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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

The Bitter Truth About Promoting Produce To Children

Few subjects bring about the kind of unanimity of opinion that the desirability of promoting fresh fruits and vegetables to children does in the produce trade. It is a clear win/win: improve the health of America’s children while increasing sales for the trade. The Produce for Better Health Foundation has long run a special site for kids. The United Fresh Fruit and Vegetable Association works through the United Research and Education Foundation to push its Project Fresh Start, which fights for public policy changes to ensure that children will meet the new Dietary Guidelines for Kids regarding fruit and vegetable consumption.

Private companies are in the game as well. From the beginning of the 5-a-Day program, Dole has been closely aligned and now is preparing to launch its SuperKids program. Sunkist has a variety of children-driven initiatives, including a Healthy Habits for Life Partnership with the people behind Sesame Street, a position as The Official Fresh Snack of Little League Baseball and its Take a Stand program to get kids 7 to 12 years of age to operate lemonade stands for their favorite charities.

The Produce Marketing Association is trying to help by providing a useful list of its member’s web sites that offer special content for kids, their parents or educators. It is a good effort to try and organize disparate content spread all over the web but, beware; the quality of the content on these sites varies considerably.

The produce industry is certainly on the side of the angels here, but efforts to sell more fresh produce to children will have difficulty obtaining the desired health effect if a way isn’t found to get children to eat, not just sweet fruit and potatoes, but vegetables. A study in the American Journal of Clinical Nutrition indicates that there may be an innate sensitivity to bitterness that affects vegetable acceptance and consumption during childhood.

Bryan Silbermann, President of the Produce Marketing Association and your friendly Pundit had a lively exchange on the subject in an issue of one of the Perishable Pundit’s sister publications, PRODUCE BUSINESS.

We do need to act. The Junior Pundit primo (aka William, segundo is Matthew) channeled strong thoughts on the subject here.

Is It A License To Print Money?

There has been a recent explosion in the use of cartoon characters and produce. In addition to long-established uses such as River Ranch and its use of Popeye on spinach or Ready Pac, which merged in Tanimura & Antle’s use of Bugs Bunny on carrots, Nickelodeon just announced an expansion of its licensing program with Grimmway Farms, Boskovich Farms and LGS Specialty Sales to include Borton & Sons, Reichel Foods and Seapoint Farms so that SpongeBob SquarePants, Dora the Explorer, Avatar, The Backyardigans and the characters from Blue’s Clues can be on a broader range of produce.

In addition to the original clementines, spinach and baby carrots, Nickelodeon’s characters also will appear on packages of bulk packs of apples and pears, cherries, Nick Stix Carrots and dip, apple and dip and both organic shelled edamame and thaw-and-eat organic edamame pods.

Ready Pac announced it is bringing Tweety Bird and the Tasmanian Devil into the fold and launching a new line of products developed for children. Disney has two separate, and somewhat conflicting, programs. It is doing a healthful food program featuring “Chef Mickey” and other Disney characters with over a 100 items at Kroger that includes fresh-cut vegetables with dip and has licensed the Disney Garden brand to Imagination Farms, which is a non-transactional produce company working to develop a line of produce to be marketed with Disney characters. Imagination Farms has announced alliances with Ito Packing and Crunch Pak.

The effort is enormous and it is bringing branding and attention to children to a department that has been lacking for both. But it is unclear if these characters actually increase produce sales to consumers. The problem is this: most retailers still only carry one brand of any produce item. So if these characters are producing incremental sales, it is still pretty much a mystery.

One thing is for sure, though: The shippers with these programs gain access to retailers to talk about the programs. To many a shipper, that makes it worth it all by itself.

Here is a question: Can this explosion of kid-themed produce justify a redesign of the produce department with a special “Kid’s Produce Stand”? And would such a use of space pay off?

Specialty Cheese Is, Well, Special

The 23rd Annual Conference and Competition of the American Cheese Society was held in Portland, Oregon, and Cabot Clothbound Cheddar, a cooperative venture of Cabot Creamery and Jasper Hill Farm, was named the Grand Champion. The Pundit congratulates the winners of each category in this highly credible and competitive competition. But if large chain retailers would pay more attention to the ACS, they are the ones that would get the prize.

Specialty cheese is the quintessential perishable food as it is an absolutely perfect way for food retailers to differentiate their stores. The reason? While the quality, assortment and basket of service on all perishables is key to separating one chain from another, the hundreds, indeed thousands of specialty cheeses available mean that each store must offer to the consumer an edited selection of specialty cheeses and, in that editing, is every opportunity to distinguish one store from another.

In the ACS competition there were 22 major categories and 91 subcategories, with a total of 941 cheeses entered. You can get an idea of the scope of the American specialty cheese industry by looking at the 2006 Annual Competition and Judging Results Brochure. Remember both that these are only the ones entered in the competition and we are just talking about North American cheeses here; countless thousands more can be imported.

Many big time retailers have gotten arrogant and assume that vendors will bring them product, but the small volume of many of the best specialty cheeses means that they sell out easily and the cheesemakers aren’t looking for orders from people who count their stores in the hundreds, much less the thousands.

Here is where micromarketing and store differentiation kick in. What is the right mix of specialty cheese for each store? The choice for a retailer is simple: get educated or rely on distributors to not only tell you what is good, but to understand what mix will work for each concept and location.

One of the reasons I know the quality of the judging at ACS is that Lee Smith, my longtime friend and associate and the Publisher/Editorial Director of DELI BUSINESS magazine, one of the Perishable Pundit’s sister publications, was an Aesthetic Judge this year. Lee has long been a champion of the specialty cheese business, and among the many contributions that Lee writes each year in DELI BUSINESS is the best Specialty Cheese Guide for the trade. Any chain retailers out there who are looking to gain a competitive edge should think seriously about the opportunity in the specialty cheese category. Make sure you have top people at ACS next year and, in the meantime, if you would like a free copy of the 2006 Specialty Cheese Guide that Lee wrote in DELI BUSINESS, just send an e-mail with your name, title, company and address here.

The Charity Of Business

Charity has been much in the news lately as Bill Gates announced his intention to transition out of a day-to-day role at Microsoft in order to spend more time at the Bill & Melinda Gates Foundation. Warren Buffett announced his pledge to donate much of his fortune to the same foundation. Late last year ReasonOnLine featured a terrific debate between Milton Friedman, the Nobel Prize winning economist, John Mackey, founder and CEO of Whole Foods and T.J. Rodgers, founder and CEO of Cypress Semiconductors on the topic, “Rethinking the Social Responsibility of Business.”

Mackey is smart and articulate but comes out on the short end of the debate because there is a Catch-22 to his argument. Mackey wants to claim that businesses have responsibilities to their customers, suppliers, employees and community other than making profits. But he also wants to claim that acting on these responsibilities builds long-term value. For example, Mackey explains the Whole Foods concept of “5% Days” as such:

"First, there can be little doubt that a certain amount of corporate philanthropy is simply good business and works for the long-term benefit of the investors. For example: In addition to the many thousands of small donations each Whole Foods store makes each year, we also hold five 5% Days throughout the year. On those days, we donate 5 percent of a store’s total sales to a nonprofit organization. While our stores select worthwhile organizations to support, they also tend to focus on groups that have large membership lists, which are contacted and encouraged to shop our store that day to support the organization. This usually brings hundreds of new or lapsed customers into our stores, many of whom then become regular shoppers. So a 5% Day not only allows us to support worthwhile causes, but is an excellent marketing strategy that has benefited Whole Foods investors immensely."

The point is obvious. Of course they should have 5% Days if it is a wise marketing strategy. Maybe they should even have 5% Days just because it increases the affinity of their customers or their employees for the company. Perhaps they should even have 5% Days because it makes politicians feel good about approving their site plans for new stores. Maybe they should have 5% Days just because John Mackay would quit if they didn’t and he is a leader worth paying that price to keep. But all these things are just sound business strategy and have nothing to do with whether corporations, particularly publicly held corporations, should be altruistic or have responsibilities beyond maximizing profits.

Milton Friedman, of course, caught this right away and quoted from his original 1970 article on the subject in The New York Times Magazine:

“Of course, in practice the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions.

“To illustrate, it may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government.…

“In each of these…cases, there is a strong temptation to rationalize these actions as an exercise of ‘social responsibility.’ In the present climate of opinion, with its widespread aversion to ‘capitalism,’ ‘profits,’ the ‘soulless corporation’ and so on, this is one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest.

“It would be inconsistent of me to call on corporate executives to refrain from this hypocritical window-dressing because it harms the foundations of a free society. That would be to call on them to exercise a ‘social responsibility’! If our institutions and the attitudes of the public make it in their self-interest to cloak their actions in this way, I cannot summon much indignation to denounce them.”

I give the now 94-year-old economist the last word. You can read a nice interview The Wall Street Journal Editorial Page did with Milton and Rose Friedman, his wife and a prominent economist in her own right, here.

Whole Foods And The Lobster Tale

The decision by Whole Foods to stop selling live lobsters but continue selling lobster meat in other forms has been greeted with some skepticism. David Merrefield at Supermarket News put it this way:

The lesson to be learned from this is that in retailing, when it’s necessary to make a change, tout that change as a high-value development, and do so in a style that will resonate with the core shopper base.

Live lobsters are an increasingly slow-moving category, so many supermarkets have removed lobster tanks without a thought about using the occasion to generate publicity. According to a news article in the Chicago Tribune, Jewel abandoned live lobsters eight years ago. Several weeks ago, Safeway quit selling live lobsters too, probably becoming the largest chain to eschew the product. Safeway didn’t gain much of a halo effect because the decision was styled in straightforward business terms: They didn’t sell well, so out they went.

Others thought the whole thing hilarious.

But my favorite assessment was from the House Democrats of Maine. Funny simply because one knows they would go to the ramparts to defend any creature obstructing development in Timbuktu. But they do have a point:

And, not to state the obvious, but the lobsters Whole Foods was selling are ALIVE. If you could ask the lobsters in the store’s tank who has the better quality of life, them or the butchered meat and salmon filets in the Whole Foods display case, we’ll bet a lobster dinner that we know the answer.

And maybe more telling:

How is this compatible with the company’s stated interest in selling the most natural food available and bringing consumers closer to food producers? Can you find anything more “natural” in a natural food store than a live Maine lobster?

What this episode actually tells us is that a big chunk of the organic/natural/whole food movement is about politics, not food. With a bunch of new organic/natural/whole food concepts around the bend, the issue is whether there is a substantial market for these products that don’t share the political affinity of the Whole Foods customer base. Publix sells live lobsters in some stores and, so far, there is no word on whether the new Publix GreenWise concept will do so. The Pundit lives in Boca Raton where one of the first GreenWise stores is due to open so he’ll be watching carefully to see if Publix goes after the crunchy granola folks. My guess: there is a big market for organic that couldn’t care less about politics. Boca Raton with a big affluent population is a decent test.

Nutrition Labeling Guidelines Rules

Aaaahhh it’s back! The arrival on my doorstep (or to be more exact in my e-mail box) of the news that The Food and Drug Administration published its final rule regarding “Food Labeling: Guidelines for Voluntary Nutrition Labeling of Raw Fruits, Vegetables and Fish” brought back tons of memories. When the very first regulations were published back in 1991, the Produce Marketing Association took a leadership role in making sure that an easy-to-use package, complete with in-store poster, video and workbook, was made available to produce retailers in order to accelerate compliance and thus avoid the possibility of mandatory regulation. Dole stepped up to the plate and funded the program and your friendly Pundit, along with the partner who got me into consulting in a big way, the late, great, Stan Silverzweig, were hired to write, design and execute the program in conjunction with PMA’s staff and retail board.

The deadlines were tight and I vividly remember a long night at a photo studio laying produce out on a large board painted with yellow lines to look like a highway. We were shooting the photography for posters themed, The Road to Good Living.

That poster, video and workbook are long gone. PMA still offers a voluntary nutrition labeling program, which you can buy right here. Though I am sure they will update it for the new rule, this latest rule isn’t required (or as required as a voluntary rule can be) until January 1, 2008, although anyone can use the new statistics effective immediately.

Though there is minor jiggling of nutritional labels and serving sizes for many of the listed products, perhaps the most significant change is that when retailers are providing nutrition labeling information for more than one fruit, vegetable or raw fish variety, they can now specify that the they provide negligible amounts of trans fat, in addition to saturated fat and cholesterol. Fish have to add negligible amounts of dietary fiber and sugars. With trans fats being such a topic of concern this may help.

Here are the top produce and fish products sold fresh — not canned or frozen — listed alphabetically:

Top 20 Fruits
Apple Nectarine
Avocado (California) Orange
Banana Peach
Cantaloupe Pear
Grapefruit Pineapple
Grapes Plums
Honeydew Melon Strawberries
Kiwifruit Sweet Cherries
Lemon Tangerine
Lime Watermelon

Top 20 Vegetables
Asparagus Iceberg Lettuce
Bell Pepper Leaf Lettuce
Broccoli Mushrooms
Carrot Onion
Cauliflower Potato
Celery Radishes
Cucumber Summer Squash
Green (Snap) Beans Sweet Corn
Green Cabbage Sweet Potato
Green Onion Tomato

Top 20 Fish
Blue crab Oysters
Catfish Pollock
Clams Rainbow Trout
Cod Rockfish
Flounder/Sole Salmon (Atlantic/Coho/ Chinook/Sockeye/Chum/Pink)
Haddock Scallops
Halibut Shrimp
Lobster Swordfish
Ocean Perch Tilapia
Orange Roughy Tuna

A quick look at the above lists makes you think about the merchandising opportunities the industry is missing. We sometimes split our efforts into the very top few items and then add specialties for variety and differentiation. But we have major items here that are almost never given innovative merchandising approaches.

A great guide to merchandising loads of fresh produce items is published each year in PRODUCE BUSINESS. If you are a retailer and need another copy of the Masters of Merchandising supplement, give us your name, title, company and address and we’ll get you a copy, compliments of the Pundit.

U.S. Beef, Food Safety And Freedom

It is good news for America’s beef producers that the market in Japan is now open. However, there are plenty of indications of skepticism in Japan about the safety of U.S. beef and thus real doubts about how quickly demand in Japan will ramp up to pre-embargo level. Japan was the largest importer of U.S. beef, buying almost $1.5 billion in 2003.

The relationship between the U.S. and Japan is so deep that many Japanese wonder if their government wouldn’t open the market for political reasons, to help an ally. And the issue is problematic. On the one hand, from any reasonable cost/benefit ratio the Japanese standard of inspecting every cow is not justified. But the threat, in its nature, is different from the kind of statistical dangers that advocates of restriction on pesticides or other such things point to. Bovine spongiform encephalopathy (BSE) and its human form, variant Creutzfeldt-Jakob Disease, have been linked to more than 150 deaths, mostly in Britain.

It is important for the food industry to make sure that trade policy decisions are made on a scientific basis. So a country, under WTO rules, can’t ban a product because they declare a “hunch” about it. But if a country is willing to enforce an inspection regime against its own producers, and Japan does require that 100% of all domestic cattle be tested for BSE, do we really want to say they can’t apply that rule to imports?

Beyond trade policy there is another issue at stake: The United States Department of Agriculture is prohibiting companies from doing their own tests. So no U.S. producer can market its product as 100% tested, whether to sell in the U.S. or overseas. The USDA is contending that such testing is not needed. This is probably true. The odds of an individual getting sick seem to be infinitesimal.

Still, it is a free country and if a consumer wants to buy peace of mind by paying extra for a brand of beef that is 100% tested, it is not clear why it is any business of the government to stand in his way.

The USDA seems concerned that the very existence of 100% tested beef might make consumers think that untested beef is not safe.

The same issues have been raised regarding the marketing of certified organic product and the use of various certification agencies such as Nutriclean.

Bottom line: the USDA is not charged with restricting consumer choice or preventing marketers from looking for niche markets or a competitive edge.

A couple of month’s ago Creekstone Farms, a Kentucky-based producer of what it calls “Natural Black Angus Beef,” announced that it has filed a lawsuit against the USDA challenging its ban on voluntary BSE testing. It is hard to imagine why it shouldn’t win.

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