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Produce Business

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American Food & Ag Exporter

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Is Organic Produce Healthier?

Earlier this year we ran a piece, Blunt Talk On Organics In The UK,which told the story of what happened when David Miliband, the Environment Secretary, gave an interview:

David Miliband, the environment secretary, says organic produce, which is usually more expensive, is a “lifestyle choice” with no hard evidence that it is healthier.

The same piece quoted Egon Ronay, a noted food critic in the UK:

He questioned the way organic goods were marketed, stating there is no scientific proof they are healthier….

He told the BBC: “The public has no clear idea what organic food is. We’re being conned and I think the minister ought to be pinned down and ought to be challenged to spell out in terms that the public can clearly understand what is organic food.”

Now a new analysis by the British Nutrition Foundation also casts doubt on nutritional claims regarding organic food:

The overall body of science does not support the view that organic food is more nutritious than conventionally grown food, says a new review from the British Nutrition Foundation.

The review, published in the journal Nutrition Bulletin and authored by the BNF’s Claire Williamson, could re-ignite the debate between conventional and organic fruit that has raged with claim and counter-claim from both sides.

“Organic farming represents a sustainable method of agriculture that avoids the use of artificial fertilizers and pesticides and makes use of crop rotation and good animal husbandry to control pests and diseases,” wrote Williamson. “From a nutritional perspective, there is currently not enough evidence to recommend organic foods over conventionally produced foods.”

But the organic potato people did get a little good news:

There exists “moderately strong and consistent” data to show that organic potatoes were richer sources of vitamin C than their conventionally grown counterparts.

And more research is certainly needed:

“More research is also required in the area of phytochemicals, such as flavonoids and carotenoids (if the potential health benefits are found to be evident).”

What is not known is the extent to which perceived nutritional benefits motivate organic purchases:

According to Williamson: “There appears to be a perception among many consumers that organic foods are more nutritious and therefore healthier than conventionally produced foods. However, to date there are limited data to support this view.”

But the report also says:

Despite the insufficient data on the subjects, Williamson noted that nutrition is not seen as a major reason why people consume organic food. Concerns about the environment, pesticide levels, food additives or animal welfare are listed as more important factors by many consumers.

So the best current information we have is that, overall, there is no nutritional benefit to organics, but there may be exceptions, such as potatoes. Though we need more research, it may not matter to consumers anyway!




Wal-Mart In India
Faces Tremendous Obstacles

We have mentioned that Wal-Mart has cut a deal with Bharti to expand into India. India has laws that preclude foreign companies from actually operating retail stores, so the idea is that Wal-Mart would function as a wholesaler while Bharti actually operates the stores.

The final paperwork remains to be signed, but Bharti claims it will roll out the first six stores in March 2008.

Yet opening stores in India doesn’t seem to be easy for anyone, especially if you want to sell fresh fruits and vegetables. It seems that in what is still a very poor country, the selling of fresh produce is the livelihood for many people and these merchants are binding together to fight new competitors.

An organization named Reliance Retail has opened many small produce stores with plans to open other formats:

….Reliance Retail had commenced its retail operations in the country with the opening of a first cluster of 11 stores on 3rd November, 2006, in Hyderabad. Reliance ‘Fresh,’ in a short span of five months, has since come a long way with the tally of its neighbourhood, convenience, stores going up to 80. ‘Fresh’ stores are already operational in several parts of the country including Hyderabad, Chennai, Jaipur, NCR, Delhi and a few tier II towns mostly in Andhra.

These 80 stores occupy gross floor space of about 1.90 lakh sq. ft. at an average per store space of about 2,400 sq. ft.

Following are some of the salient features that are common to Reliance ‘Fresh’ format of convenience stores across the country:

  • Average display space of over 2,000 square feet per store.
  • Sale of fruits, flowers, vegetables, cereals, grocery, dairy and bakery product of good quality at attractive prices.
  • Year round availability of over 150 varieties of fruits.
  • Around 200 products, mostly staples, under private label: Reliance ‘Select.’
  • Sale of non-vegetarian products through separate entrance and exit.
  • Customer Assistance: roughly one ‘Associate’ per 100 sq ft of space.
  • Each store caters to the needs of around 3,000 families living within a catchment area of two km radius.
  • ‘Reliance One,’ membership programme for frequent (loyal) customers.
  • Home Delivery and shop-on-phone facilities.

Depending on the roll out of its back-end infrastructure, Reliance will continue to open new stores in different urban areas of the country…

But protests and political activist are trying to stop this rollout:

After recent protests in Ranchi (Jharkhand) and Indore (MP), Reliance Retail faces opposition from trade body in Haryana too!

While, ‘Fresh’ in the past has faced opposition from vegetable and small vendors in Jaipur and Chennai, certain sections of the ruling alliance in Kerala and West Bengal are also opposed to the entry of big business in retail in general and of Reliance Retail in particular.

Now, Haryana Pradesh Beopar Mandal (Haryana State Trade Federation) has warned that it would resist any move by Reliance ‘Fresh’ to open its stores in Haryana. This was stated by the Federation President Bajrang Dass Garg, who is also Chairman of the Federation of Consumers Cooperatives Wholesale Stores Limited (CONFED), while speaking to media persons, reports UNI.

“Wherever Reliance ‘Fresh’ had opened its stores for retail sales of fruits and vegetables, the business of vegetable venders had suffered badly,” added Garg. He hoped that the Congress ruled state government would not compromise with the interest of traders and small shopkeepers.

The opposition is being organized around something called Roji Bachao Samitee, that roughly translates as the Save Livelihood Committee. In a country such as India, where providing jobs is such an extraordinary priority, it is doubtless going to be very difficult to keep in mind a long term perspective as the economy goes through a rationalization.

It is difficult even when the new stores are all owned by fellow Indians. So the involvement of foreign names in this economic transformation will probably just give opponents another company to hate. Which is why such effort is being given to what the stores should be called in the Bharti-Wal-Mart collaboration:

The Bharti Group and US partner retail giant Wal-Mart, are planning to use three separate brand names in India for three different store formats. “It’s only logical that we call the cash-and-carry format Bharti-Wal-Mart as it’s a joint venture between the two companies. The Bharti-owned front-end retail stores and the franchisee-owned neighbourhood stores will carry two different names. It makes sense to operate under three different names but nothing has been finalized as yet,” Bharti Group chairman Sunil Mittal told ET.

There is intense speculation on whether the Wal-Mart name will be used in India given the political controversy…

For a company of Wal-Mart’s size, an involvement in a market the size of India’s is almost irresistible. Yet this is, almost certainly, a very long term investment with much turmoil to be expected in the years ahead.




Disney Misses An Opportunity
To Boost Healthy Eating

The Pundit spent Father’s Day weekend at Walt Disney World (the Jr. Pundits shrewdly determined that Dad would love the chance to pick any ride he wanted to go on for Father’s Day), which gave us a chance to evaluate its efforts to serve healthier food at its theme parks.

There is no question that one can eat as healthy as one wishes at Walt Disney World; the upscale restaurants at the international pavilions in EPCOT and in the hotels carry everything. The Pundit is trying to drop a few pounds, and our dinner at Spoodles, a Mediterranean restaurant at the Boardwalk resort, was both delicious and offered plentiful healthful options.

Fast food in the parks is always more problematic. As we wrote here, we find Disney’s claim that it has changed the default option to healthy food on its kid’s meals to not really be accurate. The reality is that there is no longer any default option, and so if you order a kid’s hamburger, they ask what options you want on the side. You can choose healthy sides or unhealthy sides.

The Pundit family doesn’t do much fast food, though, as we tend to book sit-down character meals in the park, and there we find Disney is probably caught in the same trap as many foodservice operators are when it comes to fresh produce: they cheap out.

At the hotel restaurants Disney offers everything, and they will sell you whatever you want on an a la carte basis. When it comes to things Disney is paying for, such as upgrades to the menu at fixed menu restaurants, they really like to give you starch much more than fresh produce.

For example, the kids love dinner at the Liberty Tree Tavern, a fixed-menu, family-style, all-you-can-eat dinner option during which Pluto, Goofy, Minnie and Chip & Dale came to our table. To speed service, the restaurant, which sports a colonial theme appropriate to its location in the Magic Kingdom, serves every patron a decent salad (Mrs. Pundit loves the Strawberry Vinaigrette Dressing) and then for the main course sliced turkey, beef and pork loin served over a mountain of bread crumb stuffing. Along with this comes a heaping bowl of mashed potatoes and an equally large bowl of macaroni and cheese. They also serve a tiny plate of vegetables. On our visit it was green beans.

One issue is that, to our taste, they ruin the green beans with some sauce. We find, consistently, the park over-sauces vegetables and we fear it is often with butter. We had a similar fixed menu lunch at the Land Pavilion in Epcot, and the tiny serving of vegetables were simply drenched in what certainly appeared to be a butter sauce, which you could see pooling at the bottom of the serving plate.

Our bigger point is that this Liberty Tree Tavern main course is an illustration of the produce dilemma in foodservice operations:

  1. The operators emphasize the protein as that is what they are evaluated on by consumers. All you can eat on three meats makes many consumers feel they are getting good value.
  2. Massive amounts of starch — in this case, copious amounts of mashed potatoes, macaroni and cheese and stuffing — fill up consumers with cheap food. They feel fully sated walking out of the restaurant. Many large bowls and platters filled with cheap starches to both the eye and the stomach make the meal feel bountiful.
  3. The niggardly small serving of green beans is accounted for very simply — it is not as important to consumer perception as the protein and not as cheap as the starch. That, in a sentence, is why they don’t serve three large platters of vegetables to go along with the starch.

For the produce world, in general, this is a problem in dealing with foodservice operators. For Disney, an organization that has taken upon itself an obligation to encourage people to eat in a more healthy manner, menus like this are simply inappropriate and should be changed.




Yes, Disney Garden’s Apple Slices
Were At Disney!

One thing we can report is that the Disney Garden brand apple slices were for sale at the Farmer’s Market in Toontown.

This contrasted our reports here and here in which, on a previous visit, we caught Disney filling some shorts with local supplies.

The Pundit family would like to thank the folks at Crunch-Pak who produce the slices, as well as our friends at Imagination Farms, as the sliced apple packs sustained the Pundit family during our visit.

We found the perfect light snack and hope that Disney will make them more widely available throughout the Park. After all, it is not only the pre-school set that ought to eat healthy. Every coffee cart in the theme park has to have a refrigeration facility for milk to make the lattes and cappuccinos — why can’t every one of these offer the apple slices along with the Danish and muffins and other fattening stuff?




How Wal-Mart Lost A Customer

One more little report from Walt Disney World about how easy it is to lose a customer and how the bigger a store is the more things can impact the decision.

A talkative waiter, noting the Pundit children’s high fruit consumption, started talking about how much fruit his children ate. Which segued into where he shopped.

He used to be a loyal shopper at a Wal-Mart supercenter near his home, buying over $100 a week in food and, often, picking up other items while he was there.

Yet he hasn’t stepped into a Wal-Mart in two years and cancelled his Sam’s Club membership.

Why?

Two years ago he brought his car into a Wal-Mart auto center to have two new tires put on. At opening they promised him the car would be ready in an hour. He went for breakfast, returned, they said another hour, this went on for five hours whereupon the truth came out, as our waiter related the story: Wal-Mart had lost his keys.

They virtually disassembled the desk, looked everywhere, another two hours and the keys were found.

There was no apology, not even an offer to replace the two tires at once, for free, so our angry waiter took his car and went in and asked to speak to the manager. The manager sent out somebody who claimed the manager was “too busy” to see the man. But offered to give him a $20 Wal-Mart gift card.

Offended by both the paltry card — considering he blew a whole day off from work — and even more, offended by the unwillingness of the store manager to meet with him and the obvious lack of authority of the person they did send, he let the woman keep the gift card and drove away, never to return.

The guy obviously knew food. He talked about Goodings and its glory days, showing 20 varieties of mushrooms and he perceived a new Publix by his house to really be competing with Whole Foods. But where does he spend the over $5,000 a year in food purchases that no longer go to Wal-Mart… SuperTarget gets that business.




Pundit’s Mailbag — Tesco’s Behavior

In response to our overall coverage of Tescos’ Voyage to America and, specifically, to our piece, Working With Wal-Mart May Not Be As Bad As You Think — Tesco Could Be Tougher, we received this thoughtful letter:

I think people are going to find that the grass is not greener on the other side.

I feel people are quick to complain about Wal-Mart because it is the popular thing to do. Many vendors who may seem satisfied use the fact that so many people are harping on Wal-Mart to try and better their situation by jumping on the bandwagon.

If Tesco is able to make a serious presence in the U.S., it will be interesting to see if vendors who end up dealing with both companies have better views of Wal-Mart in the end.

I think in the world of big companies like this, vendors have to deal with the demands or lose the business as plenty of other people are nipping at their heals.

It is surprising to me that Tesco chose Bonipak as a vendor. I wonder myself if this is a situation where Tesco could not find anyone else to take its deal or if the two companies mutually struck up a deal. From my dealings, Bonipak is a great vendor who treats its customers well with high quality product and customer service.

It will be interesting to see how their relationship with Tesco impacts the long term goals of Bonipak.

But give them credit for taking a chance. If Tesco succeeds, it could be huge for growth with Bonipak long term.

— Matt Roy
Produce Director
Lincoln Poultry

For those who don’t know, Lincoln Poultry is one of those companies that has long outgrown its name. Though it started as a poultry and egg distributor, it is now a full line foodservice distributor. We find something appealing in a company that must have been advised by everyone and their brother to change their name, yet sticks steadfastly to its roots.

Matt’s letter brings us to the heart of the dilemma. For all the problems in dealing with big buyers, for big vendors, there is no alternative.

Dealing with Tesco probably is tougher than dealing with Wal-Mart for the simple reason that Tesco operates in an even more consolidated market than the U.S., so if vendors bellyache, so what? Where are they going to go?

Of course, just because one can get away with something, doesn’t mean one should do it. So when we told of perfectly reputable produce vendors being treated rudely, with unreturned phone calls from the U.K. and an unwillingness to disclose the name of produce personnel here in the U.S., we weren’t reporting any crimes — but we were questioning why.

Sure Tesco could take the position that it has its vendors and doesn’t care about anyone else. But what is the upside to that strategy? They save some staffing cost? This is a multi-billion dollar effort to establish a base in North America.

Who knows where the next new idea will come from? One of the guys whose phone call Tesco never returned owns shopping centers on the side — a lot of them. He called about his produce business but, maybe, if they were in communication, he would offer them a good location — or a few of them.

There is no question that other, larger, players were offered the deal that Bonipak has and turned it down. Which just means that it is more of an opportunity for Bonipak. It gives them a chance to be a strategic partner with one of the largest retailers in the world. They are smart people and are hoping to ride on the wings of this expansion. More power to them.

We are sure many of the individuals who work for Tesco both in the U.K. and the U.S. are perfectly good people. But for all the talk of deep research they did on the American consumer, there are behavioral patterns that indicate they did not do comparable research on the trade.

Because they are alienating good people for no reason. That is not nice, and it is not good business.

What should they do? Well, PMA is coming up… why don’t they call PMA, ask to rent some spare rooms in the convention center and explain that they will offer a 5-minute appointment — gratis — to any PMA or United Fresh member who wants to meet with someone from Tesco.

They can bring some people from the U.K. to add staff for the three days of the exhibition. It would make the industry feel better, support the industry trade associations and be good for Tesco to let in some new ideas and meet some new people.

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