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Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Wal-Mart Reports Strong Earnings:
Is It Creating A Pricing Umbrella For Aldi?

We’ve written a lot about Wal-Mart, and recently, the series we’ve been running on procurement changes have made some think we were hostile to Wal-Mart.

Among the pieces we’ve run recently:

SPECIAL EDITION: Wal-Mart’s Global Food Sourcing Initiative Closes The Peterson Era And Threatens Sustainability Of Agricultural Base

Flaws In Wal-Mart’s Produce-Procurement Thinking

Wal-Mart’s Blind And Costly Focus On FOBs

Wal-Mart Produce Procurement ‘Set-Up For Devastating End’

The End Of The Sam Walton Era At Wal-Mart: Navigating A New Business Model

The truth, however, is that we have always thought and have often written that Wal-Mart is a great national resource. There is simply no question that the ability to offer excellent prices on good quality goods frees up the purchasing power of countless millions of Americans.

It is not just Wal-Mart customers who have gotten this benefit; Kroger, Safeway, Supervalu… virtually all retailers are more efficient companies than they would have been and offer better values to consumers than they would have had Wal-Mart not existed.

So our critique is not an attack on the Wal-Mart concept. It is a claim that some of things Wal-Mart is doing either A) will not, in the long run, help it achieve its own goals, and B) offers an assessment that there are contradictions between Wal-Mart’s professed values, particularly around sustainability, and its actions in agriculture.

Which brings us to the latest news. Wal-Mart just announced strong earnings:

Earnings Exceed Guidance and First Call Consensus Estimate Highlights — Walmart reports fourth quarter earnings per share of $1.23 and adjusted earnings per share(1) of $1.17, five cents above the company’s latest guidance and five cents above the First Call consensus estimate. — The company’s full year EPS was $3.72 and adjusted EPS was $3.66. — Net sales for the full year topped $405 billion, with International net sales exceeding $100 billion for the first time. Walmart U.S. comparable store sales for the fourth quarter were below guidance. — Consolidated operating income for the fourth quarter was $7.3 billion, up 13.8 percent from last year. — The company leveraged operating expenses for the fourth quarter and expects to leverage expenses for fiscal year 2011. — Walmart ended the year with strong free cash flow(1) of $14.1 billion, an increase over last year of almost 21 percent. — The company has returned $11.5 billion to shareholders through dividends and share repurchase this fiscal year, a level of return that is 58 percent higher than last year. — Walmart posted a pre-tax return on investment(1) (ROI) of 19.3 percent for fiscal year 2010, equal to last fiscal year’s ROI.

It is all very strong, but we see long term problems growing out of the short term success. Of course, business is all about making money, but making too much money can create opportunities for competitors, because a market leader, such as Wal-Mart, provides an umbrella for pricing that others can undercut.

We look at Wal-Mart’s sales chart…

Net Sales

Net sales were as follows (dollars in billions):

Three Months Ended
January 31,
Years Ended
January 31,
Net Sales20102009Percent
Change
20102009Percent
Change
Walmart U.S.$70.969$71.293-0.5%$258.229$255.3481.1%
International29.57224.75119.5%100.10798.8401.3%
Sam’s Club12.28511.8363.8%46.71046.899-0.4%
Total
Company
$112.826$107.8804.6%$405.046$401.01.0%

…and then we look at Wal-Mart’s Profit Chart…

Segment Operating Income
Segment operating income was as follows
(dollars in billions):

Three Months Ended
January 31,
Years Ended
January 31,
Segment Operating Income:20102009Percent
Change
20102009Percent
Change
Walmart U.S.$5.632$5.3435.4%$19.522$18.5625.2%
International1.8911.49026.9%5.0334.9401.9%
Sam’s Club0.3050.438-30.4%1.5121.646-8.1%

…and we see something creating an opportunity for ALDI and deep discounters.

Wal-Mart’s US stores had a sales increase of 1.1% over the previous year. Yet Wal-Mart’s US store-related operating income went up by 5.2%.

Now Wal-Mart claims its sales growth was slowed by deflation, especially in food, and the company credits tight cost control with the increased profits.

This may all be true, but begs the question: What should Wal-Mart do with the additional margin it earns when it finds ways to reduce costs?

If you follow Sam Walton’s notions of Wal-Mart as a ”buying agent” for the consumer, the answer is obvious. Agents pass on cost reductions to their principals.

From a standpoint of fealty to consumer interests, the constant cutting of prices as Wal-Mart achieves greater efficiencies allows consumers to vest in the Wal-Mart brand an assumption that Wal-Mart always has the best prices. How can it not? Wall-Mart is super efficient, and as it gets more efficient it passes on the benefits of that greater efficiency to the consumer.

We would think that reputation, that brand equity, borders on priceless.

From a competitive business point of view, if Wal-Mart passes on any efficiencies it can gain, there won’t be enough margin in the markets to encourage competitors to invest.

Ideally we would like to see sales rise sufficiently that even if Wal-Mart passes on all efficiencies gained and works on closer margins, dollar profits are still up. But if need be, we would think it wiser to work closer and snuff out competitive opportunities while winning customer loyalty than it would be to maximize this year’s profits.

Wal-Mart is so big, so powerful, has so many smart executives and great consultants, it may sound ridiculous to think this Pundit focusing on perishables can discern anything from these financial statements that such important people haven’t already seen and rejected.

Perhaps, but remember that there were times when Sears, A&P and General Motors also seemed invincible. It may take a very long time, all the current managers may long be retired, but we see seeds being planted that will one day threaten the behemoth of Bentonville.

Discussing these issues is not hostility to Wal-Mart; it is called free consulting.




More On Consumer Reports Analysis:
Is The Issue Safety or Quality?

Our piece, Trevor Suslow Of UC Davis Speaks Out: The Truth About Consumer Reports, Bacteria And Packaged Leafy Greens, was widely circulated. In fact, the American Council On Science and Health, which we wrote about here, picked up on the piece in its ACSH Morning Dispatch:

Consumers Union: Go Back to Burgers

Jim Prevor’s Perishable Pundit blog points out the “lack of sophistication with which Consumers Union approaches the science” in their recent revelation that packaged salad can contain bacteria.

“Sure, Consumers Union is very good at finding bacteria; there’s bacteria everywhere that won’t necessarily make us sick,” says Stier. “It’s unfortunate that people are being scared away from healthy, conveniently packaged vegetables at a time that our country is so concerned about dealing with obesity. Here the vegetable producers and marketers have offered a valuable tool to make vegetables more available, and the scar-mongers at Consumers Union are trying to alarm us about something on unscientific grounds. It’s basically an effort to further a legislative goal of more food safety regulation.”

Dr. Ross adds, “Foodborne illness is a problem, but pointing out how many leafy vegetables have coliform bacteria on them does not add to the discussion about food safety.”

We also received dozens and dozens of responses on this piece. A number were simply polite expressions of appreciation as so many media outlets publicized Consumer Report’s piece without any real thought about what it meant:

Thank you for printing Dr. Trevor Suslow’s response to the Consumer Reports article.

Bradley W. Sullivan
Attorney at Law
Lombardo & Gilles, LLP
Hollister, California

Many of the letters, though, we wouldn’t even consider publishing because they were nothing but anonymous ad hominem attacks on Dr. Suslow. In other words, instead of attacking any particular argument Dr. Suslow made, people decided to call him names.

Of course, some of the letters sought additional information, and Dr. Suslow was kind enough to provide some amplification on a main topic of interest — the intersection between consumer behavior and packaged salad quality and safety:

Comments regarding cold-chain management, product temperature at point of purchase (POP), and the role of the home consumer in handling of packaged salads have prompted additional requests for information. Two main questions regarding consumer recommendations emerged:

1. Is post-purchase temperature equally relevant for quality and safety?

2. Can consumers really judge if product has been temperature-compromised at POP?

Simple answers to the theme of Question #1 are not possible because exceptions to lower risk or higher risk can always be made and are equally valid.

The most responsible answer is “It depends.” However this is unsatisfactory, especially when trying to provide information consumers can use as an everyday rule of thumb. So I will make a brief general attempt and hope any backlash is not too intense. To limit the scope of the response, I will stick with packaged salads for the most part.

Is post-purchase temperature equally relevant for quality and safety?

Temperature management and cumulative cold-chain history are predominantly quality issues and determine a product’s visual, sensory, and nutritive keeping-potential. The FDA Food Code (2009) has identified Time/Temperature Control for Safety (TCS) limits, at or below 41F (5C), for certain value-added produce that must be applied to distribution, storage, and display. This includes cut leafy greens as well as fresh-cut cantaloupe, pre-sliced or diced tomatoes. These are designated as TCS foods due to recurring outbreaks AND the known growth potential of bacterial pathogens on the product.

The recognized low infectious dose of many pathogens may be sufficient to cause illness in highly susceptible individuals, and growth on the product is not necessary to cause great harm. However, not all possible pathogens and variants of these pathogens, which may infrequently find their way onto or into product, are equally infectious to all individuals.

Proper post-purchase temperature management may, and likely will, keep a bacterial contaminant, such as Salmonella or pathogenic E. coli, below the threshold for illness for an individual consumer. Improper post-purchase temperature management may, and likely will, contribute to elevating these pathogens above an individual’s personal threshold and, by cross-contamination in serving, increase the chance of exposure in an individual portion from the same bag.

The absence of visual signs of improper temperature exposure, such as spoilage or decay, provides no assurance that significant growth of bacterial pathogens has not occurred. Recent research evidence suggests that the pre-consumption environment may increase the aggressiveness (lowering the threshold) by activating mechanisms for human infection. In summary, with all best efforts at prevention and control, if pathogens are present in packaged salads, the consumer is at risk of illness, possible long-term health effects, and death.

Keeping packaged salads cold is essential to quality and may reduce risk to individual consumers, though not likely all consumers of the same lot.

Can consumers really judge if product has been temperature-compromised at POP?

Yes and No. I’ll bet you knew that was coming. Realistically the Yes is very small and No the more sensible response. So to keep this answer simple for a change, let’s stick with the No side of the equation and talk briefly about a potential consumer-oriented solution that always crops up following media coverage of high counts of bacteria on packaged salads.

Time:Temperature Indicators or Integrators (TTI) have been around for a long time and are used on many perishable products. The function of a TTI is to make improper and abusive temperature exposure, linked to known quality defect-inducing conditions, readily apparent by a simply visual inspection, usually a color change, color development (invisible to highly visible), or progressive loss of color bars on a small patch or tag. No equipment is needed and no special training is required for anyone to get the information.

Photo courtesy of Cold Chain Technologies

 

There are many types and there have been many improvements in accuracy and readability over the past 15 years. For the consumer, TTI’s affixed to a bag, clamshell, or other individualized purchase unit would be the relevant location. These have been used in the EU for many years, including on value-added produce. There are many arguments for and against the value of TTI labeling, which is beyond the details of this response; retailers in the U.S. have consistently argued against their use.

Do TTI’s tell the consumer anything about product safety? Not really, apart from considerations for TCS in the answer to Question #1 above. If the TTI validations, and therefore the rate of color-change, were adjusted to pathogen growth response rather than quality loss and shelf-life parameters, it could be argued that a level of consumer protection had been achieved. Under the current boundaries at the low end of cold-chain performance, would safe product be destroyed? Highly likely.

Could TTI’s help simplify a consumer’s POP decision about quality? I think so.

Would the use of TTI complicate a retailer’s liability? I will let the experts answer that.

We thank Dr. Suslow for these thoughtful responses.

To us, both questions addressed by Dr. Suslow illustrate how a supposedly consumer-friendly change can turn out to be anti-consumer.

Traditionally there was a negligence standard for product sales, and so a manufacturer — including a producer of food — could only be held liable if the company was negligent or violated an implied warranty. Then in 1963 a unanimous Supreme Court of California handed down a decision in the famous Greenman v Yuba Power Products, Inc., which held that a “manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being.”

When it comes to food safety, this means that the producer of a food is typically the one responsible if there is a food safety problem. However, a retailer selling the item can be held liable, but this is typically only secondary liability that comes into play if a producer is insolvent. This explains why retailers are very rigorous on making sure producers have liability insurance.

This legal standard means that many food safety measures that might otherwise be taken are not. In a negligence-based legal environment, producers of the products Dr. Suslow mentions — “cut leafy greens as well as fresh cut cantaloupe, pre-sliced or diced tomatoes” — might well have warning labels on the products advising consumers they should not be left in hot cars, not be left out of refrigeration, etc. — because under a negligence standard, the producers would want to establish that they warned consumers. They would want to establish that the consumers, rather than the producers, were negligent for not following instructions. But under a standard of “Strict liability,” the producer is equally liable with or without the warnings — so why depress sales with lots of warnings.

The same goes with retailers. They could insist on sending consumers home with all TCS foods in an insulated bag or cooler to keep them cool. It is, however, an added complication and expense, and the retailers are not liable so doing so doesn’t decrease their liability.

The Time:Tempertaure Indicators (TTI’s) do pose a more interesting legal question. On the trade side, selling a product that was indicating it had been exposed to temperature abuse or was in the system too long would seem to create the opportunity for a producer to sue a retailer if a producer was ever held liable for a food safety problem on product that had been sold despite a warning on the package.

There is even an issue as to whether such a device would transform a product from one that is expected to be “used without inspection” into one that consumers could be legally expected to inspect. Although in the spinach crisis, there was a lot of evidence that people who got sick had consumed product after its “best if used by” date, and that didn’t seem to limit liability — although “best if used by” is not the same as an advisory “ do not consume” after a given date.

Of course, whatever the state of liability law, many producers and retailers would insist on such things as Dr. Suslow discusses if they thought it would solve a real problem that was hurting people. The frequency of known illness is so slight from these products that adding a highly imperfect screen such as warning labels or Time:Temperature devices can be expected, at enormous cost, to have indecipherable effects on the frequency of foodborne illness related to these products.

…Which doesn’t mean the industry shouldn’t look at some of these things more closely. For the most part, these are quality issues more than food safety issues. We remember Frieda Caplan chastising the apple growers in the state of Washington at a speech before a Washington Apple Commission event that must have been two decades ago.

She pointed out that the growers and packers spent millions to immediately cool and refrigerate the apples during storage. She reminded them that they used expensive reefer trucks to transport the apples, that the supermarket chains would store the apples in expensive refrigerated warehouses and deliver them to each store in a refrigerated truck but then, to get added shelf space in a store, the apple shippers would encourage retailers to give them a big dry table at the front for apple display.

She asked if all that investment in refrigeration didn’t prove that the growers and shippers thought it very important, and wasn’t the willingness to be displayed on a dry table a deal with the devil — a short-term sales boost weighed against a longer term decline as consumers got apples in poorer condition and thus were less satisfied with their purchases?

Papa Pundit was for a long time a major exporter of iceberg lettuce to Europe. Back in those days, lettuce was shipped by truck to New York and then transferred to an ocean-going vessel for delivery. We learned how even minor temperature changes could affect the life of the product. In addition to a physical inspection in New York, the old tape from the Ryan temperature recorder was carefully reviewed after the cross-country journey. We learned, with very expensive lessons, that if on the cross-country trip the temperature rose over our specified range, even for a day, the lettuce, though looking perfect in New York, would not make a good arrival in Europe.

We paid attention to that because it would cost us a lot of money if we didn’t — and we knew it. It is hard to get shippers or retailers to pay attention to the fact that consumers may not be getting the shelf life or flavor in their kitchens that they would like to because there were temperature deviations somewhere in the chain — maybe in the consumer’s car ride home — or because the consumer held the product too long.

Warning labels, insulated bags, Time:Temperature devices… all would help with these quality issues but, to date at least, producers and retailers alike generally judge the payoff as too diffused and too little to make the investment worthwhile. We doubt this Consumer Reports article will change that verdict.

Once again, thanks to Dr. Trevor Suslow of UC Davis for helping the industry analyze this important issue.




‘Buy American’ and ‘Buy Local’ Requirements Confusing School Foodservice Buyers…Chilean Fresh Fruit Association Speaks Out

Elementary and secondary school foodservice programs are enormous purchasers of food and have enormous influence on the next generation of shoppers, so what goes on in school foodservice really matters.

One group to recognize this priority and realize there is some confusion on what the rules and regulations require is the Chilean Fresh Fruit Association, which issued this notice to address the confusion head on:

Chilean Fresh Fruit Association Gets Clarification on the USDA “Buy American” School Foodservice Provision

As the winter progresses and U.S. supplies of such well-liked and nutritious fruits as blueberries, peaches and grapes wane or are unavailable, many school foodservice operations are keeping fresh fruits on the lunch menu with ample supplies from Chile.

“Yet some school districts unwittingly are hesitant to fill the seasonal gaps with fruit from Chile because of a misunderstanding regarding the Buy American provision in the USDA’s governance of the National School Lunch and School Breakfast Programs,” said Tom Tjerandsen, Managing Director North America for the Chilean Fresh Fruit Association.

Because of this confusion, the CFFA has reviewed the guidance issued by USDA on this question. That guidance makes it clear that schools can purchase summer fruits from Chile in the winter when U.S. supplies are not adequate to meet the need.

The USDA’s document states, “The Department shall require that a school food authority purchase, to the maximum extent practicable, domestic commodities or products.” But sometimes it is not possible, much less practicable, to buy domestic commodities, especially in winter time. There is simply not enough fresh fruit to go around from domestic sources, or the cost of domestic fruit is too high.

To address the issue, the USDA periodically issues clarification memos. The Q&A section of one of those memos specifically addresses those two situations:

Question: Are there any exceptions to the requirements of the Buy American provision?

Answer: Yes. While rare, two situations which may warrant a waiver to permit purchases of foreign food products include: 1) the product is not produced or manufactured in the U.S. in sufficient and reasonable available quantities of a satisfactory quality; and 2) competitive bids reveal the costs of a U.S. product is significantly higher than the foreign product.

“Many school districts already have that understanding, and their students are enjoying a wide range of healthful fresh fruits,” Tjerandsen said. “We hope that the school officials who have, up to now, misunderstood the provision and its exceptions can and will rest assured and begin to bring the fruits back onto the lunch menu.”

The guidance clearly allows for the purchase of counter-seasonal items. In fact, when you read the things states typically send out to their school districts, like this document from Colorado, one realizes that, as a practical matter, the “Buy American” provisions are unlikely to have much practical effect on fresh produce procurement at all.

Fresh produce is typically imported because it is out of season at that time domestically, it is never grown in the US commercially or because it is significantly cheaper to import than to buy domestic.

This turns the requirement into as much of a record-keeping requirement as anything else. But it is a shame if school foodservice directors prevent healthy habits from forming by dropping products. A child acclimated to eating grapes every day at lunch all during the school year has a better chance of continuing that habit when school is out and for the rest of his or her life.

What is probably going to be more of an issue for the commercial produce industry is the local movement, as represented in Eat Smart-Farm Fresh! — this initiative, building momentum for a decade now, encourages local purchases:

Section 4303 of the Farm Security and Rural Investment Act of 2002 adds a new paragraph (j) at the end of section 9 of the Richard B. Russell National School Lunch Act pertaining to purchases of locally produced products. The provision requires the Secretary to encourage institutions participating in the school lunch and breakfast programs to purchase locally produced foods, to the maximum extent practicable.

We are asking you and your State agencies to encourage school food authorities participating in the National School Lunch and School Breakfast Programs to purchase locally produced foods, to the maximum extent practicable, along with other foods. This provision does not absolve school food authorities of their obligation to adhere to all applicable procurement requirements.

The whole thing is, not surprisingly, political. It is illegal to have geographic requirements on school procurement, but the schools are supposed to try to buy local.

Small farms are mentioned liberally, but the fact that all local farms are not small farms, is basically ignored. And all these terms — local, small, etc. — seem subject to many definitions or have no definitions at all. And there is no money to overpay for things in order to get locally produced product.

Still, the political writing is on the wall. Only a few states are national shippers of scale, but every state has local growers, so every initiative in this area gets vast political support.

We think it is horribly unfair. Broccoli or strawberry producers should compete on quality, service and price; we should not have laws creating sinecures based on geography. If local producers can compete, terrific. And we would have no objection to, say, expanding funding for the Ag colleges and Agricultural Extension so these institutions and agents could better help growers use the best technology to grow productively — wherever they may be. But to tell a farmer from California or Florida that their product, even if better quality and less expensive, is not going to be purchased because of Federal procurement rules is terrible. It hurts the children, who get lower quality product, and the taxpayer, who has to pay more to purchase more expensive product. That is a political choice that makes us all worse off.




As South African Grapefruit Enters The US Market, Who Will Step In To Build Year-Round Demand?

Andrew Southwood used to be the Vice President of Business Development at Fisher Capespan and then founded freshXpressions a organization that bills itself as providing “Management Solutions for Growth” — a sort of outsourced management concept to help companies with stretched management teams.

Now he sends word that a new player is entering the US grapefruit market:

FISHER CAPESPAN EXCITED THAT SOUTH AFRICAN
GRAPEFRUIT IS PERMITTED US MARKET ACCESS

On the 3rd of February, 2010, the Animal Plant and Health Inspection Service (USDA department) announced that it had approved 16 new magisterial districts in three South African provinces as ‘black spot free’. With this status, citrus produced in these areas is now permitted access to the USA, provided all protocols are correctly followed.

The new areas located in the Northern Cape, Orange Free State and North West Province are set to become good supply sources particularly for Star Ruby grapefruit, which does extremely well in the dry desert-like growing conditions. The quality of Star Ruby produced in the north west is well known, with the fruit showing excellent internal red color, high brix values and a thin skin. Add to this fruit that regularly falls into the size 30-36 count range, and it is not difficult to see why Fisher Capespan is excited at the prospect of adding South African grapefruit to its southern hemisphere citrus offering.

According to Marc Solomon (President of Fisher Capespan), volumes likely to be shipped to the USA this year will be moderate. The reasons for this are that many of the grapefruit orchards are still young and not in full production, plus growers in these regions do not have experience with the protocols required. “As the orchards mature and experience is gained in producing fruit for the USA, volumes could rise to over 500,000 cases (15kg) in the next five years” he said.

South African grapefruit will be available in the US from the end of May through to the end of July, at a time when domestically produced grapefruit is usually available in limited volumes. The first few arrivals are expected on containers and once the conventional vessels start arriving in mid June, will accompany the rest of the South African citrus offering.

For retailers particularly on the east coast of the US, this development is good news. With the growing strength of the summer citrus category, the addition of a high quality red grapefruit will further boost summer citrus profits!

Although South African navels and clementines have been on the market, this is the first entry for South African grapefruit. To be able to export to the United States, South African citrus-producing regions have to be certified as “black-spot free,” and earlier surveys found that the traditional growing areas in the eastern part of South Africa were not black-spot free.

This northwestern region comprising Northern Cape, Orange Free State and North West Province is far from those traditional growing regions.

The grapefruit industry has suffered in recent years. A fruit traditionally eaten at breakfast, it has not caught on with a younger generation that doesn’t sit down to eat breakfast. Then, as a double whammy, concern over drug interaction led to a decline in consumption among the older clientele, who were the core demographic.

We have no doubt the fruit will do well initially. There is limited availability during the South African market window, and the South African volume will be moderate.

Perhaps, however, the prospect of year-round supply could start to lead to reforms that might lead to a resurgence of demand.

There is no national grapefruit marketing effort, and one wonders if one couldn’t be set up along the lines of the watermelon and mango boards where product from many states and countries are all included.

Perhaps also there could be an outreach to McDonald’s. Today’s grapefruit varieties are delicious and require no sweetener — not like Grandma’s grapefruit, covered with sugar or honey — and McDonald’s has the youth audience and has shown a desire to at least offer healthy options. Why couldn’t every McDonald’s breakfast meal offering come with a choice of the deep-fried hash browns it currently offers or a lightly grilled half grapefruit? It is not as portable as a car-oriented culture might like, but an axiom of nutritionists is that one should pay attention to one’s food — not eat and read or eat and drive. This is in sync with the cultural trend to treat one’s food seriously. Perhaps McDonald’s will want to stake a claim in this space.

How about it McDonald’s? A pilot program in one city? You could offer a healthy option and, quite possibly, reinvigorate a whole industry. That is The Road to Sustainability on steroids… and think about the video: Grateful farmers in Florida saying you saved the business, grateful farmers in South Africa saying you created new markets to help a teeming country provide jobs and promote exports. If anyone in Oak Brook can share the dream, e-mail us here and we’ll get you in touch with everyone you need to make it happen.




Plea For Ellen DeGeneres To Consider Produce In Her Sugar-Free Diet

For those of you who don’t pay attention to these things, Ellen Degeneres, famed comedienne, film actress, voice of the animated Dory in Finding Nemo and host of the eponymously named Ellen, the Ellen Show and, currently, the Ellen Degeneres Show, has sworn off sugar.

Ellen was already a vegan, motivated to become one mostly by animal-cruelty issues. The decision to ban sugar seems motivated by a search for more energy as she took on a second job as a judge on American Idol.

Since she was already a vegan, it is not obvious that giving up sugar will cause Ellen to increase consumption of fruits and vegetables. However the produce industry is blessed with many who can seize a marketing opportunity when they see it — prominent among them is Dan’l Mackey Almy of DMA Solutions.

Dan’l is the “ring leader” of an effort called “Fresh for Ellen,” which is kind of a “fan club” supporting Ellen’s sugar-free journey and suggesting that she eat a lot more fresh fruit to get sweetness in her life.

Among other things, Dan’l promises that the group will give each of Ellen’s audience members a fresh fruit basket and will donate 1,000 pounds of fresh produce to the charity or cause of Ellen’s choice each time Ellen features and talks about a fruit on her show. Here is the video Dan’l used to try and entice Ellen into responding:

So far Dan’l hasn’t gotten an on-air response from Ellen. There also wasn’t an on-air response to a promise to donate 5,000 pounds of fresh produce if on her Valentine’s Day show Ellen would hold up a piece of fruit and say “I love the sweet, juicy flavor of XXXX”.

Still, Ellen has a lot of air time to fill and, one day, she might just turn to Dan’l, so the effort is all upside for Dan’l and the industry with no downside.

We confess, though, that we find Ellen’s effort both incoherent and unscientific. It is incoherent because it is not even clear to us what, precisely, Ellen has decided to give up. Initially she indicated that this is a big sacrifice because “everything” contains sugar and she was going to give it all up, specifically mentioning wine and vodka.

This left us perplexed. Neither sugar cane nor sugar beets are typically used in either the production of vodka or wine. Although vodka can be made from lots of things — Ciroc is made from grapes — most commercial vodkas, such as Absolut and Gray Goose are made from wheat, fermented with yeast and distilled down to virtually pure ethanol, which is then diluted with water.

Although sometimes winemakers will resort to chaptalization — the adding of some sugar to grape juice to get the alcohol levels up during the fermentation process — it is a last resort and not likely to have happened on any wine Ellen is going to be drinking.

Of course there are sugars in alcoholic beverages. With enzymatic action, yeast converts sugars into CO2 and alcohol — this is the basis of wine-making. But the sugars are not from sugar cane. If Ellen’s rule is to not eat anything with any kind of sugar, she will be very hungry.

In fact, very quickly, Ellen began to backtrack and in a way that made us question the scientific sensibility of her program.

By day two, she was declaring that it is OK to put Agave nectar in coffee and that she is “all for” what she calls “natural sweeteners.” Yet sugar cane and sugar beets are every bit as natural as the various species of agave.

In fact, the reason Ellen likes agave nectar is because it is sugar; it is mostly fructose and glucose. Table sugar is sucrose, which can be split into its two component sugars, fructose and glucose.

People, including Ellen, can prefer one source of sugar to another, and some types are sweeter than others and that might effect how much one consumes but, basically, there is simply zero evidence that anyone’s health will be improved by putting 25 calories of agave nectar in their coffee as opposed to 25 calories of sugar.

Obviously many were confused by Ellen’s declarations because she pretty quickly felt the need to announce that, yes, she was still eating fruits and vegetables and that she meant to say she was giving up “cake” — and would try to get a nutritionist on the show because she didn’t want to be “telling people the wrong thing to do.” A thought you would have thought might have crossed her mind before she went on national television announcing this plan.

Maybe the industry will luck out, and Ellen will call Dan’l to be on her program. If she does, I hope she will bring Dr. Elizabeth Pivonka, who not only serves as the President of the Produce for Better Health Foundation but also is a registered dietician with a doctorate in food and nutrition science.

She could explain the many good reasons for eating whole foods such as fruits and vegetables without engaging in pseudo-scientific romanticism regarding all things “natural.”

Ellen can provide a lot of publicity; the industry should work with her, but we shouldn’t be seen as endorsing nutritional advice that has no basis in science.




Frieda’s Karen Caplan Launches A Blog

The Pundit was just a boy when the family business was negotiating with a lady in California to set ourselves up — we were in New York and she in Los Angeles — as a kind of forward-distribution and sales center for her then-amazingly exotic product line — things like fresh herbs!

Alas the negotiations were never concluded successfully and so this Pundit didn’t have an exceedingly interesting and fun business selling specialty produce to take over and build upon and thus had to fall to punditry.

Karen Caplan was more fortunate. As the eldest daughter of Frieda Rapoport Caplan, the founder of Frieda’s, Inc., Karen came to assume the position of President and CEO of Frieda’s, Inc. and has served the industry in a wide range of capacities, including the first woman to be President of United Fresh.

Now Karen has launched a blog, called What’s on Karen’s Plate, a sort of hybrid half-business, half-consumer effort.

In her first post, So, what is on my plate? — Karen credits the movie Julie and Julia with sparking an obsession with becoming a blogger and points to an Inc. magazine story, Strange Fruits, published way back in 1989 that credited her family business with changing the way America eats. The author of the article, Erik Larson, was assisted to that conclusion by many industry notables who he quoted in the piece: Ralph M. Pinkerton, Harold Alston, Dick Gladden, Dick Spezzano, and a very young incipient Pundit now writing this column:

Says James Prevor, publisher of PRODUCE BUSINESS magazine, “She recognized early on that as a small company she could not compete with the media budgets of the Doles and Chiquitas, but that because of the nature of the items she had, she did have the potential to generate excitement and news coverage.”

And this:

PRODUCE BUSINESS’s James Prevor says her gender had a certain PR value as well. “Just the fact that she’s a woman in a man’s business made her different,” he says. “It made her stand out from the beginning.”

And this blog is another way for Karen Caplan and Frieda’s to generate excitement and news coverage and, generally, stand out.

Karen has tried to tie together sports and business in The Business of the Super Bowl, and talked about her visit to a trade show in Europe with Berlin: Fruit Logistica trade show, a trip we made a few years ago and wrote about here.

Karen talked about bartering for “Ugli” Fruit, an item we have mentioned here. She also wrote about her company’s Healthy Living Initiative, as an attempt to deal with rising healthcare costs, an issue we have written about here, here and here.

Karen’s salute to Frieda, My Mother is Always Right, pointed to Frieda’s knack for identifying people, issues, new products, etc. Specifically Karen pointed out that her mother was a longtime admirer of Norman Borlaug, the father of the green revolution and, arguably, responsible for saving more lives then anyone who ever lived. The Pundit wrote a cover story titled Feeding the World in 2050 for AMERICAN FOOD AND AG EXPORTER magazine that was principally a homage to Dr. Borlaug.

Karen also wrote in praise of a vegetable in her piece, Arugula: Spice of Life, and although we’ve never had the pleasure of sampling “Karen’s famous grilled vegetables”, it made us yearn for a dinner invitation on our next trip to Los Angeles.

Running a produce business and writing a good blog is not easy. Much of what she might like to say, she won’t be able to, and good writing is time-consuming and hard work.

Yet one thing we have always admired about the Caplans — Frieda, Karen and Karen’s sister Jackie — is that they know how to get the most out of what resources they have. That’s an important entrepreneurial skill, so we are sure Karen will do great with this new venture and we wish her all the best.

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