Each year, we gather together a unique group of industry leaders to participate in the Perishable Pundit’s Thought-Leader Breakfast at The New York Produce Show and Conference.
You can review some of the previous year’s participants at these links:
The panel is important in two ways. First, it is a vibrant discussion about industry issues and so helps the industry to move forward. Second, because the breakfast takes place just before the trade show, it serves to open minds and makes attendees more receptive to new products, new packaging and new ideas.
It is with great pride and pleasure that we unveil The Perishable Pundit Thought-Leader Panel for 2019:
Chief Executive Officer
Rich Dachman is the Chief Executive Officer of Brighter Bites. Rich comes to Brighter Bites with more than 40 years of experience in the produce industry, 28 of them at Sysco, the world’s largest broadline food distributor. He retired from Sysco in June of 2019 as Vice President of Produce for the global company. He had been a member of the Brighter Bites Board of Directors for more than three years. Rich was awarded the Foodservice Achievement award by The Packer in 2010, and served as chairman for the Produce Marketing Association in 2012.
Director of Produce & Floral
Allegiance Retail Services
A Produce industry veteran with over 30 years of experience in procurement and category growth within the Supermarket industry. Kelly currently serves as the Director of Produce and Floral for Allegiance Retail Services. Her responsibilities at Allegiance include managing sales, coordinating advertising, merchandising and operations activities, and managing a procurement team and merchandising team. She began her supermarket career at Wakefern Food Corporation where she served 31 years honing her skills in a variety of departments including Grocery, Commercial Bakery and Produce. In her 18 years in the Produce Division, she was a Category Manager and successfully managed a multitude of commodities and was instrumental in the yearly growth of sales for the Division. Kelly was also a Regional Sourcing Category Manager in South America, South Africa and California where she became a seasoned expert in field agriculture.
Kelly is a graduate of the Kean University where she earned a Bachelor of Science Degree in Marketing.
PF Chang's Bistro
Robin, the Category Manager for PF Chang’s Bistro, is a produce industry veteran with more than 25 years’ experience in purchasing, sales and business development. Her current responsibilities include all Agriculture purchases for both PF Chang’s and Pei Wei brand. Prior to joining PF Chang’s, Robin worked for Boston Market in Golden, CO. She currently serves on the board of directors for the Produce Marketing Association and its Foodservice Committee. Robin is a Colorado native and a graduate of the University of Colorado in Boulder.
Chef & Co-owner
Will Horowitz, is the chef & co-owner of well awarded East Village restaurants Ducks Eatery and Harry & Ida’s meat and supply co. He is the author of the newly released book “Salt Smoke Time” with Harper-Collins and co-founder of seaweed jerky based company Akua Seagreens. He currently runs a small NYC based food innovation lab, focused on working with brands to develop added-value plant forward products using more sustainable practices with more whole ingredients. His culinary background is in studying heritage techniques, ingredients and integrating them into modern renewable ideas and technological advances. His culinary roots run deep, in grandparents on both sides: one a French-trained chef cooking seasonally in the colonial fishing village Orient, Long Island, the other running a traditional Jewish Delicatessen in Harlem. Will attended Naropa University in Boulder, Colorado for Tibetan Buddhism & Permaculture, where he spent extensive time studying off-the-grid living and primitive survival. A big believer in using the natural world as our greatest inspiration, he is an avid forager, fisherman and conservationist.
Produce/Floral Buyer Merchandiser & Procurement
Tony Mirack has been associated with McCaffrey’s Markets as Produce/Floral Merchandiser and Procurement for the past 13 years. His responsibilities are all phases of produce and floral operations including retail merchandising, procurement, advertising, development of new products and sales strategies.
His personal mission is to deliver excitement and enthusiasm to the produce and floral industries and the future directions in his own inspiring way. His expertise is in produce and floral merchandising, motivation, marketing strategies and training.
He was associated with two major produce wholesalers and an independent supermarket as a Buyer, Produce Specialist and Produce Manager for over 26 years.
Starting his produce career at the age of 15 in 1979 with NorthStar Produce as a dock worker on the Eastern Market in Detroit, Steve Oats moved to Phoenix in 1979 and went to work at Smitty’s as a retail produce clerk. He then worked for a small independent IGA retailer for a few years and later worked his way up to Produce Supervisor for Reay’s Ranch Markets. In 1996, Wild Oats Markets purchased Reay’s and promoted Steve to National Director of Merchandising. He left Wild Oats for the opportunity to open Sprouts Farmers Markets as their first Produce Director; then the original founder/owner of Wild Oats founded Phoenix-based Sunflower Markets, and Steve followed him. In 2012, 44 stores later, Sunflower sold to Sprouts and Steve followed the founder again to Lucky’s Markets in 2013. After 44 years in the business, Steve has physically grand-opened over 200 new stores and 5 DC’s. On a personal note, he is married and has 4 adult children, 10 grandchildren and 3 spoiled rotten dogs, all living in and around Goodyear, AZ. Currently he and his wife live in Orlando supporting Lucky's rapid growth in Florida.
Sr Director Produce
Julie started her produce career with Fresh Choice more than 26 years ago. She began with an entry-level position and worked her way into sales. In 1999, she was recruited by Sysco to be a produce buyer. Since then she has held several roles with Sysco all in the Salinas produce procurement office, including 5 years as Sr. Director. In March of 2019, Julie accepted the role of Vice President of Produce overseeing all produce operations for Sysco. A recipient of the PRODUCE BUSINESS 40-Under-Forty Award, July has served on the board for Ag Against Hunger and the Foodservice committee for PMA. Currently she serves on the board for PMA.
for Produce and Floral
Steve Oroszlany began his produce career at the age of 16 and in 1990 became a produce manager. He left Foodtown to join King’s Supermarkets as a manager in 1996. Steve came to Wakefern as a produce merchandiser in 2006 and joined the procurement staff in 2011 as a category manager. Steve was promoted to Procurement Manager for Produce and Floral at Wakefern in October of 2017. He lives in Bloomingdale NJ with his wife Kristen and daughters kaitlin and Lauren.
Vice President of Produce
Matt Reeves’ roots are firmly grounded in the Grocery retail world, with over 25 years of experience across all levels. Matt started as a carry out for HEB in Texas while attending high school, and soon became a produce manager during college. He spent 21 years in various roles from store leadership to produce procurement with HEB. After leaving HEB, he launched a successful consulting business focused on the supply, buy, and operational sides of retail. In 2019, he joined the Grocery Outlet family as the Vice President of Produce and Floral. Matt is keenly focused on driving produce and floral sales, and is excited to shape the future of fresh in his new role!
Tim York started working in the produce industry more than 35 years ago at H. Hall & Company, a grower/shipper of strawberries and mixed vegetables. In addition to being a founding employee and the current President of Markon, Tim also has held numerous committee and task force positions, including Member, USDA Fruit and Vegetable Industry Advisory Council; Chairman of the Produce Marketing Association (2002); Director of the PMA; Chairman of PMA's Foodservice Division; Chairman, Center for Produce Safety Advisory Board; and is a founding member of the Stewardship Index for Specialty Crops.
This year, while the Javits Center is under construction, the breakfast is back at the Hilton Midtown Hotel in the Trianon Ballroom and the time is from 7 am – 9 am. We have set up special transport to take everyone to the Javits Center right after breakfast to be present for the show ribbon-cutting at 10 am.
We hope you will join us for breakfast, help us cut the ribbon at the show and, in general, help us SOAR to New Heights as individuals and as an industry.
Check out the website here.
Let us know if you need a hotel room here.
And, most importantly, register here.
When we launched the first New York Produce Show and Conference back in 2010, one of the first calls we made was to Professor John Stanton at Saint Joseph’s University to see if we could get him and the school involved in the show. He was very generous, and one of the early “sneak preview” pieces detailed his intentions on his presentation at that first show:
Research To Be Unveiled At The New York Produce Show And Conference Shows ‘Local’ Preference Versus Organic,
It took just a few minutes after that piece was published before an industry luminary, then President of the New York Apple Association, sent in a note:
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
This was the start of a great friendship, and Professor Stanton has presented at our events in New York, London and Amsterdam unveiling important research that we chronicled in pieces such as these:
The Great Trinity Fueling Modern Retailing: Millennials, Convenience and Technology
Promotional Optimization Used to Ramp Up Produce Sales: Techniques from Grocery that Can Boost Produce Sales
Branding and In-Store Marketing: Perfect Together
Bringing Produce to New Markets: Opportunities and Obstacles in The New Retail Environment
What is in a Label? Does Promoting No-GMOs Impact Perception of the Rest of the Department? Would a Positive Message Smell as Sweet?
‘Local’ Preference Versus Organic
So, of course when Professor Stanton told us he was working on mangos and marketing to Generation Z, we were intrigued and asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Dr. John Stanton
Chairman and Professor of Food Marketing
Saint Joseph’s University
Q: We’re always honored to have you present at our events, and especially as we celebrate the 10th year of our iconic New York Produce Show & Conference. Attendees praise you for mastering the art of imparting pull-no-punches wisdom to jostle industry norms with quick-witted jocularity. Your talks elicit great ideas and engaging audience participation.
A: Thank you so much for saying that. I think part of it is I really like this stuff. I like the food business, and I like the challenges that come within working in the food industry. Because of that, I just enjoy sharing the results of the things that I do.
Q: What research have you been working on recently to share with us at the Show?
A: I just finished a short research piece on Gen Z knowledge and uses of fresh mango. It was interesting for me as I never knew how often the kids drink smoothies and how frequently they use mango.
Q: That sounds promising for the mango industry!
A: On the surface, maybe, but unfortunately that’s not the reality based on my research.
The biggest challenge for the food industry, in general, is being willing to accept change. Many of the food companies all want to be first at being second. The problem with the produce industry is it’s really focused on the product as opposed to the consumer. It’s really a very sales-oriented mentality as opposed to a marketing mentality. If we think about marketing, it is the process of making what people want to buy, not making people buy what you want to sell.
Q: Wouldn’t you agree, though, that pre-cut fresh fruits and vegetables and other convenience-type produce items have quite a strong presence in the market now, with value-added, trend-right products on the rise; albeit there were plenty of naysayers in the infancy of packaged salads?
A: That’s right. There are certain segments and hundreds of companies that have really done a good job at this — cauliflower rice, for instance, or Perdue’s plant-based nuggets.
Q: Our October Produce Business cover story lays out the case for the produce industry to re-capture the dialogue in the plant-forward movement, as the ‘original’ plant, to drive plant-based diet trends and shifting lifestyles.
A: The whole market, no matter what segment, is looking for more and more convenience. We must focus on making our produce more in the form that people want it. The produce industry is doing it, but I’d argue it’s happening relatively slowly. That’s kind of the problem. I think the industry still perceives that as the exception, not where they should be heading. I imagine someone saying, ‘I can’t believe we can’t just sell apples anymore. Now, we need to cut the darn apples up and put them in bags,’ instead of being happy, ‘we can pre-slice the apples in individual-sized packs, so mothers can give them to their kids, and get a lot more margin on this...’
My specific research that I’ll be presenting is related to this. I was working with a distributor of mangos, and he said to me, John, mango consumption around the world is going up must faster than in the U.S. We have to figure out what are the issues that Millennials and Gen Z’s have with fresh mangos.
This is going to be the group of people who will be the success factor or the failure of the mango industry in the U.S. if we can’t get Millennials and Gen Z’s to buy more mangos. The category is not going to grow that fast, to say the least.
Q: So, you embarked on targeted consumer research to increase U.S. fresh mango consumption by capturing the category’s elusive consumer segment of Gen Z’s and younger generations?
A: Exactly. We did the research to try to determine what are some of the obstacles for this younger generation to buy and eat more mangos. Of course, the younger generation for me, personally, is everyone else, since there are so many people younger than me now!
Q: I’m starting to feel the same way.
A: I’m talking about the truly younger! The first thing that surprised us, was that most of these kids in fact had mango, but the biggest use was the frozen mango that they put in smoothies.
Now, just to show the difference between my generation and the younger generation, I probably had five smoothies in my life.
I was surprised in the focus groups, when we asked, how many kids have smoothies at least more than twice a week, everyone’s hands went up. We discovered some didn’t even know what a whole mango looked like, only as the frozen pieces used in their smoothies. They like the taste of mango; it’s not that they don’t enjoy the product. They were just not familiar with the fresh fruit.
Here are some of the things they didn’t understand: They had no idea how to judge a ripe or non-ripe mango. Part of the reason is some of the mangos come in and stay green forever, even though they are ripe and perfect. Some others have blush on them when ripe. Different varieties look different when they’re ready to eat. The younger generation is confused by this.
We gave them a taste test. There was one mango they all said looked the worse; it was pure green and it didn’t look ripe, but when they did a blind taste test, they thought it tasted the best. The one they thought had the worst flavor actually had the best flavor.
The other thing, they had no idea how you cut up a mango. The ones who tried to do it were stumped by the big seed in middle. We had a guy do a demo on how to cut it up, and people were surprised. There was a complete lack of knowledge on how to cut it up.
Q: I don’t want to interrupt your flow, but what were the demographics of your focus group? If you had more of an ethnic background, you might be very familiar with mangos. Then I would think the results would be quite different....
A: Oh, yes, that’s true. The answer is, we intentionally concentrated our research on non-Hispanic, Caucasian Gen Z’s, and a few Millennials, but mostly Gen Z’s. Our group was roughly between ages 20 and 25. They were all college students in the Philadelphia area who were exposed to things and sophisticated.
If we did this study in a remote place and I said people don’t understand mangos, that might not be surprising. I think a fair criticism would be, why don’t you do this in New York or Massachusetts. But this group we interviewed, if anyone was going to know about mangoes, they would.
Q: And how many people were included in your research? Do you feel it was a good statistical sampling?
A: Focus groups aren’t supposed to be statistical. Let me answer it this way: I believe that the opinions and attitudes in our focus groups comported with what the larger world would be like for this segment. I’m convinced based on our research that virtually anyone in this targeted age group wouldn’t know how to judge a mango. I think the views were representative to help in our specific study objectives.
Q: Thanks, this provides some perspective.
A: Of course. The key to this is we didn’t have Hispanic people in the group. For the record, I would say we didn’t because we really wanted this focus on non-Hispanic Caucasians. That is still the largest group to be focused on.
The second reason, if the industry wants to market their product in Hispanic grocery stores, or on various TV shows — however they would market it — they would do it totally differently for Hispanics. It’s almost like two entirely different marketing programs. Imagine having a marketing program to tell Central Americans or South Americans, we want to show you how to pick a mango, and they would be saying, ‘my Grandma taught me how to pick a mango.’ And that’s what we’re missing. We don’t have that kind of tradition with this product.
The third thing, unlike other fruit… when these kids were really young, five or six years old, their parents probably had fruit around the house — apples, pears, nectarines, plums — but virtually none of them grew up with mangos in the house.
Certain industries like the apple industry can rely on a level of knowledge passed on through generations of families. The mango industry really has to start from scratch with the Gen Z’s and the Millennials.
Q: The U.S. is a melting pot of cultures and international cuisines, where Gen Z’s have wide access and exposure. Doesn’t that help push things forward?
A: Young Americans didn’t know what avocados were at one time. Now avocados are a major choice. Guacamole toast is something every college kid eats. The good news for the mango industry is, it can be done.
The results of this study, if you will, showed the importance of doing the most basic type of information-sharing with the audience. The mango industry cannot make an assumption it is anything like the apple, pear or plum industry, where this younger generation is going to have a long tradition of eating their product. It’s going to be a new product, even though it’s been around a long time and for sale a long time; this younger generation doesn’t understand it.
But the other good news is these younger people love the taste of mango, they love putting mango in their smoothies, but for them mango is just stuff that’s so good for their smoothies. They really didn’t understand what this product was, and where it came from and how to judge it and how to cut it, etc.
Q: Is one of the goals to market mangos beyond smoothies, to expand young people’s horizons to use mangos in more ways?
A: The key about their interest in smoothies is the evidence they like the product. It’s not something you have to convince them to eat, that this is something they should learn to like.
Q: Right, it’s not like you’re trying to persuade them to eat root vegetables.
A: That’s a good example. You’re exactly right. Before we even begin, we have evidence that they really do like this product. They just don’t have enough knowledge and skill to be able to make it part of a more regular purchase.
I think to be successful in the U.S., the mango industry has to go beyond smoothies.
Q: And what would you suggest?
A: We didn’t really get that far in this research. We got to the point that Number One, the industry has to do some educational promoting, because people just don’t know enough about mangoes and the different varieties. How many different varieties of apples are there?
Q: It’s countless...and there are new apple varieties continually being introduced.
A: How many different varieties of mangos can you tell me about? Do you know how many there are?
Q: I’d just be guessing, maybe five to ten, until going on the Internet. I’m surprised to learn there are over 500 known varieties of mangos! Although, I’m seeing the number commercially grown with access to the U.S. market is a small fraction of that...
A: That’s the point. You and I are both reasonably knowledgeable about the produce industry, and when I started this project, I didn’t even know there were different varieties of mangos.
To give you an example… when one of my ex-students, who works for a mango distributor, came to my international marketing class to discuss the results of our research, he didn’t bring any mangos with him. He said it was because the types of mangos we were importing now weren’t the best variety. Here was a variety that wasn’t very good.
Q: Could this be related to some requirements with imports to the US? Industry executives say mangos either have to be irradiated — and none of the retailers seem to want irradiated fruit — or put in a hot water bath, which can have a negative effect on the quality of the fruit. It does kill the insects and meet U.S. import regulations, which is important, but the world’s best mangos may not come to the U.S.
A: This is an overall issue, and a challenge, but my research focuses on the opportunities...
Q: Have you connected with Nic Jooste? He worked for Cool Fresh International, which is now part of The Jupiter Group, at our events? I think you’d be simpatico. He has developed some clever marketing strategies for winning over Gen Z’s, and his entertaining presentations suggested we have eight seconds or less to make an effective pitch! It takes Generation Z’s eight seconds to decide if something is good or bad, according to Jooste, noting, the attention span of a goldfish is nine seconds, referencing an empirical study on web-use with attention span statistics.
A: That’s absolutely true. There’s no question about that. What that’s going to do is put a lot of pressure on the mango marketing association because Gen Z’s total lack of knowledge on mangos means, somehow, they have to break through in eight seconds, as Nic Jooste brilliantly sums it up!
That’s going to be a challenge. It’s going to be hard for the mango industry.
Q: Going back to your point of how you would market differently for a Hispanic audience, is there a subset marketing strategy for how you would reach Gen Z’s?
A: There has to be. We’ll probably do some more research in the future, trying to look at what kinds of statements we can make about mango that actually gets their attention in eight seconds.
Q: You’ve talked in other presentations about retail disruptions, changing demographics, and effects with the Internet and social media, so that plays into the equation as well...
A: There’s a lot of things happening. For example, the mango industry is probably going to continue to grow but a lot of their growth is going to come from the US Hispanic market where their challenge is totally different; it’s not trying to get people to know how good a mango is, etc. The challenge is trying to get the best quality mango in the store where the Hispanic shopper shops. At the same time, they have to have a separate marketing program to get these Gen Z kids to start thinking mango.
The difference is with Gen Z you’re almost starting from ground zero. I’ll tell you what a success would be… we see a younger generation person at a grocery store walking in the produce section; the young person might look at apples and glance at plums, but stops when he or she sees the mangos. The first objective of the mango industry has to get the younger generation to stop and at least consider mangos.
Q: So, this involves many different things … it’s the signage, how you package it...
A: You can buy fresh citrus or citrus in a jar -- many of these produce categories have convenience-level foods. Apples do, carrots do, you can buy chopped onions, peppers and celery, spiral squash, cored pineapple, as well as a whole pineapple. I’m suggesting they consider doing the same with mango. I don’t know if it will be successful or not. But certainly, if you look at the market and the success of these other convenience produce products, it’s something they at least have to think about.
I love mango, and always have, and if I had to pay a bit more to have it sliced, I’d do it in a heartbeat. Although, when I slice a mango and I have that big seed, my hands are a mess. I just like to eat as much as I can off that big seed.
Q: I think that would make a nice action photo to add to this piece!
A: Especially with mango dripping down my chin. Almost all the research I’ve done has shown that successful new products come about not by convincing people to buy more of the product but by selling them in the form these people are looking for. Convenience is Number One, making it easier for people to snack or have a meal...The key to this is focusing on convenience and getting an increased margin.
Some categories haven’t done a good job in this respect. In the mushroom industry, for instance, you pay virtually the same price for the whole mushrooms as you do for sliced, washed mushrooms. I think they should be charging a lot more for sliced washed mushrooms.
Q: Wouldn’t they charge more, if they could? Is it a supply-and-demand issue?
A: Well, if you asked executives in the mushroom industry, they would say this — and I know because I’ve worked with them. The suppliers say the retailers won’t let us get that price. It’s just easier to capitulate and charge the same amount, etc. It requires some commitment, some belief if you will, that people really will pay more. Maybe it requires doing the research to show retailers they can make a lot more money for the convenience-focused products.
One of the big obstacles is the retailers themselves. They will fight you to keep price as low as possible. When you go in with these consumer-focused products, you need to convince them and make a compelling case.
A good example is when the produce industry came out with lettuce in a bag, and retailers fought it. Who will pay twice as much for half as much product? Retailers were too focused on keeping the price down. What they didn’t understand was that the modern consumer didn’t want to buy a whole head of lettuce, eat half and throw away the leftovers wilting in the refrigerator. People didn’t want to wash and cut up the lettuce, and all those things that add value for the consumer. If we just make it perfect for the consumer, they’ll pay more.
For the younger generations, I’ve hammered on their desire for convenience, and the second thing is healthy food. And mangos have a wonderful health story, but, of course, so do most produce items.
Q: Where does your research go from here?
A: I would like to do a standard concept test, where we create — not physically but conceptually — certain kinds of pitches, about taste, health, etc., to learn what kinds of things have some impact on Gen Z’s beliefs in a short period of time — remember we only have eight seconds.
With mushrooms, we had focus groups like we did with mangos, where we did a concept test to find out, what are the things that stop consumers from buying and using more mushrooms. We came up with a list of 10 things. For each one of those 10, we theoretically created a product, and had them evaluate that concept, as to how much that could influence their decision. I’ll give you one that was very good and one that was very bad.
We discovered one of the biggest uses for mushrooms was steak, but one of the reasons consumers weren’t using them was they would forget to buy them at the supermarket and realize it when they got home. One of the concepts was to create steak-cut mushrooms and merchandise them in the meat section next to the steaks. It was a successful product.
On the other side, consumers didn’t like to go to the trouble to clean mushrooms, and the concept was to include a disposable brush to clean them off with. And consumers couldn’t care less.
With mushrooms, we did both focus group and online surveys. The focus groups are not meant to be a representation of the whole market. It gives us an idea of the impact, combined with the quantitative online survey — 99 percent of the time I do both. The focus group just helps us do a better job with the quantitative.
Another researcher could say that you don’t know that much about these people from a few focus groups on mangos. I would simply respond in this instance, it was so clear that no one in the room had any clue about mangos. The preponderance of evidence was so strong I wouldn’t have any hesitation in recommending you need to go out and do education on your product. What I wouldn’t be willing to say at this point is here is exactly how you should do it because we don’t have that data.
I think one of the most valuable uses of an executive’s time is to look at what others are doing, listen to what others are saying, and try to integrate these lessons and insights into what they do. Some people use The New York Produce Show to find customers to sell, that’s good, I’m glad they do that.
But there’s an incremental value in attending the educational micro-session. I can become a more knowledgeable person in my field. We don’t have that many chances to do that, because when we’re at work, we have so many day-to-day things to deal with, but here you have a few days to let your mind be open, and the opportunity is there for those ready to take it.
There’s not a show that I’ve gone to, where I haven’t said, wow, what a good idea. Somebody has a good idea at this show. That’s the value of The New York Produce Show. Is it possible to make calls and sell your product outside of the show, sure, but the NYPS makes it a lot easier because it brings everyone together with so much more to learn.
Q: The educational component in many ways is a grounding element of the New York Produce Show. Attendees commend the virtues of the educational sessions to bring in experts like yourself to share your research.
A: The virtues are reciprocal. I sit in on other speakers’ presentations, and I can attest to the fact, it’s an excellent education.
The core of Professor Stanton’s research is clear. Younger consumers, not from cultures that commonly eat mangos, enjoy the taste of mango as evidenced by consuming frozen mangos in smoothies several times a week.
Yet these same consumers are mostly ignorant about mangos. They don’t know the varieties, how to cut them, how to determine if they are ripe, etc.
Professor Stanton then challenges the industry:
1) To produce more convenient versions of fresh mangos, say fresh-cut variants.
2) To educate younger consumers about mangos so they will feel comfortable buying them.
3) To persuade retailers and condition consumers to pay more for value-added produce
Further Professor Stanton argues that certain items, such as mangos, require this education more than others — because people didn’t grow up with the item and so were not taught to consume it by their mothers and grandmothers.
All this seems impossible to argue with. But there are implications to all this that need to be thought of.
First — I would not let more traditional items off the hook. Yes, the pundit’s grandmother ate a half grapefruit for breakfast every day. So, it was a traditional product consumed in a traditional way.
But, the fruit was so tart that she would cover the entire top of the grapefruit with sugar before she would eat it! Today, of course, fantastic varieties are, themselves, sweet.
Apples may have been common forever, but there is a reason Honey Crisp is so popular today. Traditional memories can lead to lower consumption over time as new varieties take the place of tradition. Consumers need to constantly be reintroduced to products as they change.
Second — We would love to see some research on how young people actually change behavior when given more information that they didn’t request. The Jr. Pundit Primo, aka William, has always loved The Food Network and cooking shows and, as he has reached his late teens, he has begun cooking quite a bit. When he feels like making a new dish, what he does is whip out his phone and, in a minute, has a new recipe, a shopping list, anything he needs.
Information was much harder to acquire when the Pundit was his age. If the Pundit wanted to know about fresh mangos – what would he do? Go to the library? So, we might have been more interested and absorptive of information presented by marketers of mangos.
We need real research, but our sense is that if young people want information today, they get it instantly.
So, the challenge is not to educate young people but to make them want the education. In other words, if you can get Rihanna, Justin Bieber, Lady Gaga and Katy Perry to all toast with a Mango Martini or eat Mango toast for breakfast. It will all go viral on Instagram – then the Mango Martini and Mango toast will be trending and everyone gets educated.
Third — The thirst for convenience, low food waste, economical options… all poses challenges to the fresh industry. Buying pre-cut frozen mango and using it for a smoothie is very convenient, zero waste and very economical. Who says that consumers are really desperate for alternative ways to eat their mango? Maybe this is the optimal way?
Fourth — Many options have an upside and downside. This Pundit lives in Florida and frequently buys fresh-cut mangos at his local Publix. It is decent, but it is a little bit like buying sliced tomatoes; the mangos need to keep on the firm side to slice them. So just as fast food chains that buy pre-sliced aren’t buying the most juicy, ripe tomatoes, so the fresh-cut mango is not showcasing the optimal flavor.
Fifth, and perhaps most important for the industry… All these programs may, in fact, boost mango sales and consumption, but would these sales actually lead to increased produce consumption or would it just mean consumers would buy more mango and fewer plums? Another area for deep research!
Come to The New York Produce Show and Conference. Engage with Professor Stanton and help the industry think through these important gateway issues — that, if handled well, could lead to higher produce consumption.
You can register for the show here.
This is the website
Let us know if you need a hotel room here.
Come and join the effort to think through these important issues!
We look forward to seeing you in New York!
We often like to have speakers who have just vacated important positions. If they are still in the fray, they are often close-mouthed. If they have been out of position long, their information often gets dated, and quickly. So, when he heard Jacqui Green left her position as CEO of Berry Gardens, we wanted to grab her up quickly.
With sales of close to half a billion US dollars, this company is a berry giant in the UK. Berry Gardens also has an exclusive arrangement with Driscoll’s, tying them into a large breeding and marketing program. We asked Gill McShane, Contributing Editor at Pundit sister publication ProduceBusinessUK.com to get a “sneak preview” of Jacqui’s presentation:
Former CEO of
Berry Gardens Ltd.
North London, UK
Q: Jacqui, you have an impressive resumé, having worked for a number of global fresh produce companies at a senior level, including Berry Gardens, Bakkavor, Capespan, International Produce and Teresa Hermanos.
You describe yourself as having led teams to deliver double-digit growth, redefined business models and shaped sustainable cultures, and, until very recently, you served as the CEO of Berry Gardens, one of the largest berry companies in the UK. By way of introduction to our readers, can you give us a brief overview of your background, experience and achievements in the produce business to date?
A: Most recently, I was the CEO at Berry Gardens, and, prior to that, I was the Sales and Procurement Director. Berry Gardens is a cooperative, which is interesting as it gives you the ability to be the grower and the supplier all at once, which is really empowering. One of the two punctuation marks in my career at Berry Gardens was achieving huge double-digit growth on berries, having shifted to a consumer-led approach from production-led.
I invested the team into quite a large insight function and consumer research. We bought a lot of data from Kantar and IRI to support the company’s movement in the direction of what the future consumer is looking for. In the past, British agriculture has suffered a little from growers just growing what they’ve always grown, so that was a big growth trajectory based on a real cultural shift.
The latter part of my time at Berry Gardens was punctuated by the discounters becoming more troublesome to the big four retailers in the UK. In response, the retailers have been getting into newer models of working more directly with the growers. That model is putting pressure into the system, which is good in many ways but, unfortunately, it runs the risk of affecting innovation and investment in the future.
Prior to Berry Gardens, I worked for Wingland Foods, which is one of the prepared-salad and ready-meals factories within the Bakkavor Group, supplying exclusively toWaitrose. There, we experienced great growth, teeing into all consumer preferences for convenience, health, online, and the younger generation’s desires.
That was a really interesting experience to understand how to extract value from convenience products, up to the point where it goes too far (for example, a product like pre-chopped onions). Also, it raised the question of whether you need a great big food factory for lower-risk prepared food, or if can it be done without all the investment. It’s really interesting times, and I think this will play out in produce. I feel there’s a middle ground still to emerge.
Q: At the Global Trade Symposium, you will be talking about the own label (retailer private label) market, how to retain competitive advantage, and how to communicate with consumers. Is that a fair assessment?
A: The premise is that for fresh produce in the UK,half (at least) of the lines are sold in own [retailer] labels. As consumers become more demanding, it is all the more critical that messaging of why own label is the right choice becomes loud and clear — and right now there is a distinct dumbing down of any such message. So, my talk is from a personal perspective where retailers could move to keep/gain the consumer loyalty (across all generational sets) and, in turn, suppliers get to stand out.
Q: Can you give us a rundown of what your presentation will entail, and the topics that you will cover?
A: I’ll start with an explanation of private label. I’ll talk about UK consumers; the different generational types and what’s important to them. I’ll provide a snapshot of the UK produce marketplace and illustrate with photos how it looks now. Then I’ll talk about how retailers and suppliers in the UK might respond to what consumers want, and how they can do that better.
Q: You mentioned that your talk will come from a personal perspective. Will you share any experiences to back up your thoughts?
A: I’ll mainly use an IGD (The Institute of Grocery Distribution) report called Shoppers of the Future, plus a couple of other pieces of intel that are more produce specific, which I’ll attribute in my presentation. The IGD report looks ahead to what shoppers in 2025 are likely to want in terms of the trends that businesses should consider.
Q: Will you be speaking about the UK perspective only? Or, will there be any learnings for global produce and retail executives?
A: Private label is a really interesting topic. I could speak solely about the UK, but you can draw certain parallels with global trends. In the US, about 20% of produce is sold under private label, but not in every retailer. In China, meanwhile, it’s only 5%. It’s a really interesting trend. Europe is where private label came from, which means it’s well advanced here, so there are learnings for everyone.
I don’t know all the global retail players well, but my understanding is that all retailers are pushing to have more private labels. So, I think my messages will be useful since all retailers have their own initiatives on sustainability, planet and people; they have a lot to shout about. I hadn’t really thought my talk would end up being a call to arms, but I think other retailers could take away some learnings.
Q: To set the scene, can you give us a brief overview of how private label works for fresh produce?
A: Effectively, private labels were designed by retailers to gain control of the supply chain, and to be able to control the pricing and margins that they derive from selling products. Brands have huge power over retailers, so private labels give retailers scale, the ability to personalize, and the quality is pretty good. The retailers were able to write the quality standards and literally put their name to it. In terms of food safety, the UK has a very legislative-heavy production model, so we have fewer food scares and issues than other global markets. Generally, private label has mostly upsides.
The downsides, and there are some, are that you do lose innovation. It’s hard for one retailer to warrant spending what a big brand would spend. Also, and a retailer would disagree, but removing competition from the marketplace isn’t necessarily healthy, as it probably doesn’t foster new entrants who make everyone ‘up’ their game. Then comes the sad bit; it can become a race to the bottom with the retailers in control of the supply chain, and all parts thereof. There is the risk that if there isn’t a margin in each area of the supply chain, then people will cut costs and corners, which can lead to food safety and security issues.
I do think it could end up with a reversion to a product that is just ‘good enough’, with no incentive for producers to produce something novel or better. The risk is that produce will end up being a commoditized market because everything will be about the lowest possible cost. I think that’s sad because a lot of the market growth for products like tomatoes, berries, grapes and even some veg has come from innovation, through the introduction of new varieties, intense flavors, etc.
On the upside, there can be great innovation. For example, let’s say, Tesco pioneers a brand-new packaging material that allows us to remove plastic. It has far more chance of landing in a meaningful way if that material is used throughout Tesco’s private label. That would have much more impact than if, for example, Mars discovers the material and uses it on one confectionary item. There is a big piece around those initiatives being more impactful through private label.
Q: So, what is the current situation with private label for produce in the UK, and where is it going awry in your opinion?
A: There’s a disconnect in the UK where a very high percentage of produce is sold under own label, while the retailers are doing amazing initiatives (like Marks and Spencer with its eco and ethical program, Plan A, or Sainsbury's 20 x 20 Sustainability Plan), but they’re missing a trick in terms of letting the consumer know what is happening behind that label with sustainability, heritage, quality, food safety, etc.
There’s been such a dumbing down of any provenance stories. For example, the other day I bought a punnet of strawberries, with a film lid on the top and white print that reads ‘Sainsbury’s strawberries’. It was so uninspiring, and I know they’ve done it to pare it back and reduce costs. But I think we’re going to end up having, for instance, a branded Florette ‘Vitality’ salad pack that looks amazing sitting next to, say, a Sainsbury’s own label salad which is fairly plain.
What I want to talk about is how the retailers have got really good stories to tell, but they’re not doing it very effectively. You’ve got to recognize the value in what you've got.
Q: Do you feel this disconnect has come about because of the sheer volume of produce that is sold under private label in the UK? If retailers don’t have to compete alongside many brands, is the issue simply that they feel they don’t need to try that hard?
A: Yes, it does feel like that but, equally, it’s happening not just in produce. For example, own label non-meat sausages in Sainsbury’s have quite nice, bright packaging and look funky, but sitting right next to them is a branded version in the most beautiful packaging. So even when they are competing side by side, retailers are still not getting it quite right.
Q: If the private label drives out the marketing and R&D costs, who is going to produce the innovative products and build demand in the future?
A: If retailers don’t get their finger out, there will be lots of private, branded companies. Although I don’t think there will be a big player, like Unilever,stomping in, retailers do need to be mindful that the little sub-brands are really appealing. The younger generation actually quite likes brands; they like the niche brands, as it’s all visual for them.
Retailers need to think about how they are talking to those generations. However, the one caveat is that fancy packaging alone is not the answer; fancy artwork and cardboard sleeves are not going to work with the younger generation. It’s going to have to be dramatically different from anything the retailers have ever done, which is why I think the story of their credentials will really chime with what’s important to future generations.
Q: Is the potential for new brands why it’s becoming more critical for retailers to make loud and clear why own label is the right choice for consumers?
A: The critical thing for the retailers is that their competition is going to come at them in the likes of online retailers; small, niche brands; and home delivery schemes, like Able and Cole or HelloFresh. Little by little, these tiny players might destabilize things. If retailers don’t get their voices heard quickly, in terms of the initiatives they’ve been championing for years, they risk losing out. It feels like they have to move quickly to demonstrate their credentials before these small independents start to gain ground.
What’s interesting is that the younger generations are going to become quite distrusting of the big brands, so there’s an opportunity for the retailer brands to become really trusted and loved. Retailers need to think about how they are viewed by this skeptical generation. I think a lot of what they’re doing already really does put them ahead of the big brands.
The tragedy will be not getting that message right. Personally, if I didn’t know that each of the retailers has very meaningful and credible objectives surrounding sustainability, planet and people, as a consumer I would be very cynical about private label. But I do feel our retailers have just missed the opportunity to tell consumers.
Each retailer and their respective clients have a unique set of expectations, and by using own label, that retailer is able to really target what their consumers want. If we look at brands, more often than not, they are appealing to a mass market, and not appealing to a more niche customer at, say, Little Waitrose, or an Aldi store outside of urban estates, or The Co-operative on the high street.
Private label offers a level of personalization. Everything consumers buy in stores has the retailer’s name on it; the retailers are in control of their supply chain, quality standards, auditing suppliers. To have that power really gives retailers the ultimate credibility with their consumers.
Q: So, how can retailers gain the loyalty of consumers? What’s your advice when it comes to building trust in private labels?
A: It’s about communicating their initiatives to consumers. That might be in store; it could be online, on pack, or by using technology in store, such as digital markers. For example, Florette has a beautiful website all about them and the growers. Whereas, if you search for ‘Sainsbury’s mixed salad’ you get a photo of the bag and a bit of nutritional information.
The point is why wouldn’t you have that own label product linked to your credentials for sustainability, environment, water, people etc.? That, for me, is the biggest miss at the moment. But this isn’t irreparable; there is a huge win to be had without having to do very much. Produce ticks all the boxes when it comes to health, quality and convenience. We’re really are in a good place to respond.
Q: Taking packaging as an example, what could retailers do to make their own brand more communicative? You say fancy packaging is not enough…
A: It’s difficult. Retailers need to call out the things that are important to consumers, but they have to be so ‘broad church’ to suit the different generations. At the very least, they could start to educate consumers about their initiatives with perhaps a logo that sits on the pack. So, anything from M&S would show a ‘Plan A’ badge. Of course, Tesco had its Nurture standard logo but no one knew what it was.
People don’t have time to read a lot of information on pack, nor do they have time to stand and read boards or posters in store. It’s about educating them when they’ve got the time to listen, and making that message cue up again at the fixture or online. Online, there’s nothing stopping retailers from making a really big deal about it, or it could be a strapline across the page. Or, it could be more of an experiential thing, like inviting customers to meet the grower via the loyalty card scheme.
Q: Do you think social media is the most effective way to engage with today’s time-poor consumers?
A: Yes, I do. Social platforms are the quickest, easiest way to communicate with anyone born this side of the Millennium. Why wouldn’t you share your manifesto on the environment, find an ambassador, and get people talking about it? It’s all about investing for the future. The younger generations need a bit more sign posting as to what retailers are all about. They are quite cynical of big organizations.
Q: What about produce suppliers? How can they communicate with consumers via private label, and how can retailers ensure the growers’ voices are still getting through?
A: I think that’s still very relevant when you look at what consumers want. They want the stories behind the product and the growers but, really, it’s the retailers’ job to get consumers up to speed. The grower’s voice has to be with the retailer, and, ideally, the retailer will shout about them; for example, by making a documentary about them, or describing them as ‘the best tomato grower in the world’. Definitely, there’s still a voice for the grower through the retailer.
As a supplier, you sign up to a retailer’s codes of conduct and manifestos almost as if it was a pseudo brand. The point is that you don’t sell out on your own voice. Rather you would argue that if you over-deliver on a retailer’s expectation you’d be rewarded with more growth. It should become a self-fulfilling prophecy because more and more growers with the right mindset are producing more for the retailer.
Q: Are there any other messages that are important for retailers to get across in order to strengthen their private label?
A: Health. Every one of the generational groups rates health as an important factor for different reasons. So why aren’t we making more of the fact that everything in the fresh produce fixture is inherently healthy? Ifeel we’re missing a trick in terms of communication. Everyone knows that fruit and veg are healthy but, collectively as an industry, we could do a whole load better, and to miss out on making that point is concerning.
Look at some of the products that have managed to get into the marketplace that are pseudo healthy — it all comes back to brands because the branding is really clever. So, how do we educate people that that isn’t good for you? The difficulty with produce is that you can’t make the health claims like with other products because produce isn’t an ingredient. You can only say it’s ‘rich in Vitamin C’ etc. Maybe this is a question for legislative change — how can we make bolder health claims to help people realize what’s good for them? I think we’re quite conservative as a nation in the UK. This might be an area where retailers could step up and be a bit braver.
Q: Overall, what will be your overarching message through your assessment of private labels at the GTS?
A: We must recognize that the world is very small now, so any learnings from around the world will have resonance and relevance in another marketplace. Private label for produce is one area where the UK is very different to the rest of the world. But every marketplace has its own specific dynamics.
What’s really useful in any symposium is to spotlight something very different. For me, I often most enjoy the speaker who has nothing to do with fresh produce because they throw a real curve ball and bring a completely different perspective.
Q: What would you like to inspire in all attendees?
A: Anywhere where the industry has started out as branded, and now moving to private label will encounter resistance because there’s the perception of a loss of power, and the introduction of competitors. But the critical thing we all have to remember is that we’re all about the future consumer.
Ultimately, we’re producing a healthy product that will nurture people for the future from both a health and an ethical, sustainable point of view. We need consumers to understand what retailers and growers are doing, and to support that. Our focus should be on healthy consumers for the future, and raising consumption globally; maybe taking head on some of these pretend healthy products, and, for now, disregarding brand wars. We know the younger generation is very skeptical about brands. It’s about moving with the times, and being consumer-focused.
We find the whole issue of private label in produce somewhat problematic.
Fundamentally retailers like private label for three reasons:
They want to eliminate the ability of branded companies to use consumer pressure to make them carry items.
They want to increase margins or reduce consumer costs or both by eliminating the investments that branded companies make in R & D and marketing.
They want to bring produce into alignment with the other departments, so there is branding consistency.
Of course, we have had experience with what happens when a UK-type private label program lands in the US. We wrote quite a bit about Tesco’s efforts to Come to America as Fresh & Easy.
Tesco came into America and did much of Jacqui talks about. They set up unique standards, down to how long the stem of an artichoke should be or how many grapes in a clamshell.
They had all this produce produced to its specifications, then they brought it into a common facility for packaging with no reference to any producers.
All of the sudden, the retailer learned that these Category Champions, who grew and packed to the rigorous standards that Tesco had established, were not always the cheapest guys on earth. They also learned that many consumers seemed to place no value on these traits that were so expensively specified.
So, the dedicated producers, who had bet on Tesco’s success in America and spent time and treasure to produce what was requested, were more than a little peeved when they came into the stores and suddenly saw pallets of standard competitive product bought as a kind of “opportunity buy” from brokers, other shippers and terminal markets and displayed at prices undercutting the product produced to spec.
Of course, many of the best shippers never got involved at all. Driscoll’s itself walked out of a vendor meeting, announcing that this private label approach was inconsistent with its own goals!
The reason private label has so much trouble in the American produce industry is that for most companies there is very little in the way of R & D or marketing to “save,” so there are no “savings” to hold as increased margin or to pass on to consumer savings.
That is why if you go into an Aldi, for example, you are likely to see produce from most of the top brands.
To insist on everything under a private label would both add costs in terms of labeling differently and preclude the retailer from taking advantage of market opportunities.
We actually see a kind of counter-private label trend brewing… The retailers want private label so they can walk away from any supplier who wants what the retailer perceives as too much money. But now, with genetics being tied to branding, the producers have a chance to turn the table.
If a retailer wants to sell Cotton Candy Grapes — and they do because their customers want them — the retailer has limited numbers of people to deal with.
So far, big berry growers in the UK have gone along with the retailers’ desire for private label. But that might not last forever.
In the end, producers want to have distinctive genetics, which they want to brand so that consumers will demand the product and be willing to pay for it. It is a big power shift in the produce industry, and retailers may not like it very much.
In any case, the role of private label in produce — what retailers should be trying to accomplish and what producers should be trying to accomplish — is a big issue.
Come to the Global Trade Symposium and The New York Produce Show and Conference to get a leg up on this important matter.
Here is the Global Trade Symposium website.
Here is the New York Produce Show and Conference website.
If you need a hotel room, please let us know here.
And register for the event right here.
Position yourself for success in 2020 and the years ahead by absorbing the incredible information, networking and commerce available only in New York.
We look forward to seeing you.
Terminal markets are old institutions, founded at the “terminal” of the railroad to allow sellers to sell and buyers to buy. Yet their role is often misunderstood.
Supermarkets are big buyers, of course, but the place terminal markets occupy is unique in the produce ecosystem. Whereas retailers buy what they want to buy, terminal markets help producers sell what they need to sell.
As such, the markets stand at a unique nexus in the produce industry. On the one hand, terminal markets are crucial to the prosperity of the growing community. A retail chain may decide it only wants a certain size, a certain grade, a certain variety – but the Good Lord has not seen fit to allow a grower to only produce that. Farmers need outlets for ALL the crop. ALL the sizes. ALL the grades. ALL the varieties.
On the other side, this flexibility creates enormous opportunities for independent retailers and restaurants – it means they can find exceptional values and offer differentiated product. It means they can often underprice and out-merchandise the largest retailers, often with fresh product.
Indeed the terminal markets serve as the distribution center for the independents that have none of their own, and, in so doing, support the differentiated retailing and unique restaurants that make cities appealing places to live and work.
It’s a unique value proposition ranging across the produce supply chain.
And as the biggest of all the produce markets, Hunts Point is well positioned to take the lead in explaining this value proposition to stakeholders of all sorts.
When we heard that the Next Generation of Leaders had decided to take the bull by the horns and begin an effort to rebrand in a way that will capture the value proposition it offers, and that they had decided to unveil this rebranding at The New York Produce Show and Conference, we asked Pundit Investigator and Special Projects Editor Mira Slott to see if she could get some background on the branding to be unveiled at the show:
Vice President of Operations
AJ Trucco, Inc.
Chair Public Relations Committee
Hunts Point Produce Market
Bronx, New York
Q: The Hunts Point Produce Market will be unveiling a new brand strategy throughout the New York Produce Show, culminating in the unique opportunity to experience the enormity and importance of the Market in action during a special, exclusive tour that takes place on the last day of the event.
According to the website, Hunts Point is the largest produce terminal market in the world, generating $2.3 billion in sales, and trading 210 million packages of produce every year. It supplies the full international spectrum of produce varieties throughout the New York Metropolitan region and surrounding areas, covering some 23 million people. True to its roots, Hunts Point Market still engages daily with more than 2,500 green grocers, and supplies produce to 23,000 restaurateurs, in addition to filling orders for all the big retailers...
I understand you’ve been extremely busy gearing up for the campaign launch…
What was the impetus for developing a new brand strategy? Could you describe the reasons for embarking on this rebranding? What was involved in the process?
A: This idea sprouted from what we call the Next Generation of Leaders at the Hunts Point Produce Market. We’ve created a committee of the Next Generation to work on matters affecting the market such as marketing, and through our meetings we realized that the market has so much to offer — expertise, variety, value, etc. — but the message wasn’t being conveyed properly with our old brand. Therefore, we decided to embark on a rebranding project.
Q: What are the key messages you want to convey with this new brand strategy, and why? How are you looking to position the Market’s brand identity?
A: We want to convey our expertise in the industry that is based on businesses that have been well established in the produce industry, some for four generations. The produce market has been around for more than 200 years, but, while we are steeped in a history of expertise, we also have an eye on the future and modern-day needs.
The goals of the campaign are to create greater awareness of the market, its merchants and the amazing variety, freshness, and expertise that can be found here. When it comes to produce, we know best.
Q: Where and to whom will the campaign be directed?
A: Everything from customers to various stakeholders and to our community.
Q: Are you looking to reach a new audience unfamiliar with Hunts Point Market or not fully aware of the dynamic qualities that make Hunts Point Market an invaluable resource? Are you trying to reconnect with people who already know of Hunts Point Market with new inspiration, i.e., what sets it apart and makes it unique? Is there new information, notable changes/improvements to the Market that people may not be aware of that this campaign highlights?
A: All of the above! We have an amazing story here, and we are an integral part of the food industry in the tri-state area, and we want to tell our story.
Q: Are you creating different messaging/campaign materials for different audiences? Are there misconceptions about Hunts Point Produce Market that this campaign is looking to address? If so, what would those be?
A: The market can be a bit intimidating or overwhelming to some, so we are trying to educate current customers and potential new customers on how to navigate the market and make it more approachable for them.
Q: What is the scope of the re-branding campaign? Could you describe all the elements?
A: We’ve engaged in a full rebrand from design of a new logo to new messaging and new brand collateral — a completely new look and feel from before.
Q: What is involved in each of the elements (logo, slogans, promotional material, brochure, signage, website, social media, etc.)? How will the campaign be marketed?
A: It’s being launched at the NYPS with many touchpoints that we hope will resonate with the attendees. And there will be more to come over the next 12 months.
Q: How did you come up with your new brand slogan, We Know Best, and what is the significance you want to connote? There are so many qualities connected with Hunts Point Produce Market… how do you prioritize what to focus on?
A: We went through an extensive process, which began with a brand questionnaire, meetings and stakeholder interviews. We distilled from all of that information what is most important about the market. We decided through this process to focus on our expertise. We know produce and we know it well. This market has existed in one shape or another for over 200 years. That is something that sets us apart from all of our competitors.
Q: Could you provide historical context for the re-branding? What kinds of branding/promotional campaigns has Hunts Point Market done in the past? How different is this re-branding campaign from other campaigns?
A: We created a logo and slogan many years ago, but to my knowledge this is the most extensive rebranding process we have undergone.
Q: Is there a way for people interested in participating in the campaign to become involved?
A: All campaign initiatives are open to all merchants in the market. It’s been an open and transparent process. We wanted to make sure to collect as much input and generate as much participation in the process as possible.
This is a difficult interview since we are talking about something that won’t be unveiled until the show. So all the more reason to register and come join us at The New York Produce Show and Conference!
You can sign up right here. And don’t forget to sign up for the tour of Hunts Point, a special event taking place on Friday, the day after the show!
You can check out the show website here.
If you need a hotel room, just let us know here.
And if you are already registered and want to know how to add the Hunts Point tour to your itinerary, let us know here.
The Pundit’s family business was an original tenant when Hunts Point opened in 1967 — it was exciting then and, now, to rebrand and re-market is a brave new day.
Come see it all at The New York Produce Show and Conference and on Friday at the Hunts Point Market in the Bronx.
John Bovay is one of those up-and-coming young academics. He was with us when he was at the University of Connecticut, delivering riveting talks such as this one:
Getting Down And Dirty On Food Waste: UConn Professor John Bovey Unveils New Research At New York Produce Show And Conference
Now he is at Virginia Tech and brought along Virginia Tech as the newest member of our University Interchange Program where professors share their latest research-- thus helping to disseminate knowledge-- and students get a chance to be mentored, get access to educational activities, start to build industry relationships, seek out internships and jobs.
He also brought some new research on the interrelationship between organic and conventional produce sales. We asked Matt Ogg to find out more:
Agricultural and Applied Economics
Q: You have provided valuable insight at previous editions of The New York Produce Show and Conference (NYPS) into hot topics ranging from food waste and food safety impacts, to GMO and non-GMO food labels.
This year, you’re back to analyze another significant subject when it comes to consumer habits and purchasing decisions – in the form of the implications of rising demand for organic fruit and vegetables in the US. Can you expand on what your subject matter will entail?
A: I’m going to start the presentation with the general motivation for why we’re interested in this research topic, which is that fruits and vegetables (FV) are healthy, so it’s important from a public policy perspective to encourage people to consume more. There have been policies discussed that would create more incentives for people to consume healthier foods. These include subsidies on healthy foods and taxes on unhealthy foods.
The specific research question that we are considering is: ‘What are the implications of rising organic FV demand on prices for organic FV and conventional FV, and what are the implications of those changes in prices on the consumption of FV?’
Another reason why we’re interested in this question is the relationship between income and healthy diets. It’s not just a health issue; it’s also a social issue in a broader sense. Obviously, because organic FV are more expensive than conventional FV, higher-income people who already have healthier diets tend to be larger volume purchasers of organics. Those are just the basic facts about the way organic and conventional products are consumed by different groups of people.
But we realized there was probably a gap in economics literature in terms of studying demand for FV using econometric techniques, which are the specialized methods that economists use to analyze data. That gap is that sometimes, but certainly not all the time, demand is considered to be this one equation or set of relationships that characterize the preferences of every consumer in the market.
We know that different people have different sets of preferences. So, this study really illustrates the differences in the conclusions that one might draw when analyzing the effects of some kind of policy change.
Another way of thinking about the key question paper is: Could an increase in organic FV demand that only affects demand for organics by a small group of consumers result in price shifts that, in turn, allow people to buy more conventional FV at a better price, and actually increase consumption of conventional FV? That’s something we investigated in the research using some of the sets of parameters, some of the ways of quantitatively characterizing the market. We see that result. We see that increases in demand for organic FV may result in price changes for conventional FV that, in turn, increase the consumption of conventional FV among certain groups of consumers.
Q: That’s certainly fascinating food for thought, and we’ll come back to the results later. Firstly, now we have a comprehensive overview of your session topic, could you guide us step by step through the structure of your presentation in terms of the points you’ll discuss?
A: I’ll start with the motivation for our paper; talking about Americans’ dietary quality and the shortcomings in terms of fruit and vegetable intake compared with dietary guidelines, and the connection between diet and income, and the implications of dietary quality for health. These are all issues with which the audience will be very familiar.
Then, before I start talking about demand as an economic concept, I want to carefully describe what economists mean by demand. So, a shift in demand doesn’t just mean an increase in quantity demanded. It means that at any given price, consumers in aggregate are willing to buy more of a product. So, if I said that consumption of apples increased from 100 million tons to 105 million tons over a certain period of time, that would not necessarily mean that demand increased in an economic sense. It might be that prices were lower, and therefore people consumed more. Rather, a demand increase means that when holding prices constant, people were willing to buy more.
One thing I’m looking forward to hearing from the audience is the ways in which they anticipate the demand for organic FV might shift besides a couple of possible reasons that I mentioned earlier; such as effective marketing, or health scares, or positive health information that affects demand for one type of produce or another. Or, there might be government-supported information campaigns. The US Department of Agriculture (USDA) has some support for organic producers. Other than these avenues, I wonder whether there are any other important drivers of demand that I should include in the paper.
The next thing I’ll do, after talking about demand in general terms, is to talk about a specific type of economic modelling, called an equilibrium displacement model or a multi-market model. It’s an analysis of what happens to quantities consumed, and prices paid, when distinct products are linked in either consumption or production. Obviously, in the case of organic FV and conventional FV there are all kinds of interlinkages. That’s the mechanism by which increased demand for, say, organic bananas might have an effect on conventional bananas.
People have budget constraints, and they only want so many bananas in a week. So, if I buy 15 total bananas, I’d have to choose how many organic and how many conventional. If I increase my demand for organics, I’m probably not going to increase my demand for conventional also, but maybe at some times of the year I like to eat more bananas. These are all kinds of considerations that need to be made when doing analysis of demand for FV. It’s really an empirical question, so we have to analyze the data to see what it’s telling us about the relationships between different types of products. The key is whether they are substitutes or complements. That is: ‘Do I consume more of A and B at the same time?’, or ‘When I consume more of A, does that mean I consume less of B?’.
Then I’ll get into the details of the simulation exercise that we did, and the results.
Q: How recent is this research? How long did you work on the paper, and with whom did you collaborate?
A: My co-authors are Brandon R. McFadden, who is an assistant professor in the Applied Economics and Statistics Department at the University of Delaware; and Conner Mullally, an assistant professor in the Food and Resource Economics Department at the University of Florida. We’ve been working on it for about two years, and it has not been published yet as we’re seeking comments that could help improve the paper.
Q: You’ve explained about the motivation for this research. Could you elaborate on how the questions and answers raised in the paper are significant for the fresh produce industry?
A: That’s a really great question. A lot of producers, wholesalers and others attending the NYPS are going to be marketing organic FV and conventional FV. Although I mentioned that not every economics paper adequately characterizes consumers as having heterogeneous preferences (as having different sets of preferences or different ways of making decisions about how they consume), that’s really intuitive. Because the implications from using different sets of assumptions about the way people make decisions are so different, it’s important to consider the possibilities that are outlined in these research results. That is, that there is a possibility that an organic FV promotion campaign could increase consumption of conventional FV.
I think attendees will be interested in seeing what I think are unexpected results in terms of demand for one thing affecting total quantity consumed of the produce in aggregate. By seeing these results, it will certainly generate interest because I’m not sure that the results are intuitive. But the results will also have a bearing on how people think about marketing their products, and marketing organic FV versus conventional FV, or other quality dimensions.
I have to say it with a little cautionary note, however, which is what we have here is an illustration, and based on the data, the implications are going to be very different. It’s something that needs to be considered, but it’s not possible for me to make a prescriptive recommendation. It’s more the concept of substitution between organic FV and conventional FV, and the effects of demand for one set of products on consumption of another group of products.
Q: Did you set out to prove or disprove anything with this research? Did you have any hypotheses?
A: It wasn’t really a hypothesis we wanted to prove or disprove. It was more that we were interested in showing how something like an organic FV promotion campaign could have very different effects on those consumers who often buy organics, versus those consumers who never buy organics. It was just to see what those different effects might be.
Q: What theory and simulations did you undertake to gather the evidence that you will be presenting? Can you enlighten us more about the multi-market equilibrium displacement model, and how it helps to examine the impact?
A: The equilibrium displacement model is a very typical model for analyzing impacts of a policy change or shock to markets, especially in agricultural economics. But what we did that, I think, was innovative was to add this concept of heterogeneous demand functions, or heterogeneous consumer preferences to that standard equilibrium displacement model. That’s the theory part.
For the simulation, what we’ve done, so far, is to use evidence from existing literature on the relationships between prices of some products, and demand for those products and other products; these are called elasticities.
So, we use those parameters from the literature in an equilibrium displacement model with heterogeneous demand to illustrate the implications of two different demand shocks. In one scenario, we simply simulate a 5% increase in demand for organic FV. In the other scenario, we simulate a 5% increase in demand for organic FV and a 5% decrease in demand for conventional FV, and we show the effects of these two different scenarios on the consumption of organic FV and conventional FV by consumers in aggregate, and by two different groups of consumers for the purpose of illustration.
Q: What were the interesting results for Scenario 1 and Scenario 2?
A: In the first scenario — where we simulate a 5% increase in demand for organic FV — we show that for Segment 1 consumers (who are consuming the majority of organic FV) a 5% increase in demand for organic FV would cause them to buy a little bit more organic, as they would substitute away from conventional to buy a little more organic, and overall their consumption of FV would rise by 0.1%.
In the second scenario — where we simulated a 5% increase in demand for organic FV, and also a 5% decrease in demand for conventional FV — we see the total consumption decreasing among Segment 1 consumers. That result is driven by the really large market share for conventional FV. So, even though they’re consuming a lot of organic FV, the majority of their FV is probably still conventional.
When they’re shifting a lot of their consumption from the less expensive conventional FV to the more expensive organic FV, their overall consumption of FV is going to decrease. To make it clear, what I’ve simulated shows a 7% increase in organic FV consumption, and about a 5% decrease in conventional FV. But because they’re spending more on conventional FV, that 5% decrease in conventional FV consumption outweighs the 7% in organic FV consumption.
Then, those consumers who are consuming most of the conventional FV (Segment 2), they would be consuming even more conventional FV after such a shift in demand, and fewer organic FV because the shift in demand for organic FV would cause a rise in the price for organic FV, so those people who don’t have strong preferences for organic FV would consume a little bit less organic FV, and shift towards even more conventional FV, and, according to our simulation, their overall consumption of FV would rise also.
Q: And can you clarify exactly why the overall consumption of FV rises in your study?
A: In our simulation, it’s because a demand shift in terms of increasing demand for organic FV is going to increase the price of organic FV, and it’s going to decrease the price of conventional FV, at least relative to organic FV. So, people are going to be able to buy more, and get more for their money in terms of conventional FV. Since conventional FV still makes up such a large share of total produce, the net effect is to increase total sales.
Q: And can you expand on why the increase in the price of organic FV causes the price of conventional FV to decrease?
A: This is a result of organic FV and conventional FV being substitutes in consumption. What that means in specific economic terms is, for example, when the price for organic apples rises, consumers, in general, are going to buy more conventional apples. So, that’s the mechanism for increasing demand for organic FV to trigger increased consumption of conventional FV.
Q: Does this present a dilemma for organic FV producer-suppliers? Since if organic FV is promoted, their traditional organic FV consumers could end up buying less, but at the same time they could have a positive impact on overall FV consumption…
A: I think that’s really good insight, but I think it’s a win-win because those people who have strong preferences for organic FV… if they are motivated to buy more organic FV, and they feel happy doing that, then organic companies will benefit. At the same time, if there is some hypothetical event that triggers a demand shift, and if that allows the prices of conventional FV to fall, it will benefit the mass of consumers who are not generally purchasing organic FV. That would certainly be a win for those consumers also.
In terms of consumers, it’s a win-win. I don’t see necessarily a scenario where an organic FV promotion campaign benefits sellers of conventional FV, but we do expect to see perhaps an increase in quantity demanded of conventional FV through these substitution effects, but in terms of revenues and profits I’m not sure that that’s the story the simulation is showing.
Q: Is it safe to say then that the rise in demand for organic FV is a good thing overall for fresh produce sales and consumption?
A: I think it probably is, yes, because organic FV are seen as a higher quality product. They always command a higher price in retail, so I would think that rising demand for organic FV would certainly be a good thing for the produce industry in general.
Q: What was the overall conclusion of your paper in a few standout points?
A: I’ve got three takeaway messages. The first is that, as we’ve been discussing, the increasing demand for organic FV can affect the market prices for both organic FV and conventional FV, and it can lead to increased consumption of conventional FV through the substitution effect. In particular, non-organic buyers (who we call Segment 2) may especially benefit from lower prices for conventional FV that come about as a result in the increase in demand for organic FV.
The third conclusion is what I’ve shared; naturally we see that organic FV buyers decrease their consumption of FV when something happens that motivates them to shift their demand to buying even more organic FV because they are more expensive than conventional FV, so they can afford to buy fewer.
Q: Once your paper is published, what will happen next in terms of it being able to influence policy agenda in the US?
A: Well, that’s a great question. I used to work at the USDA, and I have collaborators there with whom I still work. This paper is preliminary work, and I hope it will help to inform future research that will, in turn, be able to provide more specific policy guidance, eventually.
Q: Will there be a follow-up paper?
A: I do think so, yes. Probably, we’ll try to follow this research with some more detailed analysis of the effects that I’ve talked about. I feel there’s a need to do more careful analysis of the substitution between organic FV and conventional FV because it’s been about 15 years since the organic regulations came into force in the US, and a lot has changed in the market since then. Organic demand continues to grow stronger, and there are more products out there labelled organic. The existing research needs to be updated to reflect the modern realities of the produce market.
Q: Given your research and findings, what actions do you recommend that fresh produce executives should take?
A: I hesitate to be prescriptive, but it’s important for executives to recognize that marketing activities and promotions may not only have effects on the product line that’s being promoted but also on demand for other products. Also, it’s important to use data analytics (the tools that economists use) and statistical analysis that we refer to as ‘econometrics’ (or market analytics) to be able to better anticipate what the overall effects might be of promoting one line on the overall company bottom line, and the industry-level implications also.
Q: Overall, what do you hope attendees will learn from your presentation this year?
A: In terms of inspiration, I hope that I will be able to continue the conversation I’ve been having over the past few years at the New York Produce Show about the importance of the produce industry for health, and to continue the conversation about social issues associated with diets in general.
The research is intriguing, and we are looking forward to digging deeper at the show.
We have a few preliminary thoughts:
Although it may be true that an individual can substitute organic for conventional or vice versa, at any given moment, that is not true for the populous as a whole. In other words, if this season there are a nine million cartons of conventional pears and one million cartons of organic pears – that is it. No matter how high demand might be for organic pears, there is no substitutability because there are no more organic pears. Obviously, if people come to believe pears can cure cancer or improve one’s sex life than, like tulip bulbs in Holland of yore, the price of organic pears can skyrocket. But whether pears sell for a nickel or $50 – at the end of the year, in our example, 10% of the pears sold will be organic, 90% conventional. There are no other pears in the world and, as such, no increase in love for organic pears can lead to an increase in consumption of conventional pears at any given moment in time.
It is important to recognize the role of produce retailers as the gatekeepers in what consumers have the option to buy. On a low volume item, a retailer can decide it does not wish to take up two slots -- one for organic and one for conventional. Whereas the typical conventional consumer will eat either organic or conventional, since the passionate organic consumer is only willing to buy and consume organic, many a retailer will decide to only sell organic leeks, herbs or some other low volume item. So, the sales statistics for organic do not directly give much of a picture of consumer demand for organics. Think of the fact that Coca-Cola is certified Kosher. Because Coke does not have pork, shellfish, mix milk and meat, etc., it is easy to certify Kosher. So, Coke does this. But it would be foolish to point to the enormous amount of Coke consumed and say look at how big the demand is for Kosher food.
Attention must be paid to the impact promotions may have on the remaining, non-promoted, product. The research seems to suggest that higher prices for organic (driven by the economist’s perception of demand, meaning a willingness to pay a higher price) could lead consumers to buy more conventual. First, I refer to Point One above — there is no “more” conventional at any given point in time. So, this is impossible. Second – even if there was more, the reason why consumer demand (in an economist’s sense) increases is likely to be very relevant. If the organic demand increased because it came to be believed that eating organic will make you rich, because of some positive element non-disparaging to conventional produce, this might have no impact on conventional produce sales. But if the reason the demand for organic produce increases is disparaging to conventional — say that people are told that conventional produce is bad due to pesticides and organic is good — then the same forces that cause an increase in demand for organics could well cause a decrease in demand for conventional.
It is important to remember that produce is not a closed-loop system. That is to say that if one enjoys an organic piece of fresh fruit for dessert each day and the price goes up, one could switch to conventional – but one could also buy frozen, canned, dried or decide to eat ice cream instead. Many people have decided to give up a daily Starbucks to pay off a credit card debt or save for a vacation. So, the relative value consumers place on things makes it difficult to know where their money will go if the price of an item rises. It strikes me that this makes this kind of calculation exceedingly difficult.
Of course, the best research always leads to more things to research!
Understanding the role that rising demand for organics may play in the future of the industry is very important, so please join us and join in this meaningful discussion with Professor Bovay.
You can see the website here.
Let us know if you need a hotel room here.
Please register right here!
Looking forward to seeing you in New York!
Jim Jefcoate did a great job moderating our “Fast Forward to 2029” panel at the Global Grape Summit earlier this year in London. So, we asked him to come to New York and bring his crystal ball with him to discuss one of the most crucial issues in the produce industry — the rise of discount retailing.
Retailers look to the UK and Ireland, see market share numbers of 10 percent plus and wonder if the big UK supermarket chains, knowing what they know now, would handle the entry of Aldi and Lidl into the market any differently.
Put another way, was the loss of market share to discounters inevitable or was it an outcome that better strategy could have avoided?
The very week that The New York Produce Show and Conference is being held, Lidl is opening a new store on Long Island signifying its expansion into the New York Market following its earlier acquisition of 27 Best Market stores.
Aldi is in the midst of a five-year $5.3 billion dollar investment plan in the US.
Other types of discounters are also growing; for example, Dollar General just announced it will open 1,000 new stores next year.
Now all this must be kept in perspective. The US is a big market and these are small stores. We would estimate that those 1,000 new Dollar General stores won’t, collectively, account for a quarter of 1% of the US Grocery Market.
But growth is growth, and retailers need strategies to make sure they don’t lose market share. Growers and shippers need to develop a strategy to capitalize on these growing markets.
Jim Jefcoate, having working on the buy and sell side, is ideally situated to use the UK and Ireland as a case study on what may happen in America and how both competitors and suppliers can act to improve their situation. We asked Gill McShane, Contributing Editor at Pundit sister publication ProduceBusinessUK.com to find out more:
(Former Senior Director of Fresh Food and Manufacturing for Walmart)
Spalding, Lincolnshire, UK
Q: Jim, you’re well-known within UK fresh produce circles for being a fresh food supply chain specialist, with over 30 years experience in procurement, supply chain and quality management strategies. During that time, you’ve held senior technical positions at Asda, Fesa UK, Del Monte Fresh Produce (UK), International Produce Limited (IPL) and Walmart. For the purpose of introducing you to any of our US or international readers who may be unfamiliar with yourself, could you quickly summarise your produce career and retail experience as a way to frame the presentation that you will be delivering at the Global Trade Symposium 2019?
A: Over the years, I’ve been hopping from retail into the vendor side and back again. I started off with Asda in mid- to late-1980s, working as a quality inspector in their fresh produce depot, before Asda had general centralised distribution. Then, I became Asda’s first produce technologist, focusing on food safety and compliance.
Eight years later, I jumped the fence to what was then a small fruit importer called Fesa UK. I was the technical manager, again looking after the same areas, plus I was the technical contact for all the retailers. After that, I moved to Del Monte Fresh Produce in the UK to work in a similar role as the interface for the retailers but also the interface for Del Monte’s production side.
In 2005, I moved to IPL, which at the time was independent of Asda and Walmart. When they took the option to buy IPL in 2009 I became part of the Asda and Walmart family. Around 2011, I spent 15 months in the Asda team as their technical director.
Subsequently, I came back to IPL for three years as group technical director before moving into what Walmart calls ‘upstreaming’, looking after manufacturing sites as the senior director of upstreaming, and, later, as the senior director of fresh food and manufacturing.
Q: It’s fair to say that you have a very good grasp on the UK retail market and its mechanics to be in a position to share some valuable insight for attendees?
A: Yes, what I’ve always found quite interesting is looking at the retailer relationship with public perception and the media. The tabloids in the UK are probably as aggressive as any media in the world, so looking at the stories coming out while having a better understanding of what’s going on in retail is always interesting. Also, I’ve watched the rise of the discounters, and witnessed the reaction at Asda, as part of the Big Four, along with Tesco, Sainsbury’s and Morrisons.
Q: Of course, at The Global Trade Symposium, you’ll be speaking about the rise of discount retailers, using the UK as a case study for what other markets, especially the US, might expect in the future. Can you give our readers a sneak preview of how your presentation will unfold, and the key topics up for discussion?
A: I’ll provide some background to UK retailing, and the history of the discounters Aldi and Lidl, before discussing retail performance in the UK over last 30 years. The second half of my presentation will look at what’s changed in UK retail; concentrating on the economic crisis and consumer trust in retailers. Also, I will explain the success factors of the discounters; their corporate structure, product range, store operations, value chain, suppliers, and marketing. Then, I will look at what I believe to be the future challenges for the discounters. I’ll also look at the US market and its produce industry, before finishing with some parting thoughts.
Q: To put your subject into context, can you describe what has happened in the UK with regards to discount retailing, and why?
A: There have been all sorts of things written about why the discounters, Aldi and Lidl, have been in ascendency in the UK, and some of it is very valid but there are other factors that tend to be overlooked. A lot has been about price, coupled with quality, and value. But I think it goes a lot deeper into the customer psyche than that. I think a lot is around trust.
If you go back to the turn of the millennium, the British public was becoming more and more disillusioned with figureheads in British society. There was the perception of being deceived by politicians, with scandals like the claim about the existence of weapons of mass destruction in Iraq and the misuse of expenses among some Members of Parliament. Then there was the banking crisis, so the British public very much fell out of love with the financiers, as newspaper stories in 2010 reported on bankers awarding themselves bonuses again.
The Big Four retailers [Tesco, Sainsbury’s, Asda and Morrisons] got caught up in that too. There was the horse meat crisis in 2013, reports of people trafficking, and supplier abuse (which led to the Groceries Supply Code of Practice or GSCOP being set up) and, obviously, a very aggressive media reporting on all of this.
Generally, I believe the British public were just waiting for politicians and bankers to get a kicking, and, latterly, the Big Four retailers too. In the meantime, the discounters were steadily rising, and building more stores. I think a number of planets came into alignment… One of these was the issue of trust. The British public was waiting to lay into the Big Four retailers. Secondly, in the media there was a rise of reports about how to be thrifty with your money. Websites emerged like comparethemarket.com, and people like Martin Lewis of MoneySavingExpert.com fame were very much in ascendency, telling consumers to shop around, and, for example, to change their energy company for a better deal. The discounters were very nicely placed for this idea of: ’Let’s shop around for bargain’, and ‘Let’s stop ourselves from being overcharged’.
As this was happening, the Big Four retailers were taking a big hit on trust. Meanwhile, stories about the discounters in the British media were concentrating more on the bargain benefits to a more cost-conscious society, rather than on any horse meat or people-trafficking issues that the discounters may or may not have had in their supply chains.
Q: That’s an eye-opening analysis of the influencing factors at the time that contributed to the attraction of the discounters among British shoppers. Do you think Aldi and Lidl did anything in particular to further drive that interest?
A: Marketing has been genius by the discounters. Numerous television adverts have been extremely influential on shoppers by driving home the message that the branded products they already love are great, but the discounters’ products are just as good, plus they’re cheaper. There are three key elements to their ads; firstly, humour, which Aldi is very good at; secondly, they get the price message over to shoppers; and, thirdly, they get the quality message over. Then they keep repeating it for whichever product it might be.
Q: Do you think the emergence of heavily competitive discount retailers is a pattern that is happening, or will happen globally? Already, Aldi and Lidl have set up shop in the US… What trends in the UK are resonating elsewhere, or are likely to translate internationally?
A: There are a number of aspects in the retailer model that have allowed the discounters to be where they are, so retailers need to look at their model, starting with their corporate structure. They’re all privately owned, and this is very apparent in the UK. This means the discounters have been able to take the long view, more so than the others. Tesco, Sainsbury’s and Morrisons are all listed on the London Stock Exchange; they all have shareholders screaming about return on investment. Asda is a little different as they don’t get the hit from shareholders, although they do get it from Walmart executives, so the pressures are similar.
Retail traders prioritise three things on a continuous basis: like-for-like sales, market share and gross margin. The annualisation of these metrics is a huge focus for them because it’s a huge focus for City [of London] analysts, and, therefore, their larger shareholders. This means it’s a significant challenge for them to look much beyond 12 months, and to take the longer view that the discounters can.
Also, if you compare the Big Four to the discounters, their operating models are obviously different. On average, a UK discount store has 1,500 SKUs. The average Big Four store carries 35,000 SKUs, while the largest can carry 90,000 SKUs. So, just one SKU in a discount store equates to around 60 SKUs in the largest Big Four format. When you’ve got 60 times as many SKUs, it’s 60 times more difficult to maintain your availability, so actually getting the products on shelves. Then customers become disappointed with the range they were promised versus what is available on shelf. A lot of economies are gained in how the discounters operate their stores, and much of that is because they have a reduced range. You need fewer staff disproportionately to fill shelves with a smaller range because the SKUs do not get lost in the store back-up. In their supply chain, meanwhile, the discounters ask vendors for a really great price, with no extra requirements, so it’s very low maintenance.
The other factor is marketing. The discounters are pushing continuously the link between the quality and price of their products to improve the value perception, whereas I don’t believe that the Big Four’s advertising is as effective at linking the two. I think that this can be addressed easily by retailers in the US.
Q: What can retailers in the US and, indeed, worldwide learn from the developments in the UK in terms of competing more effectively with the discounters?
A: One thing is to look at smaller stores, and a lot of retailers are doing this now. But global retailers must remain very in tune with their customers. British shoppers have become more promiscuous. So, the question is: ‘Have, say, US customers become as promiscuous?’. Equally, you’ve got to bear in mind that the top nine supermarkets account for over 95% of the grocery shop in the UK. In the US, meanwhile, the top ten supermarkets account for only 52% of the grocery shop. There is a lot more headroom for growth in the US.
Additionally, I don’t believe that the Big Four’s strategy of using a lower tier (e.g. ‘Sainsbury’s Basics’ or ‘Asda Smart Price’) to compete with the discounters on price has been particularly effective. The three-tier proposition has been presented to the customer on the basis of ‘Good, Better, Best’. However, I believe that when a discount retail customer benchmarks these tiers against the single discounter tier, they perceive them as ‘Worse, Same, Better’. Even though blind taste panels repeatedly have put both mid- and entry-tier products from the Big Four ahead of the discounter equivalent on quality, the customer does not perceive this to be the case.
Q: To get a sense of how the discount channel operates, let’s look at their approach when it comes to fresh produce. How do discounters think about their fresh fruit and veg offering? Do they have lower quality standards, for instance?
A: Again the big differentiator is the range. I don’t think the discounters have a different approach on produce quality specifications; they just carry a smaller range. Although they’ve not got a massive fresh produce range, they concentrate on doing it really well. What they don’t do is try to go for a Class 2 product. The discounters very much procure to compete. But it’s easier to compete on quality and availability when you’ve got a narrow range. It’s also worth mentioning that fresh produce studies have shown that availability has a bigger impact on quality perception than it does in other categories.
Q: Do the discounters have lower food safety, sustainability, or traceability standards?
A: They tend to outsource the management of those standards. So, they’ll give food safety to a laboratory or certification body to manage. As the discounters get bigger, I’m not sure exactly how sustainable that will become. By comparison, the Big Four rely on significant in-house teams, as well as certification bodies who audit standards like the GFSI, GlobalGAP and Red Tractor.
Q: Are discounters more flexible about buying produce? For example, will they accept different sizes, or not carry an item if it’s scarce?
A: It doesn’t become as big an issue because their range is so narrow. Discounters are not under that availability pressure because they haven’t got eight different variants of carrots, for example. However, having spoken to a number of discounter vendors, they have said that the discounters tend to be more flexible on attributes such as size, but not to a significantly different extent to the Big Four.
Q: How do discounters feel about branding? Do they stock brands, or do they insist on private label?
A: Both Aldi and Lidl have exclusive brands, which, unlike the Big Four, do not carry the retailer’s name. We used to call these ‘tertiary brands’, rather than ‘own brands’. However, around 90% of the discounters’ range is covered by these brands.
In the UK, there are few fresh produce brands, such as: Florette and Rooster Potatoes, whereas in the US produce brands are a lot more recognised. Again, that’s one area where the US market is different. Where there is brand loyalty in fresh produce that may offer the retailers and those brands some protection against the discounters.
Q: How do discounters think about their vendor relationships; are these transactional, long-term, etc.?
A: They are no shorter-term than the Big Four. All the retailers try to develop strong partnerships with their vendors. But because the discounters’ ranges are narrower, they concentrate supply into a very small number of vendors. The big selling point for vendors into Aldi and Lidl is the simplicity of the relationship; you don’t need armies of agronomists and specialists.
Q: In what ways do Aldi and Lidl differ in their approach in the UK?
A: There is not a great difference between the two in the UK. Aldi, possibly, has a slightly higher percentage of own label. The one thing to mention, and, probably, it’s not as pertinent to produce, is we mustn’t forget that the discounters are backed up by very big organisations in Europe. They’re not just UK operations; they have German buying power behind them. I don’t think that translates into produce as much but, certainly, for their bargain aisle; that’s how they get some of their crazy deals.
Q: Can we expect mainstream retailers to enter the discount space? For instance, a year ago Tesco in the UK launched its own discount retail brand called Jack’s? Do you think it will be successful, given that fewer stores have opened than expected (only 10), and one store has already been axed?
A: What I believe Tesco is doing is piloting the concept. It’s too soon to say whether it will succeed or not. Tesco will keep trying things to see what works, and what they can learn. The millstone in the UK for the Big Four is that their largest formats (where they are seeing the biggest decline in customer traffic) are the most profitable. As you come down the scale to their convenience stores, they become progressively more margin diluting, with online being the least profitable. This is another planet that has come into alignment. The size of the discounters’ stores has appeared just as it became ideal for the change in British shopping habits.
One of the things that mainstream retailers are doing is cutting down the size of their stores, and franchising out floor space to make it more of a destination space (e.g. Argos in Sainsbury’s stores). The retailers will be doing more of that because there’s too much floor space. I think there will be some fairly tough questions around how much the Big Four are prepared to re-cut their models. They will have quite a challenge in selling a long-term plan to the City in order to convince analysts that they are turning around their ships.
Q: Can companies such as Walmart, Costco and Asda compete with discounters on price?
A: I believe that there’s scope for them to get closer on price, by looking at efficiencies in their store operations, and focusing the price match on the 1,500 SKUs that are equivalent to the discounters’ SKUs. Also, I think they need to look at how many tiers they should be using to compete. In their supply chains, they need to ensure that the discounters are not leveraging their volume. Some 94% of discounter shoppers also frequent other supermarkets. The Big Four need to work out how to recapture these customers. Shouting about their greater range and better quality, I believe, would have an impact, as well as improving availability through range rationalisation.
Q: In what ways have the discounters evolved since they set up shop in the UK, and where does this leave the mainstream retailers in terms of improving their competitiveness?
A: Aldi and Lidl haven’t changed much from their original model, which is very much their strength. However, both the founders of Aldi and Lidl have since passed away, which means that maintaining the ‘Founder’s Mentality’ becomes an ever increasing challenge, particularly as their size increases. Walmart has found the same challenge as the credo of the genius that was Sam Walton becomes an ever more distant memory. If the discounters start to stray too far from their founders’ model it could start impacting their growth. As an example, if discounters start opening up in-store bakeries, fish or deli counters on a wide scale, their operational costs are going to start going up. As the range increases, and the costs rise they could start to lose their point of difference against the Big Four.
Q: Is the success of the discounters likely to continue? I read that the German discounters are both opening roughly a store a week in the UK… What else can the Big Four do in the meantime?
A: Aldi is looking at operating 1,200 stores by 2025. Their increase in market share appears to be through store openings, rather than like-for-like growth, although we cannot be sure since Aldi is a Private Company. The discounters are growing into a market that has very little headspace, so something is going to have to give somewhere, whether one of the Big Four, or other supermarkets, fall by the wayside. Obviously, Asda and Sainsbury’s tried to resolve that [with their proposed merger] but they weren’t allowed. Personally, I think the discounters are going to hit a ceiling in the UK but I haven’t a clue where that ceiling is. It will be interesting to see the success that they have with their ambitious move inside the M25 [the London Orbital Motorway is a major road encircling almost all of Greater London].
I believe that British shopping habits have not finished evolving yet either. Don’t forget that the Big Four’s large store formats are not only losing ground to the discounters, but also to online shopping, even if it’s their own online service. I believe that online shopping will continue to eat into bricks and mortar market share, which could be the factor that curtails the discounters’ growth. Also, the one unknown, that I have avoided mentioning deliberately, is Brexit. Who knows how that is going to affect the dice roll…
Jim doesn’t know it, but he is echoing another ex-Walmart guy, Bruce Peterson, in pointing out the enormous difference in the behavior of public and private companies.
We wrote a lot of Tesco coming to America as Fresh & Easy, and it is fair to say that whatever the errors and whatever the problems, if Dieter Schwarz, the German owner of the Schwarz-Gruppe, which owns Lidl, had decided the group needed a US presence for strategic reasons, the company would not have quit. They would have regrouped, retried, relaunched until they found a successful formula.
Yet blaming The City or Wall Street strikes me as a bit of a cop-out. Many of our biggest companies, such as Amazon.com, have enormous stock market valuations despite little or no profitability. So, when it is said that the shareholders and analysts put pressure on companies to show short term profits, that is not exactly true. It is more that they put pressure on companies to have a believable strategy for success.
One thing that Jim reminds us of is that discount retail is in a sense more a procurer like foodservice than conventional retail. In foodservice, the purchases are highly concentrated on a few items — Potatoes, Onions, Tomatoes and Lettuce — so the challenge for most of the rest of the industry is to get on the menu. In a sense, the challenge for small store deep discounters is to get on the buy list.
The produce industry is extremely bad at this. The tendency is to sell what we have to sell rather than to engage in longer term efforts to get on the menu. One wonders how sales teams need to be reconfigured if many items are to get shelf space at these smaller format stores.
We remember when Dick Spezzano toured us through the new Vons Pavilions concept in 1985. (Now, among other things, he runs the student program at The New York Produce Show and Conference.) He explained to us the philosophy that the cornucopia of assortment the store offered in produce was a massive draw. While many of those items sold very little, it positioned the store as the place you could get everything, and it provided a halo effect of freshness and variety.
The philosophy has been falling out of favor for years with SKU rationalization ascendant. For better or worse, though, the hard-discount, small-store combination makes the variety strategy problematic.
By focusing competitive pressure on pricing of the high volume SKUs, it leaves little room for conventional supermarkets to burden those items with costs due to shrink and handling of a large variety.
Retailers have scrambled for answers, but our experience is that the multi-tier strategy that Jim Jefcoate critiques doesn’t work for two reasons: First, retailers are so afraid their good customers will trade down that they either don’t stock the low cost range or design the packaging to intentionally look bad or otherwise don’t actually want to sell the product.
Second, there is a psychology that is hard to beat. When one buys at Aldi or Lidl, one is buying whatever brand they sell. Everyone is equal. But when one buys the deep discount brand at a conventional supermarket, one is buying the “cheap-o” product, regardless of quality. Maybe self-conscious people think a neighbor will notice — at the store or even when they see the label in the house — or the cashier looks at them differently.
It seems like there is a tipping point. If a discount concept is seen as cheap, it may not be socially acceptable for many people to shop there, but at some point, things pivot and they become smart places to shop. Being seen as stupid and overpaying for things is not socially acceptable either!
In any case, the rise of discounters and what it means both for competitors and the supply chain is a very important issue.
Please join us at the Global Trade Symposium and The New York Produce Show and Conference to help prepare yourself for this growing world of discount retailing.
You can register here.
If you need hotels let us know here.
The Global trade Symposium website is here
And The New York Produce Show and Conference website is here.
Come be a part of the change! See you in New York!
We already know that altering the environment can change the nutritional value of some items. For example, the use of UV-B light can enhance the Vitamin-D content of mushrooms.
When we learned that a team from Rutgers was working on a project that might allow us to alter the taste of produce items, especially those grown in controlled environments, we were intrigued. We asked Gill McShane to find out more.
Doctoral Candidate in Food Science
New Brunswick, New Jersey
Dr. Beverly Tepper, Ph. D.
Co-founder and Director of
Center for Sensory Sciences
& Innovation (CSSI)
New Brunswick, New Jersey
Q: Regina, at the New York Produce Show you’ll be giving a talk about controlled environment agriculture (CEA) and the flavor profiles of leafy greens grown using this method. What will be some of the key points you’ll be discussing?
A: My talk will focus on how we can use controlled environment agriculture as a tool to help us understand how we can improve or amplify some of the flavors that are in the leafy greens in order to make them more flavorful and potentially more nutritious.
We’ve been working with AeroFarms, and they’ve manipulated the growing environment to understand how growing conditions are affecting the way the greens taste, because there's a lot of research that's based on leafy greens grown in a field.
When you're growing something in a field, there's a lot of variability in the environment; there's not a lot of control there. Most of the research studies that have looked at the growing environment and its effects on sensory characteristics are not necessarily controlled.
Q: And how long has this research been going on with AeroFarms?
A: We actually have a grant where we are collaborating with AeroFarms. The grant was awarded in 2017, so we're at the end of year two right now.
Q: Okay. What are some of the more enlightening findings that you've had so far?
A: If I can speak generally, we’ve found that you can amplify or you can kind of dial down some of the flavors that are in the greens. You’re not necessarily changing the entire profile of the leafy greens, but you can manipulate how the flavor is either enhanced or subdued.
Q: Is that independent of the actual varieties and the seeds of the leafy greens you’re dealing with?
A: We're seeing a kind of interaction. Depending on what part of the environment they're changing, that's going to have different effects on different types of greens. So not every single type of green is going to respond in the same way to an environmental stress.
Q: There’s also the sensory testing element of the work you’re doing. How is that being done to find that discernible difference of flavor? And are consumers involved?
A: The testing that we're currently doing is not necessarily based on consumers’ liking of it; it's actually based on training a group of people to become very specialized in determining the different flavor profiles within the greens.
They're able to pick up on things like spiciness or bitterness that are present in the greens. They're just looking at intensity right now. We are doing some consumer testing where we will look at consumers and see what their reactions are to two different types of greens… if they prefer maybe one variety over the other, or one profile over the other.
With the consumer testing, we’re not just looking at whether or not they like things, but how it's influenced by their personality and how it's influenced by their genetic response to bitterness. Through that, we're doing something called PROP testing. PROP is a chemical that some people can taste and other people can't taste. So that has been shown to influence people's eating behaviour and influence their liking of different vegetables.
Q: That’s fascinating. So, you start with your trained taste experts who are in-house, and then you go a bit deeper and get consumers involved.
Q: What are the bare basics of that training process so that you can train people to develop finely tuned palates and a better understanding of different flavors?
A: We’re using a technique that's pretty common in sensory science. It's called descriptive analysis. So you recruit a group of maybe 12 to 15 people, and they go through a several month-long training process on all of these specific flavors. You can do this kind of training with any food, but, of course, we're doing this with leafy greens.
They’re given a reference to help them understand what the different flavors are that are present. They really do this through discussion; they're working as a group to identify what the whole profile is of the food that they're working with.
Q: And what’s the plan for consumer testing? When is that going to be kicking off?
A: I’m glad you asked. Actually, we’ve just started some consumer testing. We’re doing a short study first and trying to do almost like a proof-of-concept kind of study, and then we'll move on and have a larger group of people that's maybe more representative of the actual population.
Q: You mentioned how people have different responses to bitterness. How can produce marketers or retailers work with that information?
A: It can be used by marketers, and we are looking at demographic information as well. It could potentially be used by marketers to understand the different consumer segments that exist and what types of people like specific types of greens.
Q: In the course of your work with AeroFarms and the sensory testing, what have been some of the biggest challenges along the way for you?
A: One of the things that's really difficult is the fact that these are natural products that we're working with. All of the greens kind of taste a little bit different from each other. When you get a shipment of greens, you might have different leaves that taste differently from each other. So natural products are a challenge to work with for sure.
Q: Looking at the actual controlled environment agriculture, now I know there are limits about what you can say about specific aspects of the testing, but could either of you go into a little bit of depth about the kind of elements that can be altered in the CEA space to change flavor?
Beverly: Broadly speaking when they modify various controls in this type of agriculture, they're talking about abiotic stressors. This could be changing something about the light regimen, changing something about the nutrient regimen, and so on.
Q: And water, for example.
Beverly: Yes. We have some very specific conditions that AeroFarms has manipulated in this project, but it's along the lines of water, light and nutrients. They really tightly control the environment: the humidity is controlled, the temperature is controlled and all of that.
Q: I'd like to get to the bigger picture about why do a test like this and ultimately what is the overall objective? How do you think the impact will be on the produce sector, on retail and consumers?
Beverly: We are often asked that kind of question, and I would answer it this way: sensory testing is very well developed in the food industry, particularly the food processing industry. There is a sensory analyst, sometimes a sensory group, that works with product developers to bring new products to market to make sure products are consistent and so on.
Every technique that the sensory scientist has can be used for that purpose. I am a scientific editor at Journal of Food Science, and what I've been seeing lately is many more projects working with natural products — produce — where breeders and scientists try to develop new varieties.
Instead of just taking a shot at it and breeding what they think is good and bringing that to market, they are using some of those same sophisticated techniques of sensory testing to help or to develop a strategy to bring these products to market.
I've seen this happening with, for example, kale, with arugula, with grapefruit and other citrus fruits. They're using very, very sophisticated techniques hand-in-hand with breeders, growers and producers, to get the best products out there.
So, it's really utilizing a series of sensory tools that have existed for a long time, but utilizing them in this space to add value.
Q: And it's funny because at the end of the day, it's so much work yet the consumer probably doesn't realize it.
Beverly: Exactly. It should look like it just showed up on the shelf, but there's actually a lot of work that goes behind developing that variety with the hope of success.
It is commonplace today to hear people say that breeding has traditionally been done with grower concerns in mind: yield, storage, ease of transport etc. and that flavor was neglected. This is true, though somewhat overstated. Afterall, if anyone believed that consumers would pay a premium for a certain variety, then lower yields, lower storage capacity, etc., would have been acceptable. The complaint, maybe better stated, is that in breeding there was not a good system for evaluating what consumers would or would not pay for, but it was pretty easy to judge what farmers would pay for.
Even recognizing this and even changing this, it is very tough to use breeding to make produce more flavorful, and thus increase consumption. Indeed, we first got involved with the Culinary Institute of America and created the Ideation Fresh Foodservice Forum because we saw culinary technique as a way to improve flavor that would not take 20 years as it often does to develop and commercialize new varieties of produce.
Now Dr. Tepper and Ms. O’Brien are suggesting a third path – use the environment to change the flavor profile of the produce.
It is fascinating work with many important implications. Much of the produce trade’s consumption-improvement efforts are built around sweet fruit, but much of the nutritional value of produce comes from the more harsh-tasting greens. If we could modify that flavor, make it more appealing to people, especially children, we might really change health outcomes.
So, come join us in New York to review this fascinating research and reflect on the prospects it may hold for the future.
You can check out the show website here.
If you need a hotel let us know here.
And you can register right here.
Come to New York! Come and help #CelebrateFresh