There is nothing else in the world like the annual PMA convention, which the association markets under the name “Fresh Summit.” There are larger events — Fruit Logistica in Berlin has more booths, covers more floor space and attracts almost four times the attendance. But Fresh Summit — having evolved from a small annual meeting of the association to one rich in non-trade show networking and educational programming — has a family feel that, on a national level, or even an international level in terms of interaction with the US, no other event of its scale can approach.
As such an important industry institution, it is worthwhile analyzing the role the event plays in the industry and, specifically, whether the change to a two-day trade show was beneficial. As we have gotten involved in producing events ourselves, from small executive share group meeting to The New York, London and Amsterdam Produce Shows and Conferences, we have acquired some particular expertise in assessing these things.
In addition to the change in schedule, people attending may have noticed that their badges this year included an RFID chip. It is not an inexpensive initiative, but RFID tracking can provide valuable information. It will be interesting to see how much of the data PMA collects through this tool it will release. You can set these systems up in various ways, but, fully executed, you can see exactly how many people went to an educational session, what percentage left early, how many registrants never showed up on the show floor, and, of those that did come to the floor, how much time did they actually spend there.
Implemented fully, RFID chips can also produce more subtle information, such as “heat” maps of where on the floor people went and where they spent their time.
It would be helpful if PMA releases this information, but we doubt they will release very much. The reason is not that PMA has bad numbers; PMA actually probably has very strong numbers compared to the global exhibition industry, but, inevitably, this data is going to be less than the gross counts that are now released. Of the number of people who registered, not all attend, and of those that do attend, not all are on the floor all day or even at all.
As to whether the reduction to a two-day show was a success… well, that depends on who you ask and how you define success.
And there are trends in the industry that have changed the way Fresh Summit is experienced that make this assessment more problematic.
Due to consolidation in the industry, Fresh Summit is a place where the largest vendors must play defense. If you are focusing on the domestic business and you already have the business from Wal-Mart, Costco, Safeway, Kroger, Sysco, etc. — what important new customers can you gain during Fresh Summit? Not many. So, the goal at Fresh Summit for major vendors is to hold on to what they’ve got. This means that they want to have meetings, dinners, etc., with buyers for the principal purpose of keeping them from talking to other vendors that do not have their business or do not have very much of it.
Of course they try to make these meetings productive — develop new marketing strategies, analyze data, extend product lines, etc.. — but the strategic imperative, the “prime directive” spoken or unspoken, realized or sub-conscious, remains: Monopolize as much of their customers' time as possible so as to minimize the time those customers have to identify and develop new vendors.
So, a shorter show is generally a big win for the largest players. Because these are the most important vendor relationships, they will always get the meetings, the dinner reservations, the time in the hospitality suites, etc.
In other words, a shorter event guarantees that a higher percentage of the time of those on the buy side is occupied by existing vendor relationships. So, this means that the shorter the event is, the better it is for large established players and the harder it is for smaller companies trying to gain a place in the market.
The End of Transactional Buying
The other big trend that helps define the impact of a reduction in exhibit hours is the length of the average conversation. We’ve never seen any studies on this, but it is clear that the produce industry has become more complicated than it used to be. We launched Pundit sister publication PRODUCE BUSINESS magazine in 1985 at the PMA convention in San Francisco and the typical ad in the trade press was still: “Joe Smith & Co., city, state, shipping tomatoes April through June, and a phone number.”
It was always good, of course, to see one’s customers and suppliers in person. The produce industry, by its nature, is prone to problems — quality, delivery, etc. – so knowing who you are dealing with on a personal level is helpful. But it was not uncommon to deal with people for decades and never meet them. There was no food safety to discuss, no sustainability, no proprietary varieties, no marketing support… in fact, PRODUCE BUSINESS used to run articles about the “fax auction,” as shippers complained that all too many purchase decisions were made based on competitors just faxing over prices.
Now those same accounts have quarterly business reviews sometimes at Fresh Summit. The discussions are deeper and encompass more details. There is contract pricing and exclusivity, marketing support and food safety, sustainability issues and much more. Here at the Pundit, our average meeting time with an executive was an hour-and-a-half. Now it is great that we could get these meetings in, and one function Fresh Summit serves is to save us money on travel expenses. But we found the best an individual could do was ten meetings over the two days of PMA. Since, obviously, if we can only see ten people, or even 40 or 50 people assuming we have multiple executives seeing other people, we are going to see our big existing accounts. So, once again, Fresh Summit is an occasion to play defense.
There just are not enough hours to be out there seeing the smaller, less-established players in any significant way.
Peculiarities of Layout
Every convention center is different, and New Orleans happens to have a long and skinny layout. A consequence of this is that people don’t want to walk back and forth through each aisle, so our impression – it would be really interesting to see that heat map – is that attendees stayed heavily in the center aisles rather than the wing aisles where there are smaller booths mainly composed of newer exhibitors or just smaller companies.
Again though, shorter hours mean the high density “highway” booths will get a disproportionate share of the traffic and, not surprisingly, as booths are distributed based on a point system that includes both quantity of booths taken and longevity, smaller, less well-established vendors will be disproportionately disadvantaged by shorter hours when that means attendees will limit their booth visitations to higher-traffic lanes.
Of course, all this may not matter at all… one of the main reasons for moving to a shorter show was the belief that the last day of the show was of low value anyway. But this becomes a chicken-and-egg kind of situation. The decision-makers at exhibitors often left early, and this frustrated any real buyers left on the floor who were confronted with models handing out salad rather than key decision-makers. On the other hand, those key decision-makers at exhibitors who stayed found the last few hours empty or filled with scavengers looking to collect swag. So, in this sense, we could eliminate these low value hours and nobody is actually worse off.
Of course, the crucial aspect here is whether, in fact, shortening the show leads people to stay until the show is finished. Perhaps people who leave early at three-day shows do so because they feel they can accomplish what they need in two days, and so they will stay for the entirety of a two-day show because they need those two days to accomplish their mission. On the other hand, perhaps there are people who always feel they can abandon the last few hours of any event.
It is probably a bit of a mix between the two attitudes but, anecdotally, we saw lots of evidence of top people leaving early. We left our own booth the last 2 hours of the show to do a quick scan of the show and to say hello to about 20 specific people who we hadn’t managed to see this convention. As our contacts weigh heavily toward owners or CEOs, it is probably a pretty good check of who was staying to the end. We won’t embarrass those who had left, but we can give some props to Steve Barnard at Mission Produce as he was the ONLY person on our 20-person hit list to actually be in his booth at the end. We were told that four of the other people were still in town but had gone back to the hotel, and we were told the remaining 15 had left New Orleans to either go home or to other locations.
Our experience is that people look at the available flights, and if the last departure is, say, 6:00 PM, and that means they have to leave an event at 3:30 PM rather than wait for a 5:00 PM close, then most people, with a staff to back them up, do it. They consider the loss of not being there until 5:00 PM to be a fair price to pay to save a hotel cost for the night and to get out of town and back to family and other work.
Again, though this reduction in hours is not experienced equally by all vendors, the large companies have the staff to let their CEOs go home and leave the booths to others. At most smaller companies, the owners are the exhibiting personnel. So, those last few hours or the last day when the big company booths are manned by lower level staff, the smaller more upstart vendors always had the advantage of having their owners and CEOs there and thus providing a more satisfactory experience for engagement by the buyers who did stick it out. Cutting off those last hours or day reduces the time when the small guys actually had an edge.
Now, none of this is to say it was a mistake to cut the hours. The extra day was an enormous expense, and the clear consensus of PMA’s survey and committee input was that eliminating the day was a benefit. But that doesn’t mean cutting back equally impacts all segments of the industry and how these changes affect different sectors is worth paying attention to.
What is clear is that good idea or bad, the changes create a need for smaller companies to be more aggressive in their exhibiting efforts.
We are often shocked at the number of exhibitors who think of exhibiting as a passive process; they expect that they will show up and buyers shall be presented before them. Even on the floor they are passive. Many can be observed looking at their cell phones as crowds walk by as if the buyers will wait politely for them to finish their call!
In fact, the exhibitors who are most successful are the ones who work the hardest to attract prospects to their booths. This process involves reaching out long before they get into town and creating the kind of exhibiting environment that is not focused on displaying what the exhibitor wants to sell but, rather, is focused on thinking about what is valuable for the buying community. Unless the product being offered is particularly unique, merely displaying the product is unlikely to position your company as a solution to the buyers’ problems.
Obstacles or not, there is so much opportunity at Fresh Summit that if a vendor finds he can’t make a profit at the show, that speaks more to the vendors’ limitations in marketing and sales than it does to any problem with PMA’s now abbreviated hours.
If there is one mega-trend that has transformed produce retailing more than any other, it has to be the move to data from intuition and experience.
As an industry, we really have no other choice. There was a time, not all that long ago, when produce retailing was a distinct enterprise, and the people involved in produce were passionate about the field or, even if they weren’t passionate, they perceived their future as tied up in produce where they acquired great product knowledge and personal connections. If for some reason they left their job, if they couldn’t find a comparable position in produce retailing elsewhere, they were far more likely to work on the supply side than to go into some other area of retailing.
This is no longer the case. Young workers at Wal-Mart or Amazon are often rotated through produce or perishables to gain experience in the way companies rotate people through international operations. Their next job is likely to be selling clothing or toys, and their knowledge and incentive to gain knowledge about produce is slight.
So, to run produce or their category, without the benefit of 20 years of apprenticing under experts and without the personal experience to comfortably rely on their gut, they rely on data. And, fortunately, we have more and better data available than ever before.
But, data has severe limitations; with so many numbers, how can they be interpreted?
To make that data actionable, we need to transform it into insight, and few have helped in this effort more directly than the US-based Food Marketing Institute, or FMI. We were pleased to give them a forum to unveil their initial results at our New York event:
FMI’s Deep Dive Into The Power of Produce: Research On Consumer Behavior Before, During And After Purchase To Be Discussed At New York Produce Show
And we are even more pleased to help gain international exposure for this important work by giving them a speaking forum in Amsterdam. We ran a piece focused on Rick Stein, Vice President Fresh Foods at FMI, and his contribution to the presentation under this piece:
Unique In Approach, FMI Research Answers Questions For Retailers And Producers With New Disclosures At Amsterdam Produce Show And Conference
Now we asked Pundit Investigator and Special Projects Editor Mira Slott to gain more insights by speaking with FMI’s analytics partner in this study:
Principal and Founder
210 Analytics Company
Q: Rick Stein provided an excellent preview of your upcoming presentation in Amsterdam, leaving room for you to elaborate on key issues and further break down and analyze the numbers. I can jumpstart your thoughts with some questions Rick addressed, and then you can add your perspective.
A: I can’t wait to dig in!
Q: Could you talk about your role in the study? One important aspect of the research is that it enjoins scientific and empirical data. How does this process work?
A: It all started with the Power of Meat 12 years ago. I was looking for a way to document trends in meat consumption and purchasing, but wasn’t satisfied with just showing the sales numbers, or with just the “why” behind the buy, as neither tells a complete story.
Exploring options with IRI and Nielsen, the idea was born to conduct a shopper survey to document the attitudes and emotions and overlay it with the actual sales data for the perfect 360-degree picture. The meat study has built such a strong following that when Rick joined FMI, we decided to do the same for produce. With his retailer background, he knew from experience how important this kind of information is.
Q: Do you have examples of where the science and empirical data connected and where it clashed?
A: Interestingly, there are categories like snacks, where what people say and what they do can be very different. In produce, people are actually pretty accurate in their consumption and purchasing estimations, likely because of its planned nature.
But we do see some “aspirational reporting” for sure. For instance, people’s preferences for buying organic versus their actual organic purchases once confronted with the price difference. Same for their actual price sensitivity for things like local and value-added versus how they believe they would act on paper. That’s where it’s wonderful to have the “he said, she said” and better understand the purchase drivers to optimize marketing and merchandising.
Q: Could you compare and contrast any changes from the baseline results?
A: There are many subtle and larger shifts throughout the path to purchase over these past three years. This is why it’s so important to understand trend lines in the very habitual produce purchase. This being Year Three of the study allows us to see how things are shifting. For instance, we’re seeing the consumer definition of local settling on a radius or state lines.
We’re seeing the rise of alternative channels, the ever-growing interest for local and why. For instance, keeping the dollar in the community and freshness are still very important, but because of the Millennial influence, the environmental impact is becoming a stronger driver every year. That allows the industry to play into that angle more, especially in stores with a younger crowd. It’s what makes the study so unique and valuable.
Q: How do results break down generationally, and by demographics? Could you highlight some areas that would be of interest to industry executives? Do retailers need to be cognizant of major differences in consumer behaviors before, during and after purchase, based on age, income, lifestyle, etc.? Could you share some specific findings on that front?
A: Absolutely. Bottom line is that one size fits no one. Let’s look at promotional research for instance. We still have three-quarters of Boomers and seniors browsing the paper circular. On the other hand, Millennials have massively taken to in-store research, apps, digital circular and other forms of advertising. This means that for some stores, you still need all forms of advertising. In others, say urban stores with a younger crowd, you have to be much more focused on in-store execution and digital delivery and may start to de-emphasize paper delivery.
Another good example is special growing attributes, such as organic, sustainable, local, etc. Because they are often sold at higher prices, we see above-average interest among high-income shoppers. Likewise, there are fascinating differences between young families versus singles, the middle of the country versus the coasts, etc.
Q: How complex is the report in laying out this data and pulling out the relevant information to alter strategies?
A: The study is set up in such a way that you can just hit the highlights using the Executive Summary or chapter summaries; you can read the big findings in the Top Ten; you can see a visual presentation using the deck, or you can take a deep dive into the 50-page report, where you’ll find all these demographic insights.
We have people telling us they read the report from front to back; we have others that use it as a reference guide when studying up on a certain topic. You’ll also see tips and callouts throughout the report to highlight important conclusions. I’m a big believer of insights over data, and we make it a point to help connect the dots for the reader.
Q: Rick says supermarkets remain a stronghold for the primary store most consumers choose to buy produce. However, he says Millennials over-index in the organic specialty stores. Could you provide more information on the breakdown of primary- and secondary-store shopping locations and number of trips?
How much does channel choice and cross-over shopping vary by demographics, age, household size, income, etc.? What alternative channels do traditional supermarkets need to be most concerned about?
A: The channel choice is quite a fascinating story. Produce is on the consumer radar, and one of the biggest and fastest growing areas of the store. Traditional retailers are not the only ones to realize that produce is a great differentiator and sales driver, and we’re seeing produce emerge in vending machines, dollar, convenience and drug stores and, of course, farmers’ markets are appearing everywhere.
But supermarkets have very high shopper conversion in produce (more than 85%) and are the Number One channel among switchers – shoppers who purchase the majority of groceries in one channel and produce in another. But as strong as supermarkets are, they still have an opportunity to do better in areas like ethnic-item variety and organic, where their conversion is much lower.
We’re seeing a lot of growth in convenience stores right now as well as online, but it’s important to keep in mind that the dollar base is miniscule compared with that of supermarkets. In other words, the growth percentage is huge, but the hard dollars are a fraction of the supermarket growth. Most importantly, only 56 percent of trips across all these channels involve fresh produce. Yet, when produce is in the basket, the ring is more than 40% higher. So, traditional channels have to focus on keeping and getting people into the produce department and stealing the thunder of these alternative channels; the fun and local assortment from a farmers’ market, for instance.
Q: Rick pointed to products/categories in growth mode, and how the produce department is being realigned to accommodate. Could you go deeper into that data?
A: We’re seeing four big growth areas emerge, some with quite a bit of overlap. These are organic, locally grown, brands and value-added.
1. Organic produce continues to see double-digit dollar and volume growth with aggressive gains for organic fruit. Even so, organic remains less than eight percent of the total retail produce market. However, given its popularity among Millennials, organic can be a way for traditional channels to capture and retain more of the purchase. Household penetration saw a small increase, and 26 percent of current buyers expect to purchase more, citing benefits ranging from “free-from” and positive long-term health effects to a lesser environmental impact. Non-buyers cite a price barrier along with skepticism over added benefits and superior taste as reasons to stick to conventional. With household penetration growing, two distinct segments have developed: core buyers (24 percent) and periphery/in-and-out buyers (66 percent) — each with very different attitudes, behaviors and growth opportunities.
2. Locally grown produce continues to win with shoppers and is the favorite over organic among many consumers in a direct comparison. Shoppers are settling on a mile radius and state lines as the two predominant definitions of locally grown produce. Shoppers’ reasoning for buying locally sourced produce centers on supporting the local economy and a perceived better freshness.
3. Value-added produce and packaged salads continue to be strong growth drivers for produce, with opportunity for further expansion in household penetration and purchase frequency — provided the segment can overcome price barriers and consumer questions over shelf-life, safety, freshness and quality. When estimating future purchases, 23 percent of shoppers overall expect to buy more value-added produce in the coming year. In contrast, 33 percent of the core value-added shoppers anticipate they will buy more.
4. Branded produce, both national and private brands, are growing — reflecting a +12 percent 5-year dollar compound annual growth rate (GAGR). Brand influences about half of shoppers when buying fresh produce, with national brands being more important in processed produce and local/smaller brands taking preference in unprocessed produce. Among those with a brand preference, a general like for brands is the primary reason, but brands are also seen as being safer to eat, being fresher, higher quality and more consistent purchase to purchase.
Q: Did the study reveal any unusual findings or surprises from what you anticipated?
A: I don’t think there are any earth-shattering findings in the report, so much as developing a deeper understanding why certain sales trends are happening and what we can do as an industry to grow produce dollars, units and pounds. At 99 percent, produce is a mature category. So, what are some new consumption occasions we can go after? How can we grow customers’ confidence to purchase items they’ve never made before? How can we move shoppers to higher margin items?
Q: Rick talks of the 80/20 rule in order to have good trend information. You want about 80 percent of the questions to be the same, but each year new topics and new discussions need to be introduced because of the changing dynamics of the industry. What are your thoughts here? Could you elaborate on what you’ve learned and new avenues you want to explore for 2018?
A: Well, it’s a little more like 50/50 or 60/40 to make sure that we trend all the important information but leave enough opportunity to rotate in important new topics to keep the study fresh and reflect market changes. As to 2018, I keep a running tab of all the questions and suggestions I receive over email, phone or during speeches.
I welcome everyone to provide input. This is a study developed in very close collaboration with retailers, wholesalers, growers, media, suppliers and anyone working in the produce world. In my experience, the best research is developed for the industry, with the industry. So folks, email me any time!
Q: Rick mentioned that the report explored consumers’ perceptions of food safety and trust. He said supermarkets ranked really high in food safety, as well as farmer’s markets and produce stands (despite the reality that farmer’s markets and produce stands often face temperature control and handling problems adversely effecting food safety). He also said online shopping for produce ranked lower in food safety. Do you have any more details on this issue of food safety and trust?
A: Having tracked shoppers’ food safety perceptions across many different categories, I jokingly say, “in food retailers we trust.” As pillars of the community for decades on end, grocery stores have often built up a very strong trust and loyalty among their shoppers. Online is new, and many shoppers trust their own eyes over someone else’s when it comes to safety and quality.
In the report, we ask consumers what they think about the safety (growing and handling) of the produce at different channels, and we break out the percentages, but we qualify: By no means do these numbers reflect actual food safety or quality problems; these are purely consumer perceptions of quality and safety.
Q: You’ll be presenting your U.S.-based research in Holland to a diverse global audience. What findings will be most applicable, and will there be some areas harder to translate? Do you see universal trends, as well as diverging trends? Since you are from Holland, I’m sure you have some interesting insights in that respect…
A: Absolutely! I’m very excited to share U.S.-market insights with my fellow Duchies and others. The United States is a massive market with lots of opportunity. Americans are getting more and more curious about trying new items, organic, etc., and trade without a doubt will be strong in years to come.
The harder area will likely be the discussion surrounding the various channels in the United States. Europe has always had a strong presence of markets and farm-direct sales, something the U.S. is only now starting to contend with. At the same time, the U.S. is very fractured in terms of the different channels, chains, formats and store sizes.
Another major difference, of course, is trip frequency and basket size. Thinking about my mom who hops on her bike every day for her trip to the market, the store or the farm isn’t quite what we see over here in the States! At the store level, that translates into different needs for freshness, packaging, sizes, etc.
Q: Rick shared his key takeaways to help industry executives prosper in a vigorous retail environment. How important is the produce department in that mission? What do you think are the biggest challenges and opportunities ahead?
A: Vigorous is right, and that’s why produce is on everyone’s game plan. Between deflation challenging same store sales and fierce price competition challenging margins, it’s a rough environment. Total store sales have been flat for several years now. So, everyone is looking for growth opportunities, and produce is one of the stronger ones.
Against the no- or low-growth background, produce has been averaging 3-4 percent sales growth for several years. Produce is benefiting from the health and wellness mega trend that is only strengthening. Bottom line, you have to get produce right to win in the current environment. And hopefully the Power of Produce will provide a few or a handful of nuggets and tips to do just that.
Organic produce, locally grown, value-added and branded produce – four drivers of growth in the produce retailing and four great challenges in an environment where the deep discounters are putting enormous pressure on margins.
These issues are all complicated. Organic gets so many headlines, but is about 8% of produce sales by dollar and less than 5% by volume. Branding is a focus, but how does that tie in with proprietary varieties? Value-added increasingly involves proteins that weren’t sold in produce at all until recently, and locally grown may mean new things as urban agriculture and controlled-atmosphere farming grows along with it.
What a fantastic opportunity to combine industry knowledge and these analytics to have a robust discussion at The Amsterdam Produce Show, and what a great opportunity to pick the brains of people like Rick Stein and Anne-Marie Roerink in the intimate setting that is the Hilton Amsterdam and Westergasfabriek.
Come and be a part of this discussion. You will become a smarter, more insightful person while helping your company and the industry advance.
You can check out the website right here.
Register for the event here.
Book a hotel room — where the action is — at the Headquarters Hilton Amsterdam right here.
And if you would like to exhibit or sponsor, please let us know here.
And, of course, we are happy to answer questions right here.
We look forward to seeing you in Amsterdam!
The opportunities for learning at global produce events are often serendipitous. Last year at the launch of The Amsterdam Produce Show and Conference, we had the good fortune to offer a tour that included the Robinson Fresh European headquarters in Amsterdam.
The tour was terrific. Gary York, Vice President Sales and Marketing, gave an excellent presentation, and the building itself — so very international, so progressive, so global — taught many lessons, but when the conversation evolved into an incredible discourse between Jim Lemke, President at Robinson Fresh, Bruce Peterson of Peterson Insights —who built Wal-Mart’s produce program in no small part with Jim Lemke and Robinson Fresh — and yours truly, it was a discourse that had never happened before, would never quite happen again, and, according to one important attendee of the tour, was like gaining an MBA in produce in a half hour.
That conversation ranged from a discussion on Wonky Vegetables to the integration of logistics and product, to the role of branding in produce. The value to attendees who were on that tour was immeasurable.
We detailed the tour last year in this piece:
In Search Of The Best Talent… Robinson Fresh Opens New European Headquarters In Amsterdam... Attendees Of The Amsterdam Produce Show And Conference Invited On A Special Tour
We are returning this year with some new twists, including Robinson Fresh flying in Gina Garvin, their Director of Consumer Insights, to help elevate the tour further. It is a real industry service that Robinson Fresh provides the industry, and we respect and appreciate the seriousness with which Robinson Fresh takes on this challenge.
We asked Pundit Investigator and Special Projects Editor Mira Slott to find out what lies ahead for the lucky attendees this year:
Vice President of Sales and Marketing
Eden Prairie, Minnesota
Q: As part of our pre-Show coverage for Amsterdam, we want to highlight the exceptional opportunity attendees will have to take part in a Robinson Fresh tour, following its great success at the inaugural Show last year.
As we launched the Amsterdam Produce Show, Robinson Fresh was on the cusp of expanding its European headquarters to accommodate its strategic international growth amid a rapidly changing retail environment. The company graciously opened its doors to attendees on the final day of the show for a tour of your facilities and to provide insights into the scope of your operations in the context of The Netherlands, which is so important to the global produce industry. Let’s inspire attendees with elements surrounding this year’s tour…
Could you start by giving some background about Robinson Fresh, its international scope and its value proposition? And why did you choose Amsterdam for your European headquarters?
A: I can talk about Robinson Fresh’s global expansion and why we’re proceeding in this direction and some of the headlines around this area. And then Robert Walsleben, director of European business, can get into Europe a little bit more and to why Amsterdam is important.
The reason we are expanding globally… over 112-plus years as a company entity, CH Robinson over time started to work with growers in multiple locations, first in North America, supplying fresh fruits and vegetables to our clients in the northern, midwestern U.S.
As consumers began to travel more and more, and our customer base started to expand through the U.S. and Canada, we had to develop growing relationships and growing operations, first in Mexico, later in Central and South America, primarily supplying fresh fruits and vegetables, high quality products, branded items, and consumer-differentiated products to our clients in the U.S.
As we did that, we needed to bring increasingly added value to those growers, whether it was food safety, financing, innovation through seed varieties, cold chain logistics, etc.… As those growing operations grew and prospered with the CH Robinson alliance, we realized we needed to expand our consumer base.
Q: In what ways?
A: European consumers preferred different products, different varieties, oftentimes different sizes, at different times of the year. This was the case with Asian consumers and South American consumers as well. We needed to evaluate our global retail relationships and bring some of these products to them. In doing so, we could bring value to our growers by being able to sell the entire crop and also market it to different parts of the world using smart cold-chain logistics, benefiting people in many countries, while maximizing financial return to the farms.
At the same time, as global retail relationships continued to expand and consolidate in different parts of the world, we were able to meet that demand of the retailer in multiple areas. If you look at large retailers, such as in Holland, the area we’re talking about now, we’re able to meet the needs of an Ahold, for instance, not only in Holland, but, of course, on the U.S. East Coast, where they have operations. But we’ll also form alliances in places like Indonesia, where we work with a retail chain there as well. That’s the five-minute version of our global expansion.
Q: Could you elaborate on how retail operations and the international landscape are changing? Is it important or necessary for a company to be as global as you are? Is there value in becoming a niche player as well?
A: It’s a great question. We’ve seen over the past decade or more as retailers continue to increase their footprints in multiple areas of the world in order to grab additional market share. We’ve also seen consolidation on the other side, where retailers are teaming up to create their own efficiencies and their own improved supply chain that would enhance the value to the grower.
Then think of things like most recently Amazon and Whole Foods, and why that was an important acquisition for two retailers in quite different spaces in the retail sector. But you can also look at the merger of Ahold and Delhaize closer to home in Amsterdam, where that was an important merger to enhance the position of those two retailers, not only in Europe, but in the United States and also places like Indonesia and other parts of Asia.
Then you look at global expansion. You can take U.S. retailers like Costco, and see their growth in Europe, first in the United Kingdom, and now most recently in Spain, France and Denmark. Also, you have Aldi’s and Lidl’s expansion into the U.S. The same thing goes for Tesco, first, of course, in Europe, and then also in China, Thailand and other locations.
So, these large global retailers continue to expand and look to take market share. They want to create and deliver great products to the consumers and do so in a very cost efficient and effective manner. One way you do that is to limit the number of touchpoints, the number of vendors you have to work with in order to increase your efficiencies by working with companies like Robinson Fresh, which has a global scale.
We’ve got the products and services. We can deliver value through logistics and through products, so partnering with us, you can have an advantage working with us across multiple continents, bringing consistency and high quality to your consumers, at the same time looking to lower your overall landed costs both to the store as well as your own operations because you have fewer vendors to manage.
Q: Often, retailers closely guard proprietary information and are reticent to share internal operations and strategic direction, especially in a cut-throat environment, keeping suppliers at arms’ length. Do you find retailers more open to sharing secrets with suppliers to help better manage and innovate supply chain logistics and product portfolios?
Does an increasingly more complex retail landscape demand it? At the same time, there’s always been a tug-of-war between costs and benefits of retailers dealing direct to avoid middlemen, and retailer/supplier collaboration.
A: We have definitely seen an evolution in the retail sector, where retailers are more collaborative than ever before, whether it’s replenishment or consolidation services, or being open to branding ideas and new innovative products.
Oftentimes, we’ll deliver a new product to market like our Imperial papaya or our Orangetti squash, or our own proprietary systems. For example, we have a technology that can track and trace orders around the world in a very efficient manner, whether those orders are on ocean containers on large vessels, or in the cargo hold of an airplane. And the speed at which we can track that information down to the PO level, giving these retailers virtual inventory around the world, allows them to operate in that more cost-effective manner.
However, in order to do that, they have to share information, and then that information is tied into our proprietary technology that works on behalf of the retailer. That technology is Navisphere Vision, and today we’re talking to multiple large global retailers about the applications that technology can deliver to increase their performance and develop a better overall experience to their consumer.
Q: What trends do you see on the product side, and where are the opportunities to market them?
A: One thing we know for certain, and it’s one of our strategies, is that supply chains are constantly shifting. When looking at trends, the first thing I think about is how the consumer dynamic is changing all the time. We’ve talked for a few years now about the emerging middle class in China and what that group has done to influence trends in that part of the world. For instance, in China now, there is high consumer demand for avocados.
We are meeting that demand with our Green Giant fresh avocado brand. It’s an exciting trend that has allowed us to grow in China with a high-quality product and a great brand that resonates well with that consumer.
In pursuing trends, I think about what that geography might entail. A good example is the increased consumption of sweet potatoes in Europe, first with the influx of sweet potatoes, over the last decade or so in the United Kingdom, and now most recently into Western Europe. There is interest in the healthy attributes and the great varieties that are produced in the United States, which we ship to Europe through our growing partners.
Trends definitely can be global at times, I think of health and wellness, and certainly geographically-focused specific varieties and items, or even brands. Our own Tropicana brand citrus, for instance. We’ve just expanded that brand into South America, so now for the first time, not only will consumers be able to enjoy Tropicana fresh citrus in the United States, where we’ve been partnering with PepsiCo for more than a dozen years to deliver product, we’ll now be delivering Tropicana fresh citrus to retailers in South America.
We’re excited about the emergence of that brand there and what it will do to benefit the consumer. We hope to continue and look forward to expanding our brands to other parts of the world. There’s another trend of consumers looking for high quality products as economies have improved, and consumers have more money in their pockets. They are looking for products that can benefit their lives, and we want to mirror those product offerings at Robinson Fresh.
Q: What is there to gain in the context of your business at the Amsterdam Produce Show?
A: We see it as almost a responsibility of ours, being a company of our size and with the resources we have, to communicate our value proposition to the industry and to help bring value to the entire supply chain. CH Robinson is a large global company and, depending on what circles you’re in, we’re a large global cold chain company, a large global logistics company, an expert and innovator of fresh fruits and vegetables... We’re a European company, we’re an Asian company, we’re a U.S.-centric company.
What we love about your Shows, whether it’s in New York City, London or Amsterdam, is that they give us the opportunity to speak to other attendees, to the industry leaders and to tell our story that not only follows consumer trends but helps to create consumer trends through innovative products and solutions.
The forum for these shows is exactly what we’re looking for, and it doesn’t hurt that the Amsterdam Show is only two kilometers away from our European headquarters. We were very, very pleased with last year’s show. You had a great audience and great speakers.
We look forward to sharing our story, and hearing others’ stories; to talk about the various industry issues and how together we’re going to change this industry for the better.
After speaking with Gary York in the U.S., Mira visited Robert Walsleben in the Netherlands to learn more…
Director European Business
C.H. Robinson European Headquarters
Amsterdam, The Netherlands
Q: Gary York provided an excellent overview of CH Robinson Worldwide and Robinson Fresh’s global expansion strategy. Robert, now focusing in on the Netherlands, could you share more insights on why you chose Amsterdam for your European headquarters? You were on a major growth trajectory during the launch of our Amsterdam Produce Show last year.
What are the latest developments?
A: We have a lot of new things to talk about since, primarily around the extension of our products and services, and exclusive marketing agreements with large entities. But all the reasons we’re headquartered here in Amsterdam haven’t changed and are still valid; the search for talent, proximity to the import hub in the Netherlands, ease of customer access to our corporate headquarters here in Amsterdam, proximity to our transportation solutions. For the future, what we’d like to talk about is the extension of our products to the market for 2018 and beyond as well as other exciting things that are significant.
The story for Robinson Fresh and C.H. Robinson, as Gary talked about, is global expansion. Consistent with this same story line, we’re extending a lot of products and services that we haven’t had before in the region, around logistics solutions for temperature control, new commodities, new import commodities, and a significant and rapidly growing local presence in the market, so we offer Spanish supply, Italian supply, etc.
Q: How complicated is it to expand like this? You’ve pointed to company strengths in leveraging both produce and logistics expertise, and you have this whole integrated supply chain. Could you provide some perspective on how the operation works?
A: It’s all part of what’s been our growth plan for Europe, since Robinson Fresh became an entity in Europe, just 36 months back. We’re in a plan where we’re integrating all these things Gary York has talked about, whether it is cold chain management or products that come from exported regions to Europe, like the U.S.A. and our sweet potato program, which we do in collaboration with our exclusive marketing representation from Wada Farms. And also from Central and South America, whether from our pineapple plantation in Costa Rica, melons from Panama or melons from Brazil, we’re managing the entire supply chain. We’re bringing all our capabilities to bear — service freshness, quality, and productivity in the supply chain.
Q: What would you say are some of the biggest challenges and opportunities for your company, and for the industry as a whole?
A: Following consumer trends without a doubt. Consumer trends are changing, as Gary talked about, and we have to stay ahead of them. As part of our tour at the Amsterdam Produce Show, we’re going to highlight consumer insights. We’re going to bring our director of consumer insights over to do this event and give the tour a whole new flavor.
Q: What kind of feedback did you receive from attendees who had the opportunity to join your tour last year? Could you share your overall impressions of the inaugural Amsterdam Produce Show?
A: The Amsterdam Produce Show is very exciting for us because it’s in our backyard. Our headquarters is only two kilometers away. Having all these buyers and suppliers in Amsterdam really gives us the opportunity to showcase our operation and capabilities and how our business model works. More importantly, we can build relationships. This is our headquarters, and it’s in the hub of Europe, so for us, The Amsterdam Produce Show has created positive momentum. It’s been great to have people come on the tour and walk away saying, hey, now I understand what Robinson Fresh has to offer and its value proposition.
Q: And what is the biggest takeaway?
A: What we’ve found is that being in Amsterdam goes beyond just ease of access for our customers; it also provides for some differentiation in that we’re more than just a Dutch company and wholesale trader. Our goal is to bring unique value propositions to the retail environment.
Q: How does the company structure work exactly?
A: As Robinson Fresh, we sell our products and services into four different verticals. Our Number One priority is the retail vertical. We sell into the foodservice and processing vertical as well — for instance, value-added manufacturers of French fries — but we are not in the value-added space of processing fruit and vegetables ourselves.
We also sell into the wholesale channel, and the fourth vertical is the agricultural grower/shipper. So, for us, back to the question of why Amsterdam, being integrated in our European headquarters, has allowed us to leverage many resources, where as being in a remote region doesn’t allow you that luxury. We have all of our internal analytics and shared services in this location in Amsterdam, which allows us to gain a lot of synergies.
Q: Analytics in what capacity?
A: Analytics are around two different areas. One is around the customer and category insights, and the other is around supply-chain network analytics, the ocean, air and surface transportation space, and other supply chain services. We have teams of people who can take a complex problem, cold chain logistics in this case for Robinson Fresh, and develop network solutions that bring value through improved velocity, service levels and product freshness.
Beyond just being differentiated in Amsterdam and providing easier access, the resources that we have in this location have allowed us to bring more value to our customer base.
Q: Let’s talk more about your European product expansion strategy going forward. Our sister publication, Produce Business UK, detailed your 2017 program extensions into Spanish sweet potatoes, Italian mini watermelons and Mexican avocados.
A: From a product side, the growth is strategic in both categories and volumes. We’ve got more products than these, which we’ve focused on in 2017 and grown in a significant way in Europe. Our strategy is a continuation and expansion in targeted categories where we have a value-added proposition for our customers in the retail vertical, supplying retailers in a direct way.
Q: What retailers and regions are you targeting? Are you looking to penetrate new markets?
A: These span from global multi-national retailers to European regional retailers. We’re increasing our business in the Central European region in 2017, and it’s one of our focus areas in 2018: Poland, Czech Republic, Slovakia and Hungary. We’re doing new business in all those countries this year, in addition to the UK and Western Europe, where we started our core business.
Q: What are the challenges going into those countries?
A: Our value-added proposition in product is one aspect. The other aspect is the complexities of the network and the cold-chain solutions required to deliver into those markets. Typically there is more consolidation of loads, so to achieve the best economies when you import product into Rotterdam, for example, you have to have a network established where you can consolidate and distribute product to retailers in ways that allow them a lower cost structure due to the fact you’re not paying what’s called in Europe “groupage” shipping rates, which are less than a truckload, and still meet their service requirements. This is something that differentiates us in that market.
We’re currently doing business with three major retailers in the central European region, which we’ve started in 2017. But for proprietary reasons, I can’t share their names.
Q: Are there particular products that are of interest, trends you’re seeing?
A: What we’ve focused on are tropicals or exotics from the U.S., Mexico and Central and South America, primarily the more complex import items because that’s where we bring the most value. Local production supply chains are fairly built out.
Q When you’re expanding your retail business, are you seeing differences in terms of demands?
A: For the retailers that are multinational, yes, because they generally have supply chains with more complexity and further reach. For the ones more regional in geography, generally speaking they have more of a static supply chain.
From a product side, I’d say not necessarily, because where we focus our value props is in these tropicals and exotics, and that demand exists in all retail.
Q: And the commodities where you can get the most bang for the buck…
A: …more differentiated products and also products that have major growth rates. If you look at avocados and sweet potatoes, we’re talking about growth rates significantly above the traditional produce space.
Q: Gary York pointed to avocados and sweet potatoes as examples of products that are becoming increasingly popular with new consumers in untapped markets around the world.
He can speak to growth in other specific markets, but In Europe, in general, both of these items are growing extremely rapidly; I can say it’s in the double digits for sure. You think of produce growth rates in general… if you look at Euro 28 — soon to be Euro 27 due to Brexit — produce growth is at 1.5 to 2 percent, and these products we focus on are at much higher growth rates, ten times the growth rate or more!
And in these developing economies, like Central Europe, they’re growing at even faster rates. What we’ve seen is that the trends tend to move from West to East in Europe from a consumption standpoint. When you look at per capita consumption of sweet potatoes and avocados, the numbers are much lower in the more developing countries than in the more mature markets.
Q: That’ s an important impetus for getting into new markets because of that saturation…
A: Yes. For us, it’s about opportunity to add value for our customers, and it’s a major growth vehicle for our business in Europe. It’s an important part of our strategy.
Q: How has the disruption in the retail environment impacted competition with pricing and margin pressure, etc.
A: I would say the competitive pressures given the retail disruption you alluded to — the need to be innovative and creative for these retail customers — is higher than ever. It’s certainly not business-as-usual anymore. It’s about bringing those value-added solutions to customers, beyond just product, which differentiate you as a supplier and bring value to them that they can deliver to the consumer because that’s what the end game is.
Q: In the spectrum of retailers wanting to go direct versus through middlemen, where do you see your company fitting in?
A: We see ourselves as bringing value through strategic products we are invested in. And that runs the gamut from contract growing with our grower base all the way to having ownership stake in a pineapple plantation in Costa Rica. We don’t view ourselves as middlemen. What we say our philosophy is: We want to invest in categories where we can add value and keep the multigenerational farms intact, so we serve both constituent bases, the customer as well as the supply base.
Q: In that realm, could you talk about partnerships and relationships.
A: Long-term relationships are very important. When you talk about our sweet potato program, we’re the exclusive marketer and distributor of Wada Farms, which is one of the largest growers of sweet potatoes in North America. And the vast majority of sweet potatoes we import from Wada come from North Carolina. We have expanded that relationship now into Europe now and are offering 12-month supply-chain solutions to our customers, but we also are developing local sweet potatoes from Spain.
We have been able to bring three things with the sweet potato program, making a difference in Europe. Number One, we brought infrastructure technology to allow quality improvement — we’ve built curing rooms to allow both improved product quality and a more robust shelf life for the retailer. Number Two, we brought agronomic expertise from Wada Farms, and Number Three, we brought new seed varieties, not necessarily proprietary, but varieties not traditionally grown in Europe. So, that’s an example of our investment in the farm. It’s a great model. Now we can offer our customers year-round solutions in these commodities where we have a differentiation.
Q: What are the latest developments? Can you tell us about deals in the pipeline?
A: We also have something new for 2018, which will be very big, so this is hot off the press. We haven’t officially announced yet. We’re going to now represent Verfrut is the largest owned fruit grower and exporter in Chile… I say largest owned meaning that 100% of their export is product from farms, orchards and vineyards that they actually own and control. There are other exporters that may be bigger but they are exporting fruit from other growers.
They supply in a big way grapes, apples, kiwis, and stone fruits from Peru and Chile. This is going to be a very large new program. In the U.S, with sweet potatoes, it’s been our relationship with Wada Farms that has enabled our growth, and in South America, now it is Verfrut and our relationship with Verfrut that will enable our growth into those categories.
We don’t just want to be about avocados and sweet potatoes; we need to be more diversified in our value proposition, and that’s what these types of relationships with our logistics do to provide differentiation for our customers. We’re really excited about it.
Q: Would you say this arrangement with Verfrut is exclusive?
A: We are going to manage all of their growth in Europe.
Q: That’s quite an undertaking…
A: When you look at this industry, to be able to bring the end-to-end solutions in both products and services that our company can bring on a global scale really does differentiate us from many of our competitors.
Q: It’s quite an advantage when you’re dealing with these large multi-national retailers, as Gary pointed out. You have Ahold and Delhaize joining forces, and more recently the Amazon/Whole Foods merger…
A: Global expansion of these multi-national retailers continues to proliferate. One of our company sayings is to meet the customer where they want to buy and have that capability to do so.
The Amazon/Whole Foods merger is interesting. Being over here, we don’t spend a lot of time internally thinking about what those implications are. It’s a bigger retail question. Anytime we see retail consolidation, we think of what our opportunities are, as a big logistics company and global supplier of products and services. So, as Amazon continues to build out its infrastructure and offerings to the broader consumer, we don’t see it as disruptive as the retailers do.
Q: That’s a nice segue to how you will be integrating consumer insights into this year’s tour…
A: For the retail tour, we’re bringing Gina Garven, our director of consumer insights. Last year on the tour, we gave a good overview of why we’re here, and now were’ going to build on that and take things to a new level.
Q: What will Gina present to attendees? Is this consumer research that Robinson Fresh conducts? What’s involved in the program and how important is it? How are the findings applied to the business? And does the analysis impact strategies and the bottom line?
A: Gina and the rest of her category insights team help to drive results and influence the performance of our commodities and customers through consumer-focused analysis, industry benchmarking, trends and collaborative plan development.
Q: This sounds like it weaves through a lot of areas?
A: A few specific offerings provided by this team include consumer insights, commodity supply chain mapping, assortment and merchandising analysis to include POG design, pricing and promotional analysis, and demand planning and inventory management.
The team is able to support our customers through custom reporting and analysis, dependent upon needs. At the end of the day, the category insight team goal is to be a collaborative partner by finding opportunities to drive sales in the produce department and address any pain points in the business through impactful analysis and actionable insights.
Q: That should intrigue attendees. Is there anything else you’d like to bring out in this preview piece?
A: I always like to brag about our people. In our fourth year of operation here, having talented people in our organization has been one of the key enablers of our growth.
Q: When you say talented, do you mean there are all these experts in different areas.
A: Yes, and this would include our ability to service our customers in logistics, product and account management.
Q: I remember when we did the preview for last year’s tour, and you introduced me to the team. It is somewhat like a United Nations here.
A: Just from our team in Europe, we have people representing six different nationalities, and speaking over a dozen languages. One guy speaks six languages fluently. This surely helps to break down cultural barriers and cultivate strong multi-faceted relationships, which has been paramount to our success.
We received a lot of questions when we launched The Amsterdam Produce Show and Conference and located the show in the Netherlands, but not in one of the production or port cities. Geographically, the Netherlands is small, so it is not much of an issue, but our focus was on Amsterdam as a font of innovation, a global city gathering thought- and practice-leaders from all corners of the globe. This all was in line with what we were trying to accomplish, and it turns out that many of these same issues drove Robinson Fresh to establish its European Headquarters there as well.
Not all companies would open their home and their heart to the industry in the way that Robinson Fresh has – so we are exceedingly appreciative for the industry leadership they have expressed through their support of the Amsterdam event and offering this tour to the global attendee base.
Come take advantage of an unapparelled opportunity to learn.
You can check out the website right here.
Register for the event here.
Book a hotel room -- where the action is -- at the Headquarters Hilton Amsterdam right here.
And if you would like to exhibit or sponsor, please let us know here.
And, of course, we are happy to answer questions right here.
We look forward to seeing you in Amsterdam!