It may be fresh, but it won’t be easy.
We’ve dealt with Tesco and its plans in America both here and here. Wall Street has also gotten into the game, and some clever analysts at Credit Suisse entitled their report: It May Be Fresh, But It Won’t Be Easy.
The research analysts at Credit Suisse are by the names of Michael Exstein, Edward J. Kelly, Andrew Kasoulis, Jay Carlington, Matthew Gardner and Tom Roller, and the highlight points of the report are as follows:
TESCO COMES TO AMERICA
Tesco’s pending entry into the U.S. could represent one of the major structural changes to face the retail industry in some time. We estimate that Fresh & Easy, Tesco’s upcoming U.S. format, could generate $1 billion in sales within three years and capture 2-6% of the local market share in five years, potentially making it one of the few retailers to ever achieve that type of volume growth so quickly.
But it is important to keep in mind that the U.S. retail market is ultracompetitive and Tesco will need to navigate the complexities of the market while at the same time ensuring it can build an economically feasible and scalable model that offers a truly differentiated offering relative to existing formats. As our title suggests, while Tesco may introduce a fresh format/concept, executing on its strategy will not be easy
Mass market format tying fresh food and convenience with low prices. We believe Fresh & Easy will be a hybrid model which tries to bridge the gap between traditional (Kroger, Safeway) and specialty supermarkets (Whole Foods, Trader Joe’s) with mass market appeal (Costco, Target, Wal-Mart).
Initial implications for U.S. retailers will likely be minimal, as it will take time for Tesco to test and perfect its model before it expands into geographies beyond its initial targets (Southern California, Phoenix, and Las Vegas). However, we believe retail competitors and investors need to consider the ramifications now as Tesco’s growth will likely accelerate after year two and could include acquisitions in order to gain control of real estate. In addition, we believe some retailers are already working on potential competitive responses including new box formats and/or upgrades to existing formats.
It’s too early to short supermarket stocks. Near-term supermarket earnings should remain solid, Tesco will not have meaningful scale for at least two years, and success is by no means guaranteed. That being said, investors with a longer term time horizon should not overlook this potentially large negative catalyst.
Costco has the most exposure in mass merchant space. While Fresh & Easy may not be viewed as a direct competitor to the mass merchants, Costco’s large store base on the West Coast and high food penetration creates large overlap. Target and Wal-Mart’s growing food presence in these areas should also not be overlooked. Fresh & Easy will ultimately compete for fill-in grocery trips which the mass merchants are already having a difficult time holding onto.
The report also identifies the key executive team:
CEO, Tim Mason. Mason is very well known to most observers. He has been a Tesco main board director for 12 years and, as well as his US role, retains responsibility for group marketing. He has 25 years’ service at Tesco and has a wide range of experience at all levels — buying, marketing and retail operations. We think he has particular strengths in marketing, and specifically areas relating to understanding customers (for example, along with Terry Leahy, we think he deserves a lot of credit for the huge success of Tesco Clubcard). We also think he has strong diplomacy skills and gravitas (we regard him currently as a natural Number 2 to Leahy), which are likely to prove invaluable in navigating the various issues that Tesco is bound to face in the US.
CFO, Remko Waller. Waller is not a Tesco ‘lifer’ as far as we know. However, his recent experience as CFO of Tesco South Korea makes him well qualified in our view. We think South Korea is the only Tesco market outside the UK/Ireland that has very similar attributes to the US — high GDP per head, a relatively ‘modern’ economy/consumer, high real estate prices (so, very capital intensive), and high concentrations of urban population. Importantly, Korea has also been a hugely successful market for Tesco, and one where it has competed very well with Wal- Mart and Carrefour (both of which exited Korea in recent months). Over recent years, Tesco has proved adept at managing very rapid growth while generating high/increasing returns in Korea. As such, Waller’s track record in managing that growth should prove invaluable in the US.
Retail operations, Brian Pugh. Pugh joined Tesco in 1998 when it bought its entry-vehicle (13 Lotus hypermarkets) in Thailand. He is a US national and originally worked for Wal-Mart, which he left to set up the Lotus business with one other ex-Wal-Mart executive (Jeff Adams, now CEO of Tesco’s Thai business). After the Tesco acquisition, Pugh stayed on in Thailand where he became COO. We think the combination of his US nationality and Wal-Mart/International/operations experience make him ideally qualified for his new role.
Marketing, Simon Uwins. Uwin’s has been at Tesco for 23 years, during which time he has held various buying and marketing positions, latterly as director of marketing for Tesco’s UK business. He joined Tesco from market research agency AC Nielsen and, in his recent UK marketing role, represented Tesco on Dunnhumby’s Board (Tesco’s Clubcard data partner). We regard him as one of Tesco’s best qualified marketing executives. He is obviously very well placed to bring Clubcard and Tesco’s other marketing expertise to the US.
Commercial (Buying), John Burry. Although only around 40, Burry already has around 20 years’ experience at Tesco and has a similar buying/commercial background as Mason/Uwins. Most recently he was head of prepared fresh foods in the UK, which we think will be particularly appropriate for the likely offer in the US stores. He also has international experience — he was the Commercial Director of Tesco’s Czech business. We regard him as one of Tesco’s strongest up-and-coming commercial executives.
property, Tony Eggs. Eggs too has vast experience at Tesco. He has for many years been a prominent senior member of Tesco’s highly successful UK property team, latterly as Property Director. Property is likely to be a key challenge/opportunity in the US, and Eggs will bring with him the knowledge and know-how that Tesco has developed in the UK over the last two decades. With the UK planning regime relatively tight and Tesco omnipresent, we suspect the more liberal US laws and ‘greenfield’ opportunity present Eggs with the chance to almost start again with another Tesco expansion plan.
It is a long report and not in the public domain but we’ve read it and, between the report and what else we have seen, what we notice is five key things:
Tesco may have misidentified convenience in America’s car-based culture. Although local stores are nearby, if they add an extra stop to a shopping expedition, they are not that convenient. In this sense, a Wal-Mart or Target supercenter may be a little further away, yet still be very convenient as consumers can get everything on one trip.
The decision to not sell gasoline has condemned the concept to secondary locations. The stores will have to be draws themselves and that is not easy for a 10,000-square-foot food concept.
The high prepared foods component depends on very high volume. Neither the population density nor the secondary locations in the launch markets are likely to sustain that volume.
The concept does not seem to have strong barriers to entry. If it is successful, it is not clear why Safeway or Kroger couldn’t duplicate it, much less why HEB, Publix, etc., couldn’t duplicate it in their markets before Tesco gets there.
In a rush to open a critical mass of stores, Tesco seems to have signed leases for marginal locations. This won’t make its job easier.
The problem may be that Tesco desperately wants a place in the US market, but any concept that requires prime real estate requires a very slow rollout.
So Tesco has convinced itself that small stores in neighborhoods will, if merchandised the Tesco way, be a big success.
If Tesco is correct, they will steal the crucial fill-in business from supermarkets, and with warehouse clubs and supercenters doing the big shopping trips and Tesco or Tesco-like concepts doing the fill ins, supermarkets will be in real trouble.
But the Tesco concept seems to depend on a revolutionary change in consumer shopping habits. If that revolution doesn’t occur, we may have to add Tesco to Marks & Spencer and Sainsbury’s on the list of British retailers whose plan to retake the colonies didn’t pan out as hoped.
The FDA has issued an announcement:
FDA TO HOLD PUBLIC HEARINGS ON THE SAFETY OF FRESH PRODUCE
The Food and Drug Administration will convene two public hearings to share information about recent outbreaks of foodborne illness associated with microbial contamination of fresh produce, and to solicit comments, data, and other scientific information about current agricultural and manufacturing practices used to produce, harvest, pack, cool, process, and transport fresh produce. FDA is also seeking information and comments on risk factors for contamination of fresh produce associated with these practices; and on measures by FDA that could enhance the safety of fresh produce.
|Date:||March 20, 2007|
|Time:||9:00 a.m. to 5:00 p.m.|
|Place:||Ronald V. Dellums Federal Building|
Edward Roybal Auditorium
1301 Clay Street, Third Floor
Oakland, CA 94612
|Register by:||March 12, 2007|
|Date:||April 13, 2007|
|Time:||9 a.m. to 5 p.m.|
|Place:||Food and Drug Administration|
Center for Food Safety and Applied Nutrition
Harvey W. Wiley Federal Building
5100 Paint Branch Parkway
College Park, MD, 20740
|Register by:||Register by: April 6, 2007|
According to the FDA announcement, the public meetings will address the following issues and questions:
- For each stage in the supply chain, and for each industry sector, what are the risks or practices that could lead to microbial contamination of fresh produce?
- How can or should current practices be changed to reduce the risk of contamination?
- For each stage in the supply chain, and for each industry sector, what current practices (including, for example, following the GAPs/GMPs Guide) reduce the risk of microbial contamination of fresh produce? What data are available to support a conclusion that the risk of such contamination is lower than it would be without the practice in place?
- Is fresh produce or inputs, such as agricultural water, sampled and tested for pathogens or indicator organisms at any stage of the supply chain? If yes, please describe the sampling and testing done.
- Beyond the Federal actions described in sections I.B. through I.E, what new Federal actions, if any, are needed to enhance the safety of fresh produce? On what aspects of the produce supply chain should the measures focus?
- In identifying possible Federal interventions or actions, to what extent can or should we take into account the wide variation within the fresh produce industry with respect to, e.g., the size and type of establishments, the nature of the commodity produced, the practices used in production, and the vulnerability of particular commodities to contamination? To what extent should such measures apply to specific products, sectors of the industry, regions, or businesses? For example, is there a need for special treatment for different commodity groups?
- What types of records and other information, from what types of facilities, are, or would be, most useful in facilitating traceback efforts?
- Are written food safety plans, written SSOPs, periodic assessments, training, and/or the establishment and maintenance of records useful for risk identification and risk mitigation or management purposes? If yes, to what extent are these practices in place, and in what sectors of the industry?
- How should adherence to the GAPs/GMPs Guide or new produce safety guidance(s) be measured and verified by the grower or operator, government regulators, or third-party auditors, in the event of any new recommended Federal action or in the event you are not recommending any new Federal action?
- If you are recommending any new Federal measures, please describe how they might affect certain small businesses, such as roadside stands, farm gate operations, farmers’ markets, or other small businesses involved in direct sales.
The FDA has been saying it would do this for some time and probably was waiting to see the California Leafy Greens Marketing Agreement come into effect.
The implications of these hearings are vast. They are asking the kind of objective questions that need to be addressed. For example, we are all busy drawing up new Good Agricultural Practices documents, and the FDA has the temerity to ask: What data are available to support a conclusion that the risk of such contamination is lower than it would be without the practice in place?
A good objective look at all our efforts may be bracing. In addition, if United’s call for Federal regulation is going to be heeded, these hearings will provide important evidence to support that call. Note that Point 5 asks specifically “…what new Federal actions, if any, are needed to enhance the safety of fresh produce? On what aspects of the produce supply chain should the measures focus?”
You can get full details on the hearings, including how to register and how to submit comments, right here.
The California Leafy Greens Marketing Agreement Board will hold its first meeting today, Friday, the 23rd of February.
It remains unclear who has signed up and who has not. Dole has announced that it has signed the agreement; Fresh Express has announced that it does not intend to sign. The State has come out with numbers that simply make no sense and has refused to explain its methodology.
Retail response has been mixed. Wegmans and Kroger have notified suppliers that they intend to buy California Leafy Greens solely from signatories of the agreement. Safeway has told suppliers that it can’t reconcile that position with its overall relationship with Chiquita, the parent company of Fresh Express.
There seems to be some confusion regarding precisely what the agreement requires in terms of food safety. To clarify: It never requires anyone to reduce the quality of their food safety program; it simply provides a baseline program.
We fully expect that many buyers will establish their own, more rigorous, standards and that many growers will have to go beyond the baseline in order to be certified to sell to various buyers.
Among the signatories of the agreement, there is a little bit of concern that retailers have not leapt to announce that they are restricting their supply chain by agreeing to buy only from signatories to the agreement. The agreement is expensive, both to implement the standards that are likely to be approved and to pay the assessment. The signers are afraid of getting stuck with the bill, without getting support from the buying community.
On the other hand, it has become increasingly obvious that the marketing component of the agreement is a colossal mistake.
If this was simply an agreement to follow a baseline food safety program, participation would be less in question. But the agreement has a marketing component:
ADVERTISING AND SALES PROMOTION
Pursuant to Food and Agricultural Code section 58889, the Agreement may advertise and promote consumer recognition of the Official Mark and its meaning.
QUALITY IMPROVEMENT AND EDUCATION PROGRAM
Pursuant to Food and Agricultural Code section 58893, the Agreement may engage a program of educating the public and producers concerning the Best Practices.
Basically the Agreement contemplates spending the assessment on a marketing program to tell everyone that leafy greens with the logo are safe and that consumers should look for the logo.
A top priority of the advisory board must be to disavow this language. Not one penny should be spent promoting this seal. In an industry where half the year the product comes from Yuma and there are plants all over the country, product often contains ingredients from other states and other countries. This marketing campaign will wind up scaring more consumers off our products than reassuring them.
Until the board disavows this marketing program, we can certainly understand people not wanting their money to go to fund a campaign to urge people to buy items with a seal that the growers or processors do not intend to use on their products.
As far as retailers go, since the Good Agricultural Practices haven’t even been adopted yet, it is premature for any buyer to say the GAPs are sufficient. However all buyers should pledge, no matter who or where they buy from, they will not buy product that is grown and processed to food safety standards lower than that called for in the GAP metrics that will soon be adopted.
Our piece, Tim Vaux To Leave DuPont, brought an outpouring of interest and concern from the many who have participated in United Fresh’s Produce Industry Leadership Program. Here is an assortment, some sent directly to the Pundit and others that Tim shared with us, of the things people are saying about Tim:
With such strong concern, we followed up with Tim to gain a perspective on his years with Dupont and the future of the Leadership program.
Interview with Tim Vaux, Director of Food Industry Relations, DuPont Crop Protection.
Q: In your tenure at DuPont, you’ve been a true advocate for the produce industry. What will your departure from DuPont mean for the industry? Will your interest in produce-related endeavors continue?
A: Unfortunately DuPont is restructuring and this time I was one of many who are affected. About 1500 globally will be part of this restructuring. It’s been a great 27 years and I have no regrets. The company has been good to me and my family and I believe I have been good for the company in return. I’m not ready to be put out to pasture however.
This will open a new chapter in my life. I’m not sure what it will bring, but time will tell. My ideal job would be to lead a medium sized produce company into the future by creating a strong vision with a focused team to create value for its customers.
(l to r): Kori Tuggle, Ocean Mist; Tim Vaux, DuPont;
Jerry Butt, Mixtec; Lisa Strube,
Strube Celery and Vegetable Co
Q: Since you won’t be at DuPont to continue championing the leadership program, what will its future be?
A: As far as the Produce Industry Leadership Program goes, it is fully funded through this year. I am hopeful that DuPont will continue their funding. It’s unclear at this early stage as to how or if my duties will be sliced up and assigned to others. The leadership program funding has to go through the normal strategic planning process as well as the budget process within DuPont. Unfortunately, I’ve been the champion for it and now won’t be there to make the case for continued funding. I received many voicemails and emails from alumni of the program and I’m sure the alumni association will make some plans to help support ongoing leadership programs, as well.
Q: Could you share your reasoning for why DuPont should continue supporting the program? What was the impetus for getting involved originally and what benefits have accrued?
A: Initially the program really evolved with United in mind. I was looking to showcase our current products and new ones at the time. Tom Stenzel had just been named president of United and was articulating goals he had in the area of member networking, developing and retaining new talent in the industry, and government relations. Those objectives would be ideal for development of a leadership program. At DuPont, we had done education leadership programs in other industries — corn, wheat, cotton, rice and soybean — but this was new territory.
That’s initially how it started. It’s evolved. Every year is different but retains core elements. We try to gear the program to the unique mix of people the committee selects. We take a look at the makeup, the demographics of the group, the age ranges and experience, maybe one year there are more growers than retailers or distributors. We ask what they want to get out of the program and before the first session we take their feedback and make the program as relevant as possible.
Q: How did you see the program benefiting DuPont?
A: At first it focused on our ag crop protection products, then we brought in sanitation products, then value-added packaging, and more recently our Qualicon diagnostic business, where we do quick testing for E.coli, salmonella, and lysteria.
We saw this as an opportunity to showcase our products, exposing potential customers to new products we had to sell. This was a way to get a faster launch with key grower/shippers influential in the industry. It provided one DuPont approach to the produce industry and to the way we approached trade shows. We still have new products to launch in the pipeline, so there is a continuing need for the program.
Q: Are there mechanisms within the leadership program itself that enhance the industry’s understanding of what DuPont can offer produce companies?
A: We include a trip to DuPont headquarters in the program, where participants are exposed to all our R&D resources. Anyone who comes to DuPont leaves with a new respect and understanding for the company.
At the Top Tim Vaux DuPont
Second row from top (l to r) Mike McGee, L&M;
Beth Berman, United Fresh; Ken Roth, Roth Produce;
Mark Petersen, CH Robinson;
Diane Holt, Custom Pak; Rebecca Wilson, Tom Lange
Third Row from top (l to r) Gregor Shanks, Weyerhaueser;
Larry Meuers, Meuers Law Firm; Lisa Strube, Strube Celery & Vegetable; Jennifer Verdelli, Verdelli Farms
Bottom Row (l to r): Keith Johnson, Kroger;
Phil Herbig, WesPak Sales; Jerry Butt, Mixtec;
Al Finch, Diversified Citrus Marketing;
Greg Andersen, Driscoll’s Victoria Kuhns, United Fresh
Q: Are you able to quantify the leadership program’s benefits to DuPont in terms of product sales or other tangible financial numbers based on a cost/benefit analysis?
A: Over the years, I’ve tracked product purchases by program participants. I must say the program more than pays for itself each year in increased revenues; that’s the hard return. There’s the soft return also.
Q: Are you referring to marketing and image promotion here?
A: I call it the Jeff Gordon factor. Jeff Gordon is a NASCAR driver of a DuPont Chevrolet. Ask them how they calculate their return on investment. Every time he’s in a commercial for Pepsi or milk, he’s in his racing uniform and the DuPont logo is prominently displayed. At tradeshow events, alumni travel around the show. As a result we come out with good public relations.
It’s been more than that. We really do need to give something back to an industry that’s been very good to us.
Q: How much money does DuPont actually invest in the program?
A: I don’t think I should give exact numbers, but I can say it’s a sizable investment.
Over the years since we started in 1995, we have spent well over a million dollars. We are right in the middle of Class 12, and recruiting for Class 13, which has already been funded. The money from DuPont is already in United’s bank account.
Diane Holt, Custom Pak; Mark Petersen, CH Robinson;
Tim Vaux, DuPont; Lisa Strube, Strube Celery & Vegetable;
Phil Herbig, Wes Pak; Jennifer Verdelli, Verdelli
Q: What’s your prediction for the future of the sponsorship, now that you’ll be leaving?
A: I’m not sure who’s going to take on my responsibilities, and who will absorb the leadership program, which is just part of what I do. Once we have someone identified, it will be important for me to train them in all the components.
Q: Do you have other partners in the program that could carry on your knowledge base?
A: Julie Krivanek, a consultant out of Denver, and I are the two constants of the strategic planning, sessions and program development since its launch. I tease her that we used to be the godparents, but after 12 years, we’ve become more like the grandparents. The most gratifying part of the program to me has been watching how people have developed over the years. I get a lot of pride when I read that someone got promoted, knowing that the leadership program helped develop the skills that made it possible.
Q: Are there new products at DuPont that could help the produce industry?
A: A new family of insecticides coming out in 2008 , are revolutionary products, and they’re a lot safer than traditional products. The core product within the group, Rynaxypyr, is the most exciting new thing we have coming next year and it needs to be prominently exposed through the program to the grower participants.
Q: Will DuPont be taking a more aggressive role in working with the produce industry on food safety issues, which have enveloped the industry since the spinach E. coli crisis?
A: We’re seeing groups coming out with different ideas on how to approach building confidence with consumers. I’m on the United Board, which three weeks ago put forth a strong federal mandate edict. This is unusual. This industry doesn’t typically ask for mandatory regulations, opting for voluntary measures.
At DuPont, we have so many resources and technologies in our food safety testing diagnostics business working in meats and cheeses. Maybe the time has come to focus on produce. I’ve invited them to come in May and be part of the DuPont booth. They use DNA-based technology. What’s unique about it is the speed in which the testing takes place. When working in fresh produce, you can’t wait around three or four days for a result.
A lot of times, companies will send out product while they are waiting and then run in to complications if there is a problem and they have to call it back later. Our tests are able to turn around in 24 hours. I’m getting calls weekly on food safety issues and am getting more information on ways we can help. Early on, our food safety tests were considered to be too expensive, but now customers are reconsidering.
The situation with Tim, restructured out of a job after 27 years, is becoming quite common. Is it a lack of loyalty or is it that competing in today’s hyper-competitive world allows little margin for error?
Tim is an exceptional person who has won exceptional loyalty from those he has interacted with. Hopefully DuPont will continue to fund the United Leadership program but, whether they do or not, the program is too valuable to let die and it has too strong a constituency to close down.
That may be Tim’s most lasting legacy to the produce trade.
Our piece, Dole Introduces Unique Vending Machine Concept, detailed how new vending technology was being used in a pilot program to increase consumption of produce and healthy foods for school age children. In order to learn more about how this program is playing out in real time, we spoke to the foodservice director at one of the five pilot school districts:
Q: With your hands-on experience, could you tell us how the healthy vending pilot in your school district has been working on the ground?
A: We’ve seen great progress over the past year. Right now, we don’t have a huge amount of excess traffic. We’ve placed the machine in the cafeteria, which has been advantageous from a logistical standpoint as we iron out issues during the pilot stages, but I don’t think it’s the ideal place to generate incremental sales.
The machine eventually needs to be in a different location to maximize its potential. When it’s in the cafeteria, we can trouble shoot, make sure it’s working and refill it easily. The front of the machine opens, then a tray with spirals pulls out and the employee can slide items in quite easily.
Q: Are the vending products being prepared and packaged right there on site?
A: We work out of a central kitchen that prepares our salads, sandwiches and wraps. It’s very easy to make the products in the morning that go into the machines and ship them to the schools to be served for breakfast that morning and for lunch that afternoon. We switch the products out daily. They are made and packaged here fresh each day.
Q: How are menu items determined? Are consistent specifications followed?
A: We have a food advisory team that includes students from five different schools, as well as assistant principals and cafeteria managers. We have breakfast together and talk about the menus, getting feedback from the kids on what they’d like to see and buy. Also, students are instrumental in telling us what price points, how they use the machine, whether they buy a la cart or part of lunch, etc.
Q: How does procurement work?
A: We have purchasing contracts with fresh produce venders for items like apples, oranges and grapes, as well as with meat and frozen food companies. We put apples and oranges in the machines whole. The orange rolls out into a smart waiter basket. We handle items that require additional preparation work in house.
Q: What about items like Dole bananas that have been designed with special single serve cellophane sleeves?
A: We purchase the sleeves separately and package the bananas in our central kitchen. We buy the packaging materials along with all the raw components and then put the products together.
Since we’re just doing a test, we don’t have all the arrangements worked out. We are continuing to use the companies and equipment we have now, but in the future for a turnkey solution that could change.
We do have a few extra products that we put into the machine that are not in our regular cafeteria program, but we use the same packaging procedures we have in place for products in schools already.
We are perfecting the whole procedure of how employees should be preparing product and how it looks in the package, so other districts can pick up the process and use it.
Q: What products have been the most successful?
A: Smucker’s Uncrustable sandwiches have been very popular, and we are not serving them on our lunch line. We make different wraps and salads. Our lettuce, cheese, and turkey items sell well, and students seem to gravitate to flavors like jalapeno and garlic. Another hit is the Frusion, a yogurt-style smoothie. We place the products in the machine once a day for breakfast as well as lunch. We’ve been surprised to see that students at lunch will buy breakfast cereals with milk.
Q: Are you incorporating the student card identification system into the pilot?
A: The machine works like a cash register, which is another good reason we do it in the cafeteria now. We are running the vending machines in two schools now. Approximately 50 students are buying from it, and of that 15 to 20 are reimbursable meals. The machine doesn’t have huge sales now, but we’re optimistic.
We haven’t tested the ID card system yet. Our students put in their pin number. They use their pin number in the lunch line anyway. The vending machine payment method is the same concept to what they already do now, so it’s been a seamless transition with no learning curve. We do have one school that uses ID cards. When we’ve tried ID cards in certain schools, we’ve run into problems. Some students don’t wear their ID cards and forget to bring them at lunch time.
Q: What is your sense of the project’s future?
A: It’s not cheap to buy the machine. Frankly, since I’ve been testing, I haven’t put a penny toward the machine.
I think we will eventually have more play on the machine when it’s not in the cafeteria. We’re drawing from the same students in the cafeteria line. Students need to have access to the machine at all times of day. Also, wouldn’t it be great in the evenings, when students are playing volleyball or basketball to grab a healthy snack instead of relying on concession stands? They’d be able to draw from their accounts. I think the machine will be a success once it catches on without any special attention on our part.
Sounds like they are trying, but there are still bugs to be worked out. Certainly placement of the machine is key. Question: Is the purpose of the machine to supplement the breakfast or lunch cafeteria service or is it to provide anytime snacks? There may be a place for both. Many school cafeterias seem overwhelmed and have lengthy lines so kids might welcome the chance to self-serve lunch, just the way adults welcome the chance to skip the airline desk and go to a self-serve machine.
Students who stay after school for athletics, play rehearsal, band, orchestra, clubs or meetings would also welcome a chance to buy good food during off hours.
It is a little disturbing to learn about Smucker’s Uncrustable’s being a best seller. It is not the worst thing a child could eat, but it is not a salad either. One wonders if these machines wouldn’t do better totally divorced from the school cafeteria. If a distribution method could be developed, the machines could be owned by a company such as Dole and, with such ownership, Dole could restrict what is allowed in the machines.
Coke machines only sell Coke products, Good Humor machines only sell Good Humor brand ice cream. Maybe there should be a Dole machine in every school?
Following an issue of the Pundit that featured two articles focused on corporate change, Univeg Intends To Buy Ready Pac and Sunkist And Pure Gold, we received this letter from one of the trade’s more eclectic minds:
John is always good for getting to the heart of the matter, and business transition is always a challenge to analyze. Yet we do know some things.
Heinz Deprez, the Univeg founder and CEO, has a reputation as among the shrewdest minds in the European produce trade. Here is how one of our friends in Europe put it to the Pundit:
“Hein Deprez is probably one of the smartest and brightest operators in the business that I know. Low key but very focused and strategic thinker.”
One perspective, as John points out, is that if one becomes dependent on one big customer, one can be in trouble if that customer gets in trouble as did K-Mart. Which is really to argue that one needs to select one’s customers with care if one is going to seriously align with them.
Although we may have all grown up being told not to put all our eggs in one basket, Mark Twain had a different take:
Put all your eggs in the one basket and — WATCH THAT BASKET.
Pudd’nhead Wilson, Pudd’nhead Wilson’s Calendar, Chap. 15
This perspective was endorsed by Andrew Carnegie in his essay How to Succeed in Life and, in variations, by Warren Buffet and others.
And, put bluntly, who has made more money in the produce industry than those who grabbed on during the early days of Wal-Mart’s produce program and just kept picking up product lines and DC assignments?
As John points out, few of these relationships are contractual. However, in the sense one is a “temp agency,” the reality is that once one has, as John puts it, gone the route of “outsourcing the buying function,” it is not that easy to pull it back in.
One is reminded of the old saw that if you borrow $100,000 from a bank, then the bank owns you, but if you borrow $100,000,000 then you own the bank.
A given banana company may be dependent on Wal-Mart for an irreplaceable amount of its sales, but Wal-Mart is also dependent on that banana company for a not easily replaced amount of supply.
It is not exactly an equal relationship but it is far from a trivial matter for someone to dismiss a global supplier.
Yes, Sunkist is in a difficult place as is any shipper whose focus is one commodity grown in one place. And, indeed, they need to sell what is available. So packing some sub par citrus under another brand may make perfect sense.
But this is not the first and presumably not the last freeze. The saying goes “Fool me once, shame on you, fool me twice, shame on me.” The real question is what is the management of Sunkist going to do to make sure that it will not be so vulnerable to a freeze in 2012?
The business has its wacky moments. I vividly remember some retailers rejecting product and the shippers then consigning it to my family’s wholesale operation. Then I remember the product being bought up by the street buyer for the same chain that rejected it in the first place.
As Yogi Berra said upon hearing that a Jew had been elected Lord Mayor of Dublin: “Only in America!”
Many thanks to John Pandol for his intriguing letter.
There is an ad hoc group that started it all. The National Restaurant Association has its group working on a program and the Food Marketing Institute held a conference. All these buyer-led initiatives can get confusing, so to assist the trade in keeping track of them all, we are publishing this recap of coverage all in one place.
As new developments occur, we will continue to update this recap to help keep the trade organized on this important subject.
On September 25, 2006, in the midst of the spinach crisis, we published The Role of Retailers And The Future Of Food Safety, which pointed out that it is the “representations and warranties” that buyers demand that define the food safety programs we get:
“…in the end, the strength of our food safety systems is at least as dependent on what retailers demand as they are on what the government does for the simple reason that what retailers pay for is what they are going to get.”
Then in the issue of the Pundit’s sister publication, PRODUCE BUSINESS, which was unveiled at the PMA Convention in San Diego on October 21, 2006, we published Food Safety Is A Retail Issue, which pointed out:
“…what holds suppliers back is not that they need an FDA regulation — it is that they need to see a willingness on the part of buyers to pay more to obtain a higher level of food safety and security. So far that is missing.”
The Buyer-led Initiative for Food Safety was then announced. In time it came to be signed on to by nine important buying organizations:
Ron Anderson, Safeway, Inc.
David Corsi, Wegman’s Food Markets
Gary Gionnette, Supervalu Inc.
Reggie Griffin, Kroger Company
Mike Hansen, Sysco Corporation
Gene Harris, Denny’s Corporation
Frank Padilla, Costco Wholesale
Greg Reinauer, Amerifresh, Inc.
Tim York, Markon Cooperative
Here at the Pundit, we applauded the buyer-led effort, but on October 30, 2006, ran a piece entitled Buyer-Led Food Safety Effort Leaves Open Question Of Buyer Commitment, in which we pointed out:
“What would be helpful from these buyers is…a reassurance to the grower/shipper/packer/processor community that investments in food safety will be protected.”
As Gene Harris of Denny’s added his endorsement to the Buyer-led Initiative for Food Safety, we published Pundit’s Mailbag — Denny’s Weighs In On Food Safety Effort on November 1, 2006, and we pointed out that the Western Growers Association was now looking for mandatory standards:
“Buyers can impose standards on their suppliers, but it seems as if the big grower members of WGA are more inclined to go with a mandatory program. Perhaps because this is more easily “saleable” to consumers, perhaps because the growers have no confidence that buyers will ever agree to a uniform standard on food safety and, perhaps, because growers know that buyers today can have the best of intentions but situations change and buyer’s change — and if legal product is available for much less money, that will put a lot of pressure on an organization to change its standards.”
On November 2, 2006, we highlighted an Opportunity For Buyers’ Food Safety Initiative, where we wrote the following:
“Here’s the Pundit’s suggestion to the buyers: Don’t wait for the deadline to pass. Withdraw the letter to the associations, which can only lead to endless negotiations with grower/shippers and watered-down food safety standards. Instead, create a temporary ad hoc consortium to spearhead the quick development of science-based food safety standards.
In the short term, these will be enforced by buyer demand, hopefully including other buyers who will buy into the plan; in the medium run the plan will be turned over to state authorities in California and federal authorities in Washington, D.C., as the basis for new mandatory regulation.”
We pointed out that this initiative may not stay in the hands of the ad hoc group leading the Buyer-led Food Safety Initiative when, on November 7, 2006, we announced: National Restaurant Association Forms Produce Safety Working Group and pointed out:
“What we should have learned from the FDA loss of confidence in the industry is that food safety is not something that we negotiate over. It has to be driven by the best scientific knowledge we have.”
Mark Munger of Andrew-Williamson Fresh Produce, a grower/shipper, pitched in his thoughts on the important role buyers play in the food safety arena and, on November 8, 2006, we published Pundit’s Mailbag — Insights From A Conscientious Grower, which specifically praised one foodservice customer:
I also have to commend one of our customers, who I believe demonstrates the value of collective partnerships between growers and customers. Two years ago we began working with Darden Restaurants. Darden takes food safety very seriously. They have empowered a food safety team that must approve each and every supplier. They have inspectors in the field who make weekly random inspections of growing operations, picking and packing programs. When problem issues are identified, they work closely with our food safety team to help educate our team and to ensure that collectively we fix the problem. The knowledge that an inspector can be in any field or packing shed at anytime has forced us to treat every day as an inspection day.
Additionally, Darden’s food safety team is separate from their buying team. If a farm is not up to par, they have the authority to stop all transactions until the problems are fixed. They truly put their money where their mouth is and have helped us become a markedly better company. I cannot think of a better example of the power of collective thinking between suppliers and customers. I think the industry would be well served to learn more about their programs and create similar models.
Not surprisingly, the Food Marketing Institute was not going to be content to sit this one out and, on November 10, 2006, we published FMI Steps Into The Food Safety Fray, which detailed a conference scheduled for December 5th at which FMI would host representatives from industry, associations, academia and government to advance food safety issues. Unfortunately, FMI decided to exclude the media and we pointed out:
“…if the goal is to build public confidence in the process the industry is going through, you not only open it to media, you send a velvet invitation to the big consumer media groups.
It smells of smoke-filled rooms where deals will be cut in secret. If you let in some light and air, everyone will have more confidence in the final product.”
On November 14, 2006, we published Pundit’s Mailbag: Grower/Shipper Calls Buyer Led-Food Safety Initiative Hollow Call To Action, in which a respected grower/shipper pointed out that “This is where the retailers must step out of their ivory towers and get their walk (vendor relationship) to match their talk (aligned supply chain)… If those who signed on to this letter would get committed to buying only from “qualified suppliers,” the laws of supply and demand will drive the solution and we will quickly catch up with the rest of the world in this critical area.”
On November 17, 2006, we featured Tale Of Two Buyers, in which we pointed out: “If the VPs are sincere about wanting the buyers to place food safety first, the VPs have the responsibility for changing the culture and the economic incentive systems.”
On November 21, 2006, we published Tim York Takes Leadership Role In Food Safety Crisis, which features an extensive interview with Tim York of Markon Cooperative as well as the announcement that the Buyer-led Food Safety Initiative gained ten new retail signatories:
- Mike O’Brien, Vice President Produce & Floral, Schnuck Markets, St. Louis, Missouri
- James Spilka, Vice President Produce, Meijer, Inc., Grand Rapids, Michigan
- Mark Vanderlinden, Vice President Produce Merchandising , Price Chopper, Schenectady, New York
- Greg Corrigan, Director Produce & Floral, Raley’s, West Sacramento, California
- Craig Carlson, Vice President Produce, Pathmark Stores, Carteret, New Jersey
- Don Harris, Vice President Produce & Floral, Wild Oats Markets, Boulder, Colorado
- Bryan Gannon, Director Produce & Floral, Big Y Supermarkets, Springfield, Massachusetts
- Jim Corby, Vice President, Produce Merchandising. Food Lion, Salisbury, North Carolina
- Roger Schroeder, Vice President Produce, Stater Bros., Colton, California
- Craig Ignatz, Vice President Produce Merchandising, Giant Eagle, Pittsburgh, Pennsylvania
Despite the impressive show of buyer support, we expressed some concern: “…it is also pretty clear that the prospect of one unified food safety standard acceptable to every one of the signatories, much less to those who have declined to sign, is somewhere between nil and nothing.”
On November 28, 2006, we published Words From Buyers Who Did Not Sign The Food Safety Initiative, and in this piece we added Mark Hilton, Vice President of Produce and Floral for Harris-Teeter, based in Matthews, North Carolina, as a signatory to the letter.
We also quoted buyers who had declined to sign the letter mostly due to their objection to the public nature of the initiative. We also pointed out how vendors were thinking:
Pundit Note: Many growers and shippers are irate over the effort as they see it as an evasion of responsibility. These buying organizations get exactly what they value enough to pay for. All too often, some of the same companies who signed the letter on Monday will, on Tuesday, buy some product without the slightest knowledge of where it came from.
On November 29, 2006, we ran Another Naysayer of Buyer-led Food Safety Initiative, which gave voice to the thoughts of some non-participating buyers that only mandatory government regulation is the way to go. Also on November 29, 2006, we published Pundit’s Mailbag — Buyers Lecturing Again, in which a processor there at the beginning of the national fresh-cut industry reminded us how uninterested in food safety most retailers were at the time.
On November 30, 2006, we continued our exploration of why some buyers were declining to join the buyer-led initiative with Self-Interests Play Role In Food Safety Initiatives. Also on November 30, 2006, we received a letter from Al Zuckerman of ProMark Group, which we focused on in Pundit’s Mailbag — Pundit Logic On Food Safety Regulation. We pointed out: “In terms of the difficulties on spinach and leafy greens, the key buyers are missing from the Buyer-led Food Safety Initiative. The buyers of the produce, in this case, are the processors.”
On December 1, 2006, we published Spinach And The Consequences Of Buyers’ Action, in which buyers who hadn’t signed on to the buyer-led food safety initiative pointed out that rigorous food safety systems will restrict supply and raise prices.
As we explained: “It is unknown if those who don’t buy spinach because of high prices will buy healthy alternatives. They may buy candy bars and die of complications of obesity. It is a completely open question as to whether safer spinach won’t cost lives in the end.”
Also on December 1, 2006, we responded to industry feedback claiming that foodservice did a better job than retail when it came to food safety by beginning a series of Pundit Pulses focused on foodservice. The first two, Pundit’s Pulse Of The Industry: Del Taco’s Janet Erickson and Notre Dame’s Dan Crimmins, dealt with how smaller buyers deal with these issues.
On December 5, 2006, we continued our discussion with buyers who refused to sign the Buyer-led Food Safety Initiative by noting that some of them weren’t thrilled with the Western Growers Association proposal either. Our Piece Is WGA’s Food Safety Proposal Up To The Job? dealt with the problems created for the industry when one region is declared “safer” than another and with the difficulty of utilizing a marketing order to legislate world class food safety practices.
On December 6, 2006, we ran Nine Days To B-Day (The Buyer-led Food Safety Initiative Deadline), which dealt with what will happen if the trade associations do not meet the deadline set by the buyers. Also on December 6, 2006, we continued our series on foodservice and food safety by running Pundit’s Pulse Of The Industry: Michael Spinazzola Of Diversified Restaurant Systems.
Additionally on December 6, 2006, we ran a letter from Tim O’Conner, President & CEO of the United States Potato Board in our Pundit’s Mailbag — Buying Safe Food In A Changing World in which Tim explained: “Given my experience with government inspection and regulation, I place much more value on a supply chain-led initiative to deliver meaningful long term results.”
On December 7, 2006, we ran FMI Meeting On Food Safety: More Questions To Be Answered, which looked at the contribution of FMI’s effort to play a role in preventing a future leafy green crisis.
On December 8, 2006, we published Pundit’s Mailbag — Trapping Stations And Food Safety Costs, in which a letter from Jack Vessey of Vessey & Company clued us in to the specific cost implications of food safety initiatives.
On December 12, 2006, we ran Taco Bell Makes Ready Pac Its Scapegoat, which explained that the attitude of shared responsibility for food safety that is essential for success can’t be sustained if a buyer dumps an innocent vendor at the first sign of trouble.
Also on December 12, 2006, we published New Meaning Of A Value Meal: Cultural Change Needed To Factor In Food Safety, which dealt with the way a cultural imperative to low prices could lead food safety to be sacrificed.
Additionally on December 12, 2006, we ran Pundit’s Mailbag: Aligned Supply Chains And Statistical Quirks, which analyzed the way the tyranny of large numbers can impact our perception of the food safety problem.
On December 13, 2006, we published Wholesalers, Independents May Get Windfall From Buyer-led Food Safety Initiative, which pointed out that a buyer-led initiative would likely leave lots of growers looking for homes for their product and that wholesalers and independents could benefit.
On January 3, 2007, we resumed our discussion of the Buyer-led Food Safety Initiative by publishing Publix and C.H. Robinson Join Buyer-led Food Safety Initiative, which brought the list of signatories to twenty-two:
Ron Anderson, Safeway, Inc.
Gary Bergstrom, Publix
Craig Carlson, Pathmark Stores
Jim Corby, Food Lion
Greg Corrigan, Raley’s
David Corsi, Wegmans Food Markets
Brian Gannon, Big Y Supermarkets
Gary Gionnette, Supervalu Inc.
Reggie Griffin, Kroger Company
Mike Hansen, Sysco Corporation
Don Harris, Wild Oats Markets
Gene Harris, Denny’s Corporation
Mark Hilton, Harris-Teeter
Craig Ignatz, Giant Eagle
Jim Lemke, C.H. Robinson Worldwide
Mike O’Brien, Schnuck Markets
Frank Padilla, Costco Wholesale
Greg Reinauer, Amerifresh, Inc.
Roger Schroeder, Stater Bros.
James Spilka, Meijer, Inc.
Mark Vanderlinden, Price Chopper
Tim York, Markon Cooperative
We were particularly intrigued by the possibility that C.H. Robinson’s participation, as a major vendor to Wal-Mart, might mean that Wal-Mart saw some usefulness in being somewhat related to the initiative.
On January 4, 2007, we ran Buyer-led Food Safety Initiative Maturing In More Ways Than One, that included the Buyer Group’s latest call for action.
We’ve been asked to make available in one place our coverage of the recall by Wm. Bolthouse Farms of certain 100% carrot juice products and the broader implications of this issue for food safety. This piece is updated regularly and will be re-run to include new coverage of this outbreak and issue.
We initiated our coverage on October 2, 2006, by publishing the FDA notice to consumers warning them not to drink the product, and we inquired as to the margin of safety on the product. You can find the piece, entitled Oh No! Another Outbreak, right here.
On October 4, 2006, we published Bolthouse And Juice Refrigeration, which analyzed the proper standard of refrigeration for vulnerable products and the ability of both the trade and consumers to maintain that cold chain. Read it here.
October 5, 2006, we ran Botulism III, which detailed the 12 steps in the distribution chain that the industry needs functioning properly in order to maintain the cold chain. The piece challenged retailers to evaluate the integrity of their own cold chain. You can find the piece here.
In The Botulism And E. coli Connection, which we ran on October 6, 2006, we noted similarities between the botulism outbreak on certain Bolthouse carrot juice and the spinach/E. coli outbreak. The piece is right here.
On October 10, 2006, we noted, in Bolthouse Botulism Case Hits Canada, that two Canadians were now victims of this botulism case and noted that it was an unusual cluster to occur at one time if the problem was solely temperature abuse by customers. You can catch it here.
October 11, 2006, we ran Carrot Juice Still On Canadian Shelves, we noted that Canadians were getting upset over the inability of Canada’s public health authorities to execute a simple product recall and that the frequency of recalls was raising questions over the safety of California produce. Read it right here.
On October 13, 2006, we ran Lobbying For Better Refrigeration urging industry lobbyists to work on legislation to make sure consumers have the tools they need to keep product safe at home. The article is here.
October 18, 2006, we ran a Pundit’s Mailbag — Thermometers In Refrigerators, disagreeing with our urging of legislation regarding thermostats and refrigeration. You can read the piece here.
The Pundit originally ran the Pundit Rewind on September 21, 2006. We continuously update it in order to keep everyone organized with respect to reference material on this subject; we have updated it with new items and run it again today.
Spinach Crisis Summary
With so much having been written in so short a time, thought it would be helpful to publish a sort of round-up of available material to help people understand the whole situation regarding spinach and this E. coli breakout:
The Perishable Pundit itself has dealt extensively with the subject in several major pieces. On September 15, 2006, we published Spinach Recall Reveals Serious Industry Problems, which addressed the implications of this crisis for the fresh-cut industry. You can read the piece here.
On September 18, 2006, we published Organic Dodges a Bullet, which deals with the implications of the outbreak for the future of organic farming. You can find this piece here. Also on September 18, 2006, we ran a piece called Ramifications and Reflections on the Spinach Recall, which provided our first 10-point analysis of the situation. You can read it here.
September 19, 2006, we asked Is FDA’s Concern Now an Obsession? — a piece in which we assessed whether a national recommendation to not eat spinach made any sense. You can review this here.
On September 20, 2006, we noted 10 Peculiarities about the E. coli Outbreak and reviewed why certain aspects of the situation are unlike past food-safety challenges and other unanswered questions regarding the outbreak. Read this one right here. Also on September 20, 2006, we did our third 10-point list, calling this one “Spinach Recall Begs for Solutions”, where we reviewed how the trade can deal with this issue for the future, including looking at the meat industry, the prospect of universal testing and the use of RFID and GTIN. You can read all this here.
On September 21, 2006, we asked Is FDA Causing Long-term Damage? Here we posed the question of whether punishing the innocent and the guilty alike doesn’t reduce incentives to invest in food safety. You can read this piece right here.
The September 25, 2006 edition of the Pundit includes our fourth 10-point list entitled Though Not ‘All-Clear’, Consumers Can Eat Spinach Again, which reviewed many issues facing the industry as spinach begins to reenter the market, including the FDA’s announcement, PMA consumer research, the behavior of industry association, battles over fresh-cuts and organics, the reintroduction of Salinas Valley production, the FDA’s capabilities, and more. You can read this piece here. Also on September 25, 2006, we reviewed The Role of Retailers And The Future Of Food Safety, which pointed out that buyers have an important role in insuring food safety. Catch this piece here.
Additionally, on September 25, 2006, we ran the Pundit’s Pulse Of The Industry in which a panel of retail pundits gave us insight into the way the spinach issue played in store and with consumers. You can read it here.
The Pundit on September 26, 2006, included an articled entitled The California Department of Health Services Owes People An Explanation in which the question was raised whether certain parties received preferential treatment in the current spinach/E. coli outbreak. Read it right here. Also on September 26, 2006, we did a piece questioning the efficacy of our trace-back systems. The piece was titled More Recalls Trickle In, and you can read it here.
On September 27, 2006, the Pundit analyzed the bad publicity that the Salinas Valley has received and asked Is Salinas Getting A Bum Rap On Food Safety? The piece can be read right here.
September 28, 2006, the Pundit included a piece entitled Call For Stronger FDA that analyzed the demand of some in the food industry for beefing up the FDA and its budget within the context of the spinach/E. coli situation. You can read it here.
On September 29, 2006 we did a piece called Lies, Damned Lies And Statistics that explored the contradiction of modern life that has led things to seem less safe, even as they are actually safer. Read the piece here.
October 2, 2006 we ran The FDA Needs to Reexamine Its Methodology, inquiring why it was necessary to shut down a whole industry when, as far as we know, it was only Dole brand bagged spinach that was implicated? Read it here. Also on October 2, 2006, in a piece called Needless Recalls, we examined how even if many of the recalls were unnecessary, the recalls revealed big flaws in the trade’s traceback systems. You can find the piece here. Another piece October 2, 2006, entitled Deconstructing FDA, analyzed the FDA’s statement regarding the end of the spinach crisis. The piece is right here.
The Pundit also ran a piece entitled Action Plan to Regain Consumer Confidence that both discussed the industry plan and proposed an alternative plan. Read about it here. Also on October 2, 2006, we did a piece called Collateral Damage vs. Assumption of the Risk, which analyzed some of the liability issues surrounding the outbreak. You can find the piece here. Additionally, on October 2, 2006, we published the second in our series of Pundit’s Pulse Of The Industry. This one including insight from Bob Edgell of Balls Foods and Ron McCormick of Wal-Mart, regarding reaction at retail as spinach outside California became available. Read it here.
On October 4, 2006, the Pundit ran a piece entitled In Defense of Salinas, in which, based on a discussion with a Salinas farmer, we outlined five points you need to understand about the relationship between the Salinas Valley and this outbreak. You can find it here. Also on October 4, 2006, we published Notes On Natural Selection: It Could Happen To You, which discussed the new food safety plan revealed by Natural Selection Foods and discussed the necessity of product testing. Read it here.
October 5, 2006, we analyzed the implications of the FBI raid in Salinas with Just when you thought it was safe to go back in the water… You can read the piece here.
We also explained on October 5, 2006, the involvement of Growers Express in the FBI raid in a piece entitled Bailando Juntos (Dancing Together), which you can find right here. What’s more, we discussed on October 5, 2006, why Canada is still banning U.S. spinach and what that implies about relations between the FDA and CFIA. The piece is called U.S. Spinach Still Banned in Canada, and you can read it here.
On October 6, 2006, the Pundit pointed out the importance of considering the human costs of our actions in A Look At The Faces, which you can read here. Also on October 6, 2006, we analyzed how increased use of a federal network was bound to mean the recording of more frequent food safety outlets in a piece entitled PulseNet Ups Ante In Food Safety Battle, which can be read right here.
Although not strictly speaking spinach-related, when one company voluntarily recalled certain green leaf lettuce, it was a decision affected by the overall environment caused by the spinach/E. coli situation. In Nunes Recall Reveals Testing Dilemma, published on October 10, 2006, we analyzed how stricter standards may lead to more frequent recalls. Catch the piece here.
October 11, 2006 we pointed out that the Center for Disease Control was beginning to see fresh-cut in a whole new light. You can read CDC’s Aha! Moment right here. Also on October 11, 2006, we offered Heads Up — Political Posturing On Spinach Begins, pointing out that the a State Senator in California was going to start some hearings. Read the piece here.
On October 12, 2006, in PulseNet Asleep At The Wheel, we detailed that the nation’s food safety bulletin board likes to take off on weekends. Read this astounding piece here.
Dangerous E. coli Found On One Ranch ran on October 13, 2006, and points out that this finding doesn’t tell us much. Read it here. Also on October 13, 2006, we ran Fast Testing For Pathogens Necessary, which pointed out that product testing is bound to happen and discussed options and obstacles. You can read it here.
October 18, 2006 the Pundit ran a piece in which PulseNet Explains Why It Doesn’t Work Weekends. You can find the piece here.
On October 19, 2006, the piece Pundit’s Mailbag — Greenhouses and Vertical Farming explores the potential of greenhouse and hydroponic growing in the light of the spinach/E. coli crisis. The article also explores the potential for vertical farms in urban neighborhoods. Read it here.
On October 24, 2006, we published Town Hall Spinach Meeting: Unanswered Questions, in which we analyzed what we learned and what was still a mystery after attending a Town Hall Meeting on the spinach crisis at the PMA Convention in San Diego. You can find this piece here.
October 27, 2006, we ran a piece entitled PMA Commits $1 Million To Food Safety Fixes and you can read it here. Also on October 27, 2006, we thought part of the fallout from the crisis would be a reexamination of the industry’s government relations efforts and so wrote PMA/United Merger Fresh On Our Minds. You can read it right here. Additionally on October 27, 2006, we ran Pundit’s Mailbag — Greenhouse Solutions dealing with whether Controlled Environment Agriculture might be the solution to the trade’s food safety issues. Read it right here.
On October 30, 2006, we responded to a very important proposal from several leading members of the buying community with Buyer-Led Food Safety Effort Leaves Open Question of Buyer Commitment. You can read the piece here. After the government announced that it was looking at wild pigs as the culprit in the E. coli contamination, we ran, on October 30, 2006, a piece entitled Now We Know Why Spinach Salad Is Served With Bacon Dressing. Read it right here.
On October 31, 2006, we published Western Growers Association Calls For Mandatory Food Safety Standards, in which we discussed the epochal change taking place as the industry looked to move to mandatory, as opposed to voluntary, food safety standards. You can read it right here.
November 2, 2006, we published Opportunity For Buyer’s Food Safety Initiative, which raised the idea that not involving growers in setting food safety standards was a good idea. Read it here.
On November 7, 2006, we ran a piece entitled NRA Forms Produce Safety Working Group that discussed a new National Restaurant Association initiative to impose standards on suppliers to foodservice. You can find the piece here. Also on November 7, 2006, we published Pundit’s Mailbag — United’s President/CEO Responds (Part 2), which dealt with the question of how much difference a good government relations program can be expected to accomplish at a time of crisis. Read it here.
November 8, 2006, we ran a valuable Pundit’s Mailbag — Insights From A Conscientious Grower that focused on the value buyers can bring to food safety programs. You can read it here.
On November 10, 2006, we published FMI Steps Into Food Safety Fray, which details the role a food safety conference FMI is organizing might play in helping the industry develop new food safety protocols. You can find the piece here.
November 14, 2006, we ran Pundit’s Mailbag — Grower/Shipper Calls Buyer-Led Food Safety Initiative Hollow Call To Action, in which a respected grower pointed out that growers needed retailers to walk the walk not talk the talk. Read it here.
On November 15, 2006 we published PulseNet, And The Pundit, In The News, which linked to a TV station that picked up on our reporting on ways to improve PulseNet. Read it here. Also on November 15, 2006, we published Pundit’s Pulse Of The Industry: Westborn Markets, Schnucks, Wal-Mart, in which these retailers updated us on how the market for spinach and bagged salads is recovering. You can find the piece here.
November 16, 2006, we had a piece entitled Pundit’s Mailbag — Kill Steps And Irradiation that dealt with the industry concern that no matter how we strengthen our agricultural practices, only a “kill step” can really solve the problem. Read it here.
On November 17, 2006, we published GAPs/GMPs And HACCP Plans, in which United Fresh President/CEO Tom Stenzel gives his take on what happened during the spinach crisis. Read it here. Also on November 17, 2006, we ran Tale Of Two Buyers, which pointed out that culture and compensation may matter more than intent when it comes to food safety. Find it right here.
November 21, 2006, we ran Tim York Takes Leadership Role In Food Safety Crisis, which updated us on the progress of the Buyer-led Food Safety Initiative. Read it here.
On November 22, 2006 we presented The Perishable Pundit’s Unsung Heroes Award to Hank Giclas of Western Growers Association, David Gombas and Jim Gorny, both of United Fresh Produce Association. Read all about it right here. Also on November 22, 2006 we reported the explosive news that the whole consumer advisory not to eat spinach might have been avoided had certain processors cooperated with the FDA. The piece is called Spinach Farmers Won’t Be Thanking Certain Processors This Holiday and you can read it here. Additionally, on November 22, 2006 we explained that restricting product usage could reduce the impact of future outbreaks. The article is called If You Are Eating Out For Thanksgiving… and you can find it here.
November 28, 2006 we published Words From Buyers Who Did Not Sign The Food Safety Initiative that explained one objection to the way the initiative was being handled. Read the piece here. Also on November 28, 2006, we wrote Don’t Forget The Regional Spinach Processors, which showed how Aunt Mid’s Produce Company in Detroit, Michigan, was communicating with its customers. Catch it here.
On November 29, 2006, we ran a piece called Another Naysayer of Buyer-led Food Safety Initiative that focused on the thoughts of some buyers that only mandatory government regulation would help the industry. Read it right here.
On November 30, 2006, we published Self-Interests Play Role In Food Safety Initiatives, a piece that continued our series on why some buyers don’t wish to sign on to the Buyer-led Food Safety Initiative. You can find the article here.
On December 1, 2006, we continued our exploration of why some buyers elected not to sign on to the Buyer-led Food Safety Initiative with Spinach And The Consequence Of Buyers’ Actions, a piece that looked at how food safety might impact prices and public health. Read it here.
Also on December 1, 2006, we published Pundit’s Pulse Of The Industry: Del Taco’s Janet Erickson and Notre Dame’s Dan Crimmins, which explored how smaller foodservice operators were looking at food safety. Catch it right here.
Additionally on December 1, 2006, we ran Pundit’s Mailbag — Sprout Lessons Echo Food Safety Dilemma, which pointed out what the broader produce industry can learn from the food safety woes of the sprout industry. You can find the piece here.
On December 5, 2006, we asked Is WGA’s Food Safety Proposal Up To The Job?This piece discussed both the difficulties of setting different food safety standards in different regions and the difficulty of establishing food safety standards through a marketing order. Read it here.
On December 6, 2006, we ran Nine Days To B-Day (The Buyer-led Food Safety Initiative Deadline), which dealt with what will happen if the trade associations do not meet the deadline set by the buyers. Read the piece here. Also on December 6, 2006, we continued our series on foodservice and food safety by running Pundit’s Pulse Of The Industry: Michael Spinazzola Of Diversified Restaurant Systems, and you can find this article here.
Additionally on December 6, 2006 we ran a letter from Tim O’Conner, President & CEO of the United States Potato Board in our Pundit’s Mailbag — Buying Safe Food In A Changing World, catch this piece right here.
On December 7, 2006, we ran FMI Meeting On Food Safety: More Questions To Be Answered, which looked, from a retailer’s point of view, at the contribution of FMI’s effort to play a role in preventing a future leafy green crisis. Read it right here.
December 8, 2006 we ran Pundit’s Mailbag — Trapping Stations And Food Safety Costs in which a letter from Jack Vessey of Vessey & Company detailed some costs being incurred as a result of buyers’ demands for various food safety efforts. Read it right here.
On December 12, 2006, we published New Meaning Of A Value Meal: Cultural Change Needed To Factor In Food Safety, which dealt with the way a cultural imperative to low prices could lead food safety to be sacrificed. Please read it here.
Also on December 12, 2006, we ran Pundit’s Mailbag: Aligned Supply Chains And Statistical Quirks, which analyzed the way the tyranny of large numbers can impact our perception of the food safety problem. You can catch this right here.
On December 13, 2006, we ran Wholesalers, Independents May Get Windfall From Buyer-led Food Safety Initiative, which pointed out that a buyer-led initiative would likely leave lots of growers looking for homes for their product and that wholesalers and independents could benefit. Read it here.
Also on December 13, 2006, we published Pundit’s Mailbag — Eliminating E. coli 0157:H7, which argued that we should look for legislation to prevent cattle from polluting with E. coli 0157:H7 and look to eliminate E. coli 0157:H7 from the food chain. Catch the piece here.
On December 14, 2006, we published Pundit’s Mailbag — Transitional Ground, which dealt with the food safety implications of the presumption that the spinach implicated in the spinach/E. coli outbreak was grown with organic methods on ground being transitioned to organic. Read the piece right here.
On December 15, 2006, we published the Pundit Special Science Report: Part 1 — Food Safety Vulnerabilities in Yuma And Salinas; Part 2 — The Science Of Waterborne Bacteria; Part 3 — Product Testing At Natural Selection Foods & McEntire Produce. The whole report can be found here.
On December 19, 2006 we published Irradiation Will Prevent Future Outbreaks which dealt with the need for a “kill step” in produce. You can read it here. Also on December 19, 2006 we ran Pundit’s Mailbag — Organics And Manure which dealt with the issue of the use of manure in modern agriculture. You can find the piece right here.
On December 20, 2006, we published The Cultural Contradictions of Food Safety, which analyzed how growers are placed in a financial and ethical dilemma by issues of food safety. Read the piece here. Also on December 20, 2006 we ran Pundit’s Mailbag — WGA’s Ambiguities in which Bob Martin of Rio Farms discussed the WGA’s proposal along with the challenges buyer’s demands place on growers. You can find the piece here.
On December 21, 2006, we ran Fighting E. Eoli At The Source, which detailed industry efforts to play offense, not defense, on the food safety front. Read it here. Also on December 21, 2006, we published Pundit’s Pulse of the Industry: Foodbuy’s Maurice Totty, which analyzed how a large organization, the Compass Group, worked to secure food safety. The piece is here.
Additionally on December 21, 2006, we ran Pundit’s Mailbag — Transitional Answers, which focused on the implications of the spinach/E. coli crisis. You can find the article here.
On December 22, 2006, we published Many States Are Weak At Reporting Foodborne Illness, in which we detailed how many foodborne illness outbreaks are not being identified as such due to the condition of many state labs. As they are improved, more foodborne illness will be identified even as the food supply gets safer. You can read the piece right here.
On January 3, 2007, we ran Publix And C.H. Robinson Join Buyer-led Food Safety Initiative, which pointed out the growing buying power behind the initiative. You can read it here.
On January 4, 2007, we published Buyer-led Food Safety Initiative Maturing In More Ways Than One, which detailed the latest letter written by the group. Read it here.
Also on January 4, 2007, we ran Pundit’s Pulse Of The Industry — Ruby Tuesday’s Rick Johnson, in which we heard frank talk about where food safety responsibility lies. Catch it here.
On January 5, 2007, we ran FDA’s Money Problem, which pointed out that funds for research are essential if we are ever to really resolve the trade’s food safety issues. Read the piece here. Also on January 5, 2007, we published Pundit’s Mailbag — More on Manure, in which we explained why manure needs to be banned from spinach cultivation. Catch it right here.
On January 9, 2007, we published Pundit’s Mailbag — Farmers Are Not The Cause Of Food Safety Problems, which contained an important letter pointing out that farmers are expected to deliver “dirty” product to processors. You can read it here.
On January 10, 2007, we ran Pundit’s Mailbag — Oversights In Food Safety, which featured an important letter from Tom Russell of Dynasty Farms/Pacific International Marketing calling for a ban on the use of cow manure in agriculture and a “Right to Irradiate” bill. You can read the piece here.
On January 11, 2007, we ran E-coli 0157:H7 Vaccine Approved For Use In Canada, which related to efforts to stop E. coli 0157:H7 before it can hit the produce fields. Read it here.
Also on January 11, 2007, we published Pundit’s Mailbag — Arguing For Irradiation, which included a letter from Mark Beeler of Watsonville Produce pointing out that we need a “kill step” if the goal is to stop outbreaks. You can find it here.
IMPLICATIONS OF THE CRISIS
In addition, the Pundit has done several smaller pieces that touched on various aspects of this crisis. On September 18, 2006, we raised the issue of whether food safety outbreaks such as this raise long-term issues about the viability of cartoon character tie-ins in Who Has Marketing Fortitude? You can read about it here. Also on September 18, 2006, we wrote Fit To Be Tied, which dealt with the way some companies have little sense of decency when it comes to marketing their products in the midst of a crisis. You can read this one right here.
Additionally on September 18, 2006, our Pundit’s Mailbag focused on letters received by United President/CEO Tom Stenzel and incoming Chairman Emanuel Lazopoulos of Del Monte Fresh, which dealt with the confluence of United’s Board Meeting and the spinach crisis as well as issues of industry leadership. You can find this one here.
On September 19, 2006, we noted that there might be a Greenhouse Opportunity in all this. Read this here. Also on September 19, 2006, we noted that, though fruits and vegetables are healthy, fresh produce is not necessarily the best choice for those with a compromised immune system. The piece is called Marketing Nightmare and you can find it right here.
On September 21, 2006, we did a piece called Wal-Mart Deli/Bakery Has Crisis Of Its Own that draws a link between the difficulty of preventing a Salmonella outbreak at one store with the difficulty of preventing an E. coli outbreak on an industry-wide basis. You can read this piece here.
On September 25, 2006, the Pundit noted Another Oddity In Spinach Crisis and raised the question whether some or all of the product being marketed as conventional might not be organic. Read it right here. Also on September 25, 2006, we ran a Pundit’s Mailbag which dealt both with the utility of loyalty card programs and with the nature of large, multi-line fresh-cut packing facilities. You can read this one right here. Also we did a short piece on what change was actually necessary if consumers were to be reassured of the safety of spinach. Read it here.
On September 26, 2006, we discussed the issue of recalls and how insurance plays into that. You can read this here. Also had an unrelated piece on Wegmans that included a video clip on how consumer media is dealing with the reintroduction of spinach. You can catch it here.
Additionally on September 26, 2006, we ran a Pundit’s Mailbag exploring the causes of the outbreak. You can read this piece here.
September 27, 2006, we focused on a piece in the Washington Post that helps us in Putting Things In Perspective. How does the Spinach/E. coli outbreak relate to the total numbers that get sick and die each year from foodborne illness? You can read it right here.
On September 28, 2006, we published a terrific Pundit’s Mailbag exploring the frustration the buy side felt in dealing with the spinach/E. coli situation. Read it here.
October 2, 2006, we had some Questions For Western Growers that asked how far the WGA was willing to go to make sure foreign growers meet the same standards as Salinas area farmers. Read about it here. We also asked How Committed Is The Produce Industry To Broad/National Food Safety Program. You can read the piece here.
In addition, on October 2, we ran Pundit’s Mailbag: Another Despicable Marketing Attempt that pointed out how a seed company was taking advantage of the situation and, possibly, leading to harm, by pushing its products. Read about it here.
On October 4, 2006, we ran a piece entitled Primary And Secondary Suppliers, which details how this food safety crisis has to impact retail vendor selection. Catch it right here. Also on October 4, 2006, we discussed how to help innocent spinach farmers who were victimized by this crisis in Everyone Needs to Do A Little Bit. The Pundit pledged to do its own bit. Read it right here.
October 5, 2006, we ran a piece focused on another outbreak of foodborne illness — in this case, botulism in carrot juice. The focus, however, was on the necessity to change attitudes as the produce industry becomes less a packing industry and more a processing industry. It is called Botulism III, and you can read it here.
On October 6, 2006 we pointed out The Botulism And E. coli Connection where we explained that our focus on pathogens at the product source, though important, is insufficient. Read it here. Also on October 6, 2006 we ran Pundit’s Mailbag: What Are The feds Up To? This answered a reader’s letter inquiring as to whether the FBI being in Salinas implied industry members weren’t cooperating. You can find this item here.
Food Safety, Good Delivery And Temperature Monitoring was published on October 10, 2006, and pointed out that old temperature recording devices have to be superseded by new temperature monitoring technology on all trucking of vulnerable products. Catch the piece here.
On October 11, 2006, we ran a piece that grew out of the decision of Publix to stop giving some perishables away because of food safety concerns it is called Culture of Risk-Aversion Hurts the Poor and you can read it here.
Nunes Tests Negative on October 13, 2006, raises the question of the appropriateness of recalls for generic E. coli in irrigation water. Read it here. Also on October 13, 2006, we ran Lobbying For Better Refrigeration, which pointed out that consumers are not given the tools needed to be vigilant at home. Find it here.
In addition on October 13, 2006, we published PulseNet Redux pointing out, once again, that this outbreak could have been caught earlier had the government not taken off for the weekend. Read it here. Also on October 13, 2006 we ran a Pundit’s Mailbag — Population Inured by Recalls? This piece raised the possibility that frequent recalls, with no subsequent illness, would rebound to the benefit of the trade. Please read it here.
On October 17, 2006, we ran Will Hydroponics Be A Solution To Spinach Woes? and analyzed the potential of hydroponics to head off future outbreaks. Read it here.
October 18, 2006, we had a Pundit’s Mailbag — Thermometers In Refrigerators, in which the Pundit was challenged for urging excessive governmental interference. You can find it right here.
October 20, 2006, we had two pieces related to the Nunes recall on Green Leaf lettuce. First, in a piece entitled Closure For Nunes, we detailed that the product had been declared clean by the FDA. You can read it here. Second, we had a piece entitled Partial Closure In Mexico, which explained that Mexico had decided to allow the import of U.S. lettuce but not spinach. You can find the piece right here.
On November 1, 2006, we ran a piece entitled Canada Opens Door To More, But Not All, US Spinach. You can read it right here. Also on November 1, 2006, we had an interesting Pundit’s Mailbag — The Acceptance Of Risk, which included a fascinating comparison on how the FAA views safety in airlines as opposed to the FDA looking at food. Read it here.
November 3, 2006, we published Food Safety And Why The Problem Will Only Get Worse…Or Won’t, which dealt with the way enhanced detection technology is likely to increase reports of foodborne illness — even as the food supply gets safer. Read it here. Also on November 3, 2006 we ran a brief note entitled Broader Concern For Food Safety, which linked to an FDA-produced slide show on the spinach outbreak as part of a broader food safety perspective. You can catch it right here.
Additionally on November 3, 2006, we ran Pundit’s Mailbag — CPMA’s President Sets The Record Straight, in which CPMA’s President Dan Dempster addressed the importance of communication between the public health authorities in the U.S. and in Canada. Find the piece right here.
On November 7, 2006, we ran FDA Focuses On Retail And Foodservice Food Safety which gave news of an FDA satellite broadcast for retailers and foodservice operators and addressed the general issue of buyers and food safety. Read it here. Also on November 7, 2006, we ran an Erratum correcting some calculations in our previous piece Food Safety And Why The Problem Will Only Get Worse…Or Won’t. You can find it right here.
November 9, 2006, we published Pundit’s Pulse of the Industry: Bigg’s Marvin Lyons, the first of a series of retail interviews looking at how sales at retail are going post-spinach crisis. Read it here. Also on November 9, 2006, we ran Pundit’s Mailbag — Sticking Up for the Pundit, in which an industry leader wrote in to support the work of the Pundit. You can find the piece here.
On November 10, 2006, we highlighted a quick directory of Farm-to-Fork Food Safety Resources. Catch it here.
November 21, 2006 we ran Capitol Report: United Helps Coordinate ‘Spinach Fest’ which focused on an event in D.C. reintroducing spinach to consumers. Read it here. Also on November 21, 2006 we published Pundit’s Mailbag — Woeful Costco Experience, which detailed the difficulty of getting accurate information down to store level personnel. You can find the piece here.
On November 22, 2006 we published Pundit’s Mailbag — Thankfulness in which Harris Cutler of Race-West Company offered a common sense perspective on food safety. Read it here.
November 29, 2006 featured Pundit’s Mailbag — Buyers Lecturing Again, which reminded us that retailers weren’t always focused on consumers or safety in the early years of the national fresh-cut industry. You can find the piece right here.
On November 30, 2006, we published What’s In A Name, recognizing the birth date of Theodor Escherich, for whom the genus Escherichia of which Escherichia coli is the most common member. Read it here.
Also on November 30, 2006, we published Pundit’s Mailbag — Pundit Logic On Food Safety Regulations, which dealt with a letter from Al Zuckerman of ProMark Group trying to find a reasonable proposal on food safety. Catch it here.
On December 1, 2006, we ran Speaking Of Produce Washes, which revealed a study that found that washes and water are all about the same. Read it here.
On January 3, 2007, we published Crisis Management, which suggests that simply having a spokesperson is not sufficient, you need people who actually know to speak for you in a crisis. Read it here.
Also on January 3, 2007, we ran Pundit’s Mailbag — Taco Bell & FDA’s Rush To Judgment, in which Cary Rubin of Rubin Brothers Produce Corp. objected to businesses and government when they speak out based on supposition. Catch it right here.
On January 5, 2007, we published From a Victim’s Perspective, and pointed out how continued consumer concern over produce may impact sales. Read the article here. Also on January 5, 2007, we ran Food Safety Culture, which provided a link to a food safety video that included a terrific presentation by Frank Yiannas, Director of Safety & Health for Walt Disney World. The presentation focused on building a food safety culture. You can find the piece right here.
In addition to our own work, there are many excellent sources of information out there that do not require payment, membership or registration. Three of the Pundit’s favorites:
The U.S. Food and Drug Administration has offered daily information on the crisis right here.
The Centers for Disease Control and Prevention deal with the outbreak here.
The Produce Marketing Association has maintained an excellent industry resource on the subject right here.
Please feel free to write or call if you are looking for specific information not included here. Note that many of the articles and websites have links to other resources.
Several additional pieces appear in the Perishable Pundit today, and they will be incorporated into future iterations of this Spinach Crisis Summary.