Pundit Interviews

Pundit Letters

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

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



Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

Pundit Makes WSJ Op-Ed Page

The Pundit’s father toiled in the produce trade following his father and his father before him plus countless generations back in Europe. Yet, this Pundit’s Poppa fit no stereotypes. He wore a suit every working day of his life and was (and is) an educated and intelligent man.

Among the most priceless gifts given this Pundit was the advantage of growing up in a home filled with newspapers. Maybe more important is that he read them and the one he reached for when he came home after a long day on Hunts Point was The Wall Street Journal.

This son, earlier than is typical, began to read it as well. And the editorial and op-ed pages, where the issues of the day were debated and discussed, were a window to a world in which ideas mattered.

One idea the Pundit has wrestled with for years is how to produce great publications when the short term financial incentives are typically the opposite.

This private concern became a matter of public discussion as the family that has controlled The Wall Street Journal for over a century is now considering selling to Rupert Murdoch.

The Pundit was honored to have an opportunity to contribute to the discussion of what will happen to The Wall Street Journal without the steady hand of the Bancroft family ownership, and how best to sustain the publication’s standard of quality.

The op-ed piece appeared in both the print (page A21) and online versions of the July 10, 2007 edition of The Wall Street Journal and was called The Roots of Editorial ‘Independence.’ For a limited time you will be able to read the article here.

The article’s appearance brought comments from many people. From childhood friends we had lost touch with to well known public personalities. This one, though, from right in the industry, gave us a chuckle:

Bravo for your commentary in The Wall Street Journal! Please don’t go big time on us…the fresh food industry greatly benefits from your pot-stirring.

— Grant Hunt
Grant J. Hunt Company

Many thanks to Grant for his kind note. Grant and the Pundit share a multi-generational heritage in the business, so Grant knows better than most that we were both born to the “big time,” for although there may be industries slicker and higher-profile, we’ve never yet met one that beat with a bigger heart.

It is a little trip to get such a prestigious perch, we acknowledge that, but we do things outside the industry to keep ourselves immersed in the flow of ideas and intellectual capital and then we try and bring it all home.

Our home, of course, is here.

Many thanks to everyone who sent such kind notes.

China Executes Food And Drug Safety Regulator

We confess we thought it was a joke… surely they weren’t really going to execute the guy when we mentioned that China’s chief food and drug safety regulator had been sentenced to death.

But he was executed.

It was mostly a matter of being in the wrong place at the wrong time. He had been sentenced just as China began feeling an urgent need to show the world toughness on food safety. The Chinese are taking it seriously:

China risks damaging its global credibility and provoking social instability if it does not tackle its food and drug quality problems, an official said in a rare admission amid a series of scares over tainted products.

China’s safety failings have drawn world attention since mislabeled chemical exports were found in cough syrup in Panama and pet food in the United States. There have been a series of recalls and bans on items ranging from toys to toothpaste.

In one of the most recent, the U.S. Food and Drug Administration said it would not allow imports of Chinese farm-raised seafood unless suppliers could prove the shipments held no harmful residues.

"The food security problems have impeded Chinese agri-products and food many times in international trade, and damaged our national credibility and image," Sun Xianze, director of food safety coordination at the State Food and Drug Administration, said at a weekend seminar.

"The occurrence of food safety incidents or cases not only affects the healthy development of the whole industry, but also may impact upon economic and social stability," Sun was quoted as saying by state media.

Dealing with these problems was being hampered by indolent and irresponsible officials and companies, admitted administration head Shao Mingli in a statement on its Web site (www.sda.gov.cn).

"In some regions, rectification work is carried out without energy and the quality of work does not come up to standard: it is perfunctory and sluggish," he was quoted as telling the meeting.

China has taken steps to clarify that bribery is illegal and will be punished even if a Chinese official doesn’t personally get a bribe but arranges for a family member to receive one:

China’s highest court and top prosecutor have issued a legal interpretation to combat official graft by widening the definition of bribery and granting leniency to officials who return ill-gotten gains. As Daniel Schearf reports from Beijing, China has been struggling to stamp out widespread corruption, which threatens the Communist Party’s legitimacy.

According to the joint legal interpretation, officials can now face prosecution for corruption even if they do not directly receive a bribe themselves or if they receive bribes after they retire.

The rules say an official can now be charged with corruption if cash, gifts or favors are given to family members or an affiliate with the aim of gaining the official’s influence.

The new rules also make it illegal to help arrange bribes.

David Zweig is an expert on China at the Hong Kong University of Science and Technology. He says the rules will make it easier for prosecutors to take on corrupt officials when there are no records of direct financial transfers.

"My sense is what they are trying to say is ’we are going to catch you.’ We are going to catch you when you retire," said Zweig. "Do not think you can grab the money now or cut the deal now, help somebody and you will get away with it later. We are going to catch you.’"

The official Xinhua news agency reported the rules target "new forms of corruption" to try to "catch up with the tricks of wily, corrupt officials."

The new ways of bribing officials include offering shares in companies, large discounts on houses and cars, and gambling.

The rules say officials who return bribes before they or related people are investigated will not face corruption charges, but did not indicate whether or not they could face other disciplinary measures.

The government has struggled for decades to fight widespread corruption, which Chinese leaders have said could undermine Communist Party rule.

China has in recent years convicted dozens of high-level officials, including the recent death sentence of the former head of China’s food and drug administration.

The China Daily newspaper said the new legal interpretation backs up a May regulation issued by the Communist Party’s discipline organ, which offered leniency to corrupt officials who confess their crimes.

The newspaper quoted the deputy secretary in charge of party discipline as saying, despite the offer, only a small number of officials have confessed. The paper said the official warned that China needs a better legal system to fight corruption.

Yet as this article in The Wall Street Journal points out, there is a cultural loophole that seems to limit prosecutions to the officials who are recipients of bribes but exempts people who offer or pay bribes from prosecution:

…what is less certain is China’s commitment to addressing the possibly more-widespread practice of offering bribes, not just the high-profile government officials who take them….

As a policy, the Chinese prosecution — they normally don’t go after the people who bribe. It’s been very consistent," says Fu Hualing, an associate professor on the faculty of law at the University of Hong Kong. "It doesn’t matter if it’s the lawyers bribing the judges or the companies bribing the officials."

Dr. Fu says bribery is a part of Chinese society and that the public and the government look at those who bribe with more sympathy than the government officials who accept bribes. "If you talk to people on the street, they will think that it’s the government officials who should be prosecuted, not the people who bribe," Dr. Fu says.

One is not quite sure what to make of this. On the one hand, it is obviously difficult to enforce an ethical standard on one side of an activity but not the other. On the other hand, in a society in which bribery is so common, the line between bribery and extortion is muddy indeed.

China is an amazing country, though, and if their initial instinct was to blame the West for making things up as a form of trade protection, more recent indications are that the Chinese authorities know that they have a problem.

In China, when the authorities focus on a problem, they usually make swift progress. One thing is certain: the world will be watching.

India Struggles To Retain Employees

As we struggle in America with immigration issues, it is easy to assume that nations such as India have unlimited labor available.

Yet that isn’t the way it works. In India, many software companies are pulling work back to the USA because it turns out that only a fraction of India’s engineers have the technical training, the English language proficiency and the Western cultural orientation to productively collaborate on software projects with American high-tech companies.

Even in retail, geography, transportation bottlenecks, cultural issues… all mean that everyone is not in the employment pool.

This piece from the Business Standard in India is headlined Retail Giants Innovate To Retain Staff:

As attrition rates reach unprecedented levels in the retail sector, companies are fighting back with a mix of measures including salary hikes, incentive-based targets, connecting emotionally with staff and even selling them the “American Dream.”

Take for instance, Shopper’s Stop, which has an attrition rate of 48 per cent a year among the front-end employees.

The company resorted to the first obvious weapon — hiking the salary by 25 per cent. This, of course, had an impact on the bottom line, but it does seem worth it, as replacing employees is a problem.

“Every new associate needs training and inputs. As attrition increases, the number of new associates increases and this affects service standards,” said Govind Shrikhande, chief executive officer, Shopper’s Stop Ltd.

Vishal Retail is having to cope with a 35 per cent attrition rate for its front-end employees across its 52 stores every year. While the company will provide Esops to lock in high-level managers, it is looking at incentive-based strategies for retaining lower level employees at its stores.

“We might create sales divisions within stores. Incentives will be provided to the divisions that cross the set target of sales,” said Ram Chandra Agarwal, chairman and managing director, Vishal Retai.

Pantaloon Retail already follows a team incentive model, and its employees are able to increase their salaries by 30 per cent to 40 per cent. It has a much lower annual attrition rate of 8.36 per cent for its 14,000 plus front-line staff. Pantaloon Retail credits it to the “emotional connect” that it has with its employees.

“Besides the five week product and operations related training that the staff has to go through, we make our new employees go through a Gurukul process. This is a self-discovery programme emphasising on employees’ eating habits, hygiene, interpersonal skills, teamwork and building interaction with the other gender,” said Sanjay Jog, head-human resources, Pantaloon Retail.

Fast food chain McDonalds has a high attrition rate of 83 per cent and it seeks to retain the staff by selling them the “American Dream” — the possibility of the front-line staff rising to become managers, operation consultants (that manage around five outlets) and possibly even CEOs one day.

While listed retailers like Shopper’s Stop and Pantaloon Retail offer stock options to senior managers as a retention tool, this is something that unlisted companies cannot do. In any case, the trend in offering stock options, leaves out lower level staff.

The problem of attrition is expected to only get worse as organised retail is projected to leapfrog from $12 billion now to $239 billion by 2015.

So McDonald’s battles an 83% attrition rate in India. It fights by holding out the very un-Indian pattern of upward cultural mobility.

Guess the grass always does look greener on the other side — until you get there.

Enough Said

United’s Public Policy Event Is Important; Future Years’ Scheduling To Be Improved pointed out that a scheduling error was made and, as a result, United’s Washington Public Policy Conference was scheduled over the Jewish holiday of Rosh Hashanah.

We emphasized that the slip-up was inadvertent and that it was important for those able to support the event to do so.

The piece brought this response from United’s CEO:

Thank you for addressing questions in the Pundit about our scheduling the 2007 Washington Public Policy Conference over Rosh Hashanah. As you indicated, I deeply regret this insensitivity in our scheduling of the event, and apologize that we were unable to reschedule the conference when we learned of our error. The WPPC has been held the second week of September for several years now, and it was our mistake to simply schedule it that week again without being sensitive to recognize such an important religious holiday.

We certainly appreciate that many Jewish members may want to be home with their families for the holiday, and we hope they may want to join us again in a future year. For those who might want to travel to Washington, DC, before Rosh Hashanah begins and participate in conference events that do not conflict with the holiday, we are making arrangements with several local synagogues for our guests to be able to join congregations in various denominations for services. Jeff Oberman in our Salinas, California, office has volunteered to assist anyone who might be interested to attend services in the DC area, and he can be reached directly at joberman@unitedfresh.org.

In the end, I do want to apologize again to all those who may have been offended by the conference scheduling. That was certainly not our intent and we will do our very best to learn this important lesson and exercise much more sensitivity in the future. Thank you.

— Tom Stenzel
President and CEO
United Fresh Produce Association
Washington, DC

Enough said. Thanks to Tom for his letter.

Raw Milk And Produce Do Consumers Desire Some Level Of Risk?

Our piece entitled, Risk And Raw Milk, dealt with the general issue of risk and the degree to which consumers ought to be able to accept risk in the food supply. It brought a response that shows both the astonishing diversity of produce people and different perspectives on what is risky:

Raw milk is the greatest tasting milk in the world provided it comes from cows that graze fresh green clean grass pastures with limited protein supplements preferably from Jersey or Short Horn breeds.

This is real “whole food” in its truest most natural form.

Yes, I agree there is a very, very slight chance that you could contract Tuberculosis (TB) or Brucellosis. Just read the health warning on the label from raw milk producers. The raw milk I know of on sale in California is produced in Fresno and is now on sale in the Berkeley Bowl and other places in California, produced by www.organicpastures.com .

Probably my biggest health concern about this milk, as with all dairy products, is too much is bad for one’s cholesterol levels. Raw milk will stay fresh for about 7 to 8 days under refrigeration at 4 Celsius.

Pasteurization of milk (heated to 170F for 19 seconds), “not homogenized,” is about as close to fresh raw milk as most people will ever get. I recommend you try Organic Cream Top Milk from Strauss in a glass bottle or in Trader Joe’s Organic Cream Top label. Truly a great product from cows that get to graze green pastures and live a normal existence.

The down side to this milk is the pasteurization process does reduce some essential enzyme and nutrient values, but at least you know the food safety issue are zipped tight.

Pasteurized milk stays fresh about 14 to 16 days under refrigeration at 4 Celsius.

Ultra-pasteurization of milk around 1-2 seconds, at a temperature exceeding 275 degrees: On the other end of the Un-Raw milk scene, you can drink ultra heat treated milk/ultra-pasteurized from a brick carton & homogenized that can stay fresh for many months without refrigeration.

This is the milk the average American pulls from the refrigerator in the supermarket, actually this “Fresh Milk” you are buying does not need refrigeration because of the (UHT or Ultra Pasteurization) process and the High-tech carton it is wrapped in is Aseptic. Though the dairy industry does not advertise this fact as it may actually send out the wrong message to the already confused consumer. The dairy wants you to think it is fresh.

This product is great when you need milk on the corn flakes when you are stuck in a desert for two months or are navigating around the world on a small sail boat with no sight of land for 3 months or great as a protein supplement for the starving masses in the third world when a food shortage occurs.

This product is a far cry from what Fresh Milk is. Though because of its great shelf life, this milk can be stored and shipped for long periods at the convenience of the dairy producers. UHT/Ultra-pasteurized milk should be shelved along in the markets with tinned fruit and canned tomatoes and the dairy companies should fess up to the public that this is a product far inferior than what was originally extracted from cow down on the farm.

This in turn would leave the supermarket refrigerators plenty of space for the Fresh milk that really needs to keep cool. This milk is probably safer than regular pasteurized I am guessing, and I am sure plenty of people will correct me but it is not fresh milk.

Ultra-pasteurization of milk packed aseptically will stay (Fresh?) 6 months-plus. Most of this milk is produced from mass dairy lots. Produced from cows that are jacked up on Posilac /rbST and force-fed very high levels of Proteins. Now I recommend no one drinks milk from this kind of farm, and if you do happen to drink it make sure it is not RAW.

This type of milk production is about as sick as it gets. Cows on Posilac produce about 15 % more milk than cows that are not, but have about 25% less length of life than cows not on Posilac.

This type of milk production is all about the profit of the big dairy companies and nothing about the well being of the animals they profit from and nothing to do with the consumer. As long as it looks like milk and does not make the consumer sick in the short term, then it’s ok. This is not also to mention the excessive amounts of probiotics and antibiotics that are used in the average American dairy herd today .

Cows are way over stocked and intensified, therefore producing a much higher need for disease control. The reverse assumption can be applied to less intensified farms.

— Duncan McNiff — Owner
Bayfresh Produce Co
San Francisco, CA

Duncan got his training and qualifications as a dairy, beef, sheep and grassland farm manager in Ireland in 1990, so he knows a thing or two about dairies and milk production. We have heard from Duncan before here and appreciate his insight into a world most produce people know little about.

The question regarding pasteurization and homogenization on milk is, though, whether it is in one sense the same question we are confronting on produce.

Is there such a thing as an acceptable level of foodborne illness outbreak? Or is zero the only acceptable level?

If, for example, we found that only by irradiation could we get outbreak levels to zero — as we dealt with here — would that be a good reason for the FDA to make irradiation mandatory?

Or do consumers have some rights to say they prefer some risks to others? Even if they can’t prove the merit of their case scientifically?

Many thanks to Duncan for his strong, and experienced, opinion.

Pundit’s Mailbag — ‘More Matters’ Can Be A Rallying Cry For the Industry

Our piece, Pundit’s Mailbag — Evaluating Effectiveness In Childhood Eating Studies, was built around a response to our article, ‘Nutrition-Education Doesn’t Work’ Says Associated Press Review Of Literature. Both of these articles focused on the need for research to establish that programs undertaken to achieve particular goals are effective at doing so.

For the most part, we were speaking about the U.S. government and its efforts to enhance public health, but we also addressed industry initiatives, including our own trade’s transition from 5 a Day to Fruits & Veggies — More Matters:

The Pundit must have been asked a thousand times what do we think about the new Fruits & Veggies — More Matters campaign that has replaced the old 5 a Day program. The answer is that it sounds pretty good to us, but so what? Who cares? Why is our opinion important? Why is anyone’s opinion important?

The goal of adopting Fruit & Veggies — More Matters was to increase consumption — an eminently testable proposition.

You go to one little city and adopt Fruits & Veggies — More Matters Then, in the control city you test it against whatever you want to test it against. For example, the continuation of the national 5 a Day program.

You do rigorous measurements of the things you are looking to measure. The obvious one is produce consumption. Although we question if that really is the goal as opposed to say, decreased obesity. In any case, you test what you want to test, then you compare results.

It would have been a relatively easy matter to ascertain if Fruits & Veggies — More Matters will obtain our goals. But we had to test it.

By just rolling it out nationally, we lose the ability to easily do comparative studies. As a result we just have no idea and will never have an idea if the More Matters program helps or hurts or is a neutral.

This reference brought an important response from an industry leader very involved with the Produce for Better Health Foundation:

I appreciate much of the thought you put into the Pundit of July 10, 2007, and agree with the majority of it (particularly with regard to government waste on questionable programs, and the efficacy that we should expect from the expenditure of our tax dollars), but there are some specifics with which I must take exception. Please consider these comments to be my personal views, which you may publish if you wish: I am sure that the PBH Executive Committee, of which I am a member, will have an organizational response, suitable for publication on your site (for which, I have a great deal of admiration — whatever that is worth!).

Mark Munger, of Andrew and Williamson, and I co-chaired the task force that developed the new “Fruits and Veggies — More Matters” marks for PBH — the imperative to transition the brand from “5 a Day” to something else was absolute — the embedded message in the old marks was scientifically unsound and, to your point, indefensible from a fact-based perspective.

This fact was undermining the relevance and the “sale-ability” of the message on all fronts — to consumers, to governmental partners, and to industry — . and as the marks evolved to “5 to 9 a Day” etc., the message became ever more muddled. We’re probably on the same page to that point.

The task of creating new marks was a significant marketing challenge. Precisely because PBH is NOT the Federal Government — the re-branding effort was conducted on a very tight budget — the Foundation was very diligent with the expenditure of resources against the project, and every possible dime went into research and testing of the marks for efficacy among the target audience — which, by the way, is “Gen-X Moms”, not kids.

We made a conscious decision NOT to test against “5 a Day” because it was dead, from a science-based perspective, and because resources were scarce. Also, because it had a 15-year history, it would be tough for any new mark to compete against an existing franchise — even an inherently weak one.

I’m a CPG marketer by training, I cut my teeth at Coca-Cola, and I can tell you that this exercise was not as simple as testing “new Diet Coke” graphics against old and determining a winner based on consumer preference. Your proposal of “starting with one city and testing” was not financially feasible, nor was it sound from a marketing perspective… the creative process, and subsequent testing, tweaking and retesting could have gone on indefinitely and would always have been found wanting in some regard. Great brands are not created in this manner.

Now, compound these financial and marketing challenges by considering the nature of the PBH organization: consider its equity in (and reliance on) the diffuse network of state “5 a Day” coordinators, governmental partners like CDC and NIH, NGO’s like AHA and all of the industry grower/shipper and retail interests and you have… well, let’s just say that you have a challenge on your hands. The re-branding team understood this from the outset and understood that a creative process “by committee” would produce a neutered result. So we focused, on a narrow target and on a message that would move consumer behavior.

It is a tall order for any set of marks, in and of themselves, to produce a measurable change in consumer behavior — even when supported by a formidable marketing strategy and a well-funded advertising campaign. For better or worse, PBH is not McDonald’s or PepsiCo, with a single strategy and hundreds of millions of dollars to spend on marketing communications with which to move our consumer target: this is a true “David vs. Goliath” effort; hence, we need support from all partners in industry to drive our messaging home.

I’m all for constructive criticism, but lumping “More Matters” together with other failed efforts is, in my opinion, a serious mistake. Together, our industry has formidable resources, but we need a rallying cry and a strong commitment to message around that cry — or else our competitors, who have very concise and effective campaigns of their own, will continue to roll over us like a steamroller.

PBH has done, in my professional opinion, a superb job of delivering to the industry an excellent rallying cry, around which we can collectively message with the goal of moving consumer behavior over time. No, that’s not just my “feel good” opinion, PBH, can (and I am sure, will) provide the research behind the marks pointing to their efficacy. “Fruits and Veggies — More Matters” is not a silver bullet, but neither is it just another “throw money at the problem” solution (like some, which you accurately characterize in your article).

If you find, upon review, that the course PBH has set upon has merit, I’d appreciate your using the power of your own bully pulpit to say so. We fully intend to measure our progress as we go, and to use actual consumer behavior change as our guiding metric — but we need industry support to get that done.

The Pundit can be a powerful force for rallying that support.

— Paul Klutes
C.H. Robinson Worldwide

First of all, Paul’s “admiration” — and his kind words — are worth a great deal and we appreciate both very much. We also appreciate Paul’s time in drafting such a thoughtful letter. Wrestling with such issues is the way the industry improves.

C.H. Robinson also deserves kudos for allowing and encouraging its employees to make these kinds of important contributions to the trade.

To make one point quite clear, we’ve been privileged here to publish letters from both Mark Munger and paul Klutes before, and we have no doubt that they have conducted themselves conscientiously and with earnest.

The same goes for the rest of the committee, the overall board and executive committee and the staff. We have no complaints about any individual.

Paul’s points are all well taken but much depends on what your view of “Fruits and Veggies — More Matters” actually is. If it is simply an overarching name or brand that the produce industry has coalesced around and the brand is going to serve as a sort of umbrella under which we are going to conduct a large number of programs — and, as such, any out-reach from the produce industry to private foundations or the government is not to fund “Fruits and Veggies — More Matters” per se but to fund some individual program under that rubric — then we have no problem.

This would transform “Fruits and Veggies — More Matters” into the background noise of society along with the President’s Council on Physical Fitness and press releases from FDA and CDC and the March of Dimes.

Our point really spoke to the kind of evidence necessary to raise funds to expand programs. If we view “Fruits and Veggies — More Matters” as a program — something that we would like to one day go to the Ford Foundation or federal government and ask for lots of money to expand — our point was that we are not doing the kind of research that will ever give us the kind of compelling results that would persuade others to fund the program.

Even if tomorrow fruit and vegetable consumption went up 20%, we are just not doing the kind of studies that would provide persuasive evidence that this rise in consumption was due to “Fruits and Veggies — More Matters.”

Many of the issues Paul so accurately portrays are an outgrowth of an attempt to sustain a national program with inadequate resources. This is a common problem in produce marketing.

Many years ago, a voluntary regional commodity promotion group asked the Pundit for help in designing a national marketing program. After listening to their strong case but also listening to their paltry budget, it was clear to the Pundit that the means and the ends were not in sync.

We wound up proposing abandoning, at least for the moment, the whole idea of a national marketing campaign. Instead we urged a concentration of resources on a small city. The plan was to do in that city what we hoped to do regionally and, eventually, nationally.

The idea was that that we could maintain careful records and prove that with an expenditure of a set amount of dollars per person, we could move the needle on consumption by X%.

These results would provide justification for the producers to increase their contributions and we would roll out this marketing program to five additional cities, then ten and so on.

It was a reasonable plan, but it was rejected. The growers wanted a national campaign and, particularly, they wanted television.

We were invited a year later to a lovely hotel suite at PMA, plied with expensive spirits and shown a few variants of an expensively produced television commercial.

The budget being pretty much exhausted by this, those TV commercials never got very much airtime beyond the VCR of their PMA suite, and sales of that item never did see much growth.

Paul’s point about the 50 states and the various interests all speak to a specific starting point: That 5 a Day and PBH were accomplishing something important and therefore we vitally needed to transition to the next phase without interrupting what we were doing.

Unfortunately, we don’t actually know that. If you go to the PBH website and you click on “Our Success” in the Pulse of PBH section, which one would think would be filled with glowing reports of how 15-plus years of PBH has boosted produce consumption, what you actually get is this statement:

Produce for Better Health Foundation (PBH) is a driving force behind America’s growing awareness that fruits and vegetables and good health can go hand in hand. Our work to change nutrition policy, to communicate with consumers, and to improve the food environment is making a difference — and setting an example for others….

Notice that here on our self-proclaimed success page, there is not one word about having increasing consumption. PBH was chartered in 1991, so it is not as if we are being unreasonable in saying we should have some evidence of increased consumption by now.

We have a dedicated board, we have high quality staff, so what is the problem? Well, we are reminded of an interview Pundit sister publication PRODUCE BUSINESS conducted some 17 years ago with Ray Cole, who was then the Director of Marketing Services at Sunkist. You can read the whole interview here.

The issue at hand was Sunkist’s tepid support for a California Navel Orange Promotion Order. There were many issues involved, including whether Sunkist members would get credit for Sunkist marketing expenditures, but, for our purposes, the key insight came when Ray was asked his personal opinion about the proposed generic marketing expenditure:

PB: How does Ray Cole feel about it?

COLE: I am opposed to the generic program on a totally different basis. I don’t see the industry taxing itself sufficiently to really do an effective job. I’m not even sure that Sunkist is doing the best possible job at the moment, because we’re not spending as much money as I think we should, but that’s a separate issue.

PB: Well, exactly how much money do you think Sunkist or the proposed commission should spend?

COLE: Let’s talk about what it takes to increase the consumption of California oranges, because I’m not sure we can promote navels without Valencias either. We did a lot of work in 1970-72 and repeated it in 1981 to see what the effect of more advertising on the American consumer would do in terms of consumption of California-Arizona oranges, particularly Sunkist oranges. We found a level of advertising that worked. We experimented with higher levels and lower levels and we did a test marketing program. It was scrutinized beyond belief, because it was highly questionable here at Sunkist. The first effort was done when I was back at [Sunkist’s ad] agency, and we were trying to recommend this to Sunkist. I know from that experience that there is a level of advertising that it takes to change consumption habits, and I know that consumption habits can be plused, at least I think they can. I’ve not yet heard any discussion in this talk of generic advertising that would come close to generating the dollars to spend at the rate necessary to increase consumption.

PB: You’re talking about a very big increase of how much?

COLE: I’m talking about spending probably $20 million a year. If you only spend $10 million and you don’t change per-capita consumption, what do you accomplish? You’ve taken $10 million out of the growers’ pockets for no end result. It’s kind of like trying to put a satellite into orbit and not putting enough fuel in the rocket. You blew a lot of money, for nothing.

PB: Some people would say something is better than nothing, when it comes to promoting citrus or any other commodity.

COLE: I think if you really want to do this you have to do it at a proper level, with a thought-out plan, and a comprehensive recommendation based on the size of the task, not what the grower can afford, necessarily. And let the grower decide if he wants to undertake that task. But don’t just assess him 7-cents or 10-cents a carton because that’s all he can afford. If it doesn’t give you enough money to do the job, don’t do it. That’s where my concern is about the generic program.

What Ray was saying is that you don’t start with a goal and pursue it regardless of resources. One has to view a goal in the context of available resources and then adjust the goals so they are obtainable.

Ray claimed that way back in 1990, Sunkist research had found that to move the needle on consumption of California oranges, they needed to spend $20 million per year. If they only spent half, or $10 million a year, you didn’t achieve half the goal, you didn’t achieve anything. In effect you wasted the money.

Over the last 17 years, inflation has been about 60%, so that would bring us to about $32 million a year in 2007 dollars. However, more than inflation is involved… population has increased in the U.S. by about 50 million people. Plus it seems a reasonable argument that increasing overall consumption of fresh produce is going to be more difficult than increasing consumption of oranges since substitution is easier — an orange for an apple as opposed to produce for beef.

So if the Sunkist data was correct, it is easy to imagine that to move the needle on overall produce consumption we may need to spend, say, $60 million a year. If we don’t have that, and we don’t, it is unclear what benefit is derived, if any, from spending what we do have.

Put another way, we get from Paul’s letter that things were done because this was what we could do with the resources available. Fair enough. The question is whether, instead, we shouldn’t be looking for the kinds of programs that potentially could raise large sums of money and break through this Gordian Knot.

After all, if produce is the “cure” for obesity and obesity is the cause of countless hundreds of billions of dollars in expenditures by Medicare and Medicaid, it should be possible to raise money in the tens of billions, maybe more, swamping what Coca-Cola spends.

But we haven’t built our case! We have nothing to bring to Capitol Hill where we can legitimately say: “If you fund the rollout of this program across the 50 states, you will see diabetes cases drop by 30%.”

In suggesting that “Fruits and Veggies — More Matters” could have been done as a pilot program in a test market, we were looking to build a case that would merit substantial outside funding.

Paul may well be correct that the urgency of getting rid of 5 a Day, combined with the stringencies of budget, compelled us to just roll out the best we had. We, as an industry, did research to test receptivity, but not effectiveness in changing consumption patterns. Perhaps it was impossible to do that kind of research at that moment in time.

We want to make clear that we did not say and did not intend to imply that we thought that "Fruits and Veggies — More Matters" was a "failed effort" — we do not believe that. It is brand new, still getting started. Our point was simply that the type and level of testing being done won’t get us big funding from outside the industry.

The good news is we can still test programs. We’ve been pushing the Food Dudes program here and here. Why can’t we support a pilot program in the U.S.? Afterall, the research in the U.K. and Ireland was sufficiently strong that Ireland is now rolling it out countrywide.

We need to look for programs that, if successful, could attract funding from outside the produce industry.

One thing Paul need not worry about is our finding of “merit” in any particular course PBH may take. We think it is important to discuss these issues, but we are not so arrogant as to think that we cannot be wrong.

So for basically as long as there has been a 5 a Day program, we have supported the effort and we have continued to support the Fruits and Veggies — More Matters initiative. We have donated in excess of $1 million dollars in advertising to boost PBH’s fundraising and trade efforts and have always made a point of helping PBH get support for its initiatives, as we did with this contest that PBH was promoting.

We respect Elizabeth Pivonka, the staff and the board members and think they have been given a thankless task. They need more money, many multiples of what they have, and we want to find ways to completely change the paradigm under which PBH operates so that this scale of fundraising can occur.

That is what we are bucking for, but Paul and PBH can count on our support as we struggle to get there.

Many thanks again to Paul and to C.H. Robinson for helping us address this important issue.

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