We published more than 1,000 pages about Tesco’s ill-starred venture to come to America as Fresh & Easy. We did hundreds of TV spots, radio spots and newspaper, magazine and internet interviews about the effort and why we saw it as destined to fail without a drastic change of direction. We did investor conference calls and keynoted European Retailing Conferences for investment banks
These two pieces sum up the failure:
Twenty Lessons Learned From Tesco’s Fresh & Easy Failure
The Failure Of Tesco’s Fresh & Easy: Diverse Voices And “Deja Vu All Over Again”
We didn’t bother to write much about Yucaipa’s efforts to succeed, because, well, they never really made any efforts. Now they are in Chapter 11 and out of business.
For a brief moment we thought there was a shot. The original plan was for Yucaipa to rebanner the units under its Wild Oats brand. The stores were going to be repositioned as healthy convenience stores. But when the price tag came in for new signage, advertising and whatnot, Yucaipa got cold feet and decided to make incremental improvements.
But the concept was a known loser when they bought it, and, although Tesco paid Yucaipa Cos. about $235 million to take it off their hands, that money wasn’t going to persuade consumers to like a brand they never connected with.
It is a sad story. People hoped to find the next Wal-Mart and aligned themselves with Tesco. And many lost much… even Tesco itself came out limping — its many problems can be traced to a diversion of interest to focus on this venture to conquer America.
There are lessons here, and a book should be written. We know just the guy to write it. But now it is done, and in the great mass of American retailing this most studied retailing adventure will be swallowed up and absorbed among all the disappeared retailers of days past.
Now we think of her, gone so slowly, yet so suddenly, as was written in The Tragedy of MacBeth:
She should have died hereafter;
There would have been a time for such a word.
To-morrow, and to-morrow, and to-morrow,
Creeps in this petty pace from day to day
To the last syllable of recorded time,
And all our yesterdays have lighted fools
The way to dusty death.
Out, out, brief candle!
Life's but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
It was the inaugural year of The New York Produce Show and Conference, and we had put together a unique exchange program, where we invited students from premier universities to gain contacts and consider careers in the industry, while also allowing professors at these same universities to reach out and disseminate the results of their research throughout the trade.
We wondered, though, whether industry members would be receptive to these high-end presentations. Well, we ran a piece profiling what Professor John Stanton of St. Joseph’s University would present:
Research To Be Unveiled At The New York Produce Show And Conference Reveals ‘Local’ Preference Versus Organic
It was just a few minutes later that the first letter of praise came over the transom:
With great excitement and anticipation, I await The New York Produce Show and Conference and the presentation on Local Preference Versus Organic, by Dr. Stanton.
John Stanton, undoubtedly in my book, is one of the best, if not the best authority on consumer behavior when it comes to purchasing foods and produce.
He continues to “Delight” his audiences with thought-provoking data, information and advice on how to reach consumers in a way that will influence their purchase decisions. Time after time, Dr. Stanton has identified consumer traits that if properly applied in marketing, will end in success!
His presence, along with the other outstanding presenters at the New York Produce Show, is certainly worth the registration fee alone, while the excitement of the show will be a bonus!
— Jim Allen
New York Apple Association, Inc.
Fishers, New York
So when the good professor said he had a broad and important topic to speak on this year, we quickly asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Dr. John Stanton
Professor and Chairman
Food Marketing Department
Saint Joseph’s University
Q: We’re grateful you’ll once again be gracing us with your expertise and strategic direction, following a series of excellent educational micro sessions over the years, including a lively, no-holds-barred presentation earlier this year at the London Produce Show and Conference. Could you give us a sneak preview of what issues you’ll be tackling this time?
A: The topic I chose to speak about in New York is: “The Changing Retail Environment: Opportunities and Obstacles.” The talk will address how the population is changing and how these changes are affecting what people buy and why and where they shop. It will cover the gamut from smaller supermarkets to new vending machines and continuous ordering. At the same time, we will look at how traditional supermarkets have been suffering at the hands of the new channels of distribution.
Q: In painting this scenario, what is the fate of traditional supermarkets, and how will this impact the different players within the produce industry? Will you be addressing ways to better compete?
A: The produce industry can either embrace the new channels, or see the decline of the supermarkets as a major obstacle. I’ll give examples of how the produce industry can take advantage of these new channels.
For the longest time, people bought food in two places — a supermarket or restaurant. Over the past 30 years or so, there have been more and more alternative retail outlets. We know big box stores have come in; we know convenience stores are starting to sell more and more stuff besides cigarettes and newspapers, and becoming foodservice outlets.
Big supermarkets are using lots of different formats. Many of them are creating smaller supermarket formats, much smaller. We know the dollar stores and pharmacies are all looking to sell more food. The question is, what can the industry do to facilitate and help drugstores, convenience chains, and dollar stores get into the fresh produce business, because basically, these formats are focused on the center store, but they want to get into this fresh industry.
Here’s the dilemma… one of the things I say, if you’re a produce marketer and you’re fighting for more space in supermarkets, to me that’s like fighting for the best stateroom on the Titanic.
Q: Thank you for giving attendees who haven’t had the pleasure of hearing you present before a preview of your candor, as well as your sense of humor!
A: The point is, your biggest customers, which are traditional supermarkets, are really declining, not only in the numbers, but there is a worse thing happening: They’re declining in the number of visits people are making. If your primary customer is supermarkets and people are going to supermarkets less frequently, there’s less chance they end up buying produce at your store.
Q: And it’s perishable, so if they’re coming less often, it goes to reason they’ll buy smaller quantities to avoid spoilage…
A: So the question is, where are they going? Well, they’re making a lot more stops at convenience stores, dollar stores, and these other places moving into the fresh food categories.
One produce marketer in the Midwest told me, he now is selling more produce to some pharmacies than he is to some supermarkets.
Look at Target, and I’m not talking about Target superstores, I’m talking about traditional Target stores adding more and more fresh food all the time. So more channels are adding fresh food, what’s the big deal here? It’s a different model than a supermarket. They have limited SKUs, and most product is prepackaged.
They don’t want displays of loose tomatoes. They just want bags of tomatoes that any staff member can put on the shelf and leave. They don’t want to invest in a specialized labor force that is trained in handling produce.
On top of that, there is a whole other group of people trying to sell fresh product. The next wave coming in is vending. I have pictures of people selling milk in vending machines, and just about everything you can imagine.
There are some supermarkets now that learned from the banks. The banks have the ATM inside the door so if the bank is closed, customers can still use the ATM. Now instead of staying open 24 hours, some supermarkets look at shopping patterns and what people buy late at night and have vending machines in their vestibule with products people typically buy at 2:00 in morning.
Q: That’s a clever strategy…especially since supermarkets already have the infrastructure and expertise in handling perishables, alleviating some of the challenges faced when trying to integrate vending machines with fresh produce in schools, for instance. What other alternative venues show potential for fresh produce?
A: I’ll tell you another really interesting area is the TV shopping networks; QVC or the Home Shopping Network (HSN). If you go to one of these shopping network websites and search under food, how many items do you think they sell? It’s hundreds. You’ll see meat, seafood, cakes…virtually every food item except produce.
Q: It looks like at least one produce company figured it out. On QVC, with smart marketing, Cushman’s sells its “Sugarbells” seasonal citrus in 6-pound and 12-pound boxes at specific times of year, encouraging the customer to sign up for an autoship option, where the product will be automatically shipped to them again when it comes back in season.
A: Oh yes, I do remember this, but it’s really the exception. It’s like those places where companies get customers to sign up for the fruit-of-the-month club.
Q: It’s interesting you bring up these TV shopping networks, as the industry doesn’t talk much about this channel of distribution...
A: For you to sell your product on QVC, you have to agree to sell something like $250,000 in sales every 15 minutes.
Q: I guess that kind of commitment could be intimidating in this industry because of uncertainties and fluctuations in supply availability, pricing, etc.
A: You’ve got to figure that out. You can’t just ignore a channel of distribution because the way you currently do it doesn’t fit that model.
One of my messages will be, you have to change the way you do business to satisfy the needs of the new emerging customers. Now someone might ask, how do I do that? Well, I’m not a produce expert and my role here is not to be a consultant because that would be too complicated. I’m here to show the opportunities.
Q: Will you be talking about Fresh Direct, and Amazon Fresh and the realm of growth here?
A: Yes. Let me give you an example. A typical supermarket, a big one, may have 60,000 SKUs to 70,000 SKUs. Amazon has about 500,000 food items available.
Q: That’s a huge number, although most of that is not perishable…
A: But you have to think about this. If you’re in a supermarket, you have to have space available for all those items. The more items you have, the bigger your store has to be. Amazon doesn’t need all that space for their units. Many items are directly shipped from the producer.
You can have five different kinds of beets. When Amazon gets an order, it sells the order directly to the produce supplier, who sells those beets to the consumer. A supermarket couldn’t afford to carry five different kinds of beets because they’re not finding space for them, but Amazon could.
Q: Are there differences in the type of consumer who is shopping on a Fresh Direct or Amazon Fresh versus a supermarket? For years, people thought shopping online for fresh produce was a bust because consumers desired the exciting sensory experience of buying produce in the store, as well as the control over selecting their items, in addition to problems with inconsistent quality upon delivery.
Fresh Direct was on the cutting edge of successfully overcoming all these issues…Tenley Allen, marketing manager at Fresh Direct, did a forward-thinking presentation in London highlighting how the company is winning over millennials.
A: One of the really interesting things to take place was when people first thought about home delivery, it was about buying toilet paper and Campbell’s Soup, but not perishables. They discovered the opposite. The young people, the millennials don’t know what a good cantaloupe is. They would rather have the professionals pick a good head of lettuce; well of course they buy it in a bag now.
The joke is, many people who buy perishable products actually prefer to have an expert pick it out.
Q: And of course, companies such as Fresh Direct have become extremely market and social media savvy, steering customers to what’s the freshest, tastiest, in season, as well as what to hold off on ordering until next week, customizing recipes, etc.
A: You have the ability to do all kinds of creative things online you might not be able to do in the store…The opportunities are immense. There are a lot of openings.
During the presentation, I’m going to go channel by channel and talk about the opportunities and what the issues are. But the key message is you have to start adjusting how you sell and distribute to how the customer wants you to sell and distribute.
Q: Going back to vending machines, we’ve covered ambitious attempts by companies including Dole early on to bring healthy vending machines filled with fresh produce to schools, but results have been mixed for several reasons; the additional labor and strict monitoring to insure turnover of product, administrative and student buy in, etc.
A: With vending machines, there are absolutely issues that have to be addressed that are not part of the current world of produce distribution. First you’ve got to decide, do I believe if I put fresh produce items in vending machines they will sell. If the answer is yes, then you have to figure out how do we do it. You don’t say, “OK, I have a system, and I’ll have these guys stop at vending machines on their way from the grocery stores.” It probably won’t work that way.
You probably have to sit down from scratch, and say, if we believe this is going to be an effective channel of distribution, how do we get this product to the locations, and so on.
My guess is 80 percent of people in the produce industry won’t believe this is a viable channel. But for the 20 percent who do, I would make appointments to see people whose primary business, or a part of their business, is selling through vending machines. Ask the guys at Frito Lay how do you make this work rather than saying how do we get our current system to deal with vending machines.
Q: But isn’t Frito Lay’s experience in vending a very different scenario than a produce company dealing with perishable items like apples and bananas, which require variable temperature controls, and face faster product deterioration, etc.
A: Not really. I don’t think it’s that different. If you’re selling produce, you have to be in climate-controlled vending machines, but they are as common as can be today. What’s nice; these are all computer-run, so you can sit in your office and know what’s happening with vending machine a, b, and c, and when a product is going out of date because everything is computerized.
Q: So it’s more about jumping outside the box and approaching things in a different way.
A: Exactly. We have to rethink how we’re taking product to market because the market isn’t the same as it was 25 years ago.
Q: Do you think certain produce companies or channels are better positioned to capitalize on these opportunities?
A: I think anyone can really jump in. You have two scenarios; you have the big companies that have a little bit of capital and they can invest in how to stay ahead of the game. You have the small company that is desperate, and says if we don’t find a way to start selling our product, these bigger and more famous distributors are going to tie up all the supermarkets.
Desperation is what often breeds innovation.
Q: You mentioned earlier you’d be linking into your discussion the impacts of the changing population.
A: My argument of why this will become important to all these other channels… I’ll be making the case that it’s because the population is changing. There are more single person households, more Hispanics, the millennials are coming into becoming key buyers and they have very different purchase patterns than the traditional baby boomers. They’re the three big consumer segments to watch for.
Also the time famine has continued, so even baby boomers, Gen X and Y are more likely making a stop at a convenience store to pick up a few things for tonight’s dinner.
Even Target basic stores are bringing in more food products, not to be the primary shopping location for consumers, but enough to say, on your way home we have enough stuff to make a meal.
Someone wants to make tacos, and you’ll be able to get the taco shells, ground beef, they may only have one SKU or two SKUs of ground beef, they’ll have lettuce and tomatoes, something like that. You can run in at 5:30 tonight and pick it up and be out of there. You would never go there to do your two-week food shopping.
Q: These alternative shopping channels need to know their customers well to target the right food items…
A: If I were doing a speech to the traditional grocery store, I’d have a slightly different bent. I’d say you have to figure out how to get these people to come back to your store and not go to the pharmacies and Aldi’s.
For the supplier side, hey, I’m a produce marketer and I want to be where the consumers are. And the consumers now aren’t in grocery stores — well they are, but their numbers are declining.
Q: That’s why traditional supermarkets are branching out into these different formats...
A: And most of these different formats are smaller. So, how can a produce marketer help them deal with fewer SKUs, but the right SKUs, and the most profitable SKUs, etc.? In the past, mostly what they argued for was, please just let us be in your store, but now there is a real need for collaborative thinking.
Supermarkets have been selling produce for so long, they get set in their ways. Basically they’re holding auctions for produce — whoever has the cheapest price, we’ll take that because we know what we’re doing, we know how to display it, market it, promote it. But these newer formats don’t have 50 years selling fresh produce, so they’ll be wanting help.
This is really a chance to get in on the ground floor and become a partner. They’ll have loyalty for sure.
Q: In terms of scope, percentage-wise, are these alternative channels an important chunk of produce sales, or confined to niche segments?
A: It’s still small. This is a dilemma you have with not just produce people but food people in general. They say, you know, you’re talking about dollar stores selling our product. They represent two percent of our sales… My comment is, well how much were they two years ago, and the answer is they were virtually nothing, so that’s extraordinary growth.
So many people waited to get involved with Wal-Mart, saying, they’re not a grocery store, they’re not what we think of as a food store, etc. Companies like Proctor & Gamble were late to get into Wal-Mart because their biggest sales were in supermarkets.
What we’re talking about is the future. We’re not saying some of these alternative channels will be your main customer in the next six months. We’re talking about preparing for the future. Just recognizing it, working on it, and building the platform for it, as far as I’m concerned this is a major step forward.
Q: At the conclusion of your talk, what is most important for attendees to remember?
A: The major takeaway is, the world of produce marketing is not going to be the same. The question is, when are you, the audience, going to start to make a change. When do you begin? I make the point; Noah started to build the ark before it started to rain.
Q: Your talk this year is very different from your talks in previous years, which were more “micro” in nature. You shared highly targeted consumer marketing/brand research and specific strategic and tactical directions based on your findings that could then be applied more broadly. Here you’re addressing a sweeping “macro” trend toward alternative retail channels and changing consumer shopping patterns with a plea to industry executives to capitalize on the opportunities.
A: I’ve been working on this research over the years. One of the things I’ve done with the New York Shows, and even at the London Show, was talking about specific things, and action-oriented steps, where people could walk out of the conference and make changes the next day; putting up different merchandising signage, etc.
This time, I decided I’d like to talk about the future, and just look at what the world of produce marketing may be like 10 years from now. All these things are going to happen at different times. But the fact is, most produce marketers sell virtually everything to grocery stores and have very little interest in all of these other emerging channels. My message is, don’t disregard the emerging channels, because someday they may be major channels.
Q: While it’s arguably risky for a company to put all one’s eggs in one basket, is there a concern of spreading oneself too thin?
A: Certainly, no one should be doing everything or they’ll fail. Pick something you could do well and make that an area you’ll move into, something more likely profitable three years from now versus 10 years from now. For instance, think about how you could get on the Home Shopping Network in the next year and really own that fresh business, rather than getting involved in dollar stores.
Pick what you want to do, but just don’t do the same thing. Be strategic about it. Where you think you can make a difference, and also, where the market is going to be heading for you. The main point is capitalizing on these emerging channels can mean big success.
One of the issues we are discussing in the Foundational Excellence program this year is the whole idea of distribution channels and classes of trade. Because most produce companies — even the large ones — are small compared to the total food business, their success is more dependent on their own abilities to execute than on any overarching industry trend.
Yet the big opportunities for individual companies are often to hitch their wagon to a particular star. Bruce Peterson will be at the New York show, including the Foundational Excellence program and the student mentoring program, and he can tell the story of many who didn’t see opportunity during the early days of Wal-Mart when he rang them up on the phone, because opportunity came disguised as a lot of work for just ten stores.
Yet the great fortunes built in the produce industry in the last 30 years were those who latched on to grow with Wal-Mart. Similar stories can be told of Costco and Whole Foods and it seems likely that they will be told one day of dollar stores, drug stores, online portals, meal delivery services and more.
Consumers are changing; technology is creating new opportunities, and if all one does is think that supermarkets are the competition for existing supermarkets and the customer for the industry, one is blind to the way things are going.
We’ve been pointing this out for a long time; back in 1993, we wrote in Pundit sister publication PRODUCE BUSINESS a piece called Death by a Thousand Cuts that made the point.
And The New York Produce Show and Conference is the perfect place to explore this Brave New World of produce. The new class buyers are there, the sellers are there, the thought leaders are there.
And you should be there too!
You can sign up for the show, including The Global Trade Symposium, Foodservice Forum and tours right here
You can request an invitation to the Foundational Excellence program here.
Book a discounted room in our headquarters hotel at this link.
And get travel discounts here.
We look forward to seeing you in New York!
The gist of this story is that organic and natural foods are available all over now, and consumers don’t need to go to Whole Foods to get these products. In fact, they can get them elsewhere more conveniently and less expensively.
The New York Timeshighlights the problems of Whole Foods in an article by Stephanie Strom, Wall Street Sours on Whole Foods Market:
Sales of organic and natural products are soaring — but you would never know it from the share price of Whole Foods Market, the premier purveyor of such merchandise.
Shares are almost 50 percent lower than they were in February, the high point of the year.
Investment analysts are almost uniformly negative on the company, worried that competition from mainstream retailers, which are increasing the amount of organic and natural items in their mix, will impede the growth of Whole Foods.
Costco, for instance, claims to be the biggest seller of organic foods, and Walmart now sells Wild Oats, a brand of organic products, at the same price as similar conventional brands.
“Conventional retailers can get it into their stores more cheaply, and they can be more predatory on pricing,” said Mark Retzloff, a pioneer of the natural and organic foods retail business. “If one of those stores is just down the street from a Whole Foods, there’s a big segment of their customer base that isn’t going to shop at Whole Foods anymore.”
The encroachment of traditional retailers onto turf historically dominated by Whole Foods has reminded consumers of the old nickname for the chain, Whole Paycheck, Mr. Retzloff and others say.
“Their single biggest problem is their price image,” said Meredith Adler, who follows the company for Barclays Capital. “Sure, Whole Foods is working to lower prices in produce — but if it’s also selling fish that’s $45 a pound, it will be hard to convince people that prices are good.”
The gist of this story is that epicurean options are available all over now and consumers don’t need to go to Fairway to get these products and, in fact, can get them elsewhere more conveniently and less expensively.
The New York Timeshighlights the problems of Fairway in an article by Julie Creswell, Fairway Slumps as Epicure Options Grow:
In Fairway Market’s grocery store on Manhattan’s Upper East Side, shoppers bustle past a colorful array of squash, peppers and cucumbers. A bulb of fennel or a bright red pomegranate can be picked up for $2.99. The scents of ground fair-trade coffee, pricey imported French cheese and fresh-baked loaves of artisanal bread waft through the store.
Just around the corner, at Whole Foods, shoppers bustle past a colorful array of squash, peppers and cucumbers. A bulb of fennel or a bright red pomegranate can be picked up for $2.99. The scents of ground fair-trade coffee, pricey imported French cheese and fresh-baked loaves of artisanal bread waft through the store.
Fairway’s motto may be “Like No Other Market,” but these days, a lot of grocery stores are awfully similar. When Whole Foods opened on the Upper East Side earlier this year, Fairway said sales immediately slumped at its store there.
Now, Whole Foods has been trying to get out of this box by claiming its products are better than those of others selling organic. In the same article, Walter Robb, Co-Chief Executive of Whole Foods, is quoted:
He said he recently purchased four certified organic steaks at a mainstream retailer and had them analyzed. The steaks, he said, came from organic dairy cows that had been decommissioned at about 40 months — most beef cattle are slaughtered by 24 months for taste and food safety reasons.
“Sure, those steaks technically meet the organic standards, but in terms of taste and flavor, they’re not the best example of organic meat,” Mr. Robb said.
And Whole Foods has built a big national consumer campaign around Sustainability, which we critiqued in pieces such as these:
Whole Foods’ ‘Responsibly Grown’ Program Turns Out To Be Pretty Irresponsible Implies Other Farmers Are Not ‘Responsible Growers’
A Walk Through Whole Foods And Why Its ‘Responsibly Grown’ Campaign Is Bad For Farmers
Pundit’s Mailbag — The Irresponsibility Of Whole Foods’ 'Responsibly Grown' Campaign
Whole Foods’ Responsibly Grown campaign was, in fact, specifically designed to persuade consumers that Whole Foods was a brand in and of itself, with a standard above that of organic or anything sold elsewhere.
In contrast, the CEO of Fairway, Jack Murphy, acknowledges the competitive sands are shifting:
On Thursday, Mr. Murphy said Fairway needed to respond not only to competitive pressures from traditional and upscale grocery stores, but also to e-commerce sites like Fresh Direct and Blue Apron, which deliver directly to the home. Fairway, he said, is starting its own e-commerce site for a limited test audience next week.
“There is an e-commerce thing going on. There is more competitive pricing pressure going on than ever before,” Mr. Murphy said. “Stores are popping up everywhere you look. Everybody is rushing to open a store on top of a store on top of a store. It’s more competitive than I’ve ever seen it, and everybody, quite candidly, is upping their game.”
Surely the key point here is that product is not a sufficient differentiator to ensure long term success. It is just too easy for other retailers to add any product that consumers are demanding.
It is also true that narrow specialization exposes any business to price competition. If a produce shipper only sells cucumbers, it is likely to have competition willing to sell cucumbers at break even or even a loss. These competitors can crush a competitor and live off the profits of selling peppers or other products.
So retailers living off a reputation in one product category are vulnerable to retailers that can live without profits in that category.
Of course, the other fact is that some retailers, in their ambition to grow, stretch their concept beyond its limits. Should there really be a Whole Foods in Detroit?
Now the big bet by Whole Foods is its new small store 365 banner. It is supposed to be a smaller, more economical concept.
One wonders if Whole Foods can really execute.
Consumer insights firm iModerate has a new study out:
Can 365 Reinvigorate the Whole Foods Brand?
Whole Foods is taking aim at Trader Joe’s, as well as big-box stores such as Walmart and Costco, with its 365 concept that hopes to appeal to budget-minded millennials, but will it be well received when it launches in early 2016?
iModerate found that consumers are excited at the prospect, but with a caveat – they expect Whole Foods to deliver its renowned quality at traditional grocery store prices. The top unique benefit identified (36%) was the ability for more consumers to take advantage of healthy foods thanks to the lower price-point.
“365 is Whole Foods’ chance to pivot from its elitist image and reach a new segment of shoppers that’s paying closer attention to their waistlines, but can’t afford premium prices,” said Rossow. “Giving this population access to healthier food could create immense brand loyalty for 365 and carry over to the larger Whole Foods brand. That said, if 365 turns out to be an equally expensive or lesser-quality version of Whole Foods, the concept will backfire entirely.”
The problem is that we know several potential non-produce vendors who have been approached by the 365 buying team — none of these vendors are going to fit the “traditional grocery store” price profile.
To us it sounds like the concept is already starting to blur, and what markets seem to be demanding now is clarity — Aldi means value, Trader Joe’s means a delicious epicurean approach. What will 365 mean?? It is unclear and thus, perhaps, not able to help Whole Foods.
The Ideation Fresh Foodservice Forum, co-located with The New York Produce Show and Conference, is an extraordinary event as it is dedicated to finding ways to move the needle of produce consumption in foodservice.
This is easier theorized than done. After all, in order to sell more produce, in general, we need to sell more of specific produce items; yet foodservice is dominated by the sales of just PLOT: Potatoes, Lettuce, Onions and Tomatoes.
Retailers can sell anything, but a foodservice operator only sells what is on its menu. So the challenge is for produce companies to engage in menu development so they can persuade operators to integrate their items into the menu.
Yet few produce growing, packing or marketing organizations have the requisite culinary skills to actively engage in this process, and, even more than that, the economics of the industry discourage such investment. After all, if a broccoli marketer spends seven years persuading an operator to introduce a new broccoli-based dish, what assurance is there that the operator won’t buy from another vendor for a quarter cheaper. Or decide to use frozen product from another country?
These issues and more are on the table at this year’s edition of the Ideation Fresh Foodservice Forum, and we asked Pundit Investigator and Special Projects Editor Mira Slott to get us a sneak preview:
Amy Myrdal Miller, MS, RDN, FAND
Founder and President
Farmer’s Daughter Consulting, LLC
Q: We whole-heartedly welcome you back to the Ideation Fresh Foodservice Forum. Your presentations are always lively and rich with valuable information garnered from your diverse background.
A: I love the New York Produce Show and am honored to be included in the program again this year.
Q: You’ll certainly have much to contribute to this year’s theme, “The Process of Menu Item Development.” I understand you’ll be moderating a discussion panel: “Development and Refinement –Getting into the Kitchen and Working Out the Kinks,” featuring Peter Glander, corporate chef, Ruby Tuesday; Lisa McNeece, vice president of foodservice for Grimmway Foods; and Rafi Taherian, executive director of Yale University Dining. In addition, you’ll be teaming up on a demo with Chef Suvir Saran, with whom you’ve developed a long-standing relationship. That should be worth the price of admission alone!
A: The whole setup for the Ideation Fresh this year with its focus on the process of menu development is a really important issue for anyone in the produce industry who wants to sell to foodservice. They need to understand unless you’re a fine dining chef with a menu that changes daily this is a very complex and long-term process. So the format of having three separate panels that are going to go in-depth on how the process works is a brilliant concept.
Menu item development is not like, “hey this chef has this idea, so I’m going to do something new with butternut squash, and I’m doing it this fall by putting it on the menu, and it’s going to be a limited time offer…” No, this takes a long time, and a lot of the folks participating in this conference understand this. However, for the people who are new to foodservice sales or those who just don’t understand the complexities of the operation and business service, how do you identify the next big thing on the menu if you’re McDonald’s USA, and the process is five to seven years out?
Q: Any help you can provide on that front?
A: The concept might start with what’s going to be the trend. What will people be looking for? We know health and wellness is trending a lot in terms of consumer perceptions with food today, but that’s a more complex issue as it relates to what’s good for me and my health. Now it is growing to what’s good for the health of the planet, and what about the health of the animals we’re eating…
So in identifying trends, you need to dig deeper, but we have the sense health and wellness continues to be a mega trend. Therefore, everyone is looking at putting more produce on the plate. But how that is done is the big challenge.
Q: Could you elaborate on why the menu item development process is five to seven years out for a big chain?
A: If you’re McDonald’s USA, and this is me speaking as Amy, as I’m not a McDonald’s spokesperson, if you’re that big in the marketplace doing something with a produce vendor, the very first thing you have to define is whether our supply team can get the volume we need, and then can we get it in a form to move it through our distribution system and into our restaurants, with the quality we demand; because not all produce moves through the system well with changes in temperature and what not.
From there, if we can get the volume and handle it well, with the value-added processing we need, and it’s going to have the shelf life… OK, if we’ve overcome those hurdles, will consumers buy it? That’s the scenario for McDonald’s.
Q: Do you have examples from your own experiences?
A: I can tell you, when I was with the California Walnut Commission, we did hear the stories of how it took five years to get an apple walnut salad on the menu. It was apples, grapes, yogurt and walnuts, a pretty simple formula and recipe, but can we get the consistent volumes we need? The year-round supply? Will consumers care if the apple variety changes? Can the walnuts be held, these temperature sensitive nuts, without going rancid?
So there were many obstacles to overcome with this simple offering, and it took five years. And they have to go through consumer testing afterwards. Will the consumer be willing to pay a price that makes this product profitable for the franchises?
Let’s say you’re a regional player and you want to put butternut squash on the menu. Are you going to go direct contract with the grower; is that grower going to be able to produce it; what’s your backup plan if there is a problem with an area because of very heavy rainfall, or the produce doesn’t sit well or there’s a shipping challenge? Is there a value-added form that cooks in your restaurant can handle? Are you working with a third-party supplier who is doing the recipes for you and you’re just caramelizing them? It’s a little different if you’re a smaller player, but still if you’re doing direct contract with the grower on a seasonal item, you’re looking at minimum 12 to 18 months out that you’re doing your forecasting.
And what about that kale that was so hot in 2014 and 2015? What if you’re ready to roll out a kale item in 2016, and the marketplace is done with kale? We’ve moved on, we want collard greens now, or cauliflower or whatever.
Q: With the logistical challenges you describe in dealing with fresh produce, does it still behoove foodservice operators to push for produce-centric dishes?
A: Yes. The health and wellness trend has been a mega trend for many years now, and it just continues to grow across all demographic segments. And then more so in certain segments. Millennials want to be sure what they’re choosing is good for me and good for the planet, so they are layering on aspects of sustainability.
But when you talk about fruits and vegetables, overwhelmingly, people immediately go, oh, they’re good for me, and there’s not a lot of drama.
Q: What do you mean by drama?
A: When you think about the big hot button issues for consumers right now, produce doesn’t touch on any of them.
Q: What big hot button issues are you referring to?
A: Consumers are concerned about animal welfare, antibiotics and growth hormones; they’re concerned about biotechnology and genetic modification, but the produce industry is mostly immune from those issues.
Q: Isn’t that a good thing?
A: Yes. It’s an absolute positive. Produce is positioned to continue to grow in the marketplace. But the big challenge is that produce gets taken for granted in a lot of places. For example, in a traditional restaurant kitchen, the person who cooks the meat has the highest rank and is paid the most. Grilling and seasoning a piece of meat is fairly easy when talking techniques, and you can use a thermometer to determine that steak is rare, medium or well. There are definitive ways to determine doneness, you’ve got the beautiful color… you put on a little seasoning, or pepper, and you’re done.
On the produce side, that’s where the least experienced person, who’s paid the least in that kitchen, winds up. You’re on salad prep; you’re on produce prep. Well, that’s where you need the most culinary technique and experience because produce isn’t very consistent. Making something delicious takes some effort; it takes some creativity. It takes utilization of techniques from around the world.
Raw spinach isn’t the same as cooked spinach, so you’ve got to have more talent there. We haven’t elevated produce to the level where people give it the respect it deserves.
Q: I imagine you and Chef Suvir Saran will be doing just that.
A: Chef Suvir and I are working on a PRODUCE BUSINESS article that will come out in December. This is one of the points we make there. A side of steamed vegetables is not acceptable. Anybody who does that in foodservice should be embarrassed. You’ve got to do more to make that look beautiful. OK, steamed vegetables, yeah, you can get a great pop of color, but to get aromas to entice the diner to take the first bite and the second bite and to order that again, you’ve got to try harder, so that’s what we’re going to be talking about on stage. But I don’t want to give too much away.
Q: Could you give us a taste of what attendees can look forward to?
A: You can take something like the humble green bean and turn into the most alluring, seductive, tempting thing on a plate. Part of that is the ingredients you choose, part of it is the technique, and part of it is how you describe it. Chef Suvir does these green beans with toasted coconut; the green beans are blanched, and then they’re stir-fried, and you’ve got mustard seeds and chilies, and you finish it with the toasted coconut.
The toasted coconut is the real key because toasted coconut aroma — just think of a macaroon or a coconut cream pie — when that’s put on green beans, you say wow, I am really interested in trying that. It gives you a whole different perspective on green beans.
So we’re going to go through about five different dishes in 45 minutes to give produce the respect it deserves. Taking some time and attention, looking at world cuisines, and thinking about the words we choose when describing something on a menu, when a server is standing next to a table talking about an item, or when it’s on a menu board in a quick service restaurant.
All of this matters. We have to capture people’s attention and seduce them; that’s one of Suvir’s terms he loves to use. How do get people to want something? This is classic marketing within the food space. You have to be very careful and thoughtful and reflective.
Q: How complicated is it to learn these techniques and pull off these creative items? Does it require hiring a much higher level expert or extensive training?
A: No. It’s just taking commitment, anyone on menu development, anyone who’s in charge of a culinary team, to focus and slow down, and say, hey, we’re going to put more care and effort into this; we’re going to try new techniques, but it’s not going to require new training or equipment. We’re just going to do things with produce we haven’t done before. Instead of every vegetable steamed and tossed in garlic butter and put on the plate, we’re going to change them seasonally and use roasting techniques, and look at how caramelization can improve the flavor and texture of something.
We’re going to use some spices, some herbs, some aromatics so that when food is brought out to a dining room or put on a serving line at a college campus dining environment, the aromas are making people feel there’s something exciting going on.
Q: This whole discussion is taking concepts from a high-end fine dining experience and translating them to more mainstream channels…
A: Absolutely. In high schools across the country, they’re roasting some carrots. Roasting is an awesome technique. When you oven-roast a vegetable, in a little oil, even something simple like some pepper and Italian seasoning, once you start roasting something, you get what is called the browning reaction, you get those caramelized edges and you get the sweetness from the natural sugars in the item.
But if the high school says, we’re going to roast all of our vegetables at 9:00 in the morning and start putting them on the line at 10:30 and we’re going to hold them until the last student goes through at 1:30, all of a sudden you’ve killed the benefit of taking the time to roast them. It needs to be done in batches so the flavor is brought out, and you still maintain that crispy exterior and texture. So some of this process is just slowing down and taking a little more time and care and effort.
Giving the example of high schools, people think they have so little time and so little money, and labor and equipment. And all of that’s true. But if you really care about students eating more fruits and vegetables, then you have to care how they are prepared and presented. That’s true in any environment, whether it’s our home kitchens, campus dining, or restaurants. You want food to look good, to taste good, and to smell good.
Q: Can we tie in your background and give attendees meeting you for the first time a sense of who you are, and how it’s informed your industry guidance?
A: I love for people to understand who I am because I’m not your typical dietician. I’ve always been interested in culinary. I really am a farmer’s daughter from North Dakota. My business name, Farmer’s Daughter Consulting isn’t clever; it’s just a descriptor of who I am. I spent seven years at the Culinary Institute of America, where I was immersed in these issues, learning ways to make food that’s better for you more craveable and delicious.
Q: Tell us more about your collaboration with Chef Suvir Saran.
A: I’ve been working with Suvir eight years now. We’re like a brother and sister team on stage. We work well together. We think a lot alike, but we also have areas where we disagree, which make things kind of lively for an audience.
Q: Where are you compatible on thought process, and I can’t help but ask, where do you disagree? What are some of the debates you have?
A: We both believe you have to give all this more attention and more effort. But Suvir will go to a point of time and effort that I know is no longer practical.
Suvir also is very much a fan of the very small local producer, and I’m a fan of all forms of farming. Our global food system needs everybody. We need very large scale, very efficient, and we also need small scale. We need farmers people can meet at the farmer’s market and know them by name. We want people connected in that way. But we also need more efficiencies in the system to continue driving quality, to continue pushing for health and wellness with these better-for-you items, with produce being part of that.
We need to insure food is affordable, so no matter who you are, you can buy high quality, good-foryou food. And that doesn’t mean fancy preparations, and I’m not talking about the level of fine dining, but that you can go into a QSR and get a great salad, just as easily as you can go into Whole Foods and buy it there.
Q: So, you’re trying to democratize fresh produce, drawing in the masses, while Chef Saran is more an idealist, with a drive for perfection? It sounds like you’ve developed an endearing relationship…
A: It is a really meaningful relationship for me. When we first met, I was kind of offended by some these things he was saying, thinking, who is this man? And over the years, I just adore him, and I welcome any opportunity to work with him. He’s very inspiring, and he pushes me, and he’s very complimentary and warm and caring. I get a lot out of our opportunities to work together.
Q: How did you first meet, and why were you offended?
A: I met him at the PMA Foodservice Conference. He was on stage making some crazy claims about health and wellness. Whether he realized it or not, he was making false claims to the audience. He was talking about turmeric, the spice that gives curry powder its yellow color, and saying it cures cancer. I said, no. That’s when I decided I needed to work with him and set him straight!
Q: That’s funny. You do hear many unscientific health claims bantered around these days... Actually, there’s a strong contingency in the produce industry that questions the marketing virtues of playing up the health attributes of produce, perhaps actually turning people off when they hear the words, it’s good for you… What is your view on that?
A: People inherently know fruits and vegetables are good for them, but how do we get them to fill their plates with them? We should show them how, or give them opportunities to try them in new ways to say, wow this is awesome, I want more of this, versus I should eat more of this because it’s good for me.
I’m not a believer of tricking people, of hiding fruits and vegetables in food, but can you put better quality produce on a club sandwich or a burger, or a ham and cheese, whatever? Can you create sauces and dips out of fruits and vegetables that add to the deliciousness and improve the texture?
I had a burger in a restaurant yesterday where the bun was dry. Why do they do that? Is a whole bunch of mayo the solution? If they had offered a roasted red pepper spread, that would have been awesome. I understand that this was a midscale family restaurant, but you have to try a little harder in food. I could go on and on.
Q: What is the key message you want people at the Ideation Fresh Foodservice Forum to embrace?
A: If you’re in the produce industry and want to do a better job selling your product in foodservice, you need to attend this event because it’s going to help you better understand what’s going on in the minds of chefs and menu developers.
On the flip side, if you’re a culinary professional or a foodservice professional, you need to be there because you’re going to leave with a ton of new ideas, you’re going to leave inspired, you’re going to have connections with people who believe in the power of produce as much as you do.
We need more of us working on this, standing together in solidarity to move the needle on produce consumption in this country. There’s huge potential, and a lot of room for leaders in this space on the culinary side.
It was Cornell’s Ed McLaughlin, who is spearheading this year’s Foundational Excellence program, who introduced us to a graph that showed a 100-year history of the percentage of dollars spent on foodservice as opposed to retail. The growth has been on the foodservice side. Though, as they say, past experience is no guarantee of future results — still, that is the way to bet.
Obviously this is a program for foodservice operators, but retail foodservice is the hottest part of the food retailing business, so every food retailer should be a part of this program as well. And, of course the production base that is searching for better ways to engage with the foodservice sector should also engage in this conversation.
You can register for the Ideation Fresh Foodservice Forum and the rest of The New York Produce Show and Conference right here.
Request an invitation to the Foundational Excellence program here.
Register for a discounted hotel room at our headquarters hotel, right here.
Get travel discounts here.
So come to New York, help us build demand for produce in foodservice — then try some of the hottest produce centric New York restaurants on the free nights!
It would be a shame, and probably a sin, to come to New York and never go out of a hotel ballroom or a convention center, so, at The New York Produce Show and Conference, we are proud to provide a panoply of regional tours — retail, wholesale, foodservice, urban agriculture and more.
Hunts Point is always a star on the tour circuit as we have pointed out here:
Hunts Point Produce Market Unveils New Marketing/PR Campaign At The New York Produce Show And Conference
It Is A Very Big Deal: Watch The Beauty Of Supply And Demand In Real Time At The Hunts Point Produce Market On The New York Produce Show And Conference Tour
Constantly Changing Hunts Point Produce Market Opens Its Doors To Visitors Attending The New York Produce Show And Conference
We asked Keith Loria, Contributing Editor at Pundit sister publication PRODUCE BUSINESS to find out what is in store for this year’s tour:
Fierman Produce Exchange
Bronx, New York
Chairman of Hunts Point PR Committee
Q: The Hunts Point Terminal Market has long been a cornerstone of the New York produce scene, which is why so many attendees of the New York Produce Show and Conference choose to take the tour. What’s on tap for this year?
A: They can experience Hunts Point first-hand, so they can see exactly how a terminal market operates, the biggest terminal market in the country. If you’ve never seen it before, it’s an interesting dynamic. It’s not like a big box store, and it’s not like a distribution warehouse; it’s a unique experience as you can see all the different people who come into this market, who make up what this market is.
Q: There have been some changes to Hunts Point over the past year… what should those who have taken the tour before be on the lookout for?
A: There are always physical changes, such as paving upgrades and rearranging of names and locations of merchants, but the heart of the market is the people and the product… and that changes every single day. You can visit Hunts Point every day and no two days are alike, because the product is always changing and the people are always moving.
Q: Has your customer base changed at all? What are the new market prospects (convenience stores, drug stores, dollar stores, etc.)?
A: The market serves many functions. We are the distribution center for independent operators in the most populous region in the country. We also help companies with their own distribution centers cover for shorts and fill-ins.
This particular market also is unique because we are an import hub for many different products. The entire New York restaurant scene would be very different if there was not a vibrant market in New York.
Q: How does Hunts Point act as a facility for local growers?
A: The market works with growers in the region, across the nation and around the world. The market has always worked with local growers. I know everyone has been doing a great job on promoting local, but if you notice the growth in local, it’s not just New York and New Jersey anymore.
In my opinion it should be considered domestic more than local. Isn’t that who we should be supporting? What makes a farmer in California any different than a farmer in Florida or Pennsylvania? Aren’t we looking to get the best product from whatever region at the best time of the year? That’s why they call it seasonality.
Let’s stop hanging our heads on these catch phrases that probably do more damage to the business than are helpful. Otherwise, in October, what happens when local disappears? Should people stop buying produce? No, they should go to the next domestic area that’s ready and support what’s being grown in the United States.
And, of course, some products don’t grow in the US at all or not at certain times of the year. We are here at Hunts Point ready to provide retailers and restaurants the options their customers want on a year-round basis.
Q: Show attendees have a choice as to what tour they can go on. Make your best pitch as to why they should choose Hunts Point?
A: You can’t stop in New York without seeing Joel Fierman — that’s what it’s about! I have often heard it said that it seems easy for terminal market wholesalers to make money, but you go through the tour, and just like when you go through the growing regions and you look at what they have to do and the extraordinary work they put into producing the product — now attendees can learn what we have to do in order to move the product and what that entails.
That’s the beauty of the tour — you see both sides of the coin. It’s a symbiotic relationship between growers and wholesalers, and we both work hard to move this product to the general public. That’s the importance of all the tours. Plus so many people have done business with a House on Hunts Point, but they never get a chance to visit. The New York Produce Show and Conference provides that opportunity.
Q: At the conclusion of the tour, there will be a Q&A. Why do you think this is a valuable component to the day?
A: We’re offering a one-on-one interaction, and guests have an opportunity to get their questions answered, just like it was a town-hall meeting. You get to hear answers from people directly involved in the market.
Q: What have people in past years been most surprised about in taking the tour?
A: The size of the market and the amount of product that passes through this market. It’s always that they didn’t realize how hard it is to work in this market.
Q: What are you looking forward to most about this year’s New York Produce Show and Conference?
A: We always look forward to greeting the people — the shippers who participate and the customers who come in. With all this technology, it has become such an impersonal business today. We have these great relationships on the telephone and over the Internet, but you can be in the same room with an individual you’ve known for a decade and not even know who they are. It’s always great to meet someone face to face, shake hands and say hello.
Q: If someone asked you for advice on the best way to navigate the market and succeed, what would you say?
A: Develop your relationship with a merchant on the market that you can trust and don’t spread yourself too thin. Spreading yourself out in the market is probably the biggest detriment to your business. Be smart on how you approach the market.
Markets get a hard knock, but their contributions are real and important. By distributing to independents, they help keep our cities vibrant. Because they help growers sell what the growers need to sell, they help maintain open space and the profitability of growers. After all, supermarkets generally buy the size, grade and variety they want to buy, but it is the markets that help growers sell what they need to sell.
Come and see the biggest city of the country — New York — and the biggest market in the country — Hunts Point. Come to the New York Produce Show and Conference.
Register for the whole event, including the Hunts Point, here.
Get an invitation to the Foundational Excellence program here.
Book your room in the headquarters hotel right here.
Get travel discounts at this link.