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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

What Andrew Young Should Have Said

Young resigned, in the uproar that ensued, after he was asked in an interview with a newspaper if he was concerned that Wal-Mart might drive small mom-and-pop stores out of business and force them to close. He replied as follows:

"Well, I think they should; they ran the ’mom and pop’ stores out of my neighborhood," the paper quoted Young as saying. "But you see, those are the people who have been overcharging us, selling us stale bread and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they’ve ripped off our communities enough. First it was Jews, then it was Koreans and now it’s Arabs; very few black people own these stores."

Much attention has been paid to the obvious racism of these remarks. In uttering them, he reveals himself not to have been this great champion of human rights but more to have been a simple partisan for his own group. Knowing that he harbors this kind of animosity against other groups of people will, and should, permanently reduce his stature in the eyes of the world.

To me, however, the more interesting part of this story is the ignorance of both business and economics that the quote reveals.

And, of course, it is ignorance of both that is at the root of Wal-Mart’s many PR problems.

If Andrew Young wanted to tell the truth about Wal-Mart, this is what he would have said:

“Every time a way is developed to do things better, more efficiently, less expensively, offering better service or variety… anytime there is ever an improvement in commerce, those individuals that were doing things in another way get hurt.

So, when supermarkets rolled out across America, lots of little grocery stores, butchers, bakers and produce stands couldn’t compete. And when mighty department stores rolled across America, lots of little clothing stores couldn’t compete. And when people learned that they liked to shop in safe, air-conditioned, enclosed shopping malls, lots of main streets didn’t make it.

More recently, many a hardware store couldn’t compete when a Home Depot or Lowes rolled into town, and many a toy store closed when Toys R’ Us came to town

Independent bookstores closed in the wake of Barnes and Noble, Borders and Books a Million, and who knows what businesses yet will close in the wake of Amazon.com and E-Bay?

But there is no political way to determine if it is better for consumers to buy books in little bookstores, in chain superstores or on-line. This is a decision best made by millions of people acting in their own self-interest.

Just because a Home Depot, a Barnes & Noble or Amazon.com… or for that matter a Whole Foods store… opens for business, this doesn’t force anyone to change their shopping habits. If they change, and they have, it is because they perceive a better value in the new alternative than in the old. It might be price, it might be selection, it might be convenience, service or some other attribute, known or unknown.

There are many things Wal-Mart offers to minority groups: One-stop shopping, which is a special value to a community that doesn’t have as many cars per household as more affluent ethnic groups. Facilities that are generally kept safe and well lit with security guards when shops in our own neighborhoods may be dangerous, and better prices, a crucial attribute to a community where money is not as plentiful as in other ethnic communities.

Of course it is sad if hard-working people lose their jobs or their businesses but, if Wal-Mart is offering a better deal, then people in our community will save money on their purchases. That extra money in every pocket is available to buy other things. That means that, in time, those small businesses will be replaced with other businesses.

And, politically, that is the problem. If a new concept comes into a community and cuts prices 20% and a bunch of competitors can’t compete, the 10 O’Clock News interviews them and everyone has the name and address of people hurt by a new innovation. But nobody has the name of the computer store that will open in two years because that real estate is available, nobody has the phone number of the people who get jobs at a factory because people can afford to buy more of something, nobody ever interviews the little child who goes to Disney World because the family reduced its expenditures enough to save up the money.”

Andrew Young’s words especially demean the efforts of those in the perishable food business. By the time I started working in the produce business in New York, the age of the Jewish and Italian greengrocer was fast coming to an end. Those families that stayed in the business, including my own, went on to dominate the wholesale trade.

But the Korean families I knew, and I knew many, were scarcely “overcharging” or selling “stale bread and bad meat and wilted vegetables”. In fact, most of the families I knew struggled to make a living, often with everyone in the family working long shifts as they kept the stores open 24 hours a day.

And the product was usually very fresh. One reason perishable food is typically a portal of opportunity for America’s immigrants is that they could set up a store with minimal inventory cost.

Most opened up and came down to the market every day, buying only what they absolutely needed. They sold all day for cash and came back the next day ready to buy again.

Besides, the one thing we know is that those immigrant groups provided their neighborhoods with a better value than what the people who elected to shop there could get elsewhere. Maybe it was price, maybe it was a selection geared to what that particular neighborhood wanted, maybe it was convenient location thus saving on transportation costs. Maybe it was convenience in hours of operation.

But our economy is so competitive that, in the absence of specific laws to allow it, it is virtually impossible to abuse a consumer group for an extended period of time. In fact, prejudice and ignorance always create a window of opportunity for someone else.

Amadeo Peter Giannini was the stepson of a small produce wholesaler whose business was located on the wharf in San Francisco. He built the business into the largest produce wholesaler in the West. He sold his stake at 31 years of age and opened The Bank of Italy in North Beach, which was one of the very largest communities of Italian immigrants in the Western US. He launched the bank and gave it that name because America’s bankers wouldn’t lend to Italian immigrants. In their racism, they failed to see a viable market.

After the San Francisco earthquake in 1906, Giannini salvaged the depositors’ money out of the bank and walked through the streets of San Francisco by dressing as a humble fruit peddler and burying cash, gold and silver worth $80,000 under a load of oranges. With the money intact, when other banks were closed he set up a desk on two barrels with a board and started lending money to common people, mostly Italian immigrants to rebuild their lives and their businesses.

Those Italians turned out to be far better credit risks than the establishment bankers in their ignorance perceived. So today, Amadeo Peter Giannini’s bank is called Bank of America.

More Bad News On Avain Flu

The basic problem is that, in practice, it is difficult to actually immunize 100% of a flock. This raises the specter of “silent spread” in which immunized birds carry the disease without experiencing symptoms. The following is from The Herald:

"Silent spread" occurs because immunised birds can still catch and pass on avian flu, but without presenting any symptoms. Therefore, as protection levels rise in a vaccinated flock, it becomes ever harder to detect the spread of avian flu, simply because fewer birds die. The result is increasing amounts of bird flu virus contaminating the birds’ surroundings without farmers realising it.

Hard to find good news on this front.

Do We Really Want To Eat Well?

Not only that, but obesity is starting to be a big problem not just in rich, developed countries but in developing nations such as China, where there is a major shift going on with diets moving toward animal products and vegetable oils. Professor Benjamin Senauer of the University of Minnesota explains:

"The biggest increases are being seen in parts of Asia with certain populations more susceptible than others. If we do not get to grips with this, problems associated with obesity, such as diabetes and cardiovascular disease, are going to increase rapidly."

He is urging governments to fight the problem. He raises issues such as a tax on certain calories and subsidies for production of fruits and vegetables. He also points out that in low-obesity Japan, they spend 25% of their money on food as opposed to 14% in the US.

But there are other factors: Japanese cities are designed for walking and mass transit, whereas the US suburban lifestyle minimizes walking.

Of course, in a democracy you can’t solve a problem without the political will to do so. People chatter all the time about wanting to eat right and get in shape, but, in most cases, they lack the willpower to actually do it, at least on a sustained basis. Will they support social policies that force them to do what they know is good for them anyway?

Sometimes this can happen. The reason for laws against gambling is not that most people hate gambling and so want to outlaw it. The reason is that most people are tempted to gamble but recognize that it is not good for them, and so they vote to be taken out of the path of temptation.

Unfortunately, as evidenced by the rapid spread of legalized gambling, there is scarcely a person alive who can remember that way of thinking. Today, I fear, people do not really want to eat well. They certainly don’t want to be forced to eat well; they want to eat whatever they want and then take Lipitor to solve their problems.

This does not bode well for the good professor’s proposals.

Pundit’s Mailbag — Leadership

I am so frustrated by what I call the "spreadsheet mentality" of some key industry operatives (both suppliers and buyers). So many kids can make an Excel sheet sing and get management kudos for the short run, but they absolutely forget that it was the product itself that got the end user to enjoy the product. Everything else is merely how you count the money. Somehow, the passion is gone. I know I’m not alone in saying this is a pet peeve of mine.

Where are the Spezzano’s, the DiPiazza’s, the Misasi’s, the Eldredges?

I LOVE coming to work in the morning. I absolutely cannot wait to see what we, as an industry, can do to make this world a better place. How many of my Gen-X colleagues share that same passion? I challenge some of our top association people with this missive all the time. They tell me that I am missing many of these people. If so, they aren’t showing me the type of leadership that made this industry grand.

I don’t know. I happen to really like this writer, who has worked hard for the industry, and I consider him a friend, but I confess I read the letter and I hear a little bit of Paul Lynde in Bye Bye Birdie singing “What’s the matter with kids today?”

There is no question that the industry has a lot of up-and-coming leaders. Look at a guy like Jim Lemke at C.H. Robinson, who is not even 40 and runs one of the most forward thinking groups in the industry. There is a lot of leadership in positioning an organization like that, and he still makes time to serve on the board of the United Fresh Fruit and Vegetable Association.

But this reader’s letter mentions four specific people, all of whom were Chairman of the Produce Marketing Association at one time or another, so I’ll focus on PMA. And since three of the four names he mentions were retailers when they were serving as chairman of PMA’s Board, I’ll focus on retailers.

There are a lot of great retailers on the board right now. Craig Carlson over at Pathmark adds the perspective of the powerful New York Metro region, and Anthony Barbieri at Acme adds both the authority of being based in a major buying region like Philadelphia and the resources and knowledge base that come from being part of a behemoth such as Supervalu.

Jeff Patterson at B.J.’s sees the world from the unique perspective of a warehouse club operator, and he finds time, along with Duda’s Alan Newell, to run a very important Technology and Standards project for PMA. Don Harris brings both an in-depth understanding of what it is like to work for one the giants from his years at Safeway and adds the distinctive perspective of natural/organic operator as VP Produce and Floral for Wild Oats.

Then there is all around great guy Mike O’Brien from Schnucks, who brings a Midwest regional family-owned operator to the table. And I’m not talking about senior guys like Steve Junqueiro from Save Mart or Peter Goulet, who spent years at Hannaford.

I also haven’t mentioned the obvious: Dave Corsi, VP of Produce & Floral Operations for Wegmans. He is Chairman of PMA’s Retail Board and thus on the main board and clearly fingered as a superstar on the path to the Chairmanship. He represents the retailer everyone wants to be like, and I’ve spent some time with him and can testify that he is as passionate about produce as any of those guys were. And I bet he’s a lot better with a spreadsheet than any of them were at the time they were on the board.

Different times create and demand different skills. Someone passionate about produce but ignorant about RFID, logistics, EDI, continuous replenishment and vendor-managed procurement just isn’t going to get very far today. Sure, not everyone I mentioned will go the distance and become great memorable leaders of the industry, but there were plenty of people on the board of PMA when the superstars that our writer mentions were there who have long since been forgotten. On the whole, I’m pretty confident that today’s board can stand up to that of yesteryear.

And I haven’t even touched on the many up-and-comers on PMA’s Retail Board. I’m talking about people like Steve Tursi of Wal-Mart. I’ll mention him just because PRODUCE BUSINESS named Steve one of its 40 under Forty young leaders last year and we identified another 40 leaders this year.

I’m also privileged to be on the steering committee for the Pack Family/PMA Career Pathways Fund program, funded in an extraordinary act of generosity by my good friends Jay and Ruthie Pack. This program, which brings college students to the PMA convention, is starting to identify leaders before they are even in the industry. And now, the Nucci Scholarship for Culinary Innovation is getting foodservice students at The Culinary Institute of America to think about produce, and some of them will begin their path to leadership with that program.

Then, of course, there’s the produce leadership at United Fresh Fruit and Vegetable Association, and it also has excellent programs in place to identify and train leaders.

The Dupont/United Produce Industry Leadership Program captures young leaders with potential and gives them training to develop their potential. The Frieda Rapoport Caplan Family Business Scholarship Program is helping family businesses to bring new leaders into the fold.

Not one of these leadership programs existed when any of our writer’s heroes was Chairman.

And let us not forget that the pool of leaders has substantially expanded with the availability of women to serve in such posts. Today, for the first time ever, both national produce trade associations are headed by women: Maureen Torrey Marshall of Torrey Farms at United and Janet Erickson of Del Taco at PMA.

So by any objective standard, there are more leaders, better trained, than ever before.

Yet, there is a core of truth in what this reader writes. Many of the sharpest people in the industry today are MBA-types, aces with the spread sheet but, in some cases lacking passion for the product. But produce is a very exciting and thus somewhat addictive field, so I find even most of the financial types come to love it.

Perhaps more important, look at the corporate backgrounds of the four superstars this reader mentions: Dick Spezzano, although now a consultant, rose to fame as VP of Produce for Von’s in Los Angeles; Bob DiPiazza now is VP of Perishables at Sam’s Club, but made his big contribution of institutional leadership as VP of Produce at Dominick’s in Chicago. Tony Misasi is, unfortunately, no longer with us, but he worked at Grand Union. David Eldredge still contributes as President of New Star, but he rose through the ranks at PMA while working for Tanimura & Antle.

The retailers came all from regional retailers. As such they had no competitive corporate interests to protect outside their local area, and they served on national boards to learn, network and help the industry. They had strong support from their management to be engaged.

But not one of those three companies exist anymore as independent entities.

We still have some similar companies — Wegmans, Schnucks, a few others. And they produce a disproportionate share of industry leadership. And, by the way, that isn’t just true of produce. If you went over to the International Dairy Deli Bakery Association, you would find that they’ve had superstar chairmen like Ed Meyer from Schnucks, who got the job when he was head of deli/seafood/carryout and went on to be vice president of meat and seafood.

Big national chains are a different story. Some won’t serve on boards at all. Often they will serve on boards but they are always wearing their company hat, not an industry hat. It is not the same kind of labor of love as it was for those mentioned by the writer.

The same distinction applies among shippers. The T&A that supported David Eldredge in his efforts was also a particular breed. It is privately held, yet big enough to share one of its top people with the industry. Many producers are either big, often public, companies with a corporate representative filling a board seat or too small to really let a top person spend the time necessary in volunteer leadership.

The situation is very dependent on the company and the situation. One reason Tursi’s appearance on the PMA Retail Board has significance is it indicates that Wal-Mart is intending to continue its policy of being actively involved in produce trade associations. Bruce Peterson, now Senior Vice President and General Merchandise Manager of Perishables, fought for that policy against considerable internal resistance when the Supercenter concept was brand new. And it seems that Ron McCormick, VP/Division Marketing Manager for Produce, is continuing with that policy.

In the end, it is this indication of corporate support for involvement in industry affairs that is the key. There are plenty of good people. There are some challenges in getting organizations to support them.

I remember a good friend who was actually chairman of one of the major association’s annual conventions, and his large retail employer would not allow him to attend. The fact that the person had worked hard for that day meant nothing. The fact that the company had made an implied commitment by allowing its employee to get involved meant nothing. It reminds you that in most organizations, even a high level perishables employee is just middle management, and the contribution they can make depends on their employer seeing real value in making it.

We’ve got a lot of programs out there now to develop leadership in individuals. Maybe we need a program to convince organizations that they too benefit if their people become leaders.

Mistakes Happen…
But Never Too Small To Correct

Still, it is almost impossible to publish as many words as we do each year, on the daily schedule we do this work in, without a few errors creeping into the mix.

Most of the time they are minor typographical errors, but, here at the Pundit, there is no error too small for us to correct.

If you notice an error, please shoot us an e-mail at PerishablePundit@PerishablePundit.com and let us know.

One of the great things about the web is that we can correct errors at any time even in the archive.

If you send us a minor error correction, such as pointing out a typo on a word, we will probably make the correction in the archives, send you a thank you and let it go at that.

If it is a matter of substance, we will announce the correction prominently in an upcoming issue.

In any case, every correction is appreciated.

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