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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

British Intelligence On Tesco:
Three Areas Of Concern

As we have analyzed Tesco’s journey to America, we have acquired new correspondents from wherever Tesco has operations. This note came from a gentleman, still active in the industry, who supplied fresh produce to various multiples in the UK for many years. He has also been involved with some of the most prominent shippers in the US, so he has first-hand experience with both UK retailing and US production agriculture:

I saw the link to your site in Money Week in the UK. I have been in the produce business for 25 years both in the UK and the US. I have grown businesses with Tesco that have been from boom to bust…. so I may not be entirely dispassionate in what I have to say. However I feel the need to comment on your excellent observations and I don’t believe that I am alone.

I was recently in LA and visited a Fresh & Easy. I simply had to see what all the fuss was about? What did they have to offer the US consumer that others didn’t? I was very disappointed, the store was a ‘revamp’ and in a poor location. The offering was basic, which seemed to be seen as a positive!!?? The produce was over-packaged and very poor compared to the excellent offerings in nearby stores. There were very few customers, almost outnumbered by staff!! I had expected to see ready meals but there were few. I left feeling that I still couldn’t see what they were trying to achieve.

I have also talked to producers in California that Tesco wished to trade with. They were told that their standards weren’t up to scratch and they must supply in bulk for Tesco to repack. How can this work? These companies are world leaders and highly efficient. Surely repacking can only lead to more cost and wastage??? Their attitude was extraordinary… or was it?

The same attitude has been their way in the UK for some time now. It is beginning to show in the UK stores too.

Tesco’s rise over the last 10+ years began when they correctly saw the changing eco-social changes taking place in the UK. Tony Blair saw that everyone was becoming middle class or at least aspired to be, so did Tesco.

Very cleverly Tesco positioned its brand so anyone could feel comfortable shopping there… they were able to aim at 100% of the market, other stores were pitching at different social groups so, by definition, were restricted to smaller shares of the market, some at the top — Marks & Spencer, Waitrose, etc. — some at the bottom — Morrison’s, Aldi, ASDA, etc. — and the ones in the middle — Safeway, Somerfield — lost out every which way….

The growth was phenomenal, from less than 20% market share to greater than 40% today. But that has now happened. Customers now have a ‘love/hate’ relationship with Tesco. Many have no choice.

To achieve more growth, Tesco now has to move into more non-food and overseas. At the same time they have stopped listening and have started telling customers what they want. Something they started doing to suppliers 10 years ago.

This does not bode well for Tesco’s future. It may take years to show in the financials because of their size, momentum and huge property portfolio but you can begin to see changes in the UK stores now. There is none of the American service, no “can I help you”, no “have a good one”. By contrast other stores are improving all the time, Morrison’s especially.

I feel, like you, they are going to get their asses kicked, and it will start in the US unless they make some dramatic changes and soon. I’m selling their shares.

I will keep looking at your excellent articles.

We appreciate the kind words for the Pundit and appreciate the contribution of some British expertise to the site. The big problem in getting an accurate assessment as to the likelihood for success of Fresh & Easy out of London is that Tesco has been so successful for so long that you have a whole group of people — suppliers in the industry, analysts in The City, etc. — who have basically built careers betting on Tesco to succeed. And it mostly has.

But the nature of these things is that nobody rings a bell to tell everyone that the party is over and things have changed. It is just that, quite suddenly, all those bets on Tesco that always paid off in the past, go bad.

Our correspondent raises several important points:

  1. How well is Tesco actually doing in the UK today?

On this question much may depend. It is important to note that, contrary to reputation, not all British attempts to enter the US market have been business catastrophes. J. Sainsbury started with a $20-million investment in Shaw’s in 1983 — it exited the US market after 20 years, following several acquisitions, by selling New England’s second largest chain to Albertsons for almost $2.5 billion.

Although there had been several subsequent capital investments, there also had been much profit. The reason J. Sainsbury sold the division had nothing to do with bad performance in the US — it was problems back in the UK. Sainsbury had lost its market-leading position, was deeply concerned about both Tesco and ASDA and decided to concentrate on its home market.

That we could see the same happen with Tesco is unlikely, but not inconceivable. The latest numbers show, as our correspondent indicates, a rise in market share for Morrison’s:

The latest TNS Worldpanel grocery market share figures, published today for the 12 weeks ending January 27, 2008, show strengthening growth for Morrisons. Building on the recent results posted by the firm, sales have lifted a record 11% compared with the equivalent period a year ago. As a result their market share has grown from 11.0% to 11.5%. As we saw last period, this growth is the highest for any of the retailers measured. The relaunch advertising, featuring Lulu and Alan Hansen amongst others, together with strong promotions, has certainly borne fruit.

The same report shows that others are also gaining share:

Aldi, Lidl, and Iceland post strong growth ahead of the market, but then so does Waitrose, indicating that both ends of the perceived price spectrum are continuing their robust performance.

None of this is good news for Tesco back home. Our best information is that the company is seeing small market share drops as a rebounding Morrison’s and Sainsbury combine with a pincher movement of Waitrose and entrants, such as Whole Foods, on the top and discounters, such as Aldi, Lidl and Iceland, on the bottom.

All that has to happen is for Wal-Mart to decide to push harder to open ASDA stores — perhaps with a competitor for Tesco’s Express stores — and Tesco may have other things to worry about than Fresh & Easy.

Of course, we have always been a bit skeptical about Tesco’s retail performance, noting here that Tesco’s earning were virtually all related to its ownership of real estate.

Still, Tesco’s stock is down almost 20% over the last couple of months. Wall Street will say that has nothing really to do with Fresh & Easy and, in a direct sense this is true. But indirectly, a focus on a new launch often drains talent and distracts management from its core business.

With Fresh & Easy having been launched by a dream team drawn from other Tesco operations, the implication is obvious: You can’t both put your best and brightest on a new launch and keep them at home.

And the leverage works in a crazy way. Tim Mason, who Tesco sent over to run its US division, is generally recognized as a truly extraordinary executive and a marketing genius. So let us assume he is so terrific that sales of the US stores are fully 10% higher than they would have been in his absence — what an achievement! Yet, if he was back home in the UK and his marketing savvy boosted Tesco’s UK sales by only 1% — that would be many multiples of what he is accomplishing in America — at least by measure of the company financials for the next several years.

As a leader in the UK, Tesco is always subject to a brain drain. Very possibly, by internally draining talent from Tesco’s core operation, Fresh & Easy may also be hurting UK performance.

  1. The wacky system for buying produce can’t work.

This is a big question. The other day, we ran a piece, Tesco Criticism of $5 Coupons And Hybrid Car Parking, in which a US grower shipper wrote this:

As a produce seller, there is ‘no opportunity’ to sell directly to Tesco. Because of their branded packaging concept, every item must go through a third party, and someone has to be responsible for the shrink in packaging ‘before’ the product is in its final form. It does not seem efficient and the expected value added was not there for many items (salad mix excepted).

Now our British supplier who knows US producers says this:

I have also talked to producers in California that Tesco wished to trade with. They were told that their standards weren’t up to scratch and they must supply in bulk for Tesco to repack. How can this work? These companies are world leaders and highly efficient. Surely repacking can only lead to more cost and wastage??? Their attitude was extraordinary… or was it?

This business of repacking perfectly good produce is bizarre — and unnecessary. It all derives from a British system developed to efficiently handle high volumes. It is not, per se, a bad idea; if Tesco opens Fresh & Easy stores in a place like Manhattan, these techniques that allow produce to be efficiently shipped, displayed and sold might be a winner.

But in the vast majority of the US, the population density is so much less than what Tesco is used to that the stores will simply never generate the sales velocity to need this system.

For example, Phoenix has a population density of around 2,937 people per square mile; London is about 12,331 people per square mile. Add in a much more liberal attitude toward new store openings than in the UK, a much more vibrant low- and medium-priced restaurant sector and Tesco will be lucky if it gets sales per square foot 10% of what they do in London.

So whatever its virtues, this system is designed to handle a velocity they will never need. They should switch mostly to bulk, kill the packaging, make the displays prettier, cut out unnecessary bureaucracy in procurement, and hire Dick Spezzano, Ed Odron or Ray Klocke — all ex-produce retail execs out in California — to tell them how to do it.

  1. Disrespect of Suppliers

This business of not listening and making demands on suppliers — as our correspondent explains, “….they have stopped listening and have started telling customers what they want. Something they started doing to suppliers 10 years ago.” — is very serious, more serious in the US than the UK. At least in the UK, Tesco is a dominant buyer dictating to suppliers — a national institution dictating to customers. Here Tesco is a stranger, a foreigner.

One of the buyers procuring for Fresh & Easy had questioned his suitability as a vendor. He took the insult quietly but then called us to vent at how ridiculous it was. For all its bluster, the actual orders Tesco placed were for pitifully small quantities — a few boxes here and there.

It is said that Tesco did enormous research, but maybe they forgot to read this once popular classic: How To Win Friends And Influence People

We appreciate our letter-writer from the United Kingdom and the opportunity he provides to discuss these important issues.

Vietnam Retailer Gives
Glimpse Of Future Opportunities

If one wants to fall behind in business, a good strategy is to only pay attention to what one actually needs to know. It sounds like a reasonable time-allocation strategy but, inevitably, it is what you didn’t know you needed to know that sneaks up behind you and bites you.

So we have been paying attention to Vietnam and, particularly to the efforts of Dairy Farm International to set up an operation there. We’ve mentioned Dairy Farm International before, including this piece on a small footprint store it opened in Taiwan and this letter from one of Dairy Farm’s executives in Malaysia on the subject of counterfeiting produce brands.

Well, back in the Summer of 2006, we received word that Dairy Farm International’s Singapore-based subsidiary, Giant South Asia Pte. Ltd., has received a difficult-to-obtain license to enter the market in Vietnam. The announcement was somewhat cryptic but basically it seemed that Dairy Farm would take over all the Citimart stores in Vietnam. In the fall of 2007, we learned that the stores were reopening under the Wellcome banner.

In light of both the potential of the market — about 87 million people rapidly becoming more affluent — and the connection between the US and Vietnam — 2.1 million Americans served in the military there, and almost 60,000 Americans died in that war — it seemed as if there would be pointed interest in what is going on in our industry in Vietnam today.

We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Benjamin Eng, Chief Executive Officer, Giant South Asia, (Vietnam) Ltd., local arm of Dairy Farm.

Editor’s Note: Giant South Asia, a new company that is part of Dairy Farm International, which operates more than 2,600 shops and supermarkets in Asia, is looking to capitalize on Vietnam’s emerging market and spark competition. Its foray into Vietnam began in August 2006, with the takeover and conversion of a Citimart store in Ho Chi Minh City. A second store was opened in Can Tho in September. The next two stores are located in Kien Giang and Minh Chau (Ho Chi Minh City). The Group aims to build brand equity and presence and will be seeking new sites in both Hanoi and Ho Chi Minh City. All stores will be traded under the Wellcome banner, with a focus on fresh foods. Wellcome is Taiwan’s largest supermarket chain, with some 180 stores. Strategic growth of the Wellcome brand now extends to Vietnam.

Q: What is your retail strategy in Vietnam? Could you elaborate on how retailing has evolved?

A: Vietnam is not as backward as some have perceived. There are big German Metro Cash and Carry self-service wholesale outlets and French hypermarkets, and other formats in modern channels that offer perishables, most local but some imported.

Consumers are traveling. Retailing is a competitive environment now with modern supermarkets. The range may be limited, but the retail landscape is shaping up and modernizing very rapidly.

Q: Who runs the hypermarkets you mention? Carrefour?

A: Carrefour is not here. The Casino Group from France has a big presence.

What we are trying to do is develop and promote local produce and perishables and encourage and set higher standards in quality and discipline in maintaining safety and health standards. I don’t want to be rude to locals, but sometimes there are issues with proper storage and handling. Hypermarkets are striving to do right. But local markets have a lot to learn with quality of product, which can only be maintained with proper handling.

Q: What needs to be done?

A: Investments in refrigeration are critical. But if it is not installed and utilized properly, it is useless. Therefore we are monitoring closer, and we’re training people to do the right thing in maintaining proper temperatures. We bring in a few senior people to train local employees in our associate stores in the region.

Q: You mention the importance of handling and refrigeration. What is the situation as far as people having refrigerators and freezers in the home?

A: It’s quite common. Many households can afford refrigerators in their home.

Q: Regarding transport, do people walk to the store? Can they only buy what they can carry?

A: The majority, 80 percent go on motorbikes or what you might refer to as motorcycles in the U.S. This is a very common and popular mode of transportation. Everyone working can afford motorbikes. People put baskets on the motorbikes and are able to transport purchases back home.

Motorbikes are very important for passengers of goods and those making deliveries. Young people zoom around with them. Now it’s more advanced. Normal households that go shopping use baskets and can purchase all they need.

Q: How quickly will you be expanding and what niche do you hope to fill?

A: We have three stores now. As Vietnam complies with the WTO agreement, the market will open in the next two years and we will progressively open stores where we can get sites.

Cash and Carry’s are basically wholesale, selling in bulk, more like member clubs, operating 120,000 square feet. Hypermarkets are 100,000 square feet, whereas ours are 15,000 square feet; closer in size to supermarkets in the U.S.

Q: How important are fresh foods to the mix?

A: We have a grocery department with preserved canned foods, then household product and general merchandise, health and beauty, etc. Our fresh segment has both local and imported foods, local and some imported vegetables, fresh beef, pork, chicken. The deli department is reasonably sized, with a refrigeration chiller for deli items.

Q: Do you have a service deli, where fresh foods are ordered and prepared?

A: Open case deli is not a thing here. We can’t afford to have open service behind the counter with a butcher slicing up ham. The cost structure won’t allow it. It’s just a matter of time; another year or two and I think it will be a common site.

Q: What is your target customer base?

A: We have a small expatriate community, but locals are gradually appreciating introduction of items not seen before. Vietnam is very influenced by the French; baguettes and pate are very common things.

The economy rate over the past five or six years has changed a lot. People are more enterprising, local entrepreneurs are making wise investments. There is potential for much growth.

Q: Do you import any products from North America?

A: We don’t import directly but we deal with suppliers of American products into our stores, canned products, such as the S&W brand, U.S. turkey, frozen chicken parts, sausages, breakfast cereals, and chocolates.

Q: Does a produce department carry the items Americans are familiar with, such as apples, pears, lettuce, tomatoes, potatoes, onions, berries, grapes, stone fruit, etc.?

A: We have the produce Americans know, the items you mention, apples, oranges… they’re a bit expensive but they are available in selected places, not in every store but selective stores, and I carry them.

Q: What are the major sources of produce imports? Australia? China?

A: It’s mostly local produce. Imported fruits and vegetables consist of an assortment. China, much less. Australia and U.S. are the major suppliers of imported items, but compared to local produce, the amount is insignificant.

Q: What are the greatest challenges you face?

A: There are restrictions and challenges like anywhere. There are restrictions for foreign retailers, what you can do, and what you can import. Everything imported you have to have registered with the authority, and get approval. It’s a time-consuming process.

Also, you need to be very careful bringing in imported products; you must be responsible for labeling, and quality, and it increases costs of doing business here. Local products are good and quality is good but handling is sometimes questionable. There is a good range of produce.

There are other obstacles. You have to apply for import certificates and health certificates and it takes longer here. It is a challenge to educate authorities on what you are bringing in, a lot of testing, certifications to submit.

We don’t import anything directly at the moment. We buy from local importers because we want to avoid hassles. We are learning the ropes. What we do is use local producers and local suppliers.

Q: How do you market and merchandise your products?

A: Recently, we launched a monthly promotion featuring local products mostly, and some imported. Our customers want value for their money and deals. We are also bringing in sampling and demo activities, particularly for new items, whether produced locally or introducing consumers to imports that would be of interest to them.

For instance, during the holidays, we did a Christmas turkey program, where a chef from a hotel taught consumers how to appreciate roasted turkey in the traditional American way, and cooked in a Vietnamese way. We bring in imported turkey.

There are some very high-end, five-star hotels that offer a very good Christmas lunch. We want to introduce turkey in the house, at a reasonable price, to teach our customers to buy and roast it themselves. This was introduced for the first time here. The consumer could pick up a roasted turkey the day needed, or could preorder for Christmas day. We are reaching out to the housewife and consumer directly.

We reach out to the Vietnamese consumer. This is common in the U.S. and everywhere else in the world. With limitations in retailing, and gradual awareness of good meals and good food, the educated consumer is looking for more options.

Q: Do you offer freshly prepared foods to go?

A: We are doing prepared ready-to-eat and ready-to-cook meals in a small way; marinated chicken drumsticks consumers can buy and cook at home. Also more and more young people are working, like in any big city, and can’t afford time to cook and are looking to pick up meals to eat on the run.

Q: Tell us about your produce department and how it fits into your overall strategy.

A: We have a separate produce department, which we embarked on six months ago. We used to depend on the local wholesaler. Now it’s done differently. We go to a distribution center for produce. We go out to a big wholesale distribution center, where produce is auctioned off to companies that supply small restaurants.

We go early in the morning, make our selections, package product ourselves and set it in the store. We are gradually expanding. We go to the market direct, pick fresh, clean the product up and merchandise it. It helps us control the quality, and we have the ability to offer the customers what they want. As you know, some produce is seasonal and can get very expensive. It’s difficult being dependent on the wholesaler.

If we want spring onion or parsley, people buy those items in small quantities, but it’s important for our customers. We have the opportunity to bring it in. The big boys sell cabbage and tomatoes by the tons. They don’t want to be bothered by small bunches. Certain fruits are popular with the locals and some foreigners, and we like to make them available to them. Some of our customers don’t have time to get to the wet market. Providing specialty items is a way for us to differentiate from the retail competition.

Q: The strength of your parent company and experience throughout Asia must help you in developing your presence in Vietnam.

A: We’re still learning. We’re only a year here, so we are still on a learning curve. It sounds easy, but I assure you it’s not easy. We have been operating in Asia for a long time, in very many countries and have learned lessons over the years to be very cautious in entering new markets. There are differences in each country.

In the U.S., Chicago and Seattle are very different. Try to impress people in California with the way you do retail in another part of the country and they say, go home. Some say they want to select vegetables in bulk, some like them wrapped up ready to go. Customer preferences are diverse. Demographics impact strategy.

In Asia, a product may do well in Hong Kong and poorly in Vietnam. Taiwanese like hot and spicy, Vietnamese like spicy but sour, while in Hong Kong it’s bland and clear. Spices need to be adjusted to local tastes. These countries may be neighbors but are dissimilar in so many ways. It is important to show sensitivity to the differences.

Q: Do you find distinctions among individual stores in Vietnam?

A: Slightly different; one store in the city comprises more mid-income and more modern working class. Others are in housing areas that are in the providences, and more customers are housewives with additional time to browse around and compare prices.

Consumers who go to the one in the city are still concerned about prices, but their desires are different. They want fast and convenient. They don’t want to waste time. In the smaller providences, consumers have more time for picking and choosing.

Q: On a personal note, are you a native of Vietnam? What is your vision for developing retail in Vietnam?

A: I‘m Singaporean. I’m not Vietnamese, but the company brought me into Vietnam to develop retail operations here. With my background, I’ve been with the group 20 years now. I’ve worked in many parts of Asia and am now responsible for business in Vietnam.

We’re developing our business slowly. We don’t need the marketing and exposure. Telling the public now about big expansion plans is all nonsense. We want to do well internally before shouting. We want to be moderate in our prospects and don’t want to oversell. I’m a strong believer that you walk before you run. We are still learning to stand up properly. We don’t want people to have expectations we can’t fulfill yet.

We have no real expectations, but we confess that we read words like this and smile:

…during the holidays, we did a Christmas turkey program, where a chef from a hotel taught consumers how to appreciate roasted turkey in the traditional American way, and cooked in a Vietnamese way. We bring in imported turkey.

There are some very high-end, five-star hotels that offer a very good Christmas lunch. We want to introduce turkey in the house, at a reasonable price, to teach our customers to buy and roast it themselves. This was introduced for the first time here. The consumer could pick up a roasted turkey the day needed, or could preorder for Christmas day. We are reaching out to the housewife and consumer directly. Cash and Carry deals in bulk and supplies to hotels or restaurants. A restaurant in the city charges an arm and leg for a nice meal.

We reach out to the Vietnamese consumer. This is common in the U.S. and everywhere else in the world. With limitations in retailing, and gradual awareness of good meals and good food, the educated consumer is looking for more options.

It just strikes us that if we are talking about Vietnam and the issues are supermarkets and turkey dinners, then the lot of the Vietnamese people must surely be on an upswing.

We hope the Vietnamese government will continue with its policy known as Ðổi Mới in which the economy is increasingly liberalized. And we commend companies such as Dairy Farm which seek business opportunities yet also serve to bring to the people of Vietnam new technology, new products and new management systems… and thus the prerequisites for a more prosperous future.

A special thanks to Benjamin Eng and to Dairy Farm International for sharing their uplifting example with the industry.

Hannaford Honored With Award
For Locally Grown Program

Seith Bradstreet, Will Wedge and Wendy Carter

Maine Agriculture Commissioner Seth Bradstreet (right) presents a distinguished-service award to Will Wedge, Hannaford director of produce, and Wendy Carter, Locally Grown coordinator.

We long ago declared locally grown to be the “new organic,” so we’ve dealt extensively with locally grown issues here, here, here and here. Sister publication PRODUCE BUSINESS has also focused on locally grown with articles, such as this and this.

Now the state of Maine, acting through the Maine agriculture commissioner, has presented an award to Hannaford for its focus on assisting Maine’s farmers:

Maine honors Hannaford for support of local farms

Hannaford, with a long history of working with local farmers, recently received special recognition from the Maine Department of Agriculture. Commissioner Seth Bradstreet presented Hannaford with a distinguished-service award Jan. 15 for our “dedication to Maine farmers by continuously promoting local Maine products” in our stores.

“The award has special meaning as we mark our 125th anniversary, since Hannaford got its start as a produce wholesaler,” says Will Wedge, director of produce. “We’ve always had strong ties to local farms.”

The award was presented during the annual Commissioner’s Luncheon at the Maine Agriculture Trade Show, where Hannaford had a booth to educate farmers about becoming vendors and to provide attendees samples of local fare, including Borealis Breads andvine-ripened greenhouse tomatoes.

“We’re especially pleased because it’s the first time the department has given this award to a corporation,” says Wendy Carter, Locally Grown coordinator. Hannaford has more than 220 local farmers supplying its stores, the bulk of them in New York and Maine

It is not easy to maintain a strong locally grown program, so Hannaford well deserves this award.

What also is interesting is that although it is owned by Delhaize in Belgium, Hannaford presents itself as authentically driven by the values of the communities in which it functions. Its emphasis on locally grown is best seen as an extension of that focus.

One suspects that locally grown programs have many challenges ahead, as the industry struggles to try to impose uniform and mandatory food-safety and traceability requirements throughout the whole food chain. It is not clear if smaller growers can always meet these requirements.

At the heart of a strong locally grown program is supplier development, and those local growers smart enough to affiliate with a Hannaford, Wegmans or other strong locally grown program have an advantage as these retail leaders are the best positioned to help point local growers toward what they need to do next to upgrade their standards and the level of transparency and accountability.

So Hannaford is really focusing on a triple win — it wins for its customers by providing the fresh, local product they are seeking; it wins for the growers by guiding them, along the path to food safety and sustainability; and it wins for itself by having happy suppliers and customers.

Congratulations to Wendy Carter, Will Wedge and the whole Hannaford team on this recognition.

Nager Goes To Bat For
Domex Superfresh Growers

Back at Babson College, he was a shortstop on The Battling Beavers, but he certainly hasn’t stopped short in his career. Word has come out that after stints at Dole, Del Monte, Pacific Fruit, Sunsweet Growers and Maui Pineapple, Howard Nager has accepted a new position:

Howard NagerDomex Superfresh Growers announced today that Howard Nager joined the Company as Vice President Marketing, effective February 4, 2008. Mr. Nager will be responsible for all Marketing and Category Management functions related to building brand awareness and loyalty with both the trade and consumer as well as developing those programs targeted to increase consumption of the Company’s apple, pear, cherry and summer fruit crops.

He will work closely with Domex Superfresh Growers’ strong grower base, commodity boards and industry as well as participate as part of the Company’s senior management team in setting strategic direction.

Mr. Nager brings with him extensive marketing experience in the produce industry. In his various management and executive positions, he has overseen sales and marketing programs for both produce and consumer packaged goods products. Most recently, Mr. Nager was Vice President Sales and Marketing for Maui Pineapple Company.

“Howard’s broad knowledge of the produce industry and his management and leadership skills will greatly assist Domex Superfresh Growers category growth strategy for both our conventional and organic products,” says Robert Kershaw, President of Domex Superfresh Growers.

“We continue to expand our efforts in category management, provide superior customer service, increase our focus on product quality, taste and strive to maintain some of the highest standards in the industry. Our vision is that we will be the best in the world at connecting Tree Fruit growers to consumers while staying true to the founding principles of the last four generations; honesty, a sense of urgency and integrity. We look forward to Howard’s leadership in many of these areas,” added Kershaw.

One great reason for taking this position is surely an opportunity to work with the Kershaw Family. If you read articles, such as this and this, you will certainly learn details such as the heritage of their company:

The Kershaw brothers’ business is a fifth-generation farming enterprise that started in 1878 in the Yakima Valley. Their family was among the first pioneers in the agriculturally productive area, initially starting with cattle ranching.

But you will also learn how sustainability has to be considered in judging the long term competitiveness of different growing regions:

Ed said it’s not cheap to grow apples anywhere in the world. Chinese producers cannot sustain their production of apples if they deliver them to the United States cheaper than Washington producers can. “There’s a cost to raise a product that will give a sustainable return to the land. It’s somebody’s cost. If it’s the government’s cost, at a certain point they’re going to revisit those subsidies, whether it’s for the World Trade Organization or because growers of other commodities are mad because they’re not getting a piece of the pie.

And unusual opportunities to do business:

Surprisingly, Washington has a competitive advantage in India, which is a small, but growing market for apples, Robert said. The country has a billion people and grows five million boxes of apples, mostly Red Delicious, in the northern part of the country. It’s cheaper to ship Red Delicious from Yakima, Washington, to some of the major markets in India than for Indian growers to send their apples to those markets, because ocean freight is cheaper than overland transport.

“In the southern markets, we have a competitive advantage over Indian apples,” Robert said. “Not to mention that the quality is ten times better. The only way the Indian apple can compete is on price, and that’s not sustainable.”

Howard will be a great match. He always seeks unusual opportunities and does not allow conventional obstacles to stand in his way.

Once, he was attracted to a woman he met at a trade show. As she was exhibiting across from his booth, he asked her to dinner but she declined explaining that it was a family business and she was there with her parents. Howard always rises to a challenge and said “bring them along” — which she did. So his first date with a woman he would eventually marry was with her parents. A lesser man would have shrunk from the challenge.

Howard will do great. The only problem with going from Maui Pineapple to Domex is what is he going to do with all those all white outfits he was always appearing in?

Howard Nager and Kristine Snyder

Howard Nager, then Director of Sales and Marketing for Maui Pineapple Company presenting a prize to Kristine Snyder of Khei for her recipe that won the Safeway/Maui Pineapple Cook-Off.

Best of luck to Howard, to the Kershaws and the whole Domex team.

The Pundit Parade of Presentations

Here at the Pundit, we’ve been pleased that the analysis we have offered of many issues has been sufficiently compelling to lead us to work with several investment banks to help enhance the quality of their research efforts.

Typically we do this behind the scenes and let them get the credit. However, every once in a while, we get to share what we are doing with those readers interested in the stock market. For example, we have been invited to work with Citigroup Global Markets Limited, and we will be the featured guest in a global conference call focused on Tesco’s new Fresh & Easy format and, more broadly, Tesco’s entry into America.

Here is the invitation that Citigroup sent out:

Citi European Food Retail Team Conference Call

The Citi European Food Retail Team invites you to participate in a conference call — on Wednesday, 20 February at 4pm (GMT) — to discuss the progress of Tesco’s new US grocery chain, Fresh & Easy.

Our special guest will be Jim Prevor — otherwise known as the ‘Perishable Pundit’ — who will be taking us through his impressions of Fresh & Easy as a consumer and as an industry insider. He has some firm views on what is working well and what does not seem to be working so far . . . There will be an opportunity for Q&A.

For those of you not acquainted with Jim — recently described by the Sunday Telegraph as “one of America’s most influential commentators on the grocery market” — you should check out his website at http://www.perishablepundit.com/.

If you click on the following link you will see over 50 articles he has written on various topics related to “Tesco comes to America” — http://www.perishablepundit.com/index.php?hot=tesco.

Jim’s extensive industry experience is summarised at: http://www.perishablepundit.com/biographicalsketch.php

Please join us for what is sure to be a fascinating discussion — Fresh & Easy is likely to continue to be one of the key news stories in the sector for 2008.

We are not publishing the call-in numbers because capacity is limited, but it is an open call and if you are an investor looking to learn more and feel you would like to listen in, simply e-mail us here and we’ll confirm availability and e-mail you back with the call-in numbers if there is availability.

Of course, if you have a few idle million dollars at some division of Citigroup, you can always get the info from your Citigroup contact.

For regular Pundit readers don’t expect any shocking surprises; we’ve been keying you in on such valuable intelligence in every issue. If you can’t or prefer not to make the call, you can read what we think about Tesco’s new venture in America right here.

Note the call is at 4:00 pm Greenwich Mean Time. That is 11:00 am in New York and 8:00 am in Salinas. For our readers in Sydney, Australia, that works out to 3:00 am on the following day. The good news: The conference call will also be available as an encore replay for a limited time.

Cornell University  United Fresh Produce Association

United Fresh Produce Executive Development Program
At Cornell University

As we mentioned in our piece, Cornell, March 9-14, 2008… An Exceptional Experience Awaits, we’ve had the privilege to serve on the faculty of the United Fresh Produce Executive Development Program — developed in partnership with Cornell University — since its inception. It is a stupendous program, developed under the auspices Ed McLaughlin, the Robert G. Tobin Professor of Marketing at Cornell and a great gift given to the industry by United Fresh.

The program is strictly limited to 40 people to allow for the individualized and interactive instruction as well as to facilitate peer-to-peer networking.

The program quickly sold out as word of mouth from last year’s program led to a recognition that a week-long time out from our hectic industry — in which one focuses not merely on what is urgent, but on what is important — is often just what is required to break the chains of habit and move our organizations to the next level.

The Pundit’s annual role on the faculty is to address Critical Industry Issues — last year we focused on food safety; this year we will broaden that task to look at the strategic imperative associated with sustainability and social responsibility.

The program is sold out but there is a wait list. Get your name on the list, keep a bag packed and hope United calls. It would be your lucky day. Let United know you want on the wait list here.

Seattle University Law

Seattle University School of Law

The Pundit’s participation in the professoriate will continue on a different level when we head up to Seattle University School of Law to participate in Who’s Minding the Store — The Current State of Food Safety and How It Can Be Improved

Few subjects draw more immediate attention or concern than the safety of the food we eat. Recent years have included a plethora of food warnings and recalls, raising new questions about the quality and integrity of our existing system for assuring food safety. Seattle was the epicenter of the Jack in the Box E. coli outbreak that sickened 600 and killed four 15 years ago. In addition to explaining how our present system works, this program is intended to discuss how changing consumer preferences are affecting the development and distribution of food, examine whether Federal, state and industry oversight roles are changing, and discuss how the regulatory and judicial processes can be most efficiently balanced. Participants include international, national and local representatives of government, the food industry, consumer organizations and scientists.

We have plenty of attorneys reading the Pundit every day. Some are PACA attorneys, many are general counsels for larger firms and some just intersect with the industry through clients. Whatever your role, you can pick up 9.25 General Continuing Legal Education (CLE) credits, of which 1.0 may be applied to ethics.

The conference is sponsored by Seattle University School of Law Office of Continuing Legal Education, and the program is a real “insiders guide” to the issue of food safety as it was organized and sponsored by William D. Marler, Marler Clark LLP PS, and Kenneth M. Odza, Stoel Rives LLP.

It has an all star line-up of speakers:


Welcome and Introduction of Opening Speaker 8:30-9:15 a.m.

  • Dean Kellye Testy, Dean of Seattle University School of Law — Introduction
  • David Acheson, MD, Assistant FDA Commissioner for Food Safety, Washington, DC — Opening Speaker

Session 1: 9:15 — 10:45 a.m.
Defining the Problem — How the concerns about food safety are viewed by physicians, disease experts, state regulators, and consumers. What is the scope of the problem? Do the different aspects of food safety have opposing/competing perspectives on the issue? What is the good news and bad news for food safety today?

  • Barb Kowalcyk, Citizen Advocate, Center for Foodborne Illness Research and Prevention (CFI) Columbus, OH
  • Carlota Medus PhD, MPH, Epidemiologist, Acute Disease Investigation and control section, MN Dept of Health Minneapolis, MN
  • Richard Seigler, MD, University of Utah. Pediatric nephrologist Salt Lake City, UT
  • Tom Billy, Former head Food Safety and Inspection Service (FSIS)
  • Sandra McCurdy, Extension Food Safety Specialist in the School of Family and Consumer Sciences at the University of Idaho

Session 2: 11:00 a.m. — 12:30 p.m.
How the Regulation of Food Safety Works — The roles and responsibilities as seen by Federal and State regulators, industry and consumers

How do the different food safety agencies function? Are there gaps? Are consumer practices affecting policy? What are the challenges and benefits of Federal and State agency consolidation? How has the response to Homeland security/bio-terrorism threats impacted food safety practices?

  • Bob Brackett PhD, Sr. Vice President and Chief Science and Regulatory Officer, Grocery Manufacturers Association Washington, DC
  • Mansour Samadapour, PhD, President, CEO of IEH Laboratories Seattle,WA
  • Christine Bruhn, Director, Center for Consumer Research Sacramento, CA
  • David Goldman, Food Safety and Inspection Service (FSIS), Office of Public Health USDA
  • Bala Swaminathan PhD, Director Technical and Business Development IHRC, Inc. Conceived and implemented Pulsenet. Atlanta, GA

Lunch 12:30-1:45 p.m.
Governor Christine Gregoire — Luncheon Speaker
Seattle School of Law Gallery

Session 3: 1:45 — 3:15 p.m.
Zones of Responsibility: Grower/Producer; Seller; Government; Consumer
How does the system actually work in practice? Those on the front lines of regulation, production, industry and consumer safety discuss challenges and successes.

  • John Munsell, Manager, Foundation for Accountability in Regulatory Enforcement. Mile City, MT
  • Craig Wilson, Vice President, Food Safety and Quality Assurance, Costco Wholesale Corporation. WA
  • Scott Rickman, Associate General Counsel, Del Monte Foods San Francisco, CA
  • Caroline Smith DeWaal, Director of Food Safety, Center for Science in the Public Interest (CSPI) Washington, DC
  • Andy Benson, PhD, Associate Professor, Dept. of Food Science and Technology, University of Nebraska. Lincoln, NE
  • Devon Zagory, Interim Executive Director, Center for Produce Safety, UC Davis. Sacramento, CA

Session 4: 3:30 — 5:00 p.m.
Roles of the Civil/Criminal Justice Systems: Perspectives of plaintiffs, respondents, and prosecutors. An overview of law relating to product liability. How do you prove or defend a foodborne illness liability case? What about causation? What is the legal standard?

  • Sarah Brew, Attorney, JD, Greene Espel PLLP Minneapolis, MN
  • Neal Fortin, JD, Director, Institute for Food Laws and Regulations at Michigan State University. Lansing, MI
  • Al Maxwell, JD, Weinberg Wheeler Hudgins Gunn & Dial. Atlanta, GA
  • Denis Stearns, JD, Marler Clark LLP, PS Seattle, WA
  • Brad Sullivan, JD, Lombardo & Gilles, Salinas, CA

Reception for Speakers and Attendees: 5:00 -6:00 p.m.
Seattle School of Law

Dinner for Speakers 6:30 — 8:30 p.m.
Columbia Tower Club
Dinner Speaker, Dr. Richard Raymond, FSIS

8:30-9:00AM — Speaker to be determined

Session 5: 9:00 -10:30 a.m.
How is Food Protected Overseas? International Perspectives on food safety
Experts from the EU, UK, Australia/New Zealand, China and the World Health Organization discuss international food protection. How is food safety maintained as products travel through the global marketplace?

  • Chris Griffith, Director of Food Research and Consultancy, University of Wales Institute, Cardiff, Wales, UK
  • Deon Mahoney, Food Standards, Australia and New Zealand Canberra, BC, Australia
  • Canice Nolan, First Counselor, Head of Food Safety, Health, and Consumer Affairs, European Commission Delegation Washington, DC
  • Jørgen Schlundt, Director, Dept of Food Safety, Zoonoses, and Foodborne Illness, World Health Organization — Geneva, Switzerland
  • Ge Zhirong, Vice Minister AQSIQ (General Administration of quality Supervision, Inspection, and Quarantine) for the People’s Republic of China — Beijing, China

Session 6: 10:45 a.m. — 12:15 p.m.
Role of the Media in Public Health and Food Safety: The contributions of media and science writers to Food Safety. How do reporters get the story, and get it right, in the middle of media frenzy? How do they get the information they need to inform and protect the public? What is the role of the media in disseminating public health information?

  • Phil Brasher, Agribusiness correspondent, Des Moines Register. Washington, DC
  • Steve Hedges, Food Reporter, Chicago Tribune Washington, DC
  • Doug Powell, Associate Professor, Kansas State University. Scientific Director, International Food Safety Network Manhattan, KS
  • Jim Prevor, PerishablePundit.com
  • Andy Martin, Food Industry Reporter, New York Times

12:15 — 1:30 p.m. Lunch and Closing Remarks — John M. Kobayashi, former Chief Epidemiologist, Washington State.

All in all it is a great way for an attorney involved in the industry to really be up to date on the dynamics surrounding the food safety issue. Any Pundit readers who are going to be attending, please drop us an e-mail. We would welcome the chance to touch base.

You can register for this terrific program right here.

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