictions and a willingness to speak out. It is only by a willingness to deal with tough issues that the industry can advance.

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