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



Got Produce? Schnuck’s
Mike O’Brien Tries To Add “Balance”

Jim Prevor’s Perishable Pundit, June 16, 2009

We owe a great debt to the following retailer and industry leader for writing this letter, as it is gives us a perfect opportunity to reflect on the current state of the industry as related to the generic promotion program.

As a fan of the Perishable Pundit and a proponent of the proposed National Fruit and Vegetable Research and Promotion Board, I was hoping that your column could be used as a “Fair and Balanced” forum for both sides of this issue.This however has not happened. In light of your recent column questioning PBH’s ability to move the needle, I feel I need to weigh in.

1) My assumption is that your reasoning behind questioning PBH’s effectiveness is that you question their qualifications for managing a promotion board. You know that promotion boards such as this are directed by board members and the committees they create… those members are selected by the companies writing the checks. They will be the ones determining budgets, approving marketing strategies, media and creative. They will decide the direction for promotion. They will plan and evaluate research activities. Not PBH. We don’t know that PBH will even have a role.

Your argument that PBH has failed to make a difference (which I don’t believe) actually makes the case for a well-funded national effort. If we expect people to be accountable for results, they have to have the tools necessary to perform. I’d say it is a fair statement that the produce industry has not supported a strong consumer marketing effort through PBH or any other organization.

I don’t know for a fact whether PBH has impacted produce consumption because I don’t know what the results would have been had they not been around. But I do know that they have provided a uniform platform in Fruits & Veggies — More Matters (and 5 A Day before that) for the industry to rally around. I know they have actively supported it with the best marketing tools and PR activities their budget would allow.

Your column indicated that current per capita consumption stands at 2.7 cups a day. The Food Pyramid tells me that the average adult needs to eat about 5 cups a day. That leads me to believe that there’s an opportunity for an additional 2.3 cups a day to be sold — nearly double what we’re producing and selling today. And that’s an opportunity that every one of us in this business would be foolish to overlook.

If it takes a national board to help us go after that, the cost will pale in comparison to the potential gain.

— Mike O’Brien
Vice President of Produce & Floral
Schnuck Markets
St Louis, Missouri

We should start out by saying that Mike O’Brien is an honest and good man who has long toiled to advance the industry. He has devoted countless hours to activities such as the PMA Board of Directors and the Chairmanship of the Produce for Better Health foundation. He deserves the trade’s gratitude as do his bosses at Schnuck Markets, who have enabled his involvement in the broader trade. His family, especially his wife Theresa, has made many sacrifices to make Mike available for industry work. We are all in Mike’s debt.

Further, we would say that Mike’s particular position and experience as head of produce for a respected, though relatively small, regional chain would have been ideal for helping PBH organize this effort. As a retailer, Mike has to deal with a diverse group of suppliers, yet as a smaller guy, he can’t simply issue diktats. He has to actually find win-win situations and engage in honest dialog and discussion. He has to be “fair and balanced.”

And we consider this our obligation here at the Pundit as well. We work hard to provide a forum for all sides of any industry debate. Thus it pains us that Mike would have found the Pundit coverage of this issue to not be “fair and balanced.” Yet, the very allegation points to a weakness in the case for a generic promotion program for the produce industry — virtually nobody, especially nobody who has to pay the assessment, seems to be a passionate advocate for it. In fact, the typical produce executive seems completely disinterested.

We are thrilled to publish Mike’s thoughtful letter stating his position as a proponent of the National Fruit and Vegetable Research and Promotion Board. We would publish any such letter we might receive. In fact, our efforts to be fair and balanced here at the Pundit on all issues are so great that virtually the only way one can be assured of getting a letter published in the Pundit is by writing to us with a substantive letter disagreeing with something we’ve published or a position we’ve taken.

Yet, on this supposedly important issue, virtually nobody in the whole industry has cared enough to advocate for it. In other words, Mike can rest assured… if what we have presented is not balanced, it is not because we are suppressing one side. It is because nobody cares enough about that side to speak up. Or, to put it another way, the industry may not be balanced in its opinions on this matter.

In fact, it goes beyond that. The whole initiative seems “top down” rather than rising from the grass roots of the industry. We get so much feedback here at the Pundit on every subject, and it is striking how many more people are reacting to, say, the Nolan victory over Ocean Spray than to this commodity promotion plan.

Of course this may change. Whatever the future may bring, all Pundit readers can be assured that our pages are open to all points of view and that we take pride in publishing many ideas that have yet to persuade us.

Mike also makes several specific points in his letter and we think it appropriate to address those points:

1) My assumption is that your reasoning behind questioning PBH’s effectiveness is that you question their qualifications for managing a promotion board. You know that promotion boards such as this are directed by board members and the committees they create… those members are selected by the companies writing the checks. They will be the ones determining budgets, approving marketing strategies, media and creative. They will decide the direction for promotion. They will plan and evaluate research activities. Not PBH. We don’t know that PBH will even have a role.

We are in complete agreement with Mike on this point. In fact, one of the more annoying elements of the presentation is that large segments of it are devoted to matters not within the purview of the vote. For example, there is a whole section on “social marketing,” which may or may not be a good idea but shouldn’t be in there because there is no assurance that this board, if ever constituted, will engage in “social marketing.” As Mike points out, it is some board yet to be constituted that will make this decision.

There is also a reference to the fact that the committee felt strongly that the board should not engage in any activities relevant to food safety. Yet, once again, this is interesting, but the relevance is unclear since the ultimate board is in no way bound by the thoughts of this committee. All these references create opportunities for misunderstandings when, one day, some future board decides not to use social marketing or decides to emphasize food safety in its communications. It would have been clearer for the industry if the proposal restricted itself to the facts of the matter and things that could actually be voted for or against.

Our reasoning in bringing up the PBH’s effectiveness or lack thereof was not in any way to disparage the job that has been done in running PBH. Long before this generic marketing program was under consideration, we talked about the PBH’s effectiveness in our piece titled, More Matters And The Need For Supporting Research:

In some ways Elizabeth Pivonka has the most thankless job in produce. The President and CEO of the Produce for Better Health Foundation, which ran the 5-a-Day program and now runs the Fruits & Veggies — More Matters effort, has the amorphous task of increasing produce consumption in the service of good health with a budget any marketer at Coke or Pepsi would laugh at…

In ways not widely known, Elizabeth is an industry hero. We here at the Pundit have gotten notes from people upset with Elizabeth because PBH isn’t doing some kind of promotion that the writers think would be helpful. In almost every case, Elizabeth has held back because the science isn’t secure enough on that point. On issues ranging from the usefulness of produce consumption in extending lifespan to the efficacy of a vegetarian diet in curing cancer, she has stood solid, an industry firewall against claims unsupported by good research.

In so doing, she has sustained the alliance with governmental authorities, maintained the credibility of PBH and served well consumers who weren’t misled or given false hope…

Elizabeth Pivonka is a tireless warrior on behalf of produce and her program. The board members and executive committee are equally dedicated to boosting consumption and improving public health, and rest of the staff is enthusiastic and motivated.

We also sung Elizabeth’s praises in our piece, Lousy Fruit Undermines Consumption:

We think we should nominate Elizabeth Pivonka, President of the Produce for Better Health Foundation, as the holder of the most thankless job in the industry. Here she is charged with boosting consumption through marketing and education, and we so often don’t do the job with product and at retail that is required to build consumption.

We have nothing but good things to say about Elizabeth’s management of PBH. If this board goes through, we hope she gets to head it and gets a good raise for running the much larger enterprise.

The one area where we have disagreed with Elizabeth is in goal-setting. It has been obvious to many, including us, that PBH just does not have a budget adequate to increase consumption in the United States. It also has been obvious to us that the Foundation has no evaluative metric. As we put it back in 2007:

…obtaining every goal has a cost. So if we want to bring in a big ad agency and tell them our goal is to move the needle on consumption nationally, we could prepare a budget sufficient to achieve that goal. If we do not have enough money to achieve that goal, spending what we do have just because we happen to have that much may just be a waste.

There are lots of options. We could geographically shrink the program to a pilot status with the goal of demonstrating effectiveness that would allow us to raise the needed budget. Alternatively we could change the nature of the program. For example, we could decide to build a database for each industry product so we could apply to get approved health claims for each produce item. The idea is that developing this “library” of approved health claims is within our budget to accomplish; it increases the intrinsic appeal of the product and can easily be promoted via public relations efforts.

Elizabeth Pivonka is a tireless warrior on behalf of produce and her program. The board members and executive committee are equally dedicated to boosting consumption and improving public health, and rest of the staff is enthusiastic and motivated.

Yet every program needs a metric of evaluation. Let us forget the past and just look at the future. It is 2007… how will we know in 2012, five years from now, whether we have been a success or not?

And what would we do if we failed?

The issue of industry-wide generic promotion is one on which many in the industry are ambivalent. But all are united on an attempt to avoid waste. Our concern with the advocates for this program is not that they are unable to manage a program. It is that they are desirous of “doing something” rather than bluntly saying how much it would cost to achieve a particular goal and then asking the industry if it was willing to pay the price.

For many, support for the program became highly questionable when Mark Munger, Vice President Marketing for Andrew & Williamson and the immediate past chairman of the Produce for Better Health Foundation, was quoted as saying that the proposed assessment was set at a level thought “to not be overly burdensome.” Although we praise Mark for his frankness and for his genuine concern with the economic viability of first handlers, the fact is that this is one calculation that requires steely truth if the industry is to make a wise decision.

Rather than picking one number that they think is politically palatable, we wish they would present research that substantiates a series of choices. If the industry spends X, then Y happens. If the industry spends XX then YYY happens. Then let the industry decide what level it wants to fund or if it wants to fund a level at all.

Our concern is that PBH executives have not been willing to do that in the past and we are not convinced that they are ready to start doing that now.

2) They should be applauded for raising the questions that someone needed to raise. If they didn’t do it, who would?

We have no objection to PBH raising the issue of a generic promotion board. We will note, however, that the Pundit, who is certainly not the oldest guy in the industry, attended a meeting on the subject around 1984 at the old United Fresh Fruit & Vegetable Association headquarters where the issue was how its FRESH APPROACH voluntary generic promotion board could be transitioned into a much larger mandatory program. California gave birth to 5–a-Day and PMA fanned the ember and made it national. So we suspect any number of people or organizations could have raised the issue.

Our issue with PBH’s involvement are three-fold:

First, for good order’s sake, PBH should have set up a dedicated fund for this purpose and solicited donations. Ethics and issues of donor intent aside, being in favor of mandatory assessments is a constitutional controversy, and there is simply no reason to scare off from association with PBH industry members who support the PBH message but happen to think mandatory assessments are unconstitutional. Besides, as a practical matter, the ability to raise a couple of hundred thousand dollars to fund a lobbying effort is a useful go/no-go test.

Second, PBH needed to decide if it preferred to moderate an industry discussion or if it wanted to advocate a plan. This is just very prudential advice. Advocates lose credibility. If an independent fund made up of respected producers hired recognized academic experts, such as Ed McLaughlin at Cornell and Roberta Cook at UC Davis, and let them organize an industry dialog on this matter and allowed them to conduct at least literature reviews to provide answers to questions, it would have more credibility. The program would be much more likely to pass if these academics issued an opinion that Consumption in 2020 will be X without a program and XX with a program funded at such and such a level and the return to producers will be X% with a program but only halfX% without a program. Now, with PBH trying to be both District Attorney and Judge, nobody can tell if the assessment rate is set because that is politically expedient or because that is really the optimal expenditure to increase grower returns.

Third, as we mentioned above we like Elizabeth but, speaking of what will make a program succeed, she is not the one who should be out front. Neither are Mark Munger, nor Paul Klutes, fine folks all but not the ones to make it happen. When the industry has a food safety problem, we don’t send out a Gucci loafer-wearing lobbyist from K Street… we find a farmer, preferably a female farmer who is a mother. Equally, if you want to sell a program like this, you don’t send out an association executive or even corporate executives — you send out folks who are going to pay the assessment out of their own pocket. If you can’t get lots of these people to stand-up for the program that is another useful go/no-go point.

3) Your argument that PBH has failed to make a difference (which I don’t believe) actually makes the case for a well-funded national effort. If we expect people to be accountable for results, they have to have the tools necessary to perform. I’d say it is a fair statement that the produce industry has not supported a strong consumer marketing effort through PBH or any other organization.

To be clear, we never said PBH has failed to make a difference — we said there is no reason to think it has boosted consumption. There are other things important in the world than increased produce consumption.

We agree with Mike that “…the produce industry has not supported a strong consumer marketing effort through PBH or any other organization.” As we discussed in our piece, Got Produce? Is $30 Million Sufficient?, we are not certain that it is prepared to do so now. A big cloud would surely be lifted over this proposal with acceptable independent evidence that a $30-million budget will allow for enough media purchases to boost national consumption.

4) I don’t know for a fact whether PBH has impacted produce consumption because I don’t know what the results would have been had they not been around. But I do know that they have provided a uniform platform in Fruits & Veggies — More Matters (and 5 A Day before that) for the industry to rally around. I know they have actively supported it with the best marketing tools and PR activities their budget would allow.

We agree. There was no control group, no test markets, so there is no way to know definitively. For voluntary donations, that may be an adequate standard. People are free to donate without any evidence of efficacy. It seems likely, however, that proof of any increased consumption is probably too sparse to win an industry vote to compel payments against people’s will.

That it has provided a point for the industry to “rally around” is without a doubt. There is certainly a question as to whether the industry wants to mandate an expense to pay for such a rallying point. There also is the question of clarity. Will this new program provide a rallying point or will it increase consumption?

5) Your column indicated that current per capita consumption stands at 2.7 cups a day. The Food Pyramid tells me that the average adult needs to eat about 5 cups a day. That leads me to believe that there’s an opportunity for an additional 2.3 cups a day to be sold — nearly double what we’re producing and selling today. And that’s an opportunity that every one of us in this business would be foolish to overlook.

If it takes a national board to help us go after that, the cost will pale in comparison to the potential gain.

Most produce executives at retail level would probably be in favor of the proposed generic promotion program — although retail CEOs don’t typically care as they can sell meat or dairy as well as produce. Most produce executives at retail also have decided to keep their advocacy quiet because they suspect that their endorsement of growers and shippers paying additional assessments will do the cause more harm than good.

They are probably right. After all, we know of no retailer who has announced that should the plan be adopted, all vendors should add the assessment, over and above the negotiated price, to their invoice.

The problem is that Mike is 100% correct, but as the Pundit Poppa is fond of quoting, “’tis many a slip ‘tween the cup and the lip.”

First, we have to know that we are proposing an expenditure that is sufficient to raise consumption to the levels Mike refers to. We don’t know this yet.

Second, we have to actually spend the money effectively. This is theoretical at this point.

Third, we have to make sure the supply response does not overwhelm demand, as we discussed in our piece, Got Produce? The Rent-Dissipation Hypothesis And The Issue of Cui Bono. We have no real idea how to do this.

Fourth, even if en toto it is good for the industry, we have to look at how individual segments such as row crops and family farms will fare under the proposal.

Fifth, we have to look at alternative uses for the funds. Maybe the same investment in, say, lobbying, would produce higher returns.

We thank Mike O’Brien and Schnuck Markets for speaking out. Many retailers are afraid to do so, and speaking out is a real contribution to industry dialog.

We pledge to Mike to do our very best to maintain an open venue for industry discussion and to think hard about these important issues. Just today, in addition to this rather extensive piece, we have a letter from Eric Schwartz, which you can read here, and an interview with Sharon Sass, the Nutrition Education Advisor in Arizona, which you can read here.

Eric says generic promotion is not likely to do the job for mature produce categories, and Sharon sings the praises of Fruits & Veggies — More Matters! There is also much information in the pieces we have already published, which you can review here.

It is said that there is no force as powerful as an idea whose time has come. Whether it is time for this idea, we shall know soon.

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