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Perishable Pundit
P.O. Box 810425
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Ph: 561-994-1118
Fax: 561-994-1610


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Produce Business

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American Food & Ag Exporter

Cheese Connoisseur



Tesco Marks November Eighth As Launch Date For Six Stores

The countdown begins:

FRESH & EASY NEIGHBORHOOD MARKET
ANNOUNCES DATE FOR FIRST STORE OPENINGS

Grocer set to open first six stores in Southern California

EL SEGUNDO, Calif. — Tesco, one of the top three retailers in the world, announced the grand opening date for its U.S. venture, Fresh & Easy Neighborhood Market. Six grocery stores in Los Angeles, Orange, Riverside and San Bernardino counties are scheduled to open on Thursday, November 8, 2007.

The store openings mark a major milestone for the company, which has spent years researching and planning the Fresh & Easy Neighborhood Market format. This innovative format is the result of extensive customer research in local U.S. markets where Fresh & Easy researchers spent time in the homes of consumers looking at shopping and cooking patterns.

“After great anticipation, we are thrilled to open our doors to neighborhoods in Southern California and offer them fresh, wholesome food at affordable prices,” said Tim Mason, Fresh & Easy’s CEO. “We are also excited to demonstrate our strong commitment to being a good neighbor and a great place to work.”

At roughly 10,000 square feet, these neighborhood markets will be smaller than the typical supermarket to give customers a faster, easier shopping experience. In addition to offering a range of Fresh & Easy private label and national brand name products at low prices, Fresh & Easy will also offer customers a selection of fresh, prepared meals.

Fresh & Easy has gone to great lengths to ensure all its private label products contain no added trans fats, artificial colors or flavors, and have limited amounts of preservatives. Deliveries will be made daily to each store to ensure all products are as fresh as possible.

Each Fresh & Easy store will employ approximately 20 to 30 people. The company interviews on-site at each store location, aiming to hire from the local neighborhood. Fresh & Easy intends all store employees will work 20 hours a week or more, and be eligible for comprehensive health care and other benefits. Entry-level positions will pay well over the minimum wage, starting at $10 an hour in California, and offer a potential bonus of up to 10% on top.

As part of the company’s promise to be a good neighbor and steward of the environment, Fresh & Easy has committed to build LEED (Leadership in Energy and Environmental Design) certified buildings, recycle or reuse all shipping and display materials and use environmentally friendly trailers to transport food. The company also invested in California’s largest solar roof installation on its distribution center in Riverside.

In addition to these six locations, Fresh & Easy will also open stores in San Diego, Phoenix and Las Vegas by the end of the year.

Note the focus on “social responsibility” — healthy private label products, giving jobs to many people, making benefits, including health insurance, available, wages over the minimum wage, LEED-certified buildings, recycled shipping and display materials, environmentally friendly transport and solar power.

Some of this may backfire when, for example, word gets out on what percentage of a 20-hour-per-week employee’s wages would be used to purchase that “comprehensive health insurance.” Critics will start following the logic of the arguments and ask, “Why doesn’t Tesco provide full-time employment instead of 20 hours a week and, if Tesco can start at $10, surely it could start at $12 per hour.”

The Pundit just came back from doing focus groups in both the UK and the US on Social Responsibility, and the impact of the criticism will depend heavily on two things: The level of income of the customer and the degree to which the store experience is satisfactory to begin with.

If you are attending PMA, stop by our workshop on Friday at 2:45 PM, What Do Consumers Really Think About Corporate Social Responsibility?We’ll be discussing what social responsibility means and how it influences purchasing on both the trade and consumer level.




Tesco’s Biggest Challenge: Prepared Foods

Tesco has a big disadvantage as it enters the U.S. market: Its executives speak English.

That may sound counter-intuitive but have no doubt — it is good to have a customer just like yourself, it is OK to understand that your customer is totally different than you, but the worst possible situation is to think you are similar to your customer, yet your customer turns out to be very different.

Intellectually, top Tesco executives know this. That is why they have made a point of how much consumer research they have done in America, including sending executives to live in the homes of Americans with American families.

Yet the similarities in culture and language are such that many a Tesco executive is likely to have made, and to still make, decisions based on his gut, a problem no where near as likely in, say, Thailand. Thailand is where Tesco operates its Lotus stores, and its success there is often pointed to as evidence that Tesco knows how to adapt to local markets.

If the concept is at all like what we’ve been led to believe, much will depend on how the prepared foods section goes over.

Prepared foods have a history of failing in America. General Foods tried Culinova, Kraft had Chillery, Nestle freshNes and a hundred more.

Some upscale retailers, such as Wegmans, Whole Foods or HEB’s Central Market, do a great job with prepared foods but they have a particular clientele and a particular price point.

Most prepared foods operations fail for a simple reason: Sales are too slow to support the production and frequent delivery of a diverse range of prepared foods offerings.

The choice then becomes continuing to offer a broad range and having unacceptable shrink or cutting the range, which makes the whole offer less appealing and tends to decrease sales while the distribution cost is close to fixed.

There are successful prepared foods retail programs in every major city, but these serve mostly apartment-dwellers who have small homes and high disposable income. So they shop frequently and will pay a premium for fresh, convenient food.

In most of the country, suburban dwellers have ample homes and like to stock up, which enables them to not have to shop so much — which is another definition of convenient. So they are often dissatisfied with fresh prepared food offerings because they don’t want to buy just for tonight. They may pick up four or five meals, then plans change and they get invited to barbeques, a friend from out of town flies in, they get called on a business trip, etc. — by the time they go to eat it, the food looks a little uncertain or is past its code date.

And increasing the shelf life turns out to be counter-productive. Nobody wants fresh food that has a 28-day shelf life. The lengthy code date means they won’t buy it to begin with.

So the big competitor winds up being frozen meals. In fact, typically the fresh meals tend to look frozen. The best sellers are typically hard-to-cook dishes with sauces — by the way, these also typically have the shortest shelf life and require most frequent delivery — and if they leave a clear top on the food, the sauce rolls around in transport and in store and it looks unappetizing. So they usually put a sleeve on it that makes it look very much like a frozen dinner.

These, of course, can be put away and are available even if you don’t eat them for a week or two or three months.

Thus Tesco’s success with its Fresh & Easy Neighborhood Market concept may well depend on the concept’s ability to get Americans to dramatically increase the frequency of food shopping. This may seem very easy to UK-based executives that sell loads of prepared foods in the UK every day.

There was a time, though, when Marks & Spencer was the premiere prepared foods retailer in the U.K. When the company bought Kings in New Jersey and tried to introduce its prepared food concepts to the U.S., the effort failed miserably.

Now Tesco, of course, can learn from the M&S experience — but have they?




Devon Zagory Takes Lead Role At Center For Produce Safety

First we announced, Center for Produce Safety Established: An Act Of Faith In The Future. Then we pointed out that the Center was Seeking An Executive Director For The Center For Produce Safety. Now it turns out that Pundit correspondent Devon Zagory, Ph.D., who authored an important letter on food safety that we published as part of our piece, Pundit’s Mailbag — Where Accreditation Is For Sale, We Better Know Our Suppliers, has been appointed:

CENTER FOR PRODUCE SAFETY AT THE UNIVERSITY OF CALIFORNIA, DAVIS, HAS NEW DIRECTOR

The new Center for Produce Safety at the University of California, Davis, has named Dr. Devon Zagory as interim Executive Director. The center was established earlier this year to work with the agricultural and food industries, government regulatory agencies, trade associations, research institutions, and consumer groups to enhance the safety of fresh fruits and vegetables through research, education, and information exchange.

The Center for Produce Safety was established following national E. coli outbreaks last year. Initial funding for the center came from a coalition of the Produce Marketing Association, Taylor Farms of California, the California Department of Food and Agriculture, and the University of California.

Zagory has 25 years of experience working on produce safety with agricultural producers, fresh-cut industries, and university researchers. He has worked internationally as a consultant in the fields of food microbiology and modified atmosphere packaging. Zagory was a founder of Davis Fresh Technologies, now NSF Davis Fresh, and continues to serves as Senior Vice President for Food Safety and Quality Programs.

“The Center for Produce Safety will address the quest for safer fruits and vegetables on a number of fronts,” said Zagory. “The center will serve as a nexus for developing and implementing safer practices with its many collaborators. We must reinforce consumers’ confidence in the benefits of eating fresh fruits and vegetables as an integral part of a healthful diet.”

“We are confident that Dr. Zagory, with his strong knowledge of produce safety and his extensive experience with the produce industry, will effectively launch the Center for Produce Safety’s outreach objectives,” said Neal Van Alfen, dean of the College of Agricultural and Environmental Sciences at UC Davis. “Food safety is an important issue for university researchers and food producers throughout the U.S. The Center for Produce Safety will work to ensure a safe and secure food supply for all consumers.”

The Center for Produce Safety will be located in UC Davis’ Western Institute for Food Safety and Security. The center will 1) serve as a central database for research information on produce safety, 2) will fund scientific studies to mitigate risks in produce, and 3) will provide science-based field-level training and best management practices in an effort to reduce future outbreaks of food-related illnesses.

Devon Zagory has a doctoral and a master’s degree in plant pathology from the University of California, Berkeley, and a bachelor’s degree in agricultural science from UC Berkeley. He spent eight years as an associate pomologist in the former Department of Pomology (now Plant Sciences) at UC Davis.

Zagory was co-chair of the Technical Committee of the International Fresh-cut Produce Association and was Editor-in-chief of the Third Edition of the IFPA Food Safety Guidelines for the Fresh-cut Produce Industry. He has written numerous chapters and scientific publications, and has given many presentations on produce microbial safety, packaging, quality and operations.

If you want to take the true measure of a man, ask his competitors. We did and here is a note we received on the news of Devon’s appointment:

The long search by the associations for technical staff with the appropriate experience, education and communication skills has revealed a critical void.

Devon’s training and hands-on work over the years has made him one of a small group of individuals who truly understands the fresh produce industry’s food safety needs.

His yeoman-like effort single handily made Davis Technology a player in the fresh produce industry. Devon’s vast experience and uncommon common sense will bring an even broader benefit to the industry.

— Robert F. Stovicek, PhD.
President
Primus Group

Bob’s gracious comments point to what an incredible catch Devon is for the industry in this position. In fact his qualifications are so unassailable and so unlikely to be equaled by any other likely candidate that there is only one problem: Note the word “Interim” in the announcement, that is because Devon was not looking for a job and does not need a job.

He has graciously agreed to step in to help the Center for Produce Safety capitalize on the momentum and good will.

However, now that we have got him, we can’t let him go. And we have to persuade him to stay permanently. And we should sign him up now, before the bloom is off the rose.

For all his produce and food safety expertise, the job will not be a snap. Academic politics can be brutal. In fact, toward the twilight of his career, Henry Kissinger was asked how he managed to survive the brutal politics in D.C.

Kissinger responded by saying, “Oh, it was easy after surviving Harvard faculty politics.”

Congratulations to Devon on his appointment as the George Washington of the Center for Produce Safety and a hearty thank you for taking on such an important task.




Single Step Award Winner — Joe Pezzini of Ocean Mist Farms

As part of our continuing series to interview winners of the Perishable Pundit’s Single Step Award, we have already interviewed Dave Corsi of Wegmans and Mike O’Brien of Schnuck Markets. The complete list of winners are as follows:

Dave Corsi
Vice President Produce
Wegmans Food Markets

Mike O’Brien
Vice President Produce & Floral
Schnuck Markets

Joe Pezzini
Vice President of Operations
Ocean Mist Farms

Eric Schwartz
President
Dole Fresh Vegetables

Bruce Taylor
Founder, Chairman and CEO
Taylor Farms

Tanios Viviani
President
Fresh Express

Tim York
President
Markon Group

We were pleased to announce the winners of the Perishable Pundit’s Single Step Award. It was inspired by the well-known quote from Lao-Tzu — “A journey of a thousand miles begins with a single step.” — and acknowledges the efforts the winners made in beginning the trade’s effort to recover from the spinach crisis of 2006.

Today, Mira Slott, Pundit Investigator and Special Projects Editor, spoke with a man who, by virtue of position, had an opportunity to become a leader on food safety — and he seized that opportunity:

Joe Pezzini
Vice President of Operations
Ocean Mist Farms
Castroville, CA
Chairman, California Leafy Greens
Marketing Agreement Board

Q: Congratulations on being selected to receive the Perishable Pundit’s Single Step award. It’s well suited to you, according to industry executives who describe your tireless dedication in making the LGMA a reality. What triggered your decision to chair the LGMA? You must have anticipated a tough road ahead and many late night hours.

A: From my perspective, my involvement in many ways was destiny. I just happened to be Chairman of the Grower Shipper Association of Central California, a 300-member organization of farmers, growers and shippers. I held that position at the time of the outbreak. When it occurred, my first concern was the business at Ocean Mist Farms, but then realized a greater obligation to help the organization.

It was really that sense of obligation that propelled me to step forward and address the media. I returned the phone calls and could speak intelligently about the growing of spinach. I felt compelled to stand up and represent the organization and the industry when very few people were speaking publicly.

Q: What were the key actions and turning points that led to the passing of LGMA?

A: There were some pivotal turning points in the situation. About a week into the tragedy of the crisis, there was a big town hall meeting in Salinas, and my name was mentioned as chairman of the growers group. We met with regulators for weeks on end until the advisory was lifted. As a group we worked with regulators to learn what we could from their investigation to use that to better the industry and get us back into the business. For example, if they were concerned about the water, what could we do to enhance water quality? We went back and forth with regulators on myriad issues.

We finally requested another meeting on October 10 in Sacramento, where we expected final dialogue to get the regulators to sign off and receive some sense of approval. We just wanted to get back in the spinach business. Myself and two other industry reps attended because this was in our local area, but an alphabet soup of organizations was invited; a whole set of trade associations all listening in on the phone via conference call.

This was the first time the industry was officially saying to regulators that we wanted some level of mandatory standards. If we were all going to be judged by the weakest link, we needed to raise the level of minimum standards. The Western Growers Association sparked this idea. My personal involvement was to help push the idea forward. To me that was the initiation that we would have some sort of mandatory standards that we would adhere to and LGMA was the vehicle.

We were advocates, talking mainly about California. This was the epicenter.

Q: What happened next? Wasn’t this around the time when the industry had to contend not only with the media fallout from the spinach crisis, but with the outbreak at Taco Bell and the confusion that ensued because of errors in testing?

A: We went through the Fall and a couple more outbreaks were brewing. The industry was hit again by the Taco Bell and Taco Johns incidents. In January, public hearings in California took place. I was one of the few people testifying; I testified in support of the Marketing Agreement. If we’re going to get judged, we have to have a set of mandatory standards.

Q: Not everyone in the industry was an avid supporter at the starting gate. What is your recollection?

A: When we signed on, it was a leap of faith. It wasn’t easy to be an early supporter. Eric Schwartz of Dole was under intense pressure because his company was involved in the investigation. Eric was personally involved because it was their bagged spinach implicated, and he did become a driving force and advocate for the program early on. The metrics weren’t defined or accepted by the board yet. No one really knew how this was going to happen.

A month after the hearings, we had our first advisory meeting on February 23, and I was elected to be Chairman of the LGMA. It’s been a tremendous amount of work. We were essentially starting from scratch, creating a program that had never been done before. This was a $4 million program we were putting together. We were going to have to meet every week for the next month and a half. We didn’t have any paid staff. Essentially an advisory board had to mold policy.

The industry was going through this reiteration of a matrix, involving many, many intense meetings to flush out the standards that would be accepted. There is a fine distinction that the Marketing Agreement doesn’t create the standards; the industry brings the standards to government, and the verification and enforcement is done through the marketing agreement.

Q: Have you confronted perception problems with the concept that the LGMA is “voluntary”? There has been some bad press and vocal politicians painting an analogy of the industry’s voluntary agreement as the fox watching the hen house.

A: There’s great public and political interest in this. A very well known state senator Dean Florez has been very critical. A marketing agreement by definition means you have to sign up voluntarily. But if you’re not a part of this, you won’t sell your produce. Canada has said words to that effect. That’s created a level of mandatory enforcement that probably not even the government could provide.

Once you sign on, you are contractually bound to follow these standards. Signatories have contracted with the California Department of Agriculture and USDA inspectors go out to the farms and verify the requirements are being followed.

My involvement was to steer this whole creation and implementation process. There are a lot of folks that pitched in a lot of hours to create this, but I had the dubious responsibility of guiding this along to a meaningful conclusion.

Q: What happens now?

A: The most immediate next steps are efforts to include Arizona into the program. Certainly we’re on a time table because this November harvest starts.

The Arizona program started April 1, we started certification audits July 23, and now everyone’s gone through those audits. We want to get Arizona on board with a joint powers agreement, where it becomes one program between the two states. You go through same process, initiation and application, public hearings, then a certification program a few weeks after that. The key is that we’d couple programs together with the same good agriculture matrix. Ideally we’d have the same inspectors to cross state lines, but that’s a tricky proposition because California inspectors only have state jurisdiction. The devil has been in the details.

Q: The other issue that’s sparked controversy relates to the use of the LGMA certification mark for consumer packaging and the concept of marketing food safety. What is your view here?

A: We released the service mark that buyers see on bills and paper work only. Now we are looking at the certification mark for packaging that consumers could see. All this is happening in parallel. The mark is being registered and we need to determine if and when would be the best time for consumer packaging and in that case what policies would go with that mark.

Q: This sounds like an evolving process, and a live document that will change in tandem with more scientific research and debate.

A: It’s been a mammoth undertaking. There are still plenty of critics. It’s a work in progress; it’s not perfect. We’re learning as we go. GAPs change overtime as new science comes forward and there will be some bumps in the road. This was a necessary program to be put in place. It was meant to build back consumer confidence and we think it is a good model.

Q: Will you be taking a well-needed hiatus and passing on the baton to another brave industry soul?

A: I have a two-year board commitment. I assume I’ll remain chairman. I’m not seeing people fighting for my spot! The program needs some traction. The proof will be how recalls will be handled. We look at the newspaper everyday.

Q: Will raw and finished product testing become a component of the evolving matrix?

A: It’s really unproven science now. It’s very disconcerting when you get false positives, or false negatives for that matter. The concept of testing and holding is a good one. The problem is you have to hold a whole lot of product. There is a lot of pressure to do testing, but it is not a really thought-out program. If the testing results in a significant number of false positives, all you’re doing is setting yourself up for a huge recall that is completely unnecessary.

Your best insurance is that suppliers have robust preventative programs and that’s exactly what the Leafy Greens Marketing Agreement does. It provides standards that inspectors can verify. And that should be the focus.

This Q&A is a pretty good blow-by-blow of what transpired, but the more interesting story is of human flexibility and the willingness and ability of good men to rise to a challenge. When Joe was elected Chairman of the Grower Shipper Association, he was held in high esteem, but nobody expected the job to involve what it ultimately involved. The chairman of a small regional association was not anticipated to be on network news night after night.

So Joe is our industry’s Shakespearean hero. In Twelfth Night, Shakespeare writes:

In my stars I am above thee; but be not afraid of greatness: some are born great, some achieve greatness, and some have greatness thrust upon ‘em.

Fortunately for us, Shakespeare knew what he was talking about.

Congratulations to Joe, and thank you for taking the “single step” to helping the industry get started on the road to a bright future that includes the safest fresh produce possible.




Pundit’s Mailbag — Kudos To Wegmans And An Industry Willing To Work Together

It has been a while since we last heard from Pundit correspondent Tom O’Brien, and now he writes to comment on our piece, Single Step Award Winner — Dave Corsi Of Wegmans Food Markets.

Dave’s answers are a testament to why Wegmans was voted the Number One company in the nation to work for. Their passion for their employees and customers starts with Danny Wegmans and continues down to the part-time clerk and their suppliers.

The American grower has had many roadblocks thrown in front of them and they have always stepped up to the plate and knocked the roadblocks down. Food safety will not be just one battle but a never-ending battle that we must stay on top of every day of the year.

Growers, food service and retailers working together will win this battle — it is too important not to! This is our life and our passion to grow safe and healthy fruits and vegetables.

— Tom O’Brien
C&D Fruit & Vegetable Company
Bradenton, FL

Leadership is one of the enduring themes of the Pundit; we’ve wrestled with such issues many times. Dave’s rise to industry prominence does raise the question of what kind of milieu, what corporate culture encourages both excellence to rise and industry commitment to play out.

Yet Tom also reminds us that leadership takes many forms, and some soldiers fight under the radar screen. In the end, food safety is one of those things. The success of the battle ultimately depends on growers all across America waging silent war against indifference and ignorance on matters related to food safety.

Tom even provides some motivation in reminding us that we are all proud to sell healthy fruits and vegetables and, of course, it can’t be healthy if it isn’t safe.

Many thanks to Tom for his pointed letter.

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