Over the years, we’ve been pleased to engage in many conversations with the head of the pan-European produce association:
Ten Years, Ten Lessons Learned: A Look At The European Produce Industry Through The Eyes Of Freshfel’s Philippe Binard
Pan-European School Fruit Scheme
In Defense Of Cosmetically Challenged Produce
When we spoke with Philippe on the occasion of the 10th anniversary of Freshfel back in 2012, it was interesting to review the Top Ten list of issues:
1. Evolution of consumption
2. Development of exports
3. Imports into Europe
4. Development of foodservice and convenience and innovation
5. Food scares
6. Evolution between global and local
9. Communication and promotion, and
10.Children and the consumers of tomorrow, a positive way to conclude.
The reference to “food scares” focused on a European E.coli 0104:H4 outbreak, and none of the concerns, in Europe, America or elsewhere dealt with the kinds of concerns the world is going through now.
We thought we would try to get an understanding of what Europe and the European produce industry is experiencing. Pundit Investigator and Special Projects Editor Mira Slott spoke with Philippe Binard to get posted:
Q: I hope you and everyone at Freshfel are safe and healthy and holding up OK during this global health crisis. I miss when we were all together in London. We were honored to have Freshfel Europe hold its 2019 Annual Event in connection with The London Produce Show and Conference last June. The event — themed “Building opportunities for fresh produce in an unpredictable business environment” — brought many leading produce industry executives from across the continent of Europe to London. It’s a different world since then.
A: Thank you very much for your well wishes. Yes, we are all well, but we have been confined. This is a very strange situation, and when we go on the business side, we are seeing the sector is difficult to operate and to provide food to the people.
We are concerned what will be after the crisis. A lot of companies completely stopped operating, and their future is uncertain. The way we do business will be completely different. I think there are a lot of questions of how long this will last and what will be the economic and social consequences, once we will be over this virus for this moment…. it also is not certain this virus won’t come back.
Q: The breadth and severity of the COVID-19 outbreak, how long it will last, and the possibilities of a resurgence, a second wave or even third wave … are paramount concerns here too, as the global pandemic blankets the U.S.
When the outbreak began in Europe, Freshfel formed a COVID-19 Response Team to ensure a continuous supply of healthy, safe and high quality fresh fruit and vegetables throughout Europe and beyond over the duration of the outbreak. I understand a liason was formed with Freshfel Europe members and the European Commission and other authorities, such as the Organisation for Economic Co-operation and Development (OECD), working daily in close coordination.
What do you think the biggest impacts and implications will be the European produce industry? Could you provide any information our North American produce executives will need to know?
A: Risks for products to be successfully exported globally are increasing, and importers here in Europe are experiencing high uncertainty in terms of delivery and time required for documentation checks. This increasing burden on the supply chain is set to have considerable ramifications for the long-term stability of the sector.
For me, I think we don’t have to start with the global trade side… we have to start with the production side and the impacts there.
The situation is the same for everyone. Whether you are an exporter or an importer in the U.S., you will be suffering the same kinds of uncertainties… where to get sourcing, how to get to a market that doesn’t have any disturbances. Today, this is a major global crisis.
If you’re on the supply side, you need to make sure you can find logistics solutions — I don’t know about the trade between U.S., Mexico and Canada, but in Europe there are many changes regarding ground transportation. The essential goods continue to move, but when non-essential goods don’t move — let’s say in a production region — the trucks that arrive with the fruits and vegetables sometimes come back empty, which increases the costs of transportation.
Based on the European example, I can tell you the cost of transportation of fruits and vegetables probably has increased by 25 to 30 percent because of these logistical issues, because of social distancing in the loading and unloading, which means less efficiency. When a truck is locked down longer, sometimes there are premiums of safety, sometimes there are still delays at the borders, all of that is increasing the costs of land transportation.
If you go to long distances, there are other problems. First, to make sure you can get the containers and the vessels. And then actually in the case of the U.S., for example, if you have a lot of product coming from Central America, or going to Central America, it goes by boat, and you don’t necessarily have time for the journey. Maybe the place of destination is asking to wait for the quarantine to be ended, which means 14 days, and if you only have 4 or 5 days for a highly perishable item, you also lose efficiencies waiting for product to be discharged.
Then you have all the questions of availability of the people in the port from the private sector. It’s an important sector, because you need all the mechanization for loading and unloading the vessel. And then, from the public side with the people in customs, you have people unable to get to their office, and difficulty to get the document in time, and to get the company to ship the paper. Sometimes there is no flexibility at the place of destination in meeting the export country’s requirements, and having all of the original documents. So, for international trade, you have a lot of problems.
But then you also have to look at what’s happening with the domestic supply. What are the additional problems caused by all the new rules to be in compliance? In terms of the seasonal worker, can they come, can they not come; where do they have accommodation; is it the same rules or do they need more social distancing? What about transferring the workers from their place of accommodation?
So, there are many additional costs. Will they be compensated by the increased price, or will it go back to the chain? And there are further costs throughout the distribution chain, related to social distancing, expanded safety measures... I think it could work maybe a month or two months, but if all these other costs are permanent, it could cause a lot of difficulty in their chain on financial sustainability.
Q: Your COVID-19 Crisis Management Strategy focuses on three critical action points:
First, intelligence gathering and exchange, where Freshfel collects and analyzes the immediate short and long-term consequences of COVID-19 and provides members and authorities with daily information updates.
Second, close engagement with regulators to communicate key sector issues and assist in finding practical solutions for supply chain operations.
And third, communication and awareness raising through traditional press and social media channels.
On the first action point, what has your data collection and analyses determined? What are your short and long-term projections of the pandemic impacts on the sector?
A: On the virus, I just know we are asked to provide a lot of help to contain the virus, but I’m not an ideologue… even I don’t know how long I will have to stay confined. I know for the time being in Brussels, Belgium, it’s up to the 3rd of May. I know France has announced it’s at least up to the 11th of May. But then you have some countries that are starting to reactivate some of the non-essential activity.
In Spain and Austria and in Sweden, there are different approaches. In the U.S. also, depending on which state you are in, the approaches are different. But they are not always competent, because these are very difficult elements to calculate and balance the economic activity and the health aspects. I think even the heads of states have a lot of difficulty to know exactly what they should do because it’s a completely unknown territory.
Q: Have you been able to assess what countries and products are best positioned to weather the storm? Supply and demand issues... what products are in most need from North American exporters, what products are in most demand from Europe for North American importers? What items are currently selling and not selling, and why? What are your expectations going forward with harvesting/production schedules, etc.?
A: For Europe, I think the exports from the U.S. are minimal. There are a few grapefruits from Florida; there are few apples from the East Coast; some sweet potatoes, there are a few more products, but there is not a lot of business both ways. I also think most of our products, in any case, are forbidden to be exported to the United States because of APHIS legislation.
There’s not a lot of movement between the U.S. and European countries. Some of the volumes are going through airfreight, which are suspended for the moment, which is one additional difficulty on top of that. The EU was exporting oranges and kiwi fruit to the U.S. market. But I think today, the main problem we have in Europe is to secure the seasonal worker, which is not yet fully settled. But it is improving, and that’s really important.
We are now committed to the season of strawberries and asparagus, and, as there was a lack of resources in the offshore, some of the product has been lost. But we will soon be entering into the field of the vegetable season, which will also require a lot of resources. And then, we’ll be moving into the summer crop, peaches, nectarines and apricots. That will be followed by apples, pears, citrus, grapefruit, kiwi, etc.
So, we need to be sure the seasonal workers are in the places where they need to be, so that we minimize the losses and the shops remain with enough supply.
Don’t forget that today in Europe — I don’t know if this is the same in the U.S. — all that is foodservice in Europe has been stopped.
Q: Yes, in the U.S., with restaurants shut down, the foodservice side has been decimated, and companies are quickly trying to reinvent themselves, forming new partnerships with retailers, etc.
A: Exactly the same has happened in Europe. No more food in transport to restaurants, to canteens, no more food in all these places where there is consumption away from home. That means that supermarkets are almost the only place where you can buy food.
I know, it’s too early to know exactly the figures, but probably in supermarkets there has been an increase in sales of 25 to 30 percent, which could include what some of the countries were doing before foodservice stopped, but in some of the countries, the numbers are much, much more.
There is a loss in the sector, affecting some of the consumers. What works better is probably some of the products that are more mechanized versus those products that require a lot of human factors, but I think for the moment, there is nothing really missing on the shelf.
We certainly have to look for the long term and prepare for the moment to secure the good quality. Over the medium term, we will have to address the impact of the social distancing, the influence on the auction, on the way to the auction, on the packers, on the picking. When you need 1.5 to 2 meters distance between the different people, it’s impacting the efficiency.
Q: What advice or strategies can you share with North American produce executives. Are there lessons we can learn from what’s happened in countries in Europe that have faced the crisis earlier than us?
A: What is clear is this crisis is unprecedented. When we look at the produce sector, it has been collectively fast in repositioning itself to channel the product to the main supermarket chains. There have been no shortages so far, but that doesn’t mean there’s no complexities behind that; complexities in organization, complexities in the overall management of the companies when you have a lot of people sick, when not as many people can come to work, influencing how the business operates.
We’ve had a major challenge in Europe with transportation, with European labor equality between the different member states of the EU, requiring a quick fix solution on the one hand to be sure you can control the movement of people from Italy to Austria, for instance, or from Spain to France. At the same time, we have to limit the delays at the borders for the goods. That was one of the major first issues.
The second issue was seasonal workers, which is vastly solved but not yet fully. This is a critical point — moving seasonal workers from one place to another and guaranteeing the system’s safety.
This is a global debate that is now going on in the U.S. How do you ensure you have enough equipment and masks if you need those for protection of the seasonal workers? How do you make sure you have enough testing? It is easier to put people back to work if you know they are not infected. Testing is an important element.
On the marketing side, there are completely different ways to consider or not consider making promotions in this particular moment. Campaigns had to be entirely rethought or cancelled. You must have flexibility to change events and points of sale.
Should there be any compensation to businesses, and how do you calculate this indemnity? There are many questions that are coming.
We’ve had some social data on how to make sure consumers are not afraid to buy product. They are concerned about contamination with food. We’ve had to provide documents to explain what is needed in terms of hygiene, in terms of packaging, in terms of consumer choice between packed and unpacked product.
Q: In the U.S., since the coronavirus hit, we’re finding a trend is emerging of consumers buying more packaged produce.
A: There hasn’t really been a tendency there for contamination, but as long as people are following the safety measures to prevent the spread of the virus, it is not an issue. Sometimes it’s important to talk to consumers and explain to them the situation. They may not understand about food safety, and the change in promotions, and the difficulties with logistics and trading conditions, and about contracts that cannot be falling under the same long-term conditions that you had before.
I’m not sure what the rules are in U.S supermarkets about social distancing, but normally in Europe, the rule in the shop is not more than one person per every 1.0 or 1.5 meters. So that is limiting the amount of people who have access to the premises, which means there are people having to wait outside when the weather is problematic.
Q: Have you been doing new consumer communication campaigns? Are you finding misinformation out there about the coronavirus that needs to be clarified?
A: There are two things: What we have done as an organization is very limited activities, just on social media, to reconfirm when people are at home, the benefits of having a healthy diet and eating fruits and vegetables, and delineating specific benefits of the different fruits and vegetables. But we have to be very careful not to be perceived as making links between eating produce and strengthening immunity against the virus, because there are no links or studies on that.
The second thing: We must make sure information is available from the government authorities. The information must be focused on answering questions from the consumer about the safety of the product, what to buy and what to do with the product. There are a number of frequently asked questions on a national level, so we have prepared answers that we have made available to the sector to help in the messaging if questions come up in social media or in other ways.
From our side, what we have tried to do is have good follow-up on all the day-to-day changes, and different activities taken by the authorities to assist with the sector. There are a lot of decisions being made so we try to monitor and influence the solutions, and to be up to date with the changing environment.
Q: How is Freshfel working with the EU, global health organizations, etc. You talk about the goal of having EU-wide solutions. How complicated is that, since member states have different interests and different problems? What are the best solutions?
A: It is important to have a European-wide approach — in terms of transportation, in terms of making sure you don’t create a distortion. Of course, some of the solution is to create a concrete local level approach. It’s also a matter of our constitution in Europe, where there are a number of matters within the European continent, and then there are matters of health, which are more national.
But it’s not because of the national matters of health that there is no need to have coordination between the countries. With the issue of transport, it is very important to have a European-wide approach. It’s not easy sometimes, but in general there have been a lot of decisions that have been considered, and some of them are in the scope of finding a European environment to deal with the crisis, which is very important.
Q: It’s been an issue in the U.S. where this highly transmittable virus spreads across state borders, and our society is so interconnected... There are reports, for instance here, here and here, of states bidding against each other and the federal government for medical equipment, masks, etc., driving up prices...
A: Seeing things from the outside, it seems your President was slow to take action. I think sometimes it’s very difficult, and also here… this balance between health and the economy, and where do you put the cursor. There are many countries that prefer to continue a certain level of activity, like in Germany or some Scandinavian countries, where in others there’s almost a complete lockdown or closing of activity. Who is right? That will be something we will have to assess.
Q: The approach one takes is dependent in many ways on the country’s circumstances in terms of trying to contain and to mitigate, and what’s acceptable to the culture. When it’s all over and we do a retrospective analysis, we can see how different countries implemented different strategies at different stages of their epidemic, and which ones seemed to work the best...
A: My wish is we could come back as soon as possible because all the measures cost a lot of money, but that is very difficult. I think we are fortunate to be in a relatively good situation because we can still sell.
There was a lot of activity we completely stopped, if you look at the industries and products — the airlines, the restaurant scene, and so on — it’s been problematic, and this is why we need to come back as soon as possible, but it won’t be easy.
It strikes us that it is the very capabilities of technology today that makes this pandemic difficult and gives us so many options. More than 100 years ago, during the 1918 Pandemic (H1N1 virus), we had no vaccines, no antibiotics, and we did not reduce morbidity with isolation, quarantine, disinfectants, personal hygiene and the minimizing of public gatherings.
But people had to work or they would be homeless and starve. In the end, 50 million people around the world died, while a third of the world’s population, about 500 million people, became infected.
Now, our incredibly affluent society, combined our technological advancement, gives us this liberty to decide how to deal with the coronavirus outbreak.
The questions being posed go well beyond medical questions. It is clear that the data points to a condition far more dangerous to older people than younger people. Does this give us, as a society, the right to restrict younger people from going to school, working and looking to make something of themselves in order to protect older people?
Produce trade associations can, of course, help with encouraging governmental regulations that won’t inhibit the growth and distribution of fresh produce. They can also defend those companies within the industry, most obviously foodservice, that have been damaged by government policy approaches. But the fundamental challenges posed by this pandemic are mostly great philosophical issues about who runs society, what right we have to impose burdens on one another and what type of society we hope to become. The produce industry can be just one voice in that very difficult discussion.
Many thanks to Philippe Binard and Freshfel for updating us on the European situation. We wish our friends in Europe health and prosperity.
We’ve been fortunate to have Tony Reynolds on stage at The New York Produce Show and Conference:
An Industry Transformed: At The New York Produce Show And Conference, Global Trade Symposium Speaker Tony Reynolds To Illuminate The Rapid Growth Of Unrecognized Opportunities For The Produce Trade In The UK Foodservice Sector
He has also served on our Thought Leader panels at both The London Produce Show and Conference and The New York Produce Show and Conference:
British And International ‘Thought Leaders’ Panel Announced For The London Produce Show And Conference
Industry Leaders To Share Knowledge And Ideas At New York Produce Show Thought-Leadership Panel Keynote Breakfast
Every year, Reynolds has organized and sponsored an incredible tour showcasing the produce scene at London restaurants:
Reynolds plans top-of-the-line Foodservice Tour for The London Produce Show
So we’ve engaged with Reynolds for a long time. But, like most of the industry, the company has never experienced times like these. We asked Pundit Investigator and Special Projects Editor Mira Slott to speak with Tony and update us on the situation in the UK.
Waltham Cross, Herts, UK
Q: Could you start by contextualizing your business framework to fully grasp what you’ve been experiencing since the coronavirus outbreak, and what’s been happening in the UK?
A: For us, the official day of the lockdown, which affected most of our customers, was the 20th of March. So, as of the 20th of March, I had a £250 million business, I had 14 depots around the UK. We were employing 1,300 people. We made around 3,500 deliveries a day with a fleet of 300 lorries (trucks).
Our customers were typically hotels, restaurants, airlines, and special events. We’re just coming into the UK events season. So, there would be the Chelsea Flower Show, the Wimbledon tennis tournament, the Royal Ascot horse racing event... These are all big customers of ours that we supply every year. So, from the 20th of March on through the end of July is a really, really busy time for us, because it’s not just our existing work, but all the other things we do that are very special each calendar year.
Q: Oh, my. Your business livelihood involves every place that’s shutting down...
A: Yes. That was 95 percent of our customers, who were forced to close their doors. It’s terribly sad. But you can imagine the knock-on effect for us was we had quite a lot of empty areas of our business.
Q: How have you been coping?
A: Since then, we’ve worked really hard to use the Government schemes to follow as many stars as possible. There’s a special amount you can pay employees. You can pay 80 percent of your staff up to 95 percent of their salary, a maximum of £2,500 per month. So, we were very fortunate.
We had a lot of staff that benefited from that. Most importantly, we made sure they could isolate and be with their families, and not stand the chance of getting infected with the virus. Do you have something similar to that in New York, and the U.S.?
Q: State and Federal responses are different, and Federal financial stimulus/relief packages are coming in stages... it’s a complicated, and controversial process, for sure. But the U.S. foodservice side of the business has been hit hardest, with a rippling effect through the supply chain, similar in many ways to what you describe in the UK.
A: The long and short of that was we had a supply chain that was very sophisticated, bringing in product not just from the UK but from around the world, and that just shut down overnight. We already had avocados on their way from Peru, bananas on their way from the Dominican Republic, lemons from Spain, lettuce from Italy... you just go around the whole world and there was product on the way to us from that point.
We’ve had to work enormously hard to divert that product to other areas wherever we could.
The strategy we’ve taken, since the 20th of March — we just had the four-week anniversary — so in that period, we’ve really been able to stabilize the business, work out what we needed to do with people and infrastructure, and we’re very much there now.
And the great thing is, we’re still open, we’re still operating a business that has got flexibility to do incredible things, and it’s all safe. We’ve made a lot of effort to ensure the standards are there, etc.
Q: Could you talk more about your strategies to stabilize the business, and ways you’ve capitalized on your flexibility?
A: We used the government job scheme that was a very important part of our initial strategy. We have basically calmed the overhead massively. Where we had 14 depots around the UK, we closed one in Manchester last week, so we’ve managed to take probably half our depots and cut their usage for the moment because we just don’t have the volume going through.
We’ve taken a lot of trucks off the road, and we’ve done lots of things to stop cash going out the door. Really just suspending payments to landlords done through the legal process — nothing illicit. We’ve used every possible avenue, everything has been micro-managed so we can conserve cash, and we’ve got the right platform to restart this business, which in a lot of ways, will be a lot harder than it was to reduce it down, because of all the instruction of the UK government to close all hotels, restaurants, bars, pubs you name it.
But we’re stable. For us, that’s an important part now. The thing now is for us to plan for the future. And we’re planning harder than we’ve ever done to find work in the meantime.
Q: In the U.S., companies heavily invested in the foodservice industry have been forced to reinvent themselves for survival...[Baldor, Babe Farms, Markon, Fresh Origins, Weis-Buy Farms].
A: We’ve started these home deliveries schemes, delivering to consumers because the UK retailers have struggled to meet the demands of delivering products to people’s homes.
Q: That’s interesting... is it a supermarket logistics issue with the barrage of new home delivery orders?
A: Their systems haven’t been capable of fulfilling the influx of online orders and delivery requests from those consumers who don’t go out because of fear of catching the coronavirus. They basically want to buy as much product online as possible and have it delivered to their front door. The demand has been so great that the traditional channels of doing that haven’t been very successful.
So, companies like Reynolds have been able to launch home delivery schemes to local areas and local neighborhoods, and that’s been going really, really well. So, we’ve been doing that to complement some of the other business we currently do, which is still to hospitals, care homes… and some schools have stayed open because they are for critical workers’ children, when the doctors and nurses have to go to the hospital. Their children are able to go to a school and be looked after because they’ve got no one else to keep them at home with. So, we’ve been working out that.
So, the only new thing that really has come out of this has been our own home delivery service that’s been very successful. We’re proud of that. And the nice thing is that it is something we will continue to do when we come out of this. It’s definitely got mileage to do that.
Q: That’s exciting. Did you do any home delivery before or was this a whole new venture?
A: No. This was entirely new for us. Literally, we created this home delivery service in 24 hours.
Q: It sounds like a similar story to what Baldor did here, starting in New York City, and gradually expanding its reach from there...
A: Yes, same thing. We built this website called Reynolds At Home. Basically, the consumer can go on the website and order these different boxes. They’re all pre-done. We’ve got one called the refrigerator, which has all your basic dairy components — milk, cheese, butter — and we have a fruit box and veg box.
We’ve now done a pizza box, so we’ve got our own pizza catalogue of bases and sauces and fresh ingredients. We’ve got a burger box, and a barbeque box we do for our meat company; with the weather in the UK improving, people are doing more barbeques. So, we’ve done that really well and really quickly, and that’s been great — a real benefit from other ways that have been a complete disaster.
Q: Essentially, you came up with a new business for your company. I see your vegetable boxes and fruit boxes are filled with an impressive range of different items.
[On the website, it says a typical family veg box for £15.99 contains a selection of produce from potatoes, cabbage, onions, mushrooms, cucumber, tomatoes, carrots, parsnips, lettuce, kohlrabi, broccoli, peppers, butternut squash, chilies, sweet potato, radishes, Jerusalem artichokes, aubergine, asparagus, beans, mango tout, sugar snaps and corn.
Vegetable Box £9.99 to £15.99
Understandably, there is a qualifier: “Whilst we endeavor to provide a selection of vegetables in line with the description, the dynamic availability of produce may mean that we need to substitute.” The typical family fruit box for £19.99 is just as bountiful: a selection from melon, mango, lemons, grapefruit, figs, apples, oranges, easy peelers, pears, limes, pineapple, pomegranate, coconuts, avocado, plums, papaya, berries, bananas, kiwi and grapes.]
Fruit Box £12.99 to £19.99
I wish you delivered to my neighborhood! How does it work with logistics to get product to people’s homes? Is it complicated? Have you received good consumer feedback?
A: It works really well. We’ve hand-selected a team of drivers. They’ve all been picked because they’ve got good personalities. We’ve been getting some fantastic feedback on social media, Twitter, Facebook, and Instagram, on how nice our product is, how good it is, how nice our staff are.
You need these little things to keep reminding you it’s worth it. That’s been a great benefit, just helping people out, who are at home and scared, but also to our own team to show that we’re doing some good things, and people are enjoying. For us, it’s not been easy, but it’s a good thing to do, and we already have the assets, our warehouse, and our drivers and our trucks.
Q: While you launched the program in 24 hours, it sounds like you rolled out the program smartly. I suppose there wasn’t much of a window for piloting...
A: We’ve done it in a disciplined way and controlled the cost, so it hasn’t gotten out of control. We opened it up on a week-to-week basis to different regions, different areas. We tried to control it, just to make sure we get it vetted in properly. So, it’s sustainable, and it’s scalable and something we can build on. That’s the most important because it’s something we want to continue doing, once we get this coronavirus sorted out.
Our retailers have struggled. They got hit with so much demand, not just at the local stores, but the ones doing home deliveries. They couldn’t cope with it. They would tell people we can’t take your online delivery order now. A lot of people got really scared that they couldn’t get a delivery.
Some of the others said, “Look we’re doing this, but it’s not making us any money, so it’s not something we’re really going to invest it.”
They haven’t been able to do a good job of it either. That opened opportunity for companies like us to take advantage of that.
Q: For perspective, what was the situation with home delivery in the UK before COVID-19?
A: Some of our retailers like Tesco have been doing home delivery long before coronavirus. That’s probably the largest operator. And then you’ve got specialist companies, like Ocado, that have been doing it awhile with quite different systems. They have the robotics that take the orders, and then they deliver it, but they’ve all struggled to meet the demands. It’s been quite interesting to watch it all play out.
Q: In the U.S., foodservice suppliers and distributors have formed new collaborations with retailers, since they’ve been designated as essential businesses and allowed to stay open. I’m not sure how the UK system works in that regard... Have you found opportunities there?
A: We’re not seeing that type of collaboration here. Our retail supply chains are very sophisticated as are foodservice supply chains. There are some problems there, particularly for UK crops for the moment, because there are not enough workers to cut asparagus, or pick strawberries, or cut the lettuce. We’re just going into our UK season, and that’s going to be a problem because there isn’t the workforce there to help.
We’re also experiencing problems getting products from other parts of Europe that traditionally come from trucks. The costs of getting produce to the UK has gone up three-fold. The drivers are not wanting to take the risk of leaving their families and getting stranded somewhere else in Europe and the added difficulties of getting through the route.
The retail supply chain is one that operates very much like before the lockdown. So, for us the challenge is with a lot of our growers. They say, Tony, what do you need me to grow, and I say, I don’t know. I haven’t got an answer to that. It’s a bit chicken-and-egg. I can’t tell you what to grow for me because I don’t know what customers I’ve got.
The other problem is getting money out of our customers. Some of our customers are just not paying us. They haven’t got any money. Some just don’t have any cash. In some situations, those businesses could go bust, and I could take a knock for that.
Luckily, we have a thing here called credit insurance, so basically when customers don’t pay me and go out of business, I’ve got that covered through insurance, most of it anyway.
Q: Well, that’s a bit of a help, at least in the short term...
A: Yeah, but that costs me a lot of money. There’s a big premium. But that credit insurance probably won’t even be around anymore, as it was after this because I don’t think anyone can take the risk on the credit that was originally in the restaurant or the eating-out supply chain.
So, that’s another thing at the moment — getting money out of our customers. A lot of our customers have been fantastic and have paid their bills, and that’s great, but there are some that have refused to pay.
It will be interesting to see how some of these businesses we’ve supplied for years and years will be able to survive. That’s another big uncertainty for us.
I suppose the main thing for us now is, how do we grow the business, once we get the chance to start supplying some more customers. And a lot of that depends on when the UK government allows restrictions to lift.
From the latest media updates, it seems like when people are allowed to go back out into their normal world, that won’t happen overnight. I think the first thing they’ll do is open up some schools, and they’ll open up some businesses that have been closed. Unfortunately for us, it seems like restaurants, bars and pubs and places of mass gatherings like in stadiums… that’s not going to be the first thing. It sounds like it will be one of the last things to open.
This is all hypothetical, but if at a certain point, the government will start to relax some of these restrictions and allow people to go to their local shop or garden center, or kids can go back to school, how long after that are we going to be allowed go to your local restaurant?
That could be another four weeks, another two months or more, we don’t know, so the uncertainty is a problem. But that doesn’t stop you from planning for the different scenarios.
If I’m honest, that’s what gets me out of bed now. What’s done is done. But I’m always looking at the front end for the opportunities. I’m looking at how our company can become better. Before coronavirus it wasn’t doing too bad, but I want it to become better.
We have to take something away from this now. We’ve got to be able to look back at this in three years’ time, in five years’ time, and say, you know what, that was a really tough time. Your world was falling apart around you, your business world, but God bless, our loved ones are still with us, and we did everything right in as much as protecting our workforce.
And when we got the chance to get going again, we did it better than ever, we learned during that time to really study the good things and the bad things about our business. That’s where I am and certainly the senior team. We’re getting out there each day and we’re thinking, “What can we do now while we’ve got the chance?”
It might be simple things like just looking at the flow of the warehouse every day. We’re a 24-hour business, so we never really get the chance to get a fresh look at the business. Now we do. Hey, if we do this, or we invest in this... we’re doing a lot of work with our programmers and developers, with our systems staff, it’s pretty much been given a detox. We’re clearing a lot of data, and things we hadn’t had time to do before.
Of course, you look at the sales book every day, and that will just upset you, but when sales come back, you’ll be in a better position because of the things you’re doing now. And that is what excites me at the moment. We’re all in the same boat; it’s a really, really difficult time for anybody and any business. But it’s the companies preparing for the future and getting out in front of this… those are the ones that will be able to gain and be successful again. And that’s very much what we want Reynolds to be doing.
Q: There’s much discussion in the U.S. about how the coronavirus may forever change consumer behavior, and what will be considered the new “normal.” Do you think this could apply to how consumers shop for groceries?
A: I know from my own mom and dad… they’re both in their 80’s, both are ok, but they haven’t gone out of the house for six weeks. They’ve had time to get on the computer and iPad now, and they’re actually confident going online and using the online shop. Whereas before this, they would have driven to their local supermarket. Now they’re thinking this is much easier, I don’t have to worry about finding a car park, I don’t have to que up.
This will change people’s shopping habits; this will change a lot of things in society. We’ll never go back to what we were in the UK prior to 20th of March. People will have to adapt, and we’ve all got to step up.
As the leader of our business, our family company, without a doubt there are a lot of people very scared and nervous. It’s part of my job to give people something positive to think about. We’re strong, and we’ll get through this and, in fact, be better than we were before.
We have a Facebook group at the company, and every week I do a little video to try and put people at ease and always try to be positive and give people hope, so at least with all the other hardships going on, our company is still going to be there. And hopefully we can all look back on this in years to come and say we got through it.
Q: And has everyone been OK. Have you had people become sick with COVID-19?
A: It’s a difficult discussion. We’ve had people who have been sick. You get up in the morning, and, if you have certain symptoms, you wonder. I suffer with hay fever, with all the blossoms coming out and all the crops coming out… I’m sneezing and coughing a lot. I wonder, have I been coughing more than normal, is that coronavirus? Between my wife and me, every time we sneeze or cough, we keep asking, are you alright, are you alright?
The most important thing for our friends and colleagues is we’ve done everything we can to keep them safe and make sure we’re there for them. And even if they have a cough or flu, they have no worries of having to come into work.
It’s important everyone looks after themselves and does what the country is telling them to do, which is to stay at home and no essential travel and protect our health service so they can cope with the people that are ill.
Q: Are you finding in the UK, everyone is following social distancing and the other government recommendations?
A: For the most part, everybody is going through it as the routine now. It’s hard, especially if people don’t have a garden, or if a family is living in a small apartment, it must be very, very difficult. Most people are doing a good job of acting sensibly, giving people safe distance.
With online technology, we’re all using Zoom and Netflix, people have just sort of reinvented how they live and what they need to do to survive. No one wants this long term, but I think a lot of people have said let’s get through it and get on with it.
I get these jokes that come through on TikTok (a social media tool), and on comedy shows, and people sending funny sketches… we’re all doing it. Sometimes it’s good to have a laugh.
Q: Have you seen the amusing Les Misérables song adaptation performed by the British family in lockdown at home in Kent? That made me laugh.
A: Yes. There are some fantastic ones. There’s this amazing story about an ex-army captain, 99 years old, who decided to walk laps around his garden every day to raise money for the doctors and nurses, and it got co-opted in social media. Captain Tom Moore has raised 22 million pounds for the National Health Service. It’s a major feel-good story that has captivated the headlines and that old British spirit.
Q: You’re raising many people’s spirits as well.
A: It’s a very difficult time for everyone. The important thing is we remain respectful to everyone in our companies, and we do everything we can to support our growers, who are having a difficult time. At Reynolds, we’re trying to keep positive and find new ways to improve. I know we’ll get through this. Stay safe and well, and I look forward to seeing you at this year’s New York Produce Show!
When we planned to launch The London Produce Show and Conference more than 6 years ago, we made visits to the United Kingdom, and an old customer of the Pundit’s family business said we should talk to Tony Reynolds. So we took a train and went to visit.
Tony was a very successful foodservice distributor, and we somehow connected. Perhaps it was the pictures of the family legacy, at the old Ridley Road Market in Hackney or the Old Spitalfields Market in Whitechapel or the Spitalfields Market in Leyton. Maybe it was because when we spoke with Tony’s father, it felt like talking to the Pundit Dad and Grandfather, a proud legacy of achievement, but, even more so, pride in the accomplishments of Tony. After all, what was once a small wholesaler had grown into an enormous foodservice distribution company stretching across Britain.
It is, of course, a most difficult situation, as it is around the world. The short term loss of business due to the closing of restaurants and recreation is painful, but the uncertainty of the future makes all plans problematic. When will we reopen… what will be required in terms of social distancing in restaurants and facilities in the future… what will ultimately be the ‘new normal” and for how long?
Fortunately, Tony doesn’t have to imagine the future alone. Aside from a strong team, including his wife Sarah Reynolds, his sons, Tom and Nick, have also joined the business over the past few years. We don’t know what the future will bring, but it will be different from the past. And having the blessing of working with young people, the only ones who can ever really live in the future, is a powerful asset.
Tony has spoken at both The London Produce Show and Conference and The New York Produce Show and Conference for many years, and he has been interviewed in the pages of our publications for just as long. Despite the challenges and difficulties, in the years to come we’re betting on having Tony and his family recounting the story of how they made it through difficult times and recreated a business to serve a future they had never expected.
We’ve been working with John Giles for many years. He has produced many pieces, including these:
What Are We Looking Forward To In 2020?
Commentary: Post-Brexit, where does the UK turn next in trade talks?
A More Resilient Supply Chain in Europe
How The Pacific Alliance Could Work For UK
Predictions for Europe’s Fresh Produce Sector in 2018?
What Do British Producers Need to Think About Post-Brexit?
What Is Happening Beyond Brexit?
The Pacific Alliance: What is it all about?
Lessons from Peru and Chile Powerhouses
Where Next for British Produce Post-Brexit?
UK’s Organic Market Presents Opportunities For US
What Does Brexit Mean For The US Fruit Export Sector?
We thought we would reach out and ask what he saw in the COVID-19 situation in terms of the future for the UK produce industry. He was kind enough to lay out his thoughts:
Divisional Director of Agri Food
Nantwich, Cheshire, UK
COVID-19 has had a devastating impact in the UK with the current death toll reaching some 21,000 and the likelihood that we will remain in lock down for anywhere between the next 4 – 8 weeks.
The last few weeks have shown us both how fragile our fresh food supply chains are; but they have also shown us how resilient they can be too. While initial modest panic buying in the UK led to supermarket shelves being cleared of some products, most shops have ensured supplies are getting through. With some exceptions, consumers can get what they want — even if some products are being limited.
For agricultural or food business heavily reliant on supplying the foodservice sector — where demand all but disappeared overnight — things will very tough now. It reiterates the need for fruit and vegetable companies to have balance in terms of customers and not to put your eggs all in one basket.
At the same time, it could be that COVID-19 will see online shopping systems come in to their own, as consumers look at different ways of buying food and drink. The online channels have been in strong growth for the past two or three years, and COVID-19 is likely to accelerate this market further provided they can get to grips with delivery issues experienced during the early weeks of the pandemic.
A GLOBAL ISSUE
It is clear, however, that there’s not a food or farming business in the land, and potentially in the world, that won’t be impacted by COVID-19. In the UK, every business will have someone affected by the virus, and given there is already a shortage of labour, companies will undoubtedly find it difficult to find get the right staff in the right place at times.
Imports of fruit or other agri food products from the likes of Holland, Italy or Spain, might also become more difficult. In Spain, clients have told us of labour shortages in processing plants, as well as concerns that if trucks leave the country, drivers might not be allowed back in. Fruit suppliers from the Southern Hemisphere were amongst the first to suffer when fruit couldn’t be landed or distributed into China and other Southeast Asian markets, even when fruit was already en route.
The coming weeks, undoubtedly, are going to test the resilience of every business in the fresh food supply chain. Farmers, processors and food businesses can carry on for a short period, but if this goes on for many months there could be those who just can’t deal with the pressure.
For fresh food companies that have already had to deal with the global financial crisis of 2008, the fundamental change in the structure of the retail market — with discount retailers such as Aldi and Lidl taking market share from the big four supermarkets and the uncertainty of Brexit — this is another supply chain shock they must deal with. In the foodservice sector, the overall pressure in the High Street has seen the sector tighten and, as a result, we have already seen a number of high-profile casualties.
AND WHAT NOW FOR THE ‘B-‘ WORD ?
COVID-19 has all but sidelined the issue of Brexit from the media, but behind the scenes, this is now where one can assume, the serious hard work begins. Despite leaving the EU at the end of January, our final departure from the EU is still far away in terms of how it will work on the ground. Everyone wants an end to the Brexit process —business, politicians and the voters. The stakes are still high, though,and Boris Johnson must find a way of resolving them when the issues are still complex and full of political, economic and social challenges. But in the next few months, we all probably want an end to COVID-19 even more.
Long term, UK consumer confidence could also be an issue. The government has promised to pump in billions of pounds to help support businesses through this difficult time, but some of the further economic impacts are likely to be hard. There is a danger that, just when it looked as if a sustained period of economic austerity was coming to an end, we might find ourselves in the middle of another two or three-year period of recession.
Hard-pressed consumers might either stop buying high-value products, cut back on purchases, or trade down to more value-oriented options. The foodservice sector could also continue to struggle if consumes are cautious about going out and what they spend their money on.
FINDING WAYS TO DEAL WITH SHOCK
I think it’s fair to say that for most of the UK supply chain, the whole of 2020 will be challenging and uncertain. Produce companies around the world are going to have to find a new level of resilience in how they run their operations. This is something that needs constantly looking at, but will be bought in to a sharper focus by COVID-19.
While many UK companies used Brexit as an opportunity to review all aspects of procurement, buying and selling, staffing, management, relationships with suppliers and technology, businesses would be wise to perform similar reviews now too.
COVID-19 certainly won’t last forever. However, the impacts of what we are going through — and what lies ahead for consumers and UK fresh produce businesses alike — may well last for some time to come, and we all need to be prepared.
In some ways, the likely impact of an extended pandemic would have served to separate the UK from Europe in any situation. Laborers who might carry the pandemic are being blocked all around Europe, Italy is furious at Germany because it held back shipping important medical supplies to keep them for its own population, and, of course, travel and tourism is at a standstill across the world.
More broadly, the pandemic has made people around the world less willing to rely on international sources of products. The UK government is seeking refunds after buying millions of coronavirus test kits from China, and US senators are urging a new approach when the US had to beg for masks, testing kits and other medical resources from China. Indeed, one of the questions is whether this COVID-19 situation will really change attitudes or if these problems will be forgotten as the virus fades.
There are no easy answers, of course, but in a tighter economic environment, it is likely that many trends are predictable. Surely we can expect hard discounters, such as Aldi and Lidl, to grow as money gets tight. Surely people will travel less, both for reasons of economy and reasons of fear. Overall trade is likely to be restrained as people and governments look to deal with environments they can control.
A lot, of course, depends on the unpredictable: Will there be a vaccine? When? What will happen to the restaurant and sports industries? Can people be safe and do these things? But, at very least, the situation has reminded us of our vulnerability.
The job of the produce industry will thus be to serve a consumer who thinks differently. That is a challenge… and an opportunity.
Many thanks to John Giles for sharing his thoughts.