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Perishable Pundit
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Produce Business

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American Food & Ag Exporter

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IMAGINE-NATION
Will The First Lady’s Sesame Street Campaign Reduce Produce Consumption?

When the White House says it wants to promote your products, you say yes. So it is most wonderful and fortuitous for the produce industry that First Lady Michelle Obama wanted to promote this new initiative in which the Sesame Street characters will be made available, royalty-free to the produce industry.

It is also most decidedly a feather in the cap for the Produce Marketing Association, its CEO Bryan Silbermann, and Jan DeLyser, Vice President of Marketing for the California Avocado Commission and immediate past chairman of PMA’s Board of Directors, that the association was the selected partner for this initiative and that they, personally, got to go the White House and participate in this event with the First Lady.

It was very upbeat and cute, and you can see that a good time was had by all by watching the video:

This being said, there has been a little confusion in the messaging.

First, the press release issued by PMA says that “the agreement allows PMA’s community of suppliers and retailers to take advantage of the strength and influence of the Sesame Street brand and characters like Big Bird, Elmo, Cookie Monster, and Abby Cadabby to help deliver messages about fresh fruits and vegetables.” Although this is true, the statement is incomplete. In fact, the White House insisted that anyone in produce, PMA member or not, must have access to the characters royalty-free.

Second, although Sesame Street is making the characters available royalty-free, it is the intent of PMA to charge an administrative fee. This fee may differentiate between members and non-members. We are not sure about the scale of this fee, but one wonders if it is really necessary or whether it could be just a nominal fee for legal reasons.

Third, it is also unclear what will happen to those members of the produce industry who had already contracted for the use of the Sesame Street characters. In the past, these ranks have included Stemilt and California Giant. It is not clear if any of these arrangements are in effect at this time.

Beyond the details though, and acknowledging that having the First Lady interested in promoting consumption of fruits and vegetables is a win for the industry, also acknowledging that participating in such a promotion when asked by the White House was the right thing for PMA to do, there is something unsettling here.

We can’t help but think that the whole show is a sign of a deeply troubled nation: A nation not serious about confronting its problems, whether that it be nuclear weapons in the hands of Iran or obesity here at home.

The key line in Michelle Obama’s speech was a simple one:

“Just imagine what will happen when we take our kids to the grocery store, and they see Elmo and Rosita and the other Sesame Street Muppets they love up and down the produce aisle.”

The reason we have to “imagine” is because we have no evidence of any positive movement on consumption due to the presence of Sesame Street characters on fresh produce in grocery stores.

The reason we have to “imagine” is because the First Lady did not propose a two-year pilot program done in a small geographic area with a comparable control group. In other words, she didn’t propose hard and serious work to determine if this plan will do any good. She just seized the limelight of being a do-gooder, although we have no reason to think it will do good or increase consumption.

Another key line from the press conference raises an eyebrow among anyone who knows the score:

“Imagine what it will be like to have our kids begging us to buy them fruits and vegetables instead of cookies, candy and chips.”

Alas, we have written extensively about the use of cartoon characters on fresh produce, and though there are pros and cons and wins and losses for certain people and products at certain times and places, there is zero reason to believe that the impact of placing stickers on produce is children “begging us to buy them fruits and vegetables instead of cookies, candy and chips.”

In fact, the very fact that we have to ask whether the Stemilt or California Giant projects with Sesame Street are still active or whether Grimmway is still doing Nickelodeon characters is revealing. Crunch Pak is still doing Disney, but isn’t it a small fraction of its sales? All this shows how low impact these things are. It is highly unlikely that these promotions dramatically boosted sales and were stopped or deemphasized solely because of the license fee. The truth is they didn’t move the needle on sales, much less consumption.

This is not to say that cartoon marketing can’t work. It certainly can. Some have posited a distinction between authentic equity and borrowed equity. So Bugs Bunny might help with carrots, Popeye with spinach and Cookie Monster with, well, cookies but simply slapping random characters on rutabagas is unlikely to boost sales or consumption.

And, of course, individual companies can still profit with this technique. Crunch Pak was unusual as a market leader to seize the rights to the Disney characters. It can sometimes be useful to a leader to have a second brand. Maybe Crunch Pak can give Publix an exclusive on its other products if it can give Winn-Dixie the Disney label. Still, we suspect that it mainly took on the Disney line to avoid any competitor from getting it, which would be very smart because if one is a secondary brand or company, it is hard to get an audience with retailers. Having Disney is something to talk about. So it is probably a win for companies that don’t have the strongest brand in the category to get some well-known brand equity by licensing it.

But these are reasons why individual companies might find value in licensing cartoon characters, not evidence that they increase overall sales and certainly not evidence that they increase consumption.

Plunging ahead without research is not just putting the industry in danger of losing money; it is putting the country in danger of reducing consumption.

Sometimes well-intended things have unintended consequences. Think about the crime of arson for profit – that crime only exists because we have fire insurance. Now think about this idea of spreading Sesame Street characters throughout the produce aisle.

Here is a photo of Jr. Pundit Segundo, aka Matthew, dressed up for Halloween. He was dressed as Chris Andersen, aka “The Birdman,” who is a center for the Miami Heat. We allowed Matthew to get a Mohawk for Halloween on the agreement he got a crew cut the next day.

Now Matthew is all of ten years old, and if you think you are putting an Elmo in his lunch box you’ve got another thing coming. If we ever did such a thing, it would guarantee that the produce would be in the garbage long before his buddies in the lunch room will catch him with it.

In fact, when we asked if this idea of putting Sesame Street characters on produce would encourage kids to eat more, he quickly replied: “Well, maybe it will help with really little kids, but it will make kids my age want to stay away from produce.” Again, he is just ten years old.

Now that is anecdote, not research, and he could be wrong, but so could Michelle Obama, because she literally has nothing more than her personal opinion to hang her hat on.

Just recently we ran a piece titled White House Chef Tells Industry To Try Harder; But He Needs To Check His Facts which critiqued a study cited by White House Chef Sam Kass, Executive Director of Let’s Move! and Senior Policy Advisor for White house’s Nutrition Policy regarding the use of Elmo to encourage children to eat broccoli rather than chocolate. We debunked the study by pointing out that it was a study done with cards — nobody ate anything at all — but the truth is that most of the people sitting in that PMA general session, many of whom had actual experience with cartoon marketing, knew the claims never made any sense.

Michelle Obama referenced a different study in her speech. She referenced a more subtle and sophisticated study done by several researchers, including the famed Brian Wansink of Cornell University. This study, titled Can Branding Improve School Lunches, had a better methodology than the study referenced by Sam Kass. It was conducted as follows:

After obtaining institutional review board approval at Cornell University and parental consent, 208 children (99 female) ranging from 8 to 11 years old were recruited from 7 ethnically and economically diverse schools in suburban and rural upstate New York. The study occurred during lunchtime on 5 consecutive days at each location. After selecting their lunch, children were individually offered their usual opportunity to take 1 or both of the last items: an apple and/or cookie.

On the first day of the study, both the apple and the cookie were offered without a sticker, as a pretest control. This enabled us to calibrate a baseline preference for each child. On the last day of the study, both the apple and cookie were offered without a sticker as a posttest control to help us determine if the presence of stickers on the apple had any carryover.

The remaining 3 days were intervention sessions. On one day, children were offered a choice between an unbranded apple and a cookie that had a sticker of a familiar popular character (i.e., Elmo) on it. On another day, children were offered a choice between an unbranded cookie and an apple that had a sticker of the Elmo icon on it. On another day, their choice was between an unbranded cookie and an apple with a sticker of an unknown character.

On each day of the study, each child's choice was unobtrusively recorded. Children were accustomed to knowing they could not take any lunch food home with them. The majority of children who selected a food ate at least a portion of the food.

Professor Wansink is an expert at producing intellectual candy for those with inquisitive minds. He did famous studies where people ate from a soup bowl that was secretly being refilled and noted how this  impacted the amount consumed. He did a study showing how the shape of bar glasses would impact how much bartenders would pour. He studied plate sizes and their impact on consumption… many extremely interesting things.

Yet, although they gave Professor Wansink a couple years as head of the USDA’s Center for Nutrition Policy and Promotion, this particular study is a very slight foundation on which to build an initiative such as the one announced at the White House.

A quick look at this Elmo, apple and cookie study and one quickly sees why it is not the kind of research that can be properly used to defend the First Lady’s initiative. The first problem is that the study claims more for itself than the text establishes. Here is a chart the researchers published with the study:

So, the first and most obvious problem is the chart is mislabeled. It asserts that it is a study of apple vs cookie CONSUMPTION — but no research was done on consumption at all. This was a study of selection. There is a vague claim that the “majority of children who selected a food ate at least a portion of the food,” which only tells us that, assuming accurate measurements, perhaps 49.9% of the children didn’t eat the food at all, and the ones who did might have eaten almost nothing of the food. It certainly tells us nothing at all about how consumption changed when Elmo was placed on the apples.

This is a big problem. Anyone who has gone through a store with children knows they want lots of things for lots of reasons: The packaging, the TV commercial, what their friends have, etc… none of which has any necessary connection to what the children will select to eat.

Second, the use of apples is limiting. Let us assume for a moment that children really will select and eat products they like more frequently if they have Elmo stickers on them. That might apply to half a dozen fruits. Where from this insight do we rush to assume that covering the whole produce department in Sesame Street characters will increase consumption of arugula?

Third, there was no attempt to study reactions in a supermarket or purchasing environment. Even if all of this is true and meaningful, not being a study of how people react at retail stores means that an inference as to behavior at retail is quite a leap. If this is the study on which the First Lady wishes to hang her hat, the initiative should be about school lunch programs, not supermarket produce departments.

Fourth, the study is over too quickly to determine if all this is a “novelty effect”. The Hawthorne Works was a Western Electric plant near Chicago. They did experiments with lighting and other changes and found that the change itself altered worker behavior. Some research has indicated that it takes eight weeks before a novelty effect decays to a small level: “Clark & Sugrue (1991, p.333) in a review of educational research say that uncontrolled novelty (i.e., halo) effects cause on average 30% of a standard deviation (SD) rise (i.e., 50%-63% score rise), which decays to a small level after 8 weeks.”

Fifth, consumption is more than just a one-moment decision. Surely it is not beyond the realm of possibility that a child who used to eat an apple after school every day, if somehow persuaded to eat one at lunch, might choose to switch her afternoon snack to a brownie or cheese sandwich. In other words, if you want to study how a particular intervention impacts consumption, you can’t just look at the immediate impact on one meal occasion.

It is pretty obvious that there is no research support for the belief that putting Sesame Street characters all over the produce department will lead to, as the First Lady hopes, “our kids begging us to buy them fruits and vegetables instead of cookies, candy and chips.” So why are we doing this?

We have no doubt that the First Lady really wants to improve the health of Americans, especially children. Since we don’t actually know of a very good way for the government to do this, the right public policy response would be to support research in this area.

But this is slow and boring. Announcing a test in Albany doesn’t really merit a White House press conference. Yet the fact is that we have precious little reason to think that putting Sesame Street’s characters on produce will do any good and some realistic reasons to think it might hurt consumption.

It is hard to be angry at anyone over this. It is more sad that, somehow, our society has come to yearn for the quick fix.

The Jr. Pundit Segundo plays basketball and likes football. We support him in these interests, but, truth be told, we wish he liked baseball better. Basketball is fast, it’s pretty fun to watch every minute, but George F. Will wrote of baseball in his book, Bunts, that "Baseball is a habit. The slowly rising crescendo of each game, the rhythm of the long season — these are the essentials, and they are remarkably unchanged over nearly a century and a half. Of how many American institutions can that be said?"

Not many. But the temperament to win slowly is an important one for a democracy, and it is one we are losing.

The First Lady’s dreams are so good, but without baseline studies and control groups, we will never know if this initiative does any good or any harm. That seems to be acceptable politically. Hold a rally and then on to the next thing.

It may boost the poll numbers or win an election, but it takes time, attention and resources, and it doesn’t solve the problem.

If we don’t solve the problems, our future is grim.




FACING ISSUES GLOBALLY:
UK And US Both Wrestle With Immigration Policy
The London Produce Show And Conference Is A New Industry Fulcrum Not Only For Trade But For Sharing Ideas

We’ve written several pieces lately addressing the launch of The London Produce Show and Conference:

1) New Event Planned For 2014: The United Kingdom’s Fresh Produce Consortium And PRODUCE BUSINESS Magazine Announce The London Produce Show and Conference

2) Tommy Leighton Named Managing Director For Pundit Sister Company In The UK — A Triumph Of The ‘Do Stuff’ Philosophy!

3) Product, Trade, Ideas And Friendship: Insights Into The London Produce Show And Conference

As the United Kingdom is such a focal import hub, the London event will stand on its own and exhibitors from around the world will gather to access the market.

Yet, increasingly, such events are about more than trade… they are about intellectual exchange.

We have to credit the Australians with setting the pace on this. For years, hundreds of Australians have come to the PMA convention in the US, though the amount of business between the US and Australia is quite small. Yet they keep coming because they find it profitable.

Profit is, of course, a broad term, and profit comes from gaining information, building a business network and much more.

One of the things we have observed is that issues in the UK are often quite similar to those we wrestle with here in the US. You visit the New Covent Garden Market in London, and the wholesalers start talking about building a new market, and if you close your eyes, you would swear you are on the Hunts Point Market in New York talking about the obstacles to their rebuilding project.

Immigration is another issue which the produce industry is wrestling with on both sides of the pond.

We’ve written a great deal on this issue in the US, and, right now, despite the produce trade’s best efforts, legislation appears to be going nowhere.

In the UK, the trade is inflamed due to a recent decision to end a guest worker program. Chloe Ryan, writing in the Fresh Produce Journal, had a piece headlined Government Axes SAWS Scheme:

Fresh produce leaders have reacted angrily to the government’s decision to scrap the Seasonal Agricultural Workers Scheme (SAWS), which allows fruit and vegetables growers to employ migrant workers from Bulgaria and Romania for up to six months at a time.

Meurig Raymond, deputy president of the National Farmers Union (NFU), branded the decision to close the scheme at the end of 2013 “devastating” and said growers would be outraged.

“Make no mistake, this will cause a contraction in the British horticulture sector, one which is already suffering from falling self-sufficiency levels,” said Raymond. “It will put thousands of existing permanent UK jobs at risk, stifle growth, compromise food security, and jeopardise the industry’s efforts to take on hundreds more UK unemployed for permanent work.”

The issues they wrestle with in the UK are not dissimilar to those we wrestle with in the US. For example, the piece goes on to point out that domestic production agriculture is threatened by a lack of labor:

British Growers' Association chief executive James Hallett warned the decision could lead to fruit and vegetable production moving to outside the UK. “Without adequate and reliable staffing levels, it is almost inevitable that many UK producers will cancel investment plans and switch production out of the UK,” he said.

And growers in the UK also find that citizens of their own country are just not interested in the work:

Currently around a third of staff employed at harvest come through SAWS, and Hallett said despite huge efforts by the industry, and the high levels of domestic unemployment, British workers were simply not attracted to seasonal outdoor work, paid largely at the minimum wage.

Of course, US growers mostly claim they pay significantly in excess of the US minimum wage, but the point remains that producers both in the US and the UK feel that citizens are just not interested in the work.

Michael Barker, Editor at the Fresh Produce Journal, wrote a separate editorial titled, Why the Government’s SAWS Call is All Wrong, that captured the similarity between the dilemma of the produce industry in the UK and the USA:

The government’s absurd decision to axe the Seasonal Agricultural Workers Scheme shows a complete lack of understanding of the food production sector.

Immigration minister Mark Harper seems to think that Romanians and Bulgarians gaining full EU working rights from next January means there will be more than enough people to fill the horticultural industry’s needs.

But the opposite is the case. The fact that people from these two nations will no longer be restricted to agricultural and other limited work means they will be far less likely to want to take employment as pickers and packers. After all, would you want to work in a freezing Lincolnshire field when you could take a job in a nice warm office?

In the US, the issue is more likely to be who wants to work in a hot field when one could work in a nice air-conditioned office? But the point is the same. For all the trade’s deep involvement in the immigration issue, it really stands apart, and for the same reason that Michael Barker identifies in the UK: No broad immigration reform, liberal or conservative, would really help the produce industry.

Tight rules that restrict immigration won’t allow for the labor that is needed, and more liberal laws, allowing for lots of legal immigration won’t help either because legal immigrants will gravitate to other sectors before production agriculture. So the industry needs a specialized side deal, a visa or guest worker program that is exclusive to agriculture, which they had in the UK until this recent reform.

Furthering dialog on issues such as this, comparing experiences, finding common ground, are all part of the vision of the new London Produce Show and Conference. If you would like to be a part of it, please let us know below:

If you are interested in exhibiting, let us know here.

If you would like to consider sponsoring an event, let us know at this link.

And if you would like attendee information, please let us know here.




A Cornell Study On New York Wines Raises A Fresh Question:
What Do We Mean When We Ask About Local?

Each year The New York Produce Show and Conference features our University Exchange Program, where we bring in students, provide them with a special education program and expose them to the industry. Simultaneously, faculty members from the same universities provide presentations of their most cutting-edge research so they can fulfill their mission of disseminating knowledge.

One of the most popular presenters is returning for the fourth consecutive year and we asked Pundit Investigator and Special Projects Manager Mira Slott to get us a sneak preview:

Brad Rickard
Assistant Professor
Charles H. Dyson School of Applied Economics and Management
Director of Horticultural Business and Policy Program
Cornell University
Ithaca, New York

Q: Tell us about your latest research you’ll be sharing at this year’s edition of The New York Produce Show and Conference. In years past, you’ve intrigued attendees with ongoing studies on a range of topics including the viability of generic produce promotion, a case study on branding apple varieties, and industry issues surrounding immigration reform. Now you delve into local food demand at restaurants with a study titled, Do Restaurants Cater to Locapours? Using Zagat Survey Data to Examine Factors That Influence Wine List Selections.

What spurred the study? 

A: There was a lot of research on local foods done in the past. Two problems limit the value of it. First, many of these studies target the final consumer at grocery stores or institutions and rely on consumer surveys, which can be unreliable. What consumers say they do often conflicts with their actions. Second, many of these studies had small sample sizes with a handful of people and limited data sets so the statistical accuracy raises questions.

Q: How does your study avert those problems?

A: What we’re doing is exploring institutional local demand at 1,500 New York State restaurants, but instead of doing individual surveys, we have access to 1,500 surveys. We are able to capitalize on the extensive data collected by Zagat, in addition to accessing the actual menus to build quantitative as opposed to qualitative results.

Q: So by targeting restaurants, you dramatically changed the data set trajectory…

A: Several studies have looked at consumer demand and price sensitivity for local foods at supermarkets. Other research has been done on local food procurement at institutions such as hospitals and schools.  Within the past few years, Cornell researchers, including myself, have done a range of related studies on local foods. My colleague Todd Schmit, [Associate Professor at the Charles H. Dyson School of Applied Economics and Management], looked at what it takes to buy local foods at universities.

Miguel Gomez, [Assistant Professor at the Charles H. Dyson School of Applied Economics and Management], who also has presented studies at The New York Produce Show, researched local procurement at hospitals. [Editor’s note: you can read a selection of related studies conducted at Cornell here].

Q: When transitioning institutional local foods research to restaurants, why did you focus on wines?

A: The restaurant channel offered a novel opportunity to study demand for local foods utilizing local wine as the catalyst. Looking at beverages, alcoholic and non-alcoholic, wine had a clearly defined label, specifying its origins on the menu. New York State also has a sizable and acclaimed reputation for wines. It was a nice case study to analyze institutional demand for local food and beverage products. We could explore the demand for local wine and alleviate all the qualitative issues related to local foods.

Q: So trying to quantify the amount of local produce on menus would become significantly more challenging…

A: Exactly. It becomes nebulous and complex. How do you define what foods are local on the menu and what percentage is local?   What quantity or portion of that dish is local based on the ingredients?

Restaurants have the capacity to sell wines, as well as different objectives than hospitals and schools, adding another interesting dimension.  Why do some restaurants sell more local wines than others? With so many other institutions, you have to do surveys on purchases, collect information from those doing the buying. It’s never clear when you do a survey like that. You ask questions, but are never sure how honest the answers. If consumers get phone calls, they say they are interested in local foods, but when it gets right down to it, do they actually buy local?

With Zagat, we were able to collect much more comprehensive and informative data not associated with these basic surveys. In addition, we could analyze quantitative data on wines from the restaurant menus. That’s what got us to restaurants and wines.   

Q: With the focus on wines, what can the produce industry learn?  Aren’t there different variables affecting local produce compared to wines that influence the study model and its results if applied to produce? For instance, wouldn’t the perishable nature and limited windows of availability of local produce impact the analysis? At another level, could the consumer who’s interested in local wines vary from the one that is interested in local produce?

A: We can’t directly make inferences for demand of local food or local produce. It depends on consumer rationale. There is a part of population that is interested in local food in general. If local wine or local food are on menu, they’ll buy it. We can infer that if a restaurant has interest in putting local wines on the menu, they’re likely interested in putting local meats or local produce on it as well.

Wine is not perishable like produce, so it’s easier to have on the menu year round. If a restaurant is going to search out and buy local New York wines, it takes effort. Not all carriers make it easy for restaurant owners. Although there are different types of constraints on procurement of local produce, there are commonalities.

Ease of making these products available on the menu is not straightforward. It is not easy to find or get access to New York State wines. Local wines are highly regulated and restaurant buyers have to deal with that constraint.

Those restaurateurs interested in local wines may be the folks who also have the energy to deal with the challenges of procuring local produce.

Q: Is the local wine market growing at a similar pace as demand for local produce and other local food categories?

A: Just as we were starting to think about this study, an op-ed piece by a wine writer on wines of New York appearing in the Oct 2011 issue of Wine Spectator observed seeing more local food products at restaurants, but asked, ‘how come we’re not seeing local wines at the same rate?’ Perhaps the local wine movement is lagging behind local food by a year or two. We thought it would be interesting to find out.

Q: Could you elaborate on the methodology?

A: With the interest in demand for local food and all these restaurants out there, we could use Zagat restaurant scoring mechanics to mine data. There are 5,000 restaurants in New York with a Zagat rating. That is a lot of data. We were able to find menus for 1,500 of those restaurants, so narrowed our study to those. We could comb through menus to learn which restaurants were more or less focused on local wines. We used a combination of these two sources for our information.

Q: What were the key points of data you selected from the Zagat guide?

A: Zagat uses a list of some 40 attributes to provide four scores for each restaurant based on a 30-point scale. The four scores assess food quality, décor, service and cost. Those are the metrics. There is also other valuable information. For instance, restaurants can be segmented out by cuisine category and special features such as green/local/organic.

We also collected menu information, such as number of entrees, more specific types of food the establishment serves and details on beverages. We counted the number of wines from different parts of the world and the prices; how many from California, from Europe -- more specifically from France, Italy, Spain, and from South Africa. How many local wines do they have on their menu?  We also could assess a general dedication or emphasis for local foods.

Q: With all the variables in play, were you able to isolate factors impacting demand for local wine? 

A: All restaurants were in New York State, but Manhattan showed some anomalies. If you look at restaurants in Manhattan, the ones that have higher cost scores have less local wines on the menu, but this is not true in the four outer boroughs.

Q: Why is that?

A: We surmise that might be the case because the high end Manhattan restaurants have general buying preferences for European and California wines. We’re not sure how this finding translates to other food and beverage categories. But some of the other findings have more clear links.

Q: Did you find the cuisine category to be an important determinant?

A: Cuisine type that the restaurant serves really influences the willingness of a restaurant to put local wines on the menu. We saw a notable connection with restaurants described as serving New American cuisine. That category encompasses a compilation of food types and definitions, but is broadly viewed as places that serve fresh, innovative foods.  Sometimes you hear fusion restaurants, so this could fit in as well.

While we saw a positive effect of more local wines with New American cuisine, we saw a negative effect of less local wines with traditional European and Asian cuisines. And other cuisine types didn’t have a significant statistical effect on local wine selection. That was a more surprising effect.

Q: Were you able to weigh the statistical importance of each of the four Zagat ratings -- food quality, décor, service and cost — in impacting the local wine offerings?

A: A powerful indicator of a restaurant’s commitment to serve local wines was if they earned a high Zagat score for décor. It was not the food quality, not the cost, not the service, but the décor that really seems to matter; and not just in Manhattan, but everywhere in New York State.

Q: Did that surprise you?

A: At first I wasn’t sure how to interpret that. Talking to restaurant owners that scored high in décor, these were people who paid attention to details and were mindful of small things. Owners who had these attributes were more willing to put local wines on their list and more likely to have local ingredients on the menus. We weren’t able to test the local food component scientifically, but it was a take-away.

Q: How about in the reverse? If a restaurant fits in the green/local/organic food category? Wouldn’t local wines fall naturally into that setting?

A: If a restaurant had a check mark on the local and organic feature, it would be more likely to have local wines. We were expecting to see that result intuitively, but it wasn’t nearly as strong as the décor score or restaurants in the New American cuisine category. 

Similarly, the more domestic wines a restaurant has on their list, the more likely they will include New York State wines as well. Again, this was not quite as strong an effect as the décor, which was overwhelming. That might be a take-away for someone selling local food products. The importance a restaurant owner places on local ingredients spans a very wide distribution of restaurants, all sizes and prices, not just the white linen table cloth category.

Q: In the Zagat guide, descriptions of the restaurants include quotes from consumers. Did you take those comments into account?

A: The consumer quotes provided additional perspective but were too difficult to include in our statistical analysis.

Q: Did you examine the restaurant owner’s motivations and criteria for purchasing local wines?  

A: My graduate student, Joseph Perla, built that motivation question into the middle of the paper. We don’t know if all things on the menu are based on profit margins and revenue. Introducing local wines can be a means of differentiating the restaurant brand and to have a suite of items on your menu. You are able to say you have an interest in local foods and beverages. We think this connection between the décor score and local wine offerings exemplifies that.

Q: How can research from your New York State local wine study be applied to other regions in the U.S., local food categories, and more specifically to stakeholders in the produce industry?

A: I know this study is not as produce-focused as other research I do. But I think it is bigger than wine. Demand for local foods in institutions hasn’t been well explored. We want to learn more about what institutions buy local and what types of margins influence these patterns. It was useful to target local wines as a stepping stone in this research. We’ve written the study up and submitted it to an academic journal. A piece on the study came out in the Cornell Chronical.

I can make the sell that wine is so much easier to track than produce. In a salad, some of the ingredients might be local but quantifying that presents enormous complexities.

Q: Local produce also has a seasonal window, so a chef might feature a seasonal product, dish or menu selection, constantly adjusting based on quality and availability, which could be difficult to study scientifically. At the same time, consumers have many different interpretations of what defines local. Did this influence your results?

A: The secondary objective of this study was to better define what the term local means. We split the data up in several ways. People talk about local within 100 miles, 400 miles or within a region or state. We learned that when going 50 to 100 miles outside wine regions, the demand for local wines diminished.

Restaurants ‘down state’ don’t necessarily see Finger Lake wines as local, but may see Long Island wines as local. This definition of local might be more local than what some people suggest it is. That may extrapolate to other states or other products. The lesson is, don’t abuse this term local or stretch it too far, because there is a sense that local is closer to home than people think.

Red wines from Long Island tend to show up close to Long Island, and are sold relatively close. There is this ongoing debate of what is local. The definition is perhaps a little narrower than what many people thought.

Q: You’ve definitely made the case that your study can provide new insight for produce industry executives…

A: More and more people are becoming interested in local food demand at institutions. There are a lot of small data sets exploring this phenomenon and people are relying on surveys. In that vein of research looking at institutional demand, Zagat provides a more honest data set.

Collecting data directly from menus is more truthful because it is actually what the restaurant is doing. This study offers a new perspective on what types of restaurants are likely to purchase local foods and produce, as well as shedding light on the definition of local.

Q: What other studies are in the pipeline?

A: Ed McLaughlin [Robert G. Tobin Professor of Marketing, Director of the Charles H. Dyson School of Applied Economics and Management’s undergraduate program, and director of the Food Industry Management Program] and I have been working more on the merits of a generic produce promotion program and what are the constraints of a general promotion. A survey of grower/packer/shippers in the U.S. is in the pipeline.

We also are still looking at labor policy reform and a bigger guest worker program. It seems like a pretty distant possibility now. It has gone on the backburner because it is so politically charged. Still, there is work to be done on that. We are examining impacts under different outcomes. In a status quo piecemeal reform, what it would mean for prices and trade? We’re building that program.  

And we’re doing some other work on branding these new apple varieties, which are being released from Cornell, and looking at how much they should pay the university to have access to these new varieties.

Q: You’re certainly juggling a fascinating research portfolio. We are very appreciative you are taking time out to present your latest research once again at the upcoming New York Produce Show and Conference.

***

This study is fascinating. We are not surprised by the fact that the high-priced Manhattan restaurants are less inclined to offer New York state wines. First, these restaurants serve a lot of tourists, and although tourists can have an interest in things local, the high price of wine probably leads many to stick with what they know. Second, wine is not just an item sold in the restaurant; it is often the key profit-driver for white table cloth restaurants.

We dined at an upscale Korean restaurant last year right after The New York Produce Show and Conference. The food was good but lacked the spiciness we are used to at more humble Korean eateries. When we inquired, and we were with people who knew the chef so got the straight-and-narrow, it was explained to us that selling wine was crucial to the restaurant’s P&L and that the fiery hot Korean food would overpower the wine — so selling wine was so important, they lowered the heat of the food, changed its authentic flavor, in order to sell wine. So these restaurants in Manhattan with sky high rents have to sell high price point wines — and New York wines generally lack the caché to demand such prices.

Beyond this, though, the study raises a question: what, precisely, are we asking when we ask consumers if they are interested in buying local? Wine — being not really perishable and easily transported and sold through commercial channels — should, in theory, be marketed everywhere.

In other words, if New York State wines are just as good as French or California wines, there is no reason why they shouldn’t be sold at a nice restaurant in Omaha, Nebraska. That they rarely are implies either that locals are willing to pay a premium for them and keep them to themselves — a proposition for which there is no evidence — or that the quality of the wines is not as high as those from other production areas.

Many who are experts in wines consider New York to have excellent white wines, but won’t even drink the red and, whatever the facts, the popular perception is not favorable toward New York wines:

…one part of the report, based on a national survey of 1,000 wine consumers, included an analysis of consumer perceptions of wines from the four top states  California, Oregon, New York and Washington.

"When respondents evaluated the wines of these states, California stood out in the areas of value (62%), enjoyment (88%), and future purchase intent (87%). Oregon was assessed similarly to California in terms of value (58%), and perceived as being a better value than wines from Washington (52%) or New York (50%). New York wines ranked lowest in quality compared to all of the other three states (46%).”

This seems to us to be relevant. When we are asking consumers would they buy local broccoli, we don’t think the intent if the question is to ask “Will you buy local broccoli even if the quality is not as good as California broccoli?”

We think the premise is that the quality will be equal, and that the question should be: “If we can grow local broccoli that is just as tasty and delicious as California broccoli, would you prefer it? Would you pay a premium for it?” This question can be applied to any produce item.

In such a case, consumers usually answer pro-local because the idea that it is local implies certain things to consumers: 1) It will be fresher, 2) It will be less expensive because of savings in shipping, 3) It will be better for the environment because of less shipping and related carbon output, and 4) it will help enrich the local community.

With wine you are not dealing with a parity product so the question is somewhat different. When we go to the Finger Lakes Region, we love to try the local wines, but that is wine tourism. We lean toward Cabernet, but in the Finger Lakes one drinks Riesling. So the question with local wine becomes: “Is the customer prepared to change his inclinations in order to buy local?”

That is a powerful question, and we look forward to Professor Rickard’s presentation at The New York Produce Show and Conference.

You can register for the show right here.

The Global Trade Symposium here.

The “Ideation Fresh” Foodservice Forum here.

One of the regional industry tours here.

Book a hotel room at the headquarters hotel here.

And gain travel discounts here.

We look forward to learning from Professor Rickard, the other presenters and from each other.




PMA’s State Of Industry Address Makes The Case For Women In Executive Positions:
But Is This Analysis Or Advocacy?

The annual State of the Industry address at PMA was for several years a speech delivered by PMA President and CEO, Bryan Silbermann. It was generally fact-checked to the nines. In recent years, however, other people have been included in the State of the Industry presentation, and the same fact-checking doesn’t seem to go on. This year’s presentation included a flawed claim as we mentioned in a piece titled, White House Chef Tells Industry To Try Harder; But He Needs To Check His Facts. Beyond the cartoon connection with produce, though, the State of the Industry address had other presentations that raised at least as many questions as they answered.

For example, Elisa van Dam, Senior Director of Executive Education and Corporate Outreach at Simmons School of Management, which is the institution PMA works with to conduct its annual Women’s Fresh Perspectives Conference, gave a speech telling the assembled why “women are good for business.”

It was an odd speech because it didn’t rise to the burden it assumed. In 2013, we are not aware of anyone in the industry arguing that women are incompetent or shouldn’t have executive or board roles. So, in consequence, there is unanimity that if one is trying to fill a position and the best candidate available is a woman, one should hire the woman.

So the burden of a speech such as this is higher, and the argument has to be made that having women in the business is a virtue in and of itself — that hiring the best qualified person for each job is not sufficient — that there is an independent value to having women more prominent on the team that goes beyond the value of any individual. In other words, that one should hire a lesser qualified person specifically because she is a woman because having more women on the team is an independent variable and increasing that variable produces benefits.

However, this speech, which you can read here, didn’t persuasively make that case.

Ms. van Dam started out by building a “financial case” which she acknowledged only proved correlation, not causation. In truth it didn’t really even prove correlation in a meaningful way. Three studies were presented, all of which basically took a group of companies, for example, the Fortune 500, and determined that companies that had the highest representation of women in senior management positions did better compared to those that had fewer women in senior positions.

But this type of study isn’t very helpful because all of these groupings, such as the Fortune 500, include companies from multiple industries.

It is quite possible, for example, that old industrial companies, say, coal mining or certain types of manufacturing, are both slower growing and have not been as open to, or as attractive to, female executives as more modern organizations.

Put it another way, Facebook may have Sheryl Sandberg of Lean In fame as Chief Operating Officer, and Joe’s Old Fashioned TV Manufacturing Company, may not have a top female executive at all — but that doesn’t mean that if Joe’s acquired some good female executives, it would grow like Facebook, and it doesn’t mean that if Sheryl were Stanley, Facebook wouldn’t have grown.

For these studies that Ms. van Dam mentioned to be meaningful, they have to be industry-specific. Otherwise they throw off more smoke than light.

Now Ms. van Dam also made what she called the “talent case,” which is that roughly half the people in the world are female, so companies should look to mine this talent pool. This is both obvious and unobjectionable. One reason why, say, the Islamic world has found its comparative power and influence in the world to decline compared to Christendom, is clearly that conservative Islamic countries don’t fully utilize the talents of their women.

But, once again, the “talent case” just establishes what is now a truism: that a company would be foolish to confine its recruiting to males. It does nothing to establish that one ought to preferentially hire women.

Then Ms. van Dam makes what she calls the “market case,” which basically asserts that companies should have executives that look like your customers.” Since grocery shopping, and thus produce purchases, skew heavily toward females, having more females in the executive ranks is a plus.

This sounds intuitive but, upon analysis, is quite questionable. First, it is not at all clear that Ms. van Dam is actually cautioning executives at companies whose  products sell predominately to men against the dangers of hiring too many women and thus not “looking like your customers.” 

Second, although customers for some companies may be women, they also are many other things. They are white or black or Latino or Asian; they are senior citizens or Jewish or Muslim or Catholic or Protestant; they are high-IQ or low-IQ; they are rich or poor.  Is Ms. van Dam really arguing that companies should have executive staffs that mirror their ultimate consumer base? If she is, she is certainly not presenting evidence that this produces higher profits.

Third, the notion that businesses should “look like their customers” in some way may be true, but it may not be. We have a male friend who owns a brassiere business, a successful one. How does he manage to do this? Well here is a possibility: When we were writing about Tesco’s efforts to establish Fresh & Easy in America, we suggested that the fact that we both spoke English was a big disadvantage.

In Thailand or Poland, Tesco knew it somehow had to listen to the locals, but in America it could assume it understood the market. Perhaps our male friend at the brassiere company has an advantage. A female might be inclined to assume that her anecdotal experience with brassieres is reflective of those of women in general or of the particular women who are customers of this firm.

Having no personal experience with the product, perhaps our friend is compelled to rely on statistically significant market research. We don’t know if this is true but just going on about the importance of “looking like our customers” is not necessarily true either.

Fourth, the question of who is “the customer” is something that requires some reflection. Frieda Caplan has spoken out many times to say that she thought being a woman was an advantage — not because she looked like her customers — the ultimate consumers – but because she looked different from her customers — the retail buyers and her competitors. So she was distinctive and remembered.

Finally, Ms. van Dam makes what she calls the “effectiveness case.” This relies on some studies, one in particular. Ms. van Dam puts it this way:

… ultimately, we at Simmons believe that the most important reason that women are good for business is the effectiveness case. When you have more women on a team, the team is more effective. There’s a lot of research out there, but I’m just going to highlight two studies. First, there was a great article in the Harvard Business Review not too long ago. It was actually in the “defend your research” section, because the researchers were surprised by their results.

They started by giving their subjects a standard intelligence test, and then assigned them randomly to teams. Each team was asked to complete several tasks — including brainstorming, decision-making, and visual puzzles — and to solve one complex problem. Then the teams were given effectiveness scores based on their performance. What researchers thought would happen is that the teams with the highest average IQ would also have the highest effectiveness score. That didn’t turn out to be the case. Instead, what they saw was that the teams that had more women had the best results.

This is interesting but, actually, not what the study found! The study, titled, Evidence for a Collective Intelligence Factor in the Performance of Human Groups,was a search for a collective intelligence — what makes a group smart — and that characteristic is called “C,” and here is what the study actually says:

Finally, “C” was positively and significantly correlated with the proportion of females in the group (= 0.23, P = 0.007).However, this result appears to be largely mediated by social sensitivity (Sobel z = 1.93, P= 0.03), because (consistent with previous research) women in our sample scored better on the social sensitivity measure than men [(441) = 3.42, P = 0.001].

In a regression analysis with the groups for which all three variables (social sensitivity, speaking turn variance, and percent female) were available, all had similar predictive power for “C”, although only social sensitivity reached statistical significance (b = 0.33, P = 0.05) (12).

In other words, what the study actually found was that individuals with high “social sensitivity” allow a group to have higher “collective intelligence” and that women, selected randomly, are more likely to have higher “social sensitivity” than randomly chosen men. However business executives, especially high ranking business executives, are most decidedly not chosen randomly. Business executives are hired through a selection process that selects for the traits believed necessary to succeed in that particular position.

If Ms. van Dam’s argument is that companies under-value social sensitivity and should make that more a priority, that is one thing, but that might not translate into more female hiring at all. People who apply or are considered for senior management positions do not reflect the median characteristics of their race or sex or religion. These are elites, and nothing in this study provides any support for the idea that a company will be more successful if it selects more women from senior management applicants.

The study itself is flawed in other ways. Although the groups were given tasks that were then graded, that is different than actually studying real-world business outcomes.

For one, it may underrate the value of specific expertise. A group that works well together is all fine and good, but if the task is to develop a rocket that can go to Mars and back in some time frame or on some budget, the “winning” group might be the one with the best aeronautical engineers, not the one that has the highest collective intelligence.

Second, there may be a price paid in being so “socially sensitive.” Did Steve Jobs, who was notorious for making business associates cry, succeed less than he could have, had he only been more socially sensitive? Read this description:

As early as 1987, the New York Times wrote: by the early 80's, Mr. Jobs was widely hated at Apple. Senior management had to endure his temper tantrums. He created resentment among employees by turning some into stars and insulting others, often reducing them to tears. Mr. Jobs himself would frequently cry after fights with fellow executives".

Some twenty years later, Michael Wolff's description of Jobs was little different: "There's the mercurialness; the tantrums; the hours-long, dictator-like speeches; the famous, desperate, and transparent hogging of credit; and always the charismatic-leader complex, through which he has been able to seduce and, subsequently, abandon so many of the people he's worked with. He may be as troubled and unsocialized (and, too, as charismatic) a figure in American business life as anyone since Howard Hughes".

The notion that success in business is predicted accurately by how well groups perform on the McGrath Task Circumplex is, to be generous, unproven. 

*****

The truth is that the industry is filled with super-talented women. We would hire loads of them in a snap if we had the opportunity. The vast majority of them got to where they are and keep their positions because they are talented executives, not because their companies think they should hire less talented women just to “up” the numbers. It is actually very insulting to these accomplished women.  On the industry’s “up and coming” roster, women are well represented, as in this year’s 40 under Forty group — where 33% selected are women — clearly demonstrates.

The question for us is why PMA thinks it is a good idea to have people lecture the industry with one-sided presentations. There is nobody at PMA with particular expertise in this subject, no reason to think PMA knows the “right answer” to these questions. So if PMA thinks these subjects worthy of exploration, then the association should arrange to explore it. Maybe conduct a debate, or a panel discussion with people of different views.

We don’t even mind break-out session which people choose to go to and where one person is presenting their views, but to subject the general session audiences to the highly biased viewpoint of one individual speaker really doesn’t serve the industry.

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