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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



Will Fresh & Easy Improvements Turn The Ship?

When there are industry meetings out in California, it often gives industry members a chance to see, sometimes for the first time, some of Tesco’s Fresh & Easy stores.

We’ve been in many Fresh & Easy stores during the long chronicle we’ve kept of Tesco’s Journey to America.

Following the convention, one retail expert from Australia sent a pithy note:

Had a chance to visit several Fresh & Easy stores after the PMA.
(What were they thinking of when they put these together????).

While a US expert, who has been watching along with us since the beginning, sent an update:

With Tesco’s announcement of an anticipated $250 million loss this year at their US Fresh & Easy division, I am sure that, despite their claims that it has to do with the economy, at least part of it is due to their flawed format.

I thought I would drop you a few lines on the Fresh & Easy improvements…

I believe the revamp Fresh & Easy has attempted is the end result of going back to their consumers and vendors and asking the hard questions, listening for a change, and then developing action plans for correcting the flawed format. All great, and not so great, formats start out looking one way and then get hybrid to look a bit different. This is all done to please the consumer and to be operationally sound to make a profit.

Changes I like (some are recent and some over the last 9 months):

• They have some new interior sign work that speaks better about their pricing position.

• Cut down the inventory of many items and added in shelves.

• Added in some 1,000 center store items and they seem to be all branded items.

• Took their end display of ice and relocated it to another end and add a frozen end for more frozen food space and SKU’s. They added a ½ gondola for a coffin case of additional frozen food items.

• Doubled the refrigeration space for cold beer and wine.

• Added in more beer brands and sizes.

• They have two wines priced at $1.99 a bottle and they have implemented a $19.99 full case of 12 price. The brand is Vista Point and they stock Merlot and Chardonnay and both are very drinkable.

In Produce:

• Converted their banana display from full cases to a padded banana display fixture that is kinder to the bananas and will reduce shrink and increase sales.

• Added in about 10-15 SKU’s of bulk produce from apples to citrus, to peppers. All are labeled with the new double GS1 bar code so there is no need for a scale at the front end.

•. Chris Vangelos (one of Allen Vangelos’ sons) is now a buyer at Fresh & Easy and he will bring a good skill set to them.

• They now have a full ad on a weekly basis, and often the prices are as hot as the conventional chains.

• They now have a lot of radio ads.

Changes I didn’t like:

• The coffin frozen food case they added is a non-productive case. They could have put in its place upright cases that would have added four times the linier footage and the ability to add a more significant amount of frozen food items.

• They took care of their banana display problem but didn’t take care of their always green banana problem.

• Every chain provides a free 6-pack container to buy 6 bottles of wine. Some are corrugated and some are cloth and all are free. Fresh and Easy has cloth and they charge, if memory serves, $1.99.

• Have gone from a limited amount of Category Champions who made the significant investments to comply with their food safety standards to spot buying. These Category Champions were there at the beginning when they delivered less than a pallet of certain Fresh & Easy branded commodities three times a week and they are being replaced by branded commodities that didn’t have to make the same investment and don’t have to comply with the stringent food safety standards.

******

I believe their sales are up as much as 30% since they have become price promotional aggressive, using weekly ads, and maintained their EDLP position. I understand they have about 15 store in Northern California all ready to be stocked and opened and the Stockton DC is ready to go.

I don’t know when they will open up Northern California but the unopened stores and DC has to be a huge financial burden. They have about 130 stores going out of their Riverside DC and they are bleeding red, so I would think when they open their Stockton DC the red number will increase.

In our piece onTesco’s recent earnings, we showed that average sales per store, per week are running about $83,000. although up from the $50,000 number that we and others, such as Willard Bishop, were noting early in the concept’s existence — a volume level later confirmed in its financial filings.

Since Tesco management started out with an expectation of selling $200,000 a store per week on a much larger base of stores than has actually opened, the concept is struggling.

Although we agree with our correspondent that many changes have been made and some will help, we see the problems as more fundamental.

1) Lousy real estate

In its initial rush, Fresh & Easy took over too many bad sites. It probably needs to confess its sins, close half the stores and impose rigorous site selection criteria on future locations.

2) Wrong Market Choices

It is not at all obvious that American suburban consumers want to have 10,000 square foot stores to shop in. Once they are in the car to shop, the “easy” thing to do is go to one store that has what they want. Although adding 1,000 mostly branded SKUs can help, most consumers still need to go to a supermarket and if they need to go to a supermarket, then Fresh & Easy is not “easy.” The stores would probably be a big hit in more urban areas — say Manhattan.

3) Not American-style Fresh

Americans think a fresh rotisserie chicken is cooked in a rotisserie in front of their face, not cold in a plastic bubble from a commissary. A fresh sub sandwich is when you get to tell the guy behind the counter, “Extra tomato, skip the olives, please.” Ready meals don’t sell in America. If the fresh program isn’t adjusted, it will be hard to be perceived as fresh.

4) Failure to differentiate.

Here is the rule that they should hang up at Fresh & Easy headquarters and recite it daily: In America, an undifferentiated offer against a diversity of demographics is a loser. There are two choices: Micro market each store — like Wal-Mart’s long time “store of the community” initiative — or only choose locations consistent with your offer — as Whole Foods tries to do.

Unless they change these four points, we doubt it can be a big success.

Bringing in Chris Vangelos is a plus. His brother, James, is a loyal Fresh & Easy supporter and spoke out early on behalf of Fresh & Easy, and we have long had admiration for Chris’ parents.

But this is a strategic issue and we doubt any one person can turn the ship.

Many who could help, won’t. As our correspondent mentions, Tesco has sucker punched its Category Champions and it refuses to pay dues to PMA, United and The Fresh Produce Council, so it loses out on networking and good will.

We agree with our correspondent in another way: Opening up the Northern California division without fixing the concept is just a way to lose money faster.

Many thanks to both of our letter writers for weighing in on this important project.




Will PTI Put Liability Onus In Retailers’ Court?

Our extensive work in traceability and, specifically, the Produce Traceability Initiative has led many to express strong views. Before the PTI was even formed, we did an interview with a technical expert in these matters, Michael McCartney of QLM Consulting:

Getting A Better Grasp On Traceability

Now, in the aftermath of our publication of a piece built around a letter by Dan Sutton, Director of Produce for Albertsons LLC, Michael has sent his own letter:

Many thanks for your insightful viewpoints and the Pundit’s open approach to this and other important issues.

Here is one thought on PTI to perhaps put in the mix.

How Buyers might want to reconsider resisting PTI?

Assume I am a larger farmer who can flawlessly trace back every item within minutes and that I test every load of product before shipment to the buyer.

Now suppose that a serious problem occurs.

The farmer can prove that 100% of the product in question was tested before shipment and document that on every level the product was free of the suspected contaminate.

The question is who is responsible?

Can the buyers trace the produce through their system to the store and the shelf? Is the buyer now responsible for the claim, for the intended harm or potential deaths?

For example, did the produce handler in the store have a documented H1N1 leave of absence or does the retailer have a documented hygiene policy and monitoring practice?

My point is there are many questions that buyers need to consider if they can assume for the moment that the farm and farmer are out of the liability picture and that they, the buyers, are the only ones in the picture.

Is PTI expensive? Not when you count dollars in lives saved or brand preserved.

— Michael McCartney
Principal
QLM Consulting
Sausalito, California

Many thanks to Michael McCartney for raising this issue. The truth is that for all too long, food safety practices at retail have actually been liability-avoidance policies. That is why retailers may bend many practices but it is rare indeed for them to bend the liability insurance policy requirement.

One reason restaurants in the US have been the leaders in increased standards for food safety, rather than retailers, is that the law in the US has evolved.

Although at one point in time, consumers were deemed to be assuming normal risks in consuming products and thus manufacturers could only be held liable if the manufacturer was negligent or violated an implied warranty, this doctrine was superseded by a “strict liability” doctrine after a famous case known as Greenman v Yuba Power Products, Inc.

The 1963 unanimous decision of the Supreme Court of California established that a “manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being.”

One reason it is sometimes hard to get investment in food safety is rigor in process is no defense in court.

The manufacturer is liable even if the product was fine and sealed at the manufacturing facility. If someone opens the package in a store and adds pathogens, the liability standard is still to go back to the producer.

Now, of course, producers can sue retailers to recover losses the producer paid out under this strict liability standard. The producers can say the retailers were negligent in their duties to, say, refrigerate a product or protect it from tampering but that is A) A messy matter of suing one’s customers, and B) a much tougher case that involves proving negligence. A suit against a producer basically only needs to prove A) They produced the product, and B) it caused injury to a human being.

Now, if a producer could “prove” the product was “clean” when it left its facility, would that make a difference? Possibly, but probably not. Part of what a producer sells is adequate packaging. If a producer sells product in such a way that it is vulnerable to later contamination, the producer would likely be held responsible. It might under any standard be held responsible for selling packaging that inherently couldn’t protect the product but under this absolute standard, it would certainly seem liable. Despite its ancient pedigree, one could argue that selling unpackaged, bulk produce is inherently a flaw as a producer is putting into commerce a food item unprotected from contamination.

This explains why Michael’s erstwhile partner, Bruce Peterson — who we interviewed about traceability here — has often hypothesized that in the future all produce would be packaged. His focus was on allowing traceability on the item level — say a clamshell — but, legally, under this strict liability standard, producers are liable for what happens to product all along the chain, so they may well want to protect that product.

There also is a practical issue as to whether the standard that Michael proposes — proof that product was not contaminated when it left the facility — could ever actually be met. Tests can give false negatives and testing each load is not the same as testing each leaf. So this standard would be tough to approach in a court of law.

Now Michael ends his letter by raising two points — the cost of lives saved and brands preserved.

On the branding side, this is why foodservice has certainly been focused. They are making the food and so an outbreak speaks directly to their competency. It is not as clear that consumers blame retailers if a can of soup has botulism or a bag of greens has E. coli 0157:H7. Perhaps on private label, one could imagine an issue but consumers seem to hold Campbell’s Soup responsible for its own products, not retailers.

Saving a life is precious and many producers will spend above and beyond any requirements because they don’t want to be involved with killing people.

Yet acknowledging the value of a human life still leaves a lot hanging.

For one thing, choices still have to be made. Is traceability the right place to invest? Or is it food safety practices? What about finished product testing? Or for that matter, medical research?

And of course, we put prices on lives every day. If we lower the speed limit to 30 mph, fewer people will die, but we don’t do it because the cost is too high.

How to balance these things is no easy task, but that doesn’t mean it is not a job that must still be done.

Many thanks to Michael McCartney for weighing in on this important issue.




Kismet At Killarney’s:
Sun World Grapes Appear In Michael Bublé Video

Up in Canada, there is a supermarket that goes by the name of Killarney Market. It is located in the extreme southeast corner of Vancouver, British Columbia. It was just a neighborhood supermarket when local-boy-made-good Canadian singer and Grammy award-winner Michael Bublé decided to use the market as the setting for the music video to his song “Haven’t Met You Yet” from his 2009 album Crazy Love.

Now Killarney Market may still look like a supermarket, but to many it is a Temple dedicated to the idea that in the midst of the ordinary — a supermarket shopping trip — lies the opportunity for the extraordinary.

The song is a jazzy ode to the redemptive power of love and, specifically, a paean to the notion that for each person there is an “intended one,” as the lyrics explain:

I Might Have To Wait
I’ll Never Give Up
I Guess It’s Half Timing
And The Other Half’s Luck
Wherever You Are
Whenever It’s Right
You Come Out Of Nowhere And Into My Life

The concept is similar to the Jewish concept of Bashert, a Yiddish word that means literally “destiny” but implies a soul mate or divinely preordained spouse.

Our attention to this music video and to Michael Bublé was stirred when we received a letter. One of the wonders of producing the Perishable Pundit is that we are constantly in contact with people from around the world, and one of our readers identified an Italian Blog called “La Mela di Newton” or “Newton’s Apple.” You can read the blog in its original Italian here or in English translation here.

Here was the note we received:

Hello Jim,

An Italian blogger spotted a bag of Sun World white seedless in the latest video of Michael Bublè.

Is this just a coincidence or a case of product placement?

I am a regular reader of the Pundit, a very interesting and stimulating site.

Kind regards from Italy

— Thomas Drahorad
Owner
Fruitecom srl
NCX DRAHORAD In English NCX DRAHORAD

Thomas Drahorad and the Italian blog are both interested in this scene from the music video:

Is this a brilliant bit of product placement or just serendipity? Well we asked Sun World and this is what we were told:

Thank you for you inquiry regarding the appearance of Sun World grapes in Michael Bublé’s new music video.

While this is not something that we facilitated, we are very excited to see Sun World grapes “starring” as one of Michael’s healthy purchases.

The video is for the single “Haven’t Met You Yet,” from Michael’s new album “Crazy Love,” which dropped on October 9.

The video was shot in Killarney Markets located in Vancouver, BC — the hometown of the Canadian crooner. Since we do not do much direct business with Canadian retailers, Sun World grapes probably got their lucky break through one of our broker clients.

According to digital spy.com’s showbiz column, “10 Things You Never Knew About…” Buble’s first album “It’s Time” went platinum in Italy. His grandparents were also from Italy and his grandfather was instrumental in Michael’s development as a singer. His grandfather paid for Michael’s singing lessons and offered his plumbing services in exchange for stage time for his grandson (Wikipedia). This might explain why your Italian readers were so quick to spot the placement.

— Natalie Erlendson
Marketing Assistant
Sun World International, LLC

Product placement is half business, half art. Some instances, as when Dole arranged for Curious George to wake up in the hold of a ship surrounded by Dole brand bananas, are legion.

Sometimes one just gets lucky. Perhaps the name, Sun World, with its connotations of a planet rejoicing in the sun just appealed to someone in a place to make things happen.

As the song lyrics say:

I Guess It’s Half Timing
And The Other Half’s Luck

The appeal of the video has not been limited by the fact that the woman Michael Bublé hadn’t met yet is his real life girlfriend, the Argentine beauty Luisana Lopilato. And Michael Bublé’s is also known to some for his acting, having appeared in Totally Blonde and Duets as well as two episodes of the X-Files.

We confess the Pundit has a weakness for sappy love songs, but this song has an upbeat, hopeful air, which sort of makes you feel that if your ship hasn’t come in yet, it is just a matter of time. And since you never know when or where your destiny awaits, you might as well get some food shopping done, and while you’re waiting, well, enjoy some nice Sun World grapes!

The music video has a little twist at the end, so if you want to watch, watch the whole thing:






Pundit’s Mailbag — Nobel Prize Commentary And Poetry

Jim Allen, President of the New York Apple Association, has often spoken out on the pages of the Pundit, especially on the issue of immigration reform. You can see some of his pieces here:

Pundit Mailbag — AgJOBS Bill Needs More Support

Pundit’s Mailbag — More On PMA/United Merger

Pundit’s Mailbag — One-Voice Plea On PMA/United Merger Issue

Pundit’s Mailbag — NY Apple Fights To Protect Healthy Reputation

So we were pleased that our “tongue-in-cheek” piece, Pundit Up For Nobel Prize, brought a note from the distinguished Mr. Allen:

I too would support awarding you the Nobel Prize for Literature and especially for your last scaled down version of the ‘War and Peace’ story about the Ten Riskiest Foods list by the CSPI.

Just to identify additional evidence of your talents, I would also include your excellent editorial and assessment of the new Wal-Mart business plan to “purchase?’’ apples.

I also agree with the comment made by plaintiff’s attorney Bill Marler, to remember NEVER to provoke you, or words to that effect.

But Pundit, here is the problem that will prevent you from being awarded the prestigious award: Experiences, accomplishments and tenure in your profession. It would appear that you have way too much of all of that to be eligible.

Now if we had nominated you a mere month or so after you took office, oops, I mean, after you started The Perishable Pundit, then you may have qualified. As they say, “Sorry Charlie, you may have good taste, but you are over qualified!”

— Jim Allen
President
New York Apple Association, Inc.
Fishers, New York

We appreciate the kind words, but if we were ever tempted to think we had seen it all, this desk at Pundit Central is a constant source of surprise as when, also in response to our article, Pundit Up For Nobel Prize, we received a piece of verse from the mother country:

The Perishable Pundit
Cannot win the Nobel Prize
He’s been in office far too long
He is too old and wise.

The Perishable Pundit
Cannot win any reward
Because he tells it as it is
(Puts nonsense to the sword).

To the Perishable Pundit,
No accolades accrue
From expressing his opinions
(Telling others what to do).

The Perishable Pundit’s
Commentary shows
That being in this industry
Sure has its share of woes.

So you won’t win any prizes,
Won’t be honoured,
Won’t be knighted.
Just keep on pushing out the facts
And we’ll all be delighted.

— Alick Glass

Alick Glass is the founder of Glass Associates Limited. The Pundit was a boy when the Pundit Poppa was selling to the old Glass Glover Company. We wondered if it was the same and sent a note inquiring, to which we received this response:

It’s the same Glass. Just a wee bit older. With my late father Harry and my brother Gerald, we were Glass Glover, and my brother and I remember the old Prevor Mayrsohn days and the old characters.

I really enjoy your regular communications, and was inspired to put my comments in rhyme.

I am still active in business (we major on Washington Red and Pink imports to the UK). Most folks think I’m dead already, but the industry was kind enough to confer on me the Lifetime Achievement Award this year — great tribute (trouble is you’ve got to be old to earn it. Only Obama gets the Nobel Prize Rookie Award!).

— Alick Glass
Founder
Glass Associates Limited

We had spoken on organics at the Re:fresh conference a couple of years ago. This May, they presented Alick with the award, and the Fresh Produce Journal in the UK explained the award this way:

Lifetime Achievement accolade for Alick Glass

Alick Glass, founder of Glass Associates Limited and industry representative, was recognised for outstanding services to the fresh produce sector when he won the Florette Lifetime Achievement Award at Re:fresh on Thursday.

Glass has had a 54-year, illustrious career in the industry and, at 72, is still going strong, running the multi-million pound Glass Associates Limited which he established in 1991 to focus on the North American apple business. Glass Associates and its Black Oval Growers subsidiary is currently Europe’s largest handler of Washington Apples, under Glass’s full-time direction.

Glass began work for Harry Glass Ltd and was with the company when it expanded to include operations in the port of Leith, Glasgow and Liverpool. Glass Glover Group plc became only the third UK fresh produce company to go public with a listing on the London Stock Exchange.

Glass had, by this time, relocated to London and had identified the enormous potential of fresh produce sales through a supermarket sector that was fragmented and still in its infancy. From his Langley Court office in old Covent Garden market, supported by his father Harry and brother Gerald in Scotland, he built Glass Glover into one of Europe’s largest fresh produce organisations, and one of the largest panellists of the international Fruit Marketing Boards: New Zealand, Cape, Outspan, Jaffa and Agrexco.

Glass Glover had also formed Fresha Fruit et Cie, in Carpentras, to consolidate its major share of the French apple business. While in the UK the group ranked second in tomato production centred in Garrion Bridge in the Clyde Valley, and at the Drax Power Station in Yorkshire, and was also involved in brassica production in the Thames Valley and in Spain.

Glass has represented the industry as chairman or committee member in negotiations with the ministry of agriculture, at House of Lords Select Committee meetings, and in Brussels. He was a founder member of the Fresh Fruit and Vegetable Information Bureau and of CIMO (now part of Eucofel) and, in more recent times, it was Glass who led the fight for the removal of fresh produce from the Community retaliatory sanction list against US imports.

Following the privatisation of Glass Glover Group via a £55m management buy-out in 1988, Glass, acting as consultant to Mersey Docks and Harbour Company, masterminded and invested in the development of the Sheerness Produce Terminal and its inland Spade Lane facility.

As we understand it, Aleck attributes his successful fruit trade career to two excellent teachers, his father Harry and his brother Gerald, and the idea of retirement hasn’t even crossed his mind.

Mark Newton of Florette presented Glass with the award

Photo courtesy of Fresh Produce Journal

One supposes that winning a Nobel Prize is nice and it does come with a big check. Money aside, though, winning a Nobel in medicine or physics or another hard science means you have won the esteem of your peers.

Winning the Nobel Peace Prize means you’ve won the esteem of five obscure Norwegian legislators.

We somehow think that having one’s peers in the industry recognize your achievements is a deeper and more meaningful accolade.

So we add our congratulations to Alick for his award. We also extend our expression of thanks for the poem. That such an esteemed industry member from across the pond took the time to compose this verse touches us deeply.

Many thanks to both Jim Allen and Alick Glass for their kind letters.

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