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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

Sunkist Wake-up Call?

I went to sleep last night thinking about what I would write about the decision of Paramount Citrus to leave the Sunkist co-op and begin marketing its own fruit.

I woke up dreaming of pomegranates, which is a very good thing for a pundit, especially a Perishable Pundit, as it is written in the Talmud that if a sage dreams of the pomegranate, it is an omen that he shall have great wisdom. Hedging my bets, the Talmud goes on to explain that if an ignorant man dreams of a pomegranate, it is an omen of good deeds. Either way dream of pomegranates and you are a winner.

The connection between citrus and pomegranates? Well that would be The Franklin Mint or, to be more precise, Stewart and Lynda Resnick and their company Roll International. Holdings include Fiji Water, Teleflora, Paramount Farms, Paramount Citrus, POM Wonderful and The Franklin Mint. POM Wonderful is the largest producer of pomegranates in the United States and has been the pioneer in developing a fresh juice and beverage category for pomegranates.

It is not surprising that Paramount Citrus is going to go its own way. The company was actually founded back in 1950 with the objective of giving citrus growers an opportunity to market their fruit independently of Sunkist.

Besides, after buying Dole’s citrus operations in 2000, it became the largest player in the business, accounting for about 10% of all the citrus shipped from California and Arizona. They have a lot of economy of scale all their own.

Paramount’s decision to separate from Sunkist follows Jeff Gargiulo’s decision to leave the company. It is probable that the decisions are related.

It doesn’t surprise me. Jeff Gargiulo did extraordinary work with Sunkist. The last few years working with talented people such as Rick Eastes, who launched Sunkist’s global sourcing operation, and Robert Verloop, Sunkist’s vice president of marketing, Gargiulo orchestrated an explosion of activity. Sourcing was diversified so that Sunkist could supply citrus from Chile, South Africa and Australia into Japan, Hong Kong and Canada. Domestically Sunkist began selling berries and launched a fresh-cut joint venture with Taylor Farms. Marketing found a way to work with both Elmo and Billy Dean.

But Jeff did yeoman’s work. The things he did were obviously needed for decades. I wrote a column about it 15 years ago. But working with a co-op is a challenge, and what Sunkist needs today is the kind of structural reform that other co-ops such as Calavo have already gone through.

I’ve never met the Resnicks, but the slow building of consensus necessary to achieve structural change at a co-op must be painfully difficult for anyone who can innovate as they have with Pom Wonderful. It is really a case study for the whole industry as they have poured money into both research to prove the worth of their product and product development to find new uses. A two-second look at their ad campaigns and you see this is a different kind of produce company.

Bottom line: Sunkist is an immensely important produce company, and it has a brand of almost priceless value. But its grower owners have to realize that retail has changed. Buyers need companies to manage categories and source the best product at the best value at all times. You can’t have two masters, and the master has to be the customer.

Be “In The Know” With Dairy/Deli/Bakery Guidebook

The International Dairy-Deli-Bakery Association is now taking pre-publication orders and offering members pre-publication discounts to its What’s In Store 2007. This handy compendium on trends in the industry is a must have for anyone seriously involved in these important perishable fields. And this year you will get expanded Deli PLU data plus quarterly updates on their web site. I’m pleased to say that the Pundit’s sister publication, DELI BUSINESS, always gets more than a few citations in this annual guide. Place your order here.

Bird Flu Warnings Demand Attention

Avian influenza seems on everyone’s list as the next disaster to be prepared for. The International Dairy Deli Bakery Association offers help. The Produce Marketing Association just offered a Webinar and has a follow-up one scheduled. The National Chicken Council also offers a separate web site chock full with information.

The good news: The National Chicken Council, National Turkey Federation, USA Poultry & Egg Export Council and the U.S. Poultry & Egg Association have issued a joint announcement that the ABC made-for-television movie “Bird Flu” is complete fiction.

But the risk of Avian influenza is not. Outbreaks in Europe, the Middle East and Africa are having an effect on both trade and consumption. Tyson just came out with its earnings, which were actually a loss, and for a third time Tyson cut its fiscal year outlook. Scott Kilman of The Wall Street Journal reported:

Foreign demand for U.S. chicken plunged earlier this year as the deadly Asian H5N1 strain of bird flu appeared in European flocks. Its appearance prompted many consumers there to temporarily cut chicken from their diet, though health authorities say eating chicken poses little risk to consumers, particularly in regions where the poultry industry is highly industrialized. Prices of U.S. chicken breasts fell to their lowest level in decades.

But the state of the poultry industry may be the least of our problems. Infection has been confirmed in humans. Ted Koppel scared the pants off attendees at both the National Restaurant Association and Food Marketing Institute conventions and thought the facts played out differently for each group:

To the restaurant operators he reported: "If avian flu breaks out in this country, I don’t think you’ll be keeping your restaurants open. You’ll be staying at home."

To retailers, after pointing out the most effective survival strategy was to stay home: "We’ve got big freezers. We’ve got laptops. You’re in the food business, so this could be very good for you. How many of you have a month or two supply of food stockpiled at home?"

He meant it tongue-in-cheek, but he pointed out that 5% of the population of the world died in the influenza epidemic of 1918.

Preparation is a good idea. A very good idea.

Four More Years For Irvin?

Tommy Irvin has served as Commissioner of the Georgia Department of Agriculture since 1969. He is not only Georgia’s senior constitutional officer but has served as head of his state’s agriculture department longer than anyone else in the United States. He is universally recognized as a powerful and innovative advocate for the interests of Georgia.

I first shook hands with the Commissioner when we were both in Cuba at a trade show to promote the export of U.S. food to that market. As he had pushed to open markets in Russia and China, Commissioner Irvin was pushing to open the Cuban market for Georgia farmers in line with his long-held beliefs that expanded trade is not only good for business, but promotes world peace.

As a result of the recent primary election in Georgia, it looks highly likely that Tommy Irvin will be elected to an unprecedented 9th term as Commissioner. He received more votes than all four Republican agricultural candidates — combined.

Future Foodservice Opportunities

If you are going to be in New York and don’t have a lavish expense account, you could do a lot worse than consult the guide featured in New York magazine to “New York’s Best Cheap Eats”. Cheap is, of course, relative and, in New York they set it at an entrée price of around $20. Beyond the personal interest, the list is intriguing because it is made up of all local independent restaurants.

The local independent restaurant is pretty much neglected when it comes to national producers looking to sell product. It is just much easier for big national producers to approach national restaurant chains to try to sell product. It is even easier to approach major foodservice distributors such as Sysco. A few high-end restaurants get approached to carry a new item in hope of garnering publicity, but in any city such as New York, where many restaurants buy from local purveyors who buy off the city’s local produce, meat or fish markets or other local vendors, most national vendors are just out of their element. It is a shame because these independents have more menu flexibility than a national chain.

A little bit of hope: the Produce Marketing Association just held its 25th Annual Foodservice Conference and Exposition in Monterey, California. A highlight of the conference was the inauguration of The Nucci Scholarship for Culinary Innovation under which ten students and two faculty members from the Culinary Institute of America each year receive the opportunity to participate in PMA’s foodservice conference.

This type of outreach is crucial because it gets to people who will probably never be on the board of an organization such as PMA. The Perishable Pundit’s sister publication, PRODUCE BUSINESS, was proud to be one of the sponsors of the Nucci Scholarship Golf Tournament, which funds the program.

The scholarship is named in honor of Joe Nucci, a substantial innovator himself. He was among many other things the father of Broccoli Cole Slaw, the Secretary-Treasurer of PMA and the President of Mann Packing. He died a year ago at age 40. He was a good friend.

Trying to Sell Books

ChicagoBusiness.com, a unit of Crain Communications, Inc., is reporting that Eric Schlosser and Charles Wilson, authors of Chew on This: Everything You Don’t Want to Know About Fast Food, a popular screed that is targeted for kids, are upset because McDonald’s is, allegedly, using “front groups” to attack their book. The web site quotes Wilson: “We don’t mind people attacking our book as long as it is not through front groups.”

Schlosser gained widespread fame as the author of the New York Times Best Seller, Fast Food Nation, from which much of this book is derived. The criticism he and Wilson are making is partly targeted at the launch of BestFoodNation.com, a web site launched by almost 20 food industry groups:

American Farm Bureau Federation
American Meat Institute
Cattlemen’s Beef Board
Corn Refiners Association
Food Products Association
International Franchise Association
National Cattlemen’s Beef Association
National Chicken Council
National Council of Chain Restaurants
National Milk Producers Federation
National Pork Board
National Pork Producers Council
National Potato Council
National Restaurant Association
National Retail Federation
National Turkey Federation
Snack Food Association
U.S. Potato Board
United Egg Producers

The web site bills itself as “A Celebration of Our Safe, Abundant, Affordable Food System” and is focused on presenting a positive message and to rebutting critics of the food industry. There is some question as to whether it does either very effectively. The site is so relentlessly upbeat that it tends to lose credibility.

Still it seems to be gaining momentum. Most recently, the Produce Marketing Association announced that it would start providing information to the web site.

As far as Schlosser and Wilson go, likening this array of food organizations to a “front group” is non-sensical. These organizations all represent very discrete segments of the food business so it makes perfect sense for them to combine to address the issue of the overall characteristics of the food supply.

More substantively, the criticism is beside the point and makes you feel Schlosser and Wilson’s aim is selling books more than improving society. After all, public policy discussions are advanced by the substance of debate, not by who is making the argument.

McDonald’s denies putting pressure on or paying any organization to refute Chew on This. But even if it did, Schlosser and Wilson have an obligation to respond to the reasoning, logic and evidence presented. To launch attacks on the messenger, as opposed to the message, is self-serving and promotional.

Wal-Mart Advances Green Movement

Horace Greeley may have advised young men to “Go West”, but if you really want to see the future of Wal-Mart’s sustainability initiatives you should look east from Bentonville and across the pond to announced a commitment that by 2010 it will stop sending any waste at all from its 307 stores to landfills. Everything will be recycled, reused or composted.

Further ASDA has pledged to redesign all ASDA brand packaging over the next year-and-a-half, which it thinks can reduce weight by 10%.

It explains that careful attention to packaging has let it reduce the thickness of salad bags by 15% and gotten rid of some excess cardboard in the packaging on prepared foods.

This is very top-down driven, as Lee Scott has identified sustainability as a key focus.

He likes it because it is one of the few areas where Wal-Mart can both win props with its critics and, maybe, save money.

There was a big meeting with suppliers in Bentonville on sustainability earlier this year. The message: We are going to need, and expect, a lot of help on this.

Of course, Wal-Mart and its suppliers are not alone in working to solve this problem. Consumers are being asked to help as well. ASDA runs numerous efforts to tie in with the national “Big Recycle” project to entice consumers to recycle.

Can they do it? Yes they can! They’ve called in Bob the Builder to encourage everyone to recycle at ASDA. And if that doesn’t work? Well, there is always ASDA’s Easter Bunny!

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