As we mentioned here, one of the big problems associated with the PBH Chairman and the PBH Chief Executive advocating for the proposed Generic Promotion Program for produce is that their advocacy means they lose credibility when it comes to doing research:
PBH can spend all the money it wants on surveys — but the legitimacy of those surveys has been tainted by its advocacy role, and whatever is presented in favor of the proposal will be rejected by many key players in the industry who don’t trust the process. Who wrote the surveys? Selected the questions? Who vetted them to make sure they are even-handed? Who selected the research company? How do we know what has been whispered in the ear of the researchers or how the list has been biased?
In the research currently under way, the advocates of the plan made the terrible mistake of not getting buy-in on the validity of the proposed research from critics of the program.
Here is a comment from one of the largest “first handlers” in the industry:
Have you seen the PBH research survey? The questions are stacked: “Do you believe that marketing and advertising works?”
Give me a break. I wonder how much of our money PBH spent on this.
Our correspondent is speaking of an early question in the survey that attempts to bias the thought process people will consider in answering the questions.
It is an old salesman’s trick to get the customer in the habit of saying “yes,” hoping the habit will continue onto the substantive question of whether the customer will place an order.
Equally, this question is designed to get produce industry executives into a certain mindset.
Suppose, instead, the survey asked this question:
“Do you believe that investments in marketing and advertising the products of the overall produce industry will produce returns superior to what could be earned by investing such funds in commodity-specific generic promotion, branded promotion or other kinds of investments?”
This would switch the mindset from a public health standpoint — if it increases consumption… if it “works” — to a business mindset: Is the ROI adequate to justify the program?
Later on, the survey purports to explain the purpose of the generic promotion program and explains that its purpose is to “increase consumption” — though, of course, this is actually the crux of the dispute over the program.
The advocates care only about consumption. Yet many in the industry would say that if the goal is solely consumption, that is a public health goal, not a business goal. If we believe in increasing consumption for public health reasons, we should all go down to the Department of Health and Human Services and make our case for why HHS should invest in an effort to increase produce consumption.
After all, a plan to change the dietary habits of Americans by getting them to eat less meat and dairy products and more whole grains and produce might well pay for itself through savings in Medicare, Medicaid, Veterans Health, etc., as a result of treating fewer patients with the diseases of obesity.
Yet what many in the industry have been saying is that increasing consumption is simply not a sufficient goal for a business decision. If you are going to get businesses to fund a program, you need to make a case for there being a superior return-on-investment to what alternative investments are available. And we have to look not only at apples and pears but at row crops, where supply can increase quickly.
Rather than dealing with this perspective in an authentic industry dialog, the advocates of the generic promotion program are trying to bias the process by denying there is even any issue here.
What a shame for the industry. There is not a reason in the world why this research could not have been vetted by opponents of the initiative. Not a reason in the world why we couldn’t all agree — regardless of our opinions on the generic promotion program — that a particular questionnaire or research methodology is legitimate.
Instead, because the advocates elected to proceed without this outreach to crucial industry stakeholders, we are wasting industry money on a process that lacks all credibility. What an unnecessary loss for the industry.
We’ve studied many aspects of Wal-Mart for a long time. Yet the launch of Tesco’s Fresh & Easy concept made the prospect of examining Wal-Mart’s Marketside concept particularly intriguing. We‘ve run a number of pieces including these:
A Triumph In Phoenix — Wal-Mart’s Marketside Hits The Trifecta. One Open Question: Do Suburban Consumers Want Small Grocery Stores?
More Thoughts About Wal-Mart’s Marketside
With Wal-Mart’s Marketside Concept In Stasis, Let’s Pause And Examine Ready-Meals
Now comes word that Wal-Mart has decided to rebrand the stores to herald the Wal-Mart ownership:
Marketside grocery stores add Wal-Mart name
A subtle change is occurring at Wal-Mart’s four Marketside grocery stores, which the company is testing with Arizona shoppers.
In contrast to the great fanfare and international attention that accompanied the stores’ debut in Gilbert, Mesa, Chandler and Tempe last year, the Bentonville, Arkansas-based company quietly changed the name and logo on the newest addition to its family of stores..
The stores are now called Marketside by Wal-Mart. The logo, which once appeared to be stacked fruits or vegetables, was also bagged in favor of the new Wal-Mart logo, which looks like a yellow sun or star.
Previously known simply as Marketside, the retailer had obviously wanted to distance itself from the Wal-Mart image, said David J. Livingston, a supermarket industry consultant.
He said the company probably decided it was more advantageous to capitalize on its image as a low-cost leader in the retail and grocery store industry.
“Obviously, they’re just making a business decision,” he said. “If you’ve got a name like Wal-Mart, which is a household name, why not use it to its full extent?”
Company officials didn’t return phone calls.
Tom Rex, an economist with Arizona State University’s WP Carey School of Business, agrees with Livingston.
“There’s quite a market already for Wal-Mart,” he said, “So yeah, it would make sense to me that they’d keep pushing their name.”
Wal-Mart had hoped the prototypes would be a hit with consumers and wanted to expand beyond the Valley and across the nation. However, Reuters reported last week that the company is holding back on expansion plans given the current economic conditions.
Marketside by Wal-Mart places a heavy emphasis on convenience, freshness and low prices. If that sounds familiar, it’s probably because those are also key objectives for Fresh & Easy Neighborhood Market, a grocery chain that was opened in 2007 by Tesco, a United Kingdom-based grocer. Fresh & Easy was expected to be Marketside’s biggest competitor.
Although Wal-Mart’s ownership was not a secret, the store clerks we spoke to at the opening all vehemently objected when we said they worked for Wal-Mart.
David J. Livingston, the consultant quoted in the article, is a frequent Pundit contributor, including these pieces:
Kroger And Tesco Approach Store Acquisitions Differently
Aldi Challenges Wal-Mart As Low-Price Leader
Reading Tesco Between The Lines
Tesco’s ‘Selective’ Market Research
David points out that in this day and age, Wal-Mart executives must have decided that it was advantageous to tie in with the Wal-Mart name and its reputation for economy.
Many of the negatives associated with the name have dissipated due to some clever PR by Wal-Mart, including its focus on sustainability, and due to the fact that low prices are valued more heavily in times of economic stress.
In addition, as we mentioned here, Wal-Mart has now stopped requiring that Neighborhood Markets sell at the same price point as supercenters. If two banners can have different price points and remain under the Wal-Mart brand umbrella, why not three banners?
We suspect such a change also speaks to how Wal-Mart intends to use the banner in the future — most likely in markets where Supercenters and Neighborhood Markets are part of a broader retail mix. This differs from the idea of a self-sustaining brand, possibly opening thousands of stores all over the country — including in many markets where Wal-Mart has little, if any, presence. Indeed one wonders if this brand switch explains why the California Marketside locations — not located near any Supercenters — have not opened.
As to whether it is a smart move or not, we have some doubts.
● Marketside is more expensive than Wal-Mart, as the study done by Pundit sister publication, PRODUCE BUSINESS, demonstrates. So the tie in endangers the low-price leadership reputation.
● Wal-Mart is still a down-scale retailer. Today it is chic to be cheap and so Wal-Mart is a winner. In the short run, the branding will help the stores. Long run, however, we wonder if Wal-Mart isn’t limiting its options. Prosperity will rise again one day and we think Hallmark’s approach, where its ShoeBox Greetings division is identified in small type as “a tiny little division of Hallmark,” wouldn’t be a smarter positioning.
Some people just don’t want to be downscale. Some want to be a little quirky, and some just don’t like to shop at the place everyone else does.
For Wal-Mart, the question down the road is how to appeal to broader swathes of the consuming public. We suspect it won’t be with Marketside by Wal-Mart.
From time to time we are fortunate to have an opportunity to make a real contribution. Such has been the case with our coverage of the recent sprout outbreaks. The sprout industry is small and highly fragmented. There are few financial incentives for most people to pay attention. Unfortunately, representatives of many buying organizations, such as this foodservice one, have told us they just removed the category as opposed to wrestling with its food safety problems.
Yet we are certain the category is worth paying attention to, if for no other reason than that consumers do not make a mental distinction between sprouts and other fresh produce items. An outbreak on sprouts reflects on the whole department.
Besides, though sprouts have their peculiarities, so do other produce items. We suspect that many of the solutions to the problem of outbreaks related to sprouts, solutions both technical and cultural, are likely to be relevant to the resolution of food safety problems on other items.
Sometimes our coverage has become somewhat scientific, and we know everyone won’t force themselves to read every word. That is OK. Cumulatively, though, we are creating a resource of information and analysis that just simply doesn’t exist anywhere in the world. We consider ourselves fortunate to have the opportunity to create such a resource.
We couldn’t do it, though, without the enormous contribution of “Pundit” readers. So when our piece, Lessons Learned From Another Sprout Recall — which included interviews with both Sidney Chang of Chang Farm in Massachusetts and Kendra Nightingale, with Colorado State University — brought some technical papers and an inquiry from Canada, we were pleased to add the following note to the compendium of information and analysis we have been building:
I always read with interest your newsletters on the state of the fresh produce industry. I was most interested in your recent article on the Listeria recall linked to sprouted seeds from Chung Farms.
I noted that Mr Chung was considering introducing hot water pasteurization as an alternative to hypochlorite. Some years ago, we developed a cheap and easy method to use seed decontamination treatment for decontaminating a range of seeds.
At that time there was no real incentive for changing from hypochlorite although with the current outbreak and recall, there maybe renewed interest.
I was wondering about your views on alternative seed decontamination treatments and if the industry would be receptive to adopt the method.
I have enclosed papers that we have published by the way of background information:
Inactivation of Escherichia coli O157:H7 and Salmonella on Mung Beans, Alfalfa, and Other Seed Types Destined for Sprout Production by Using an Oxychloro-Based Sanitizer
Inactivation of Escherichia coli O157:H7 and Salmonella on artificially or naturally contaminated mung beans (Vigna radiata L) using a stabilized oxychloro-based sanitizer
Concentration and Detection of Salmonella in Mung Bean Sprout Spent Irrigation Water using Tangential Flow Filtration Coupled with an Amperometric Flow-Through ELISA
— Keith Warriner
Department of Food Science
University of Guelph
Guelph, Ontario, Canada
We thank Professor Warriner for his letter. We actually think there has always been a good incentive for changing from hypochlorite — it is toxic and difficult to use, and employees generally don’t like to be exposed. We suspect consumers — especially sprout partisans — would not like to learn that their food is being dipped in a toxic substance.
The issue, we think, is really a regulatory one — and in looking at it we see a caution for the whole industry. The problem is that, as we discussed in our interview with Bob Sanderson here, in its recommendation to sprouters the FDA mentions, as its sole example, that hypochlorite may be used to wash the seed at a specific dose.
Because it gives one specific option and nothing else, many buyers have adopted this as a de facto regulatory standard.
Now we have called on FDA to be specific in its guidance, but being specific quickly degenerates into being rigid and antiquated unless one is constantly checking for updated alternatives. This is not like drugs or medical devices in which manufacturers have both a mechanism and powerful incentives to seek FDA approval.
So Professor Warriner’s work probably caught little interest, not so much because the concept is not interesting but because without FDA changing its guidance, switching procedures is a risky step for sprouters.
Nothing is without some controversy. When we reported on the almond industry’s use of steam pasteurization, we heard no end of grief from raw food advocates.
Doubtless Professor Warriner’s work will find someone in opposition. Still its focus, the use of a food-grade sanitizer to decontaminate seeds, seems well worth exploring.
We appreciate Dr. Warriner and the Department of Food Science at the University of Guelph for helping us to make the industry aware of this important research.
As part of our analysis of the proposed Generic Promotion Program, we ran a piece titled Got Produce? Has PBH Been Effective At Boosting Produce Consumption? The article brought this thoughtful assessment from an important importer of mango and various tropical items who has served as a board member of the National Mango Board:
The Produce for Better Health Foundation might have had more success in increasing consumption if we would have produced a cantaloupe that actually tasted like the muskmelon I have eaten as a kid instead of like the cardboard we now often experience; or if the consumer would have picked up a peach from Chile that wasn’t tasteless and brown in the center; and yes, even in our (my) business with mangos, there is nothing more tasty than a ripe mouthwatering Kent, yet the demand is for the hard, fibrous Tommy variety.
Point is the industry has not helped much. However, there are signs that point to the direction we need to take. Look at the increase in consumption of ripe avocados, or the “Summeripe” fruit program, and yes even in our mango business this year with the yellow ataulfo tasty mango and the support of the National Mango Board. Increases here are off the charts.
So, I agree with you — the industry needs to go back to the drawing board; we need to look at the taste and flavor of the product we are delivering and after we have done all this, then we need all segments of the industry at the table to discuss the concept of generic promotion.
Good job here!
— Bill Vogel
Tavilla Sales LA
Los Angeles, California
Bill raises important issues in his letter, issues that require contemplation, perhaps uncomfortable contemplation, for many in the industry.
There is little question that marketing and advertising can be effective in boosting demand, but they are not the right strategy in every time and every place. Sometimes Job One is product development.
When Bill alludes to flavorless varieties, poor care and handling that robs consumers of peak flavor, and merchandising decisions that put being “First” a higher priority than offering tasty produce, he reminds us of some of the real weaknesses of our industry.
Indeed generic promotion, which inherently has a tendency to commoditize the product, reduces the incentive to differentiation.
And for those who have produced superior product for which consumers are willing to pay a premium, the way this particular proposal has been set up actually penalizes them.
The Mango Board collects a flat fee per pound. If a producer offers a more flavorful product or adds value through its consistency or branding, it gets to keep any premium.
Yet under the proposed national program, a producer who merits a higher price will pay more in the assessment because it is based on price, not pounds. The cheapest, lousiest produce pays the least; high quality product in high demand pays the most — yet the generic advertising will never distinguish between the two.
So, actually, the way the proposal is written, high quality producers will subsidize the marketing for low quality producers. There is something terribly unjust and unsettling about such an arrangement.
Bill also alludes to the question of where resources need to be put. If we are going to promote highly differentiated product, say ataulfo mangos or full-flavored stone fruit or ripe avocados — is that kind of promotion best done by a national board representing dozens of produce items?
Wouldn’t it make more sense to do that kind of highly specific marketing either through commodity-specific promotion programs or via private branding?
And will this national board, obligated to sell canned pears and frozen mango as well as fresh, be well positioned to sell the differentiation of quality products?
So Bill raises two key questions: First, isn’t the real obstacle to increasing consumption not a matter of marketing, but a matter of product incompatible with consumer desires? Second, isn’t the kind of marketing and promotion we need really micro-focused on those products that delight consumers and more likely to be done closer to the product than by a national bureaucracy.
The proposed national program does not include organics. This is because the organic folks feel, with legitimacy, that the various generic programs do not sell what they have to offer: The competitive differentiation of organics. They got Congress to write them out of these programs.
Yet we suspect the board will do no better job of promoting other forms of differentiation and added value. In the dairy, beef, pork and other industries, this doesn’t really matter. A cow is a cow, and enhancing demand for any dairy product helps raise demand for milk; increasing demand for any cut of beef raises demand for the animal.
In produce, however, if a producer specializes in a particular product or a particular value-add to the product, it is only through promotion of that particular product or attribute that the producer canprofit. Yet there is zero assurance that any particular attribute — say vine-ripened product — will be promoted.
The truth is that there are great tasting melons out there — just like Bill remembers. There is good tasting stone fruit and wonderful mangos. Yet a national board, obligated to all producers, is unlikely to be the tool to market these differentiated products to consumers.
We thank Bill Vogel and Tavilla Sales LA for helping the industry talk through such an important issue.
As a little bonus thought you might enjoy listing to a couple of songs about some of the items Bill carries. Here is the Rambutan Song and The Mango Selling Song both written and performed by Bobby Locke, a salesman for Tavilla Sales Co. in Los Angeles.