1) There is no evidence the contamination came from the field, though this cannot be ruled out:
Because the samples collected in the growing fields were negative for Listeria monocytogenes whereas the environmental samples collected in the packing facility and cantaloupe collected in cold storage (discussed further below) were positive for Listeria monocytogenes,the growing fields are not a likely means of contamination. However, FDA has determined that the growing environment cannot be eliminated as a potential contributor in the introduction of Listeria monocytogenescontamination.
2) The design of the facility allowed for the pooling of water near the cantaloupes:
Certain aspects of the packing facility, including the location of a refrigeration unit drain line, allowed for water to pool on the packing facility floor in areas adjacent to packing facility equipment. Wet environments are known to be potential reservoirs for Listeria monocytogenes and the pooling of water in close proximity to packing equipment, including conveyors, may have extended and spread the pathogen to food contact surfaces. Samples collected from areas where pooled water had gathered tested positive for an outbreak strain of Listeria monocytogenes.
3) The design of the facility made it difficult to clean thoroughly:
Further, the packing facility floor where water pooled was directly under the packing facility equipment from which FDA collected environmental samples that tested positive for Listeria monocytogenes with PFGE pattern combinations that were indistinguishable from outbreak strains. The packing facility floor was constructed in a manner that was not easily cleanable. Specifically, the trench drain was not accessible for adequate cleaning.
4) A truck and driver shuttled back and forth bringing culled cantaloupes to a cattle operation which created an opportunity for contamination:
Another potential means for introduction of Listeria monocytogenes contamination into the packing facility was a truck used to haul culled cantaloupe to a cattle operation. This truck traveled to and from a cattle operation and was parked adjacent to the packing facility where contamination may have been tracked via personnel or equipment, or through other means into the packing facility.
5) Jensen Farms purchased used equipment for the packinghouse that was of a kind that could not be easily or routinely cleaned. The equipment was used previously to pack a different commodity. Trade sources indicate this was potatoes – though the FDA report does not identify the commodity. Pathogens that are not problematic for potatoes could have been introduced on used equipment:
In July 2011, the firm purchased and installed equipment for its packing facility that had been previously used at a firm producing a different raw agricultural commodity.
The design of the packing facility equipment, including equipment used to wash and dry the cantaloupe, did not lend itself to be easily or routinely cleaned and sanitized. Several areas on both the washing and drying equipment appeared to be un-cleanable, and dirt and product buildup was visible on some areas of the equipment, even after it had been disassembled, cleaned, and sanitized. Corrosion was also visible on some parts of the equipment. Further, because the equipment is not easily cleanable and was previously used for handling another raw agricultural commodity with different washing and drying requirements, Listeria monocytogenes could have been introduced as a result of past use of the equipment.
Environmental samples collected from the packing facility equipment tested positive for Listeria monocytogenes with PFGE pattern combinations that were indistinguishable from three of the four outbreak strains. After the firm discarded portions of the packing facility equipment and cleaned and sanitized the remaining packing equipment, environmental samples tested negative for Listeria monocytogenes.
The design of the packing facility equipment, especially that it was not easily amenable to cleaning and sanitizing and that it contained visible product buildup, is a factor that likely contributed to the introduction, growth, or spread of Listeria monocytogenes. Cantaloupe that is washed, dried, and packed on unsanitary food contact surfaces could be contaminated with Listeria monocytogenes or could collect nutrients for Listeria monocytogenes growth on the cantaloupe rind.
6) The failure to pre-cool the melons before refrigerating them created the environment that would lead to condensation, which created ideal conditions for pathogens to grow:
In addition, free moisture or increased water activity of the cantaloupe rind from postharvest washing procedures may have facilitated Listeria monocytogenes survival and growth. After harvest, the cantaloupes were placed in cold storage. The cantaloupes were not pre-cooled to remove field heat before cold storage. Warm fruit with field heat potentially created conditions that would allow the formation of condensation, which is an environment ideal for Listeria monocytogenes growth.
The combined factors of the availability of nutrients on the cantaloupe rind, increased rind water activity, and lack of pre-cooling before cold storage may have provided ideal conditions for Listeria monocytogenes to grow and outcompete background microflora during cold storage. Samples of cantaloupe collected from refrigerated cold storage tested positive for Listeria monocytogenes with PFGE pattern combinations that were indistinguishable from two of the four outbreak strains.
The FDA investigation is thorough and sensible, but there is not one thing new in the investigation. That is to say that every single thing mentioned as possibly contributing to this problem was a known hazard before this season began.
So how did this happen? How is it that the produce industry — and we better face up to this — has killed 25 people and caused a miscarriage? How did the regulatory environment create conditions that allowed this tragedy?
On the trade side, there are two specific questions that exemplify the problem:
A) Wal-Mart, in many ways a great leader in food safety and certainly a company with almost unparalleled resources to make sure food safety is done right, bought these cantaloupes. How did this happen?
B) Wegmans, widely recognized as a smaller chain anxious to do the right thing on food safety, wound up having to do a recall on fresh-cut cantaloupes sold at its Buffalo area stores. How did this happen?
It is actually quite clear how this happened, and there are very specific issues that must be addressed, issues that may require us to blow up the distribution chain for produce in America.
The common link between Wal-Mart and Wegmans is that neither bought Jensen Farms cantaloupes directly. In both cases, it was an intermediary that made the purchases.
We have no way of knowing for sure but it is very possible, indeed likely, that Jensen Farms didn’t have a vendor number for either chain. And it is very likely that neither chain had vetted its facilities and operations. Both chains were relying on intermediaries to do so.
Yet, interestingly enough, almost every single time we have spoken to intermediaries over the past five years after a food safety outbreak, the intermediaries themselves get squeezed out as the farms stop all sharing of information as they plot their legal strategies. The fact that this can happen is itself an indication that the supply chain is not aligned sufficiently to produce food safety.
Food safety is like flavor; to successfully deliver it you must have commitment and control in an aligned supply chain. The commitment required is to hold food safety (or flavor) as a core value. The control can only be asset-based. The parties involved must have control over the assets necessary to execute daily. These assets are obvious from the shipper standpoint, and from the buyer side it is control over the PO’s.
Yet neither the retail chains nor the intermediaries typically have any control over the “assets necessary to execute daily.” If given a choice, would the well-respected Frank Yiannas, Vice President — Food Safety at Wal-Mart, have endorsed buying a used potato dump tank rather than a new piece of cantaloupe specific equipment? Almost certainly not. For that matter, would Frontera, which was the intermediary on much of this produce that found its way to Wal-Mart, do the same? We doubt it. Would Bill Pool, the Manager of Agricultural Production and Research over at Wegmans, think this a great idea? Forget about it. But — it is highly unlikely that any of these people — or for that matter Wegmans’ fresh-cut supplier — were asked.
And if you are not going to be asked, how can you control food safety?
Well, as our spinach crisis letter-writer indicated, the way you control food safety when you can’t personally be at the farm is that you need a supply chain aligned by common values.
This is where our critique of Wal-mart’s food safety policies becomes uncomfortable for Wal-mart. When we say that Wal-mart is not doing all it can on food safety, we are not saying that Frank Yiannis is remiss. We are saying that the core of food safety is completely out of his control. Because he is not authorized to assure Jensen Farms that it is in a deep partnership with Wal-Mart and that it can count on Wal-Mart POs flowing as long as it does the right thing on food safety.
Frank Yiannis is not even authorized to make that promise to Frontera, so that Frontera can pass on the promise to its suppliers.
Properly understood, the food safety question raised by this issue is why did Jensen Farms buy a used potato washer rather than a brand new piece of equipment specific for the cantaloupe industry? The answer there is pretty clear: It wanted to save money. But, of course, if it knew that Wal-Mart would gladly pay more for product produced in superlative facilities, it wouldn’t save money by buying cheap equipment. So Wal-Mart has created the economic environment driving these food safety decisions.
We’ve never met a packer that wouldn’t love a nice pre-cooling facility. So why didn’t Jensen Farms have one? Because it is expensive to build such a facility and is difficult to amortize the cost over a six-week season. Once again, though, the issue is clear: It is not the cost of these things that are problematic; it is the doubt that Wal-Mart is aligned with Jensen Farms and will happily pay more for cantaloupes to have them pre-cooled in modern facilities. Our thought: If Jensen Farms built a world class pre-cooling facility and tried to raise cantaloupe prices sufficiently to earn a reasonable return on that investment, the cantaloupes would be then cheaper in California, and Wal-Mart would drop this deal like a hot, well, like a hot cantaloupe. So it is Wal-Mart’s procurement decisions that drive food safety decisions on a day-to-day basis — maybe more so than anything the food safety or quality assurance department might do.
This is the next generation of food safety in the produce industry — moving food safety out of dedicated departments and into the procurement function.
The only way this can be done is to drop day-to-day trading and replace that with alignment with key vendors where both parties work together on driving costs out of the system while achieving shared goals such as food safety or sustainability.
The implication of this for many industry firms is profound. In the first of our cantaloupe pieces, we referenced a piece we did regarding a problem that Costco once had with some carrots up in Canada. Costco was buying these Mexican carrots through an intermediary in Los Angeles, and we asked why it was doing this. To us, it seemed that such a large company as Costco, as committed to food safety as Costco was and is, would buy from the big mainstream carrot producers.
The thing to understand, though, is that there is no option for the Los Angeles intermediary to sell Costco carrots from Grimmway or Bolthouse. If Costco decides to create an aligned supply chain with the top people in the field – that Los Angeles intermediary is out of the supply loop altogether.
The reason so many of the trade’s food safety efforts — from the Leafy Greens Marketing Agreement to the trade association’s initial endorsement of the Food Safety Modernization Act — have revolved around standard-raising is that only generally raised standards allow the industry to exist as it has. If the Wal-Mart policy becomes simply to always buy from the top three shippers in the game, does Wal-Mart need intermediaries at all?
The food safety lesson for the trade is clear to see, but problematic to implement:
There must be an aligned supply chain built around food safety and other key values. Producers must feel confident that they will have the business so they can feel free to invest in the best equipment, facilities and dedicated food safety personnel and protocols. Intermediaries must know that they have the business so they know what values they are being paid to promote.
Despite the thoroughness of its investigation, the FDA, disregarding all its talk about prevention, continues to pull its punches and be less than helpful in communicating with the trade. It remains a politically hobbled agency. For example, the FDA made a pretty specific finding regarding pre-cooling:
After harvest, the cantaloupes were placed in cold storage. The cantaloupes were not pre-cooled to remove field heat before cold storage. Warm fruit with field heat potentially created conditions that would allow the formation of condensation, which is an environment ideal for Listeria monocytogenes growth.
The combined factors of the availability of nutrients on the cantaloupe rind, increased rind water activity, and lack of pre-cooling before cold storage may have provided ideal conditions for Listeria monocytogenes to grow and outcompete background microflora during cold storage.
So, one would think the FDA would in some way make it clear that cantaloupes should not be sold that have not been pre-cooled. Perhaps there would be a regulation to prohibit this. Perhaps the FDA would issue a “recommendation not to consume” cantaloupes that have not been pre-cooled. Surely in FDA’s draft guidance for industry, Guide to Minimize Microbial Food Safety Hazards of Melons, it would update the milquetoast recommendation contained therein:
Cooling and cold storing melons as soon as possible after harvest because delays in cooling when melons with netted rinds (such as cantaloupe) are wet from washing operations may allow for multiplication of human pathogens on the rind surface.
This guidance says nothing about pre-cooling, although that is the specific problem the FDA identified with Jensen Farms.
The FDA’s vague guidance is the bane of the industry. Food safety is not a “yes” or “no” situation. It is in many ways a public good and thus a policy choice by the country regarding how much it would like to spend on food safety.
Instead, one gets bizarre recommendations such as this one:
Employing methods to reduce flying insect access to animal feces and other likely sources of human pathogens.
Think of a poor farmer trying to follow FDA guidance. What methods should he employ? How much should “access to animal feces” be reduced? From what baseline? What are the “other likely sources” with which he should be concerned? How would a farmer know when he had adequately addressed this recommendation from the FDA?
As best as we have been able to ascertain, the FDA insists on such vague language as a self-protection method for the agency. It may recommend “monitoring for signs of animal intrusion,” but it will never say run patrols once a week to check for animal intrusion because if it turns out animals intrude in between its selected monitoring regimen, the FDA does not want to take the blame. It prefers to issue vague recommendations then; if there is a food safety outbreak, declare ipso facto that obviously the farm was not adequately monitoring for animal intrusion.
The other problem is politics. It is clear that the FDA believes all cantaloupes should be pre-cooled, but small local growers, even regional growers, typically don’t have pre-coolers. FDA executives don’t want the hassle of being dragged in front of congressional committees and asked why they are depriving Farmer Jones of his livelihood.
So instead of speaking bluntly, the FDA makes oblique references in its reports and hopes the mainstream industry will pick up on it. Of course, this is not promoting food safety; it is promoting the bifurcation of the American food system, where local and small scale operations will sell sub-standard product into an alternative distribution network, while conventional retailers sell safer product but lose market share to those selling lower priced and less safe product. Is this really the world the FDA wishes to build?
Our idea was to assemble an intimate group of industry players who would think hard about how to turn a government concept into a reality. After all, the world won’t change its eating habits on demand, the industry will have to make that happen. Fortunately we have a dynamic lady ready to instruct, inspire and encourage the effort to make the dream of increased produce consumption a reality — and to help us create a future that is not only healthy, but delicious as well. We asked Pundit Investigator and Special Projects Editor Mira Slott to get a sense of what the effort in New York will actually be like:
A: We at CIA have known for many years we have to inspire the produce foodservice industry side to increase produce consumption to meet dietary goals. MyPlate is a fantastic visual cue of what a meal should look like; half should be fruits and vegetables. When talking about MyPlate to foodservice operators, we say the French phrase mise en place, which is used in professional kitchens when organizing ingredients and other components required for preparing menu items.
We try to translate the visual of the plate to what’s meaningful to a chef or menu planner. A fast service menu developer will say, ‘we’re doing more handheld and grab-and-go items.’ When referencing mise en place, we’re finding the language of the chefs so they really start to integrate this thinking in regard to increasing the amount of produce in menu items. They visualize being in the R&D kitchen arranging the ingredients, picking from the dry pantry and cold storage. When starting the process, they need to make half the ingredients fruits and vegetables and that concept resonates better.
Q: You describe tactical approaches to changing the mentality of foodservice chefs and menu developers in meeting the objectives of MyPlate. Do you encounter resistance and how does that vary within the different foodservice venues?
A: We’ve approached volume foodservice chefs with a focus on where they’re already doing well. Extrapolating on that is more agreeable and manageable to them than thinking they’ll have to change their whole way of operating.
For example, a chef from Chipotle developed a fajita-style burrito with sautéed peppers and onions. Take that one step further by switching out rice with beans, adding salsas and guacamole and all of sudden the item has a half a plate of vegetables.
Part of what we’re doing is educating chefs on what counts as fruits and vegetables and then encourage them to work with their marketing team to educate consumers.
We also convey what half that plate should look like; often it is all French fries and consumers love them, so instead of eliminating them completely, we recommend to reduce the portion of French fries and add a salad. It’s important the items we consider don’t drive up food costs. The key is focusing on what operators are doing well, providing positive feedback and showing them that it’s not about turning operations on their head.
Q: Restaurants are geared to making money and offering the dishes that customers demand. Can produce-heavy plates garner the same price? Do consumer perceptions of value on the plate change when the protein portion is reduced?
A: We see an opening with federal and state menu nutritional labeling mandates. Menu labeling gets foodservice operators’ attention. Volume service retailers with more than 20 units are required to list calories on menus. The other approach we’re taking is demonstrating the impact on sodium and fat when you add more produce and reduce unhealthy ingredients. We’ve done comparisons when bacon is replaced with avocado, and what that does to calories and salt intake. It shows how powerful produce is at changing these calorie counts.
In California, we’ve seen dramatic changes in menus because consumers won’t order the dish if they see it is 1,800 calories.
Q: Are there actual scientific-based studies out that measure the impact of menu calorie/nutrition labeling on consumer choice? Aren’t there numerous contributing variables? What kind of marketing research has been done? Is the evidence mainly anecdotal?
A: What research shows is that it depends on a lot of factors. For example, the time of day makes a difference. The menu labeling has more impact on breakfast and lunch, versus dinner. It also depends on who one is dining with, whether it’s a business lunch, and if it’s a celebration, all bets are off.
It also depends on menu design. Does the labeling blend in beside a tantalizing photo of a big juicy cheeseburger? Is it a drive-through menu? People on auto pilot with screaming kids in the back of the car tend to order what they’re used to. In some instances, restaurants have claimed a direct correlation between lowering calories on menu choices and ordering behavior and produce consumption. But there haven’t been enough studies to validly assess the impact.
Here in California, we hear from foodservice operators that the menu labeling has led to them significantly changing the way they are forming the menu. Before, the top five items were heavy in calories, protein, flavor and portion size so consumers got a value proposition. After the calorie counts were listed, those top five went to the bottom. The top item included a pasta dish at 1,870 calories just for this entrée, and within two months of the labeling requirements, consumers stopped ordering it.
The Cheesecake Factory is known for large, large portion sizes, but it started a skinny menu because consumers were asking for it. Based on its brand proposition, diners preferred to forego a 3,000-calorie meal and save their calories for dessert.
Q: Have we reached a turning point? Despite long-term industry efforts to increase produce consumption, why do we still face a serious obesity epidemic? What solutions can lead to meaningful results when eating habits appear so engrained? And how important is the restaurant industry’s role in moving the dial?
A: Consumers do put a different value on a plate with produce versus protein. Flavor strategies are critical in making produce more appealing. For example, if you’ve had Pho Vietnamese soup, the flavor experience is so great it draws you in with its warm and comforting fragrances and the vibrant color of herbs and bean sprouts for texture. The protein portion is almost like a condiment. Diners are not going to ask where’s the meat because so many other things are entertaining the palate.
We’re talking to foodservice professionals… how do you make the dish so appealing that consumers are craving it and they’re no longer thinking I want a big steak? Create an experience around produce that’s memorable. The foodservice industry is doing a disservice when serving a side of steamed vegetables. Take some broccoli, sauté it with garlic and olive oil and top it with shaved parmesan. Make a Spanish Romesco sauce for dipping and dunking vegetables…
Q: How do strategies vary based on the different foodservice channels? Aren’t menu development choices limited to some extent by operational challenges?
A: The menu decisions are segment-dependent. McDonald’s, Wendy’s, and Burger King are weighted with worries about controlling food costs, and how does this work in a drive-through setting. Is the product hard to eat in the car, versus developing menus in family dining restaurants with different parameters?
McDonald’s has been a great leader in premium salads, where it has made quality Number One. It had the salad shaker idea that came and went, and apple slices as finger food for kids. Sometimes, it’s not rocket science.
Fruit is especially challenging, because there is a premium for labor and doing fresh-cut fruit. Consumers ask, “Why would I pay this amount when I could make this at home for half the price?” Vegetables involve more culinary techniques. Finding ways to make fresh-cut fruit flavorful and juicy is the challenge. Too often the cantaloupe and honeydew mix is hard and tastes like cardboard.
The produce industry could help foodservice by doing more on the flavor side. The truth is chefs want to use more produce in their menus but face challenges with flavor, shelf life and packaging. There is a lot of room for innovation.
Q: Is one angle on innovation going after kids with programs like the National Restaurant Association’s Kids LiveWell initiative? What is CIA doing in this arena?
Scott S. Miller Photography
A: Our Healthy Flavors, Healthy Kids initiative focuses on improving the flavor and nutrient quality of foods made available to kids in K-12 schools, campus dining and chain restaurants. We’re huge supporters of fresh salad bars, exposing kids to new fruits and vegetables while giving them choice, versus having to take the option of the day.
We encourage integration of culinary techniques, such as roasting vegetables to get caramelized flavors, or fruit salads with fresh mint to pique their curiosity and get them motivated to eat produce.
Q: Are you suggesting these salad bar options be prepared in school cafeteria kitchens or procured prepackaged? Aren’t there issues with cost, labor, training and food safety?
A: There is more and more cooking from scratch in the schools. In districts where they can accommodate the challenges, we are encouraging that. Some schools don’t have the cold storage or the equipment, and it does require labor expertise and food safety training.
Scott S. Miller Photography
In many parts of the country, kids expect more from food. They are exposed to more variety, eating out and trying foods from around the world, whether it’s Mexican with their family at an authentic local restaurant, or sushi from the supermarket. The ideal is to set up a salad bar in the cafeteria that tells a story about foods and cultures around the world and integrates back to lessons in the classrooms to make it more intriguing.
Q: What are some of the other initiatives you’re championing in your role at CIA?
A: We’ve run eight conference leadership retreats a year in San Antonio, Texas and in Napa Valley, California. We also have a campus in Hyde Park, New York, and another in Singapore, where we will start running a conference next year. Almost all our conferences include a produce focus.
If the concentration is nutrition, we partner with the Harvard School of Public Health to run two events each year. Worlds of Healthy Flavors, held every January, is an invitational leadership retreat for volume foodservice professionals from chain restaurants, supermarkets (prepared foods divisions), campus dining, and contract foodservice. With an emphasis on Asian, Latin American and Mediterranean cuisines, we bring in leading nutrition scientists and volume chefs around the country, and people making menu decisions on behalf of millions of Americans everyday.
Q: What are the main issues that foodservice executives raise in relation to MyPlate goals?
A: One of the biggest apprehensions of any foodservice operator: If I put something on the menu, will the customers buy it, and if they buy it once, will they buy it again? There’s a concern that consumers aren’t demanding more produce on the plazA: One of the other traps the fresh produce industry gets stuck in is shunning produce in any other form, and it likes to think the optimum way is fresh to the end consumer. Often foodservice operators get better results from produce preserved in high pressure packages to prolong shelf-life and in frozen form, which makes it easier for foodservice people to use, extends product quality, and expands menu options.
Although it can be heresy to say so in the fresh produce industry, frozen is often better from a nutrition standpoint. Broccoli grown in Salinas, harvested, packed on ice, and shipped across the country could be two weeks old before it gets in the hands of the consumer, and any time there’s a fluctuation in light, temperature or other transport-related issues, quality could be deteriorating and the product could be losing vitamin content. These issues are minimized when product is flash-frozen two hours from being picked in optimum condition. Fruit picked for frozen is picked at its peak. People feel guilty when they buy frozen, but I’m pro frozen.
Q: Are there avenues the produce industry can tap to grow foodservice business?
A: Produce executives need to think in broader ways if they want to see more produce used in foodservice. They need to think how the chef will be most likely to use it, and how the end consumer is most likely to use it.
Anything that increases shelf life and decreases need for labor will be well-received in quick service operations. One example is Dunkin’ Brands breakfast flatbreads with omelets inside. Those vegetables aren’t being sautéed on the site.
Scott S. Miller Photography
CIA conducts challenges to encourage volume foodservice operators to think about fruits and vegetables first in menu innovation and to stimulate solutions in a variety of ways. Sometimes teams will be given certain ingredients and must find creative ways to increase produce in the dish.
Last year at our Worlds of Healthy Flavors conference, we asked, “How do you get more fruits and vegetables on pizzas for K-12 students?” A chef from Aramark wowed a room of cynical chefs by combining barbeque sauce with applesauce, adding caramelized onions and chicken on a whole wheat flour crust that was healthy, kid-friendly and delicious.
We need to increase dialogues between foodservice operators and produce suppliers, and finding middlemen to help with processing and packaging solutions is a critical piece in meeting MyPlate goals.
What a catch to have Amy Myrdal Miller leading this effort. She is, to use a foodservice analogy – both the steak and the sizzle! Substantive and strong, understanding the culinary possibilities while confronting the business issues straight on. We are really lucky to have her.
And she doesn’t mince words. It is nice for the produce industry to think that the whole world wants fresh, but the challenge from frozen and other forms of produce is growing. From consumers who want frozen fruit available to make smoothies anytime to chefs who need frozen vegetables because their menus are uncertain, the fresh industry needs to recognize that the most direct competition may not be chips or cookies, but frozen versions of our own products.
It will not be easy to get to where we need to be. With consumer value perception focused on protein and food cost concerns encouraging lots of cheap starch, the danger is you get a big steak, a mountain of mashed potatoes, then a spear of asparagus and a cherry tomato for color.
New laws requiring calorie counts on menus may be a game-changer. Best indication? Houston’s renamed some of its units to get under the 20-unit limit. They must think it makes a difference.
What is 100% clear is that we won’t increase sales and usage just with promotion. We need ideas that will change menus. Starting in restaurants makes perfect sense because they have chefs. But these ideas will flow into the way people eat at home as well.
Please join us and contribute your ideas. Be a part of the IDEATION FRESH Foodservice Forum and help us come up with the ideas that will make produce half the plate. Many thanks to Amy and the Culinary Institute of America for helping to guide this process.
Getting Mary Anastasia O’Grady from The Wall Street Journal to keynote the Global Trade Symposium was a catch, but this is an event that just keeps getting better and better. You can’t really think about international trade without thinking about transport, and there was only one man we thought could combine an understanding of what is happening with transportation and logistics with an understanding of what might this might mean for the world of produce.
That man is Richard Bright, and we have mentioned him before in the Pundit. He’s coming over from the United Kingdom, and we asked Pundit Investigator and Special Projects Editor Mira Slott to find out what he would focus on in his presentation:
A: The fresh produce business in Europe and in the U.S. is going through profound change; a revolution wouldn’t be an exaggeration.
Previously in model A, the supply chain was more or less controlled to a large extent by supplier nations. This is best exemplified by the large “board” operations of Enza in New Zealand and Capespan in South Africa running as a single channel, where the power was held by the supplier nations.
With the dissolution of those two boards in particular, the landscape has changed quite dramatically for major fruit agencies in South Africa and New Zealand. Now, instead of the consolidated constricts, you have a much more fragmented structure. As a result, it’s much easier for customers in Europe to go directly to producers and importers.
Q: How are these changes manifesting themselves in the international trading environment?
A: With globalization of the retail sector, retailers have become even more powerful. Also, they are looking for ways to increase their margins. The biggest way to do that, unless you pay suppliers less and charge consumers more, is to cut costs out of the supply chain.
Q: Could you discuss the trend toward direct sourcing from a logistics perspective? Do you see growth in containerization and the rising influence of container lines as a catalyst to direct sourcing of fresh produce?
A: There is a dramatic increase in container ships being built and an equally dramatic rise in the amount of reefer equipment being manufactured. In contrast, the order book for specialized reefers is empty. The principal advantage of the container over the reefer ship is that the unit of shipment is reduced: instead of requiring, say, a critical mass of 3,000 pallets to justify a sailing, all you need is 20 pallets. The change has freed up a lot of exporters and producers who want to ship direct to market. More importantly, it has freed up customers who would like to source direct and not have to buy from importers and distributors.
But also, fragmentation of the industry has given retailers much more power. In the old model, the retailer would say it would like to pay this price for grapes this week. Now the retailer controls the price and says, “We’re paying you this amount.” The balance of power has shifted. And the huge increase in reefer equipment has become a catalyst.
During my talk, I’ll be going into more detail adding statistics and graphs to better demonstrate the trend.
Q: You site Zespri and Capespan as indicators of a larger phenomenon. Are these scenarios happening elsewhere in the world?
A: Zespri’s single channel balances power, so that’s the exception. What’s happening in the rest of world is that the phenomenal change in international transport logistics is allowing retailers to bypass middlemen and go to individual producers. Instead of buying bananas through Dole or Chiquita, they go directly to the source.
Q: What are the implications for the produce industry in the global marketplace?
A: The implications are so broad I could go on for hours and hours. One question it raises is the value of the brand. For a UK retailer like Tesco, the brand is Tesco. There is a movement in this direction away from supplier brands.
Q: Are most retailers sufficiently equipped to take on the logistical complexities and challenges involved in direct international trade. Wouldn’t this require a transformation of infrastructure and specialized expertise?
A: You ask a good question. It does take expertise. Maersk is the largest shipping line. They have created a subsidiary service called Damco, a freight forwarding and supply chain management provider to help retailers go direct. Maersk goes to the retailer and says, “We can ship product from anywhere in the world, so you do the deal, Mr. Retailer, with the producer, and we’ll facilitate the logistics through our subsidiary to get the product from farm to shelf.”
Q: How entrenched is this power shift you’re describing? And who will it affect most? Are there particular commodities or suppliers at more risk? What does this mean for companies throughout the produce supply chain?
A: It’s starting to happen now and will continue to happen. The principle consequence is the sector of the floating fridge reefer ship will disappear. It’s less cost efficient than the container.
It will limit the number of options of suppliers to market. And will have the most impact on companies in the Southern Hemisphere and the possible disappearance of brand, increasing power held by the retailers.
Another result is that it will keep costs low. Look at retail prices of bananas. They’ve remained pretty much the same over the years.
Q: Isn’t that because retailers have kept banana prices artificially low, often using them as a loss leader to draw consumers to their stores and away from the competitor down the street? From a marketing standpoint, bananas are a popular, high-volume commodity, where price points between retailers can be easily compared. So, retailers often look to value-added items or other differentiating strategies to drive profits...
A: Whether retailers want to finance those low banana prices themselves or force service providers to finance, the price paid to producers hasn’t changed. They’re not escaping from poverty. The retailers have become so powerful that they can push costs to the end of the chain. With disappearance of brand, the power struggle within the market will only intensify. From American multinationals to farm laborers to producers to middlemen, it will impact the entire supply chain.
Q: Is there still a place for reefer ships in certain instances?
A: Major fruit commodities will be impacted most, obviously bananas, apples, citrus, avocados, kiwi fruit and grapes. As far as the U.S. market, major suppliers’ counter-seasonal program is with Chile, and the majority of products still come from reefer ships, on a pallet-to-pallet basis.
Q: Why is that? Is product quality affected by form of transport based on commodity or trade route?
A: It’s a contentious issue. If you talk to surveyors, they claim containers on a pallet basis are inferior to reefer ships. That is changing and the quality gap is much, much smaller. I think quality issues will dissipate and be a non-issue over time.
One reason grapes from Chile to the U.S. are shipped in reefer ships is due to the methyl bromide postharvest fumigation process. The warehouses and cold storage facilities are right there, so the grapes can be isolated and fumigated right away.
If the grapes were going to the container terminal, they’d have to be shipped over, which is more time-consuming and more expensive when the program is very specific to the U.S.
There are other instances where reefer is preferred beyond just performance. There are citrus programs from South Africa and Spain to the U.S where the historic cold chain has been built around a reefer at the heart of the chain. It will take longer to make fundamental changes to that supply chain.
In Europe, the conversion from reefer ships will be faster than for the U.S. as developments are progressing at an accelerated pace over here.
Q: As this conversion unfolds, what should produce industry executives prepare to encounter?
A: It is in the process of taking place now, so there is a learning curve on the true impacts. I would speculate that over time the major implication is that the middleman distributor with his margins will be sidelined and the reefer ships will disappear. Ideally, suppliers could take lessons on the paradigm of Zespri, how it is organized, with its state regulations, where more money goes to suppliers, and the producers are wealthy. It’s completely different than anything in the world, but also almost impossible to duplicate.
I’m been writing about reefer trends for 10 years, a benchmark for the reefer industry. There’s a market for reefer ships on a weekly basis, the cost of chartering them goes up and down based on supply and demand and I track that. A tipping point has been reached, where there are enough container ships and reefer containers for reefer ships to go into freefall. In terms of quality issues, essentially, the value the reefer ship can add will be outweighed by the costs.
Q: How does a changing retail environment influence this phenomenon? For example, in the U.S., could a resurgence of regional chains and independents strengthen the need for middlemen and distributors? Wouldn’t smaller chains in a more fragmented market find it financially and logistically untenable to source direct on a global scale?
A: In the UK and Europe, there is still very much consolidation. Bigger retailers are still getting bigger and medium and smaller stores are disappearing.
In this country, the big retailers are building out-of-town complexes and putting all the smaller less efficient grocers, fish mongers, and butchers out of business in the UK. And this is the case in Continental Europe as well. In the end, the logistical element of the supply chain generates the most cost. These retailers have the resources to keep costs low, and ultimately it’s the cost that drives consumers.
Richard’s thesis — that the boom in containerization will have revolutionary impacts on the international trade of produce — is both plausible and reminiscent of what happened in the US when trucks superseded trains as the primary mode of domestic produce transportation.
The Pundit grandfather, Harry Prevor, was a wholesaler and auction buyer down in the old Washington Street Market in lower Manhattan. He was for decades the chairman of the Auction Buyers Association of America. Then, one day, there were scarcely any auctions left.
This was primarily a function of transportation. The big auctions were given space by the railroads in the railroad terminals. Massive railroad cars of fruit would be unloaded and auctioned. But with the development of the Interstate Highway System, things changed. A tractor trailer is significantly smaller than a railcar, so many who couldn’t buy a whole railcar direct could buy a truckload.
The auctions tried to survive for a while moving off the rail terminals and building facilities elsewhere. But without the railroad support, the auctions had expense structures similar to that of any large wholesaler. They just couldn’t compete.
One can certainly see that pattern happening in seaborne transport. In the days of Chiquita’s Great White Fleet, the big competitive advantage was transport. That is not as true today.
At the same time, rarely does only one thing change at a time. Richard, enmeshed in the highly concentrated British retailing system, notes the power of retailers to demand price concessions. Yet, in the long run, if retailers demand and receive such concessions that the items become unprofitable to produce, then new investment won’t be made in those sectors and a reduced supply will likely lead to bidding wars that drive up prices.
We also question if Richard isn’t shortchanging the utility and contributions of the various importers and marketers of these products. Retailers can, of course, buy direct, but they only want certain sizes, varieties, grades, etc. Marketers help producers sell what they have, and retailers buy what they want. That is a big difference.
Retailers will also find that they wind up being importers, having to dispose of unneeded product that had been ordered long in advance, deal with things not in the best condition for the stores, etc. We wrote a piece about direct importing in Pundit sister publication PRODUCE BUSINESS that you can read here. In the end, it is not clear that retailers actually save much money by direct importing.
Of course, sometimes there are other reasons. As retailers go global they become concerned with geopolitical matters. Wal-Mart’s global sourcing initiative is as much about getting its own name on customs documents around the world so it can show countries it is a big buyer as it is about saving money.
We greatly appreciative that Richard is coming across the pond to help us sort out these matters. Please join us at The New York Produce Show and Conference and at the Global Trade Symposium to discuss these important issues.
One of the beautiful facets of The New York Produce Show and Conference is that it draws on the great centers of learning in the region to create a workshop program that is both informative and useful.
It serves the great public purpose of taking research that might otherwise sit neglected in the academy and bring it to the field of battle in commerce and industry. Simultaneously the program allows industry members to open their minds to new ways of building business.
This year we’ve highlighted a few of the workshops:
Now this year we have a St. Joseph’s faculty member working at the conflux of marketing, functional foods and public health. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Dr. Neal H. Hooker
CJ McNutt Professor of Food Marketing
Saint Joseph’s University
Q: Dole through its partnership with Oakshire Mushroom Farm, and Monterey Mushrooms in a collaborative research effort with USDA, have been innovative pioneers in developing Vitamin D enhanced mushroom products using different technologies, first launching products in the marketplace back in 2008. Supported by the Mushroom Council, other companies in the industry have also been exploring ways to penetrate the market. Executives say the category has been slow to take off, or that interest is sporadic, but they point to various factors that could jumpstart new opportunities. [Editor’s note: we will be running future pieces on developments within the industry].
Tell us how your grant to study Vitamin D mushrooms came about. Could your research play a role in stimulating the category?
A: This new marketing research grant allows us to look at obstacles to consumption of Vitamin D mushrooms and marketing processes, and in the bigger picture learn how we can help manufacturers think about not only ways to approach Vitamin D nutrition attributes but different health and wellness initiatives. This USDA Specialty Crop Research Initiative, a two-year project, is trying to help create opportunities for growers, and nutrition messaging is a part of that.
Q: How are you positioning the project to achieve broader applications? Do you have a strategic direction outlined?
A: Our project is an interdisciplinary systems approach linking production methods and marketing communication strategies focused on consumer needs and wants.
Dr. John Stanton and I are both joint investigators on the ground. John is the principle investigator, and I’m the co-principal investigator. Gary Schroeder, president and founder of Oakshire Mushroom Farm, is also a collaborator. We each have different strengths we bring to the mix.
We’re looping in with the Mushroom Council so that they understand what we’re doing and what’s involved, and we can see what they’ve done in the past. We’re talking with Dole and Monterey Mushrooms as well. This study is very inclusive. There are not just academics doing this, and we think the results will be very illustrative of real solutions.
Q: Could you elaborate on the impetus for the case study?
A: There are Vitamin D-enhanced mushroom products on the market already. Products have been introduced using two alternative technologies and production systems in the U.S. to bolster the Vitamin D content in mushrooms. Other countries also are pursuing Vitamin D mushrooms. I was in Australia, where much research is being done in this area, and was surprised to learn that Vitamin D deficiency is just as much a problem there as here.
Parenthetically, in Australia, the problem is exacerbated due to a powerful government campaign to stop skin cancer, which encourages consumers to wear hats, cover themselves up and avoid the sun, the primary natural vehicle for achieving proper amount of Vitamin D. Ironically, the public health message to minimize skin cancer also results in consumers downsizing Vitamin D levels.
We found it to be an intriguing topic. Vitamin D mushrooms are on the market for quite some time, but have not necessarily been accepted as much as the industry would like. Our study is intended to help fine tune the message, look for alternative positioning strategies, and come up with a research base of what the communication strategies should be.
Q: With your background, did you go into this grant with a hypothesis?
A: With any of these grants, we don’t have all the answers at the beginning. We were excited about this grant. It relates to and fits very well with my body of work and position as CJ McNutt chair at Saint Joseph’s.
I’ve done produce marketing research in the past, mostly looking at food safety and nutrition and also sustainability strategies. Food safety studies involved recalls in fresh produce as well as poultry. I did some work specifically with fresh-cuts, where we teamed up with the International Fresh Cut Produce Association (now part of United Fresh Produce Association) and surveyed quality management systems. We connected with Rutgers and the Food Policy Institute in examining issues related to the spinach outbreak.
Most recently, I’ve done a lot of work on front-of-pack symbols, looking at the traffic light system in UK, and continue to update studies on health claims. I also received another USDA grant on organic food marketing, evaluating consumer labeling issues, not just for organic products, but for processed foods that use organic ingredients.
Q: For this grant, how will you go about getting answers?
A: Our study comprises both a production and marketing program. We’ll have comparisons of different production techniques, broadly how Vitamin D levels get elevated, as well as analyzing the packaging, and product form. We’re not dismissive of those steps. We think of production aspects as well as food marketing aspects, but both John Stanton and I are focusing on qualitative work, message texting work to try and tease out what consumers understand right now about Vitamin D deficiencies and mushrooms as a source of Vitamin D.
We want to be inclusive of all dimensions, sliced or whole, pound or bags. We want to explore all the packaging and promotional optimization we have right now, and to extend from there.
John has conducted preliminary studies on where consumers are right now with Vitamin D mushrooms, but we don’t think the research is sufficient.
Q: How is that research being considered during your present work?
A: John ran those focus groups. One of the lessons he takes from that is that it’s a matter of selling more mushrooms to people already buying mushrooms. It’s not a process of bringing new people into mushrooms. If consumers are motivated to seek out Vitamin D, they’ll look for other alternatives. His earlier research might be an indication of this. However, we won’t take these initial findings as a given. A hypothesis we’ll test is if that’s the case after presenting the message in different ways. General awareness has changed. It will influence how we frame the communication.
We will do a sample focus group round, then surveys of consumers to try and extrapolate on the information. The focus group stage is qualitative and we can get rich data; not just to learn if consumers are interested in Vitamin D mushrooms, but why they are interested. To really get a quantitative marketing strategy, we need the survey stage, where we test package design, messaging, ways of talking about Vitamin D, whether on the front of pack or elsewhere, supported by some website material, in store merchandising, etc.
After that step, we start the generalization. In the first phase of the market test focus group, we put people virtually in a store produce section with mushrooms that may or may not be Vitamin D-enhanced. We see their reaction as close to what it would be in store as we can get. We create different scenarios for representative consumers. Do you notice this? Maybe a banner displays, “Have you had your Vitamin D today?” As you know, what makes this topic so interesting is that Vitamin D-enhanced mushrooms provide a single source way of getting the FDA daily recommended amount of Vitamin D. And mushrooms are the only item in the produce section that has any Vitamin D if taken through the treatment.
Consumers associate that milk is fortified with Vitamin D; it’s a standard, so it’s not good to use the word fortified when describing Vitamin D mushrooms.
Q: Does the technology side confuse or scare uninformed consumers? How important is educating consumers, whether on the methods to produce Vitamin D-enhanced mushrooms or about the health risks associated with Vitamin D deficiencies? In recent years, there has been newfound media attention on the virtues of Vitamin D. Won’t this kind of exposure increase consumer awareness and be a catalyst to industry marketing efforts?
A: In the fundamentals, this is what we discuss. How much do consumers want to know about the process? How do we walk them along the path of how else this technology is used? In forming the parameters of our study, we made the decision not to educate consumers about the importance of Vitamin D.
Over the next few years, there will be growing discussions about the need for Vitamin D, which is undersupplied in the diet. There are initiatives in other foods to augment Vitamin D through other sources, such as baked goods through yeast. We’re not going to be the only ones talking about Vitamin D in the next two years of our grant.
I can give you an analogy. In the past 18 months, there has been a huge spike of gluten-free products. We’re not saying that our way is the only way to talk about this claim.
We talk about laddering. To get consumers to really understanding why they need a certain product, we have to educate them up to it. They may start out thinking, “I guess I need it, I’m not getting enough, how much do I need?” …and the next step is “how do I get it?”
Q: Building on the preliminary research Dr. Stanton conducted, are you gearing your work toward particular consumer groups? For example, would the target shoppers already be buying mushrooms regularly and the goal would be to trade them up to Vitamin D products, as opposed to attempting to convert an infrequent mushroom shopper? Could it be easier to win over a younger shopper preferring healthy, natural products over supplements versus an elderly shopper, who is already set with a doctor’s prescription to cover numerous ailments?
A: We’re talking to consumers that have already started to climb that ladder in how we frame the issue. We’re going into it thinking consumers are already understanding the need for Vitamin D. Again different consumers are at different points of that ladder. Some haven’t set foot on the wrung of the ladder. Are we really trying to sell more mushrooms to a mushroom lover or to everybody?
In the first case, you’re trying to move current mushroom consumers to buying more or different types. Depending on the target audience, there are different market development issues. By getting involved early on in a product category as researchers we’re salivating. We’re at the beginning of the lifecycle of this category, so it’s exciting to see what we can do to grow it.
We’d like to generalize our findings at the end to other categories. This seemed to work for Vitamin D mushrooms, so how can these techniques and strategies be applied elsewhere?
The research is driven on an applied topic, but in recognizing what grants are supposed to do, we want to generalize; that’s why I’m intrigued to be on this product, not only to study ways to increase consumption of Vitamin D mushrooms, but to couch our research in the broader context. We want to do parallel studies in products like cranberries and figs. Figs, for example, can have a higher content of resveratrol than red wine.
Q: Industry executives anticipate the tide changing with the influx of press coverage on Vitamin D and the growing number of reputable scientific reports documenting the need to increase daily allotment. Concurrently, FDA is reportedly looking to change Vitamin D intake guidelines, following recommendations from the Institute of Medicine. Could these factors amid the overall push in health and wellness campaigns recharge consumer interest in Vitamin D mushrooms? Do you weigh these variables into your research analysis?
A: Tracking news, we have to account for that in our research. Consumers’ knowledge, understanding and motivation will affect what we are studying. We have to consider that without patronizing them.
Q: Have you assessed the reasons why more consumers weren’t initially wowed by Vitamin D-enhanced mushrooms? Do you think it was more a matter of timing?
A: We think the category wasn’t rolled out with everything well-designed. It would have looked very different in 2008, not just in hindsight, but awareness was very different. MyPlate from USDA has influenced consumer interest, and other campaigns have facilitated to help this along. Now that it’s grounded in the right context, there is new opportunity in the industry.
Q: Dole, in conjunction with Oakshire Mushroom, recently came out with a Portabella Mushroom Vitamin D Powder, which it is marketing to both retail and foodservice companies as an ingredient with multiple uses. Its form is suited to receiving higher levels of Vitamin D through the company’s technology process. Will items like this change the trajectory?
A: When we talk about form, we need to understand what form consumers want this product delivered, and would they be interested in the multiple benefits if distributed as an ingredient. There are many interesting consumer issues to consider.
We’re going to do new things with this project, different dimensions that we may not have done before. The marketing aspect involves building up a produce section. This is fairly easy to do in Photoshop where you place consumers in that environment. In the past we’ve done similar things with computer screens, but we want to do more with a virtual big screen; zoom in and out of it to test merchandising and product packaging, to place the consumer at the point of decision, and then try different sets and ways of marketing. Do we put Vitamin D mushrooms around other mushrooms or in a healthier-for-you section by blueberries, edamame and other items deemed to have unique health benefits?
There’s always a ranking, and it is one thing we can play with in this environment. If a consumer comes into the produce section remembering about Vitamin D, how do we capitalize on that? What messages do we put on the package and at the point of purchase? We’ve seen a lot of nutrition packs in the produce section, with marketing on a board or placard by the box. Do we merchandise a fresh-cut version alongside nutrition packs supported by variable weight items, etc.
We start broad with the focus group to start narrowing down, then the quantitative part to exclude and test to the market stage. Most academic studies stop at the quantitative stage because it’s harder to do. Because this is so applied and real, we want to include that process.
A: We don’t have all the answers, but our presentation at the New York Produce Show and Conference will make clear why we’re so energized about this opportunity and why the produce industry should be as well. We are looking forward to the New York event as an outlet to spur conversation regarding functional foods and how the lessons we are learning regarding Vitamin D Mushrooms could both boost the mushroom category and be applied in parallel ways to other produce items.
We are fully engaged with industry so there are not just academics doing this, we think the results will be very illustrative of real solution for the mushroom category, for the produce department and for public health.
For all the talk about the healthy nature of produce, there is precious little evidence that merely talking about healthy produce boosts sales or consumption. Even listing the vitamins contained by various items seems sort of pointless as there is no known deficiency in most cases.
This initiative, though, is different. There is a real issue with Vitamin D Deficiency, and many people are getting tested and finding out they have a problem. Produce also is, in general, a poor source of Vitamin D. So if mushrooms can be made a rich source of vitamin D, it could be a source for additional sales both to mushroom lovers who now have an extra reason to consume mushrooms and to people not yet enamored of mushrooms but who might become so as they seek “functional foods” that will help them deal with their Vitamin D deficiency.
We also think this issue has broader ramifications. In produce, we are used to marketing the products we have. This is about creating products that meet specific consumer needs. One wonders if, for example, fresh-cut vendors couldn’t create lines not around flavors or ingredients but around health needs. A line of products for diabetics, for example?
It also raises marketing issues — can we become good at helping consumers discriminate between different types of the same product because one has been imbued with a special nutritional aspect? Or should we simply enhance all mushrooms with vitamin D the way all salt is sold with iodine?
At the registration link you can also sign up your spouse or significant other for a great program. We have six terrific tours and, new this year, a Global Trade Symposium and our IDEATION FRESH Foodservice Forum. All can be registered at this link.
If you would like to consider sponsoring or exhibiting, let us know right here.
Sarah Nassauer at The Wall Street Journal wrote a piece titled, A Food Fight in the Produce Aisle, and it was subtitled, “Since Fruits and Veggies Have 'Farm Fresh' Image, Other Groceries Want to Sit Alongside Them.”
Supermarkets, trying to redesign their stores amid increasing competition, are confronting a growing truth: Packaged-food manufacturers want to sit next to the lettuce.
Packaged-food manufacturers that make products like cheese and juice hope to cozy up to colorful and fragrant tomatoes, apples and pumpkins — in some cases fundamentally changing traditional store layouts.
The produce section has become the equivalent of the popular kids' school-lunch table. The area is increasingly located near the supermarket entrance, so every shopper passes through it. And stores are finding that consumers consider even packaged foods placed there to be fresher and higher quality — researchers call this a "halo effect."
But some grocers are grumbling, wanting to keep packaged goods from invading the produce section, which they say gives them "freshness credibility" that distinguishes them from the competition, such as warehouse clubs and convenience stores. With limited space, grocers are most likely to display fresh, high-margin items in the produce section.
None of this is new and has only a bit to do with the placement of the department. By virtue of the perishable nature of fresh produce, almost all shoppers have to go through the department to replace their home inventory. That is not true of, say, the snack food aisle.
Thus it has long been known that almost everything sells better in produce. We’ve been involved with stores that have put an item such as pistachio nuts in produce and seen more than ten times the sales they get in snack foods.
The way we see it, the article and accompanying video — you can watch it below — conflated several different ideas.
First, is the move to copy Wegmans and group fresh produce, bakery, prepared foods, specialty cheese, deli etc., in a kind of fresh and gourmet marketplace. This is a response not to manufacturer pressure but an attempt to both elicit a sensory response from consumers and satisfy the way they think and shop.
Second, is the placement of non-produce items that need refrigeration in the produce aisle. Vegetarian soy-based products and refrigerated salad dressings, as well as the explosion of fresh juices, fall into this category. Although one could put them elsewhere, this is a pretty logical place. Would you want to put vegetarian cuisine in the middle of the meat case?
Third, is an effort, apparently being pushed by Kraft, to move dairy to the front of the store. Obviously stores can always be redesigned, and one can certainly imagine incorporating many dairy products in a fresh food marketplace format or department. But dairy doesn’t have the high service level of the other fresh food departments, and some of its products — such as cheese – are duplicative of the deli offers.
Packaging is typically not farmstand-oriented, although that could change. In any case, putting dairy front-and-center would surely help dairy sales, but we are not aware of any research that shows it would boost overall store sales. Whatever is gained in dairy would typically be lost in other departments plus more.
None of these points, though, really relate to the headline, which is talking about putting non-produce items in produce.
A quarter-century ago there was a lot of non-produce items in produce. Fireplace logs, candy, bird seed, etc. — mostly put in on guaranteed sale. Retailers such as Harold Alston at Stop & Shop, Bob DiPiazza at Dominicks and Dick Spezzano at Vons led an effort to get rid of that stuff and make the department a refuge for fresh product.
In general, the rule became that top operators only sold non-produce in the produce aisle when it contributed to selling fresh. So this was cross merchandising — short cakes and Cool-Whip next to the strawberries or things such as guacamole mix, that were useless unless the consumer bought a bunch of avocados.
In recent years, specialty cheese has become a popular item to cross merchandise with fresh produce. To stay on top of this world, you can get a subscription to Pundit sister publication, CHEESE CONNOISSEUR, right here.
Lots of vendors try to get products in produce. High traffic driven by the perishable nature of the product, the halo effect of association with fresh produce and the general absence of slotting fees all make it prime real estate. Most retailers are smart enough to know that if they start carrying lots of non-fresh items in produce, the department would lose the very attributes that make it so appealing.
The bottom line is that consumers have to come first. What consumers want is a cornucopia of fresh foods. Any store that puts plastic tubs of cottage cheese up front or clutters up the produce department with unrelated goods is being driven by something other than consumer demand. That is a recipe for ruin.