The Pandol name carries a lot of history with it for the Pundit. Growing up, we remember the Pandol family and the Prevor family shared a shipper down in Chile and that, in the course of many friendly business dealings, we even had a PACA case that is still a key reference point in PACA law, helping to define how damages are calculated in many disputes. Mostly, though, we remember Jack Pandol as a pioneer in global trade who was a generous counselor to us during the early years after the launch of Pundit sister publication, PRODUCE BUSINESS. We memorialized Jack shortly after he passed with this piece.
Jack Pandol and his dad Jack
So as we prepared for The New York Produce Show and Conference and the inaugural Global Trade Symposium, it was a special treat that we could highlight a supply chain that starts on his son’s farm and leads to the fat of a consumer in London.
We’ve already highlighted what we are attempting to do with the Global Trade Symposium with pieces such as these:
This presentation epitomizes what we are trying to promote — seamless supply chain integration — and illustrates the way aligned supply chains can produce value above and beyond commodity shipping. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more. First Mira spoke to the American side of the deal:
Q: Could you tell us the back story behind your session at The New York Produce Show and Conference?
A: The real background briefly is that Grapery is a partnership between Jack Pandol and me, which was formed in 1989. He was an agriculture grower for a lot of years, and it dawned on him that as he gave his best fruit to friends and neighbors, the feedback was always how wonderful the fruit tasted. But then they would lament: Why can‘t we find this in the store? I was experiencing the same reactions.
That got us thinking of how flavor is of initial importance to consumers. In our dealings with customers, however, flavor is not the main focus. Except in rare cases, flavor is not the primary attribute when selling to the shipper.
Q: What can you do to fix that disconnect? And where does the process start? What are the tradeoffs? Do you have to sacrifice other product characteristics when focusing on flavor?
A: How do we make sure we deliver flavor consistently? Obviously, we have to stand by our product, and it requires an entirely different mindset. It goes way back to our breeding program.
Over the past 10 years, we rebuilt Grapery on the concept of flavor. Ten years ago, Jack started a local breeding program in Bakersfield, California. As a partner, one of the primary goals is to breed for flavor, and hopefully not give up size, yield, and shelf life issues in the process.
So a big part of that breeding for flavor involved the University of Arkansas, which had started a grape breeding program 50 or 60 years ago to develop a table grape industry in the Southeastern U.S. A lot of species native to the eastern U.S. are disease-resistant to grow in that climate, but also have thick skins, decay quickly and have severe shelf life issues. Familiar, traditional grape names were crossed with European species, but they never came up with something that worked well for the Southeastern U.S.
They decided to cross breed with varieties we grow here. Remarkably, we’re getting the flavors of those grapes, combined with seedlessness, thin skin and lack of acidity that we have in California. Cotton Candy comes directly from that cross breeding. We do a lot of crosses. We just found a taste that is exactly like eating Cotton Candy. When people taste it, their eyes get big and say it really tastes like Cotton Candy, and they can’t believe it.
Q: So you see great market potential, but what did it entailed to get that product on retail shelves?
A: Another big piece is the farming processes. When farming for flavor, it affects crop load and vine nutrition. You end up giving up some yields because when you over-crop, you can end up with less optimal flavor. There are tradeoffs, which require a different mindset for the grower typically bent on dynamic yields and low costs. It dramatically impacts farming practices. And the same goes for harvest. Actually it is more complicated at harvest because it’s necessary to retrain crews on how to harvest for flavor. All the crews, the foremen, and quality control people in the field every day carry refractometers to measure the sugar content of the fruit.
Q: Is there always a direct correlation between higher brix levels and better tasting fruit? Aren’t there other variables?
A: I used to grow wine grapes in Napa Valley, and we had endless debates on what does flavor mean… sugar is not the same thing as flavor but it’s a great indicator. We can’t just set high brix level and expect good results.
Every time we harvest we go out in the field and taste the fruit; here’s the color and maturity level that has the best flavor. Then we test for the sugar content that has the great flavor. It changes through the season with different varieties and variables in the field. If 22-brix fruit tastes the best, we target that level and train people in the field to pick that maturity level. We track pickers on how they’re picking fruit. Usually there are penalties for not doing a job right. We feel it is important to recognize and reward good performance.
Q: Do the tradeoff costs for flavor make it a harder sell on the wholesale side? And can’t taste and flavor profiles be much more subjective in a world where buyers are checking off a list of spec requirements?
A: It’s very complicated. If you have product tasting better, the next step is guaranteeing it. You’ve rebuilt your company, given up some yields, and now you have to earn a higher price for your product. So, it has to stand out, and retailers and consumers have to recognize it’s a better flavor. You have to put more money into packaging and a merchandising plan so consumers know it is better because they will see a higher price point. We have to do a good job on communicating the value.
Q: Cotton Candy grapes are uniquely novel, fun and recognizably distinctive in flavor. In this case, aren’t you starting with an advantage?
A: We’ve got the big Cotton Candy label, but even on regular varieties, we have our flavor promise on the bag of grapes across the top. Our promise is to grow the best tasting seedless grapes that you’ve ever eaten, with Jack’s contact information for consumer feedback. We supplement our product packaging with in-store signage and materials that tell a story about what we’re doing.
Q: But getting it on the retail shelf is the first hurdle… Earlier, you described the challenges of changing the mindset of buyers. Are you finding retailers receptive?
A: Our relationships with retailers and distributors are a critical component. We need to shift gears to the implications for the industry. When we grow out of flavor, we take on risks for the supply chain. When we harvest for flavor, we pick at ripeness. Product tends to be higher color. Maybe on green grapes, there is yellow in them and they will tend to shatter. Retailers don’t like to risk shrink. We hear from retailers that want rock hard fruit, bright colors and no shatter. I can grow those but they won’t taste good but those are the specs we get from retailers. They’re looking at price and shrink and what you can measure. It’s hard to measure taste.
Some varieties are going to taste awful at 22 brix, others great. Depending on the time of harvest, it’s really hard to pin down how to talk about flavor. How do buyers tell their quality control department that it will have higher color than in our specs and more shatter but will taste better?
Q: What can you do to alleviate these concerns? How do you make the case that the benefits outweigh the costs?
A: We get flooded with emails from consumers, saying, wow, I never email companies but you have the best tasting grapes I’ve ever eaten, and so many times they don’t taste good. We don’t get complaints that there was too much shatter or they were too ripe. It’s a sign flavor is so important to consumers. When the industry is only driven by shelf life and price, we miss out on sales and risk disappointing consumers.
Retailers cannot differentiate with dry goods on the shelf, only with perishable products. Fresh products make them stand out. We get emails from consumers asking, “Where can I find your grapes?” That’s pretty powerful for retailers because it’s a competitive business.
The dilemma for retailers is they’re also taking on risk buying my product. Will they have fruit that doesn’t have as long a shelf life? They lose money when they have shrink. It’s important to have fruit that can last on the shelf. It’s a big hurdle to get over.
Every time I talk to a buyer and large buying organization, they say, I understand how the product would be fit, but how do I go to my boss and justify the higher cost? Why should I put my job on the line when I’m judged by the price I buy. It only works if it’s a great flavor product so retailers can charge the premium and turn the product around fast, and it can be a point of differentiation.
It takes a whole different approach to buying. It requires different types of partnerships between growers, retailers and others in the supply chain. We’ve done things focused more on wholesale. Here’s an opportunity to satisfy the consumer, to shift the focus to what the consumer wants.
As a farmer, I’m subject to weather and all things that can happen in the field. I’m not always able to predict when fruit is at peak flavor, and sometimes I have fruit that doesn’t make that grade. Sometimes it can be pressure if the retailer wants to do promotion of my grapes three or four weeks out. A big promotion with print ads, merchandising in stores, and end cap displays, really takes planning on the retailer’s part. The worst situation we can get into is all promotions are in place, pricing is in place, and three weeks later cool weather hits and fruit doesn’t ripen as fast. Pressure mounts to pick product when it’s not quite at its peak. I have to be disciplined not to give into that pressure. And as a shipper, say there’s a rain coming and I have fruit that will be exposed and I need to pick. I have to be disciplined not to put that product in a flavor-promise package and sell it. I need other outlets. I don’t know how we get around that, it would be great to get retail feedback.
Q: Are you partnering with any retailers that are willing to embrace your flavor mission and the risks that come with that because they can envision the ultimate payoff? What feedback are you receiving on Cotton Candy grapes?
A: Our partnership with Mack Multiples to bring Cotton Candy grapes to the UK exclusively through Sainsbury’s is a case study of what happens when a customer gets engaged. Both companies have been very committed to what Grapery has been doing for years with our breeding program.
Mack Multiples has come and visited many times to see what’s happening. When we have very small volumes of a new product, we’ll send a sample box and they’ll put it in test kitchens and evaluate flavor selections and what would fit to do a program like what I’ve laid out. It’s taken years of developing relationships and experimenting and following through. It involves a little trial and error of what works and what doesn’t. We did a great job of coordinating harvest timing and packaging for their market.
Q: Did the marketing effort change to accommodate cultural differences in the UK? Is Cotton Candy more of an American pastime?
A: Cotton Candy is called Candy Floss in the UK, so our Cotton Candy grapes are marketed as Candy Floss-flavored grapes across the pond. It was a very well-coordinated, planned-out media campaign leading to a flurry of publicity on daily T.V. talk shows, in all the newspapers and online blogs. They did a really good job on how they launched the product. Sainsbury’s ran a big promotion.
Q: Was this a test run? Did you have enough supply to cover the demand? When will Cotton Candy be more commercially available and in what quantities?
A: In terms of the lifecycle of Cotton Candy, we saw the variety and breeding program a few years ago, planted root stock for a trial of four rows. Last year it fruited for the first time. After seeing the fruit last year, we got very excited about it. We had great responses.
We test a lot of varieties and sometimes they fall flat. I have a grape that tastes like a grape lollypop, but as soon as I pick it, the product falls apart, while other hopefuls turn brown. So many things can go wrong.
I’m still learning yield levels on Cotton Candy. This summer we planted our first commercial plot of Cotton Candy that won’t be produced until Aug 2013.
For the UK program, we picked the fruit in late August. There was enough quantity to cover the top stores throughout the Sainsbury chain.
If people are interested in Cotton Candy, they need to understand there won’t be a whole lot available until 2013. Then we’ll have good availability and we’d like to partner with select retailers that do a good job of promoting it.
There’s a lot of room for me to grow my business and retailers to do well. Smaller regional retailers that would make a lot of sense for me to work with. What’s really exciting is to see the level of turnover in stores when selling flavor. It changes the dynamic of how much fruit you can move through a retailer.
Black grapes are about five percent of U.S. retailers grape sales, not a big volume item. Most retailers will buy a load to mix in. I have a retailer that was selling a box of black grapes a day, but put our Flavor-Promise black grapes on the shelf and sales spiked to 14 boxes per store per day. If you look at how much volume can increase if consumer demand is there, changing the industry mindset to a flavor proposition becomes extremely compelling.
Q: Do you think all those extra sales are incremental? If consumers jump on Cotton Candy grapes, how does that affect the rest of the category and other produce department sales?
A: I don’t know how to predict Cotton Candy. If it’s cannibalizing other products, retailers don’t want that, but if it’s creating excitement and repeat customers, there’s a very strong argument for increased consumption, and not just trading one volume for another. If you can get something in front of kids they would want to gobble up instead of sour grapes or a mealy apple, it’s really powerful.
It’s a rich and complex issue that I’m passionately pursuing. Jack and I are very hands-on and make all the key decisions together. My vision for the industry is to develop partnerships like the one we have with Mack Multiples and Sainsbury’s. This program is a case study of how a relationship should work.
We harvested the first Cotton Candy in August; I’ve hidden a few boxes away and I’m hoping we’ll have fruit at The New York Produce Show and people will be able to sample it. Having the opportunity to taste the product will make a huge difference.
Then Mira reached across the pond to speak with the British side of the equation:
Q: Could you tell us more about your collaborative effort to bring Cotton Candy grapes to the UK? How does this program fit within your company strategy?
A: In contrast to the U.S., flavor is already a major driver in the UK, so we’re trying to develop that by finding new varieties of produce… and in this case grapes. All the great breeders, or most of them, are in the U.S., so we started our relationships there, looking to what’s new. We’ve known about Grapery’s work to innovate on flavor for quite some time, but within the past five or six years, the whole thing set off.
Grapery is doing the growing of the product, so it’s all through Jack Pandol and Jim Beagle’s company. Going forward, we’re looking at working together on more varieties, developing select UK licenses on their behalf and to secure what we need for the UK market.
Q: Could you talk more about the arrangement you formed for Cotton Candy grapes? Jim Beagle mentioned that in the UK Cotton Candy is actually called Candy Floss with an equivalent flavor profile. What was your reaction when you tasted it?
A: Cotton Candy grapes have a unique flavor that is completely different. No other grape is like it. In the UK, exclusive licensing agreements are usually split either on variety or by retailer. In this case, our arrangement is exclusive with variety and with Sainsbury.
Q: How did you launch the product? Was there a major marketing effort?
A: We had an article published in one of the trade publications in the UK, and it grabbed people’s imagination. The story was picked up by the consumer print media; it ran in national newspapers, and then on a daily national television program. It was very well received. We monitored activity on the Internet, which was quite intense.
Q: Were you surprised by all the attention it received?
A: Largely speaking, it’s not unique for the press to pick up on a story like this; it’s certainly not the first time. But usually it happens with negative press. It’s more unusual to make noise about it with positive press. We have quite an active media, but the catalyst was our press release, and then the TV picked it up, which exposed the news to a wider consumer audience.
Q: How was it marketed and merchandised on the retail floor? Were there any special promotions?
A: We were working with very limited volume this year because there were just a couple hundred kilos produced. The way retailers in the UK arrange product is by categories of good, better, best. Best would be the exclusive top tier line. Taste the Difference is Sainsbury’s trademark for its best line, and basically the Cotton Candy, or here in the UK Candy Floss, was available in that range for a couple of weeks. We restricted it due to volume for the late August time frame.
This year, we didn’t do a separate display because of the limited volume. It was handled as a sub brand within the grape section, displayed in a special packaging and format and its own unique label. We gave as much theater on the shelf as we could.
We’re a supplier to Sainsbury, but don’t get involved with merchandising in general. In the next two to three years or so, we look to develop marketing programs to boost excitement before it gets to store.
Q: How unique is an introduction like this in the produce department?
A: It doesn’t happen very often that we come upon such a different variety we can market. Things aren’t different enough. A product really has to be significantly different to receive this kind of attention. This is one of a kind.
Q: What was your reaction when you first tasted it?
A: Strange because it’s so different. You don’t feel like you’re tasting grapes, which have a fairly traditional profile. It really does taste like candy.
Q: What do you envision in the future with Cotton Candy grapes? Is this a one-hit wonder, or is there a way to replicate this excitement going forward? Do you have any prospects in the pipeline?
A: The promotion was a success. We were very pleased. We hope to enhance our partnerships with steady new varieties coming through. Certainly, Cotton Candy will become bigger, and then we’ll have Cotton Candy versions two and three. We’re looking not only at flavor, but the shapes of grapes. There are a lot of exciting new things in the development stages.
Q: As we began this interview, you noted that the UK market puts a greater emphasis on flavor than in the U.S. How did this contrast evolve?
A: In the UK, we’ve gone through the phase where produce was bred for aesthetics and volume. UK consumers got fed up with that, not just with grapes, but across categories. It resulted in a push to get flavors back in everything. Tomatoes are the best example. Category sales are huge now because of the move away from the traditional watery tomato to a vast range of flavorful varieties.
The change was not immediate. There was an eight- to ten-year process with new tomato varieties coming through. The problem is things don’t happen fast in produce because of the breeding process and the complications to get a new product to market.
We try to do everything, and can’t base our business on one aspect. Some consumers want flavor with top premiums. Varieties are dropping into different spheres, and there is a price tag associated with them. The market is definitely there for premium products but many consumers can’t afford them. Our overall goal is to improve the flavor of produce across categories. We do fruits and vegetables as well, generally with the same kind of work on flavor developments.
Q: For attendees of The New York Produce Show and Conference, what would you like them to take away from your presentation?
A: Hopefully by following what we’re doing in the U.K., it will inspire opportunity to change the U.S. market. Flavor is often a secondary consideration, and here is a chance to drive the whole market forward.
For some retailers, at first they won’t jump on board, but for a premium northeast retailer, there is an opening to do something different with an American company and with people doing all this great work on your doorstep… well they might be in California, but on your doorstep in spirit.
I’m on holiday now in a great American institution, Disney World in Paris with my family, but look forward to my visit to another great American institution, The New York Produce Show and Conference!
It is a fascinating story in many aspects.
First, it should give many U.S. retailers pause. These grapes were available in very small quantities this year. Why in the world should they have made their way to the United Kingdom? Is U.S. procurement often kind of passive, waiting for a presentation rather than reaching out aggressively to find new and exciting things to offer consumers? Were American retailers not willing to pay the premium needed to secure these grapes? Were American retailers not flexible enough to work these grapes only in select stores while volume is thin?
We spent a few days over the years watching the first cherry harvests fly off to Japan, whose buyers had paid up front to secure the fruit, while American retailers let them go. We think there is enough in this story to cause retailers to reassess buying practices.
We give a salute to Sainsbury’s and Mack Multiples for doing their job and being proactive about finding what best suits the consumer.
Second, despite the focus on the novel taste traits of this grape, this story shows that proprietary varieties all by themselves are not the answer. You can mess up the quality of any variety by picking it when, in Jim Beagle’s example, the retail ad campaign is about to break, rather than when the fruit is ready. You need an aligned supply chain in which all parties – in this case The Grapery, Mack Multiples and Sainsbury’s — are in accord on the primacy of flavor.
Third, this focus on an alignment of values has implications beyond flavor. It is the precise value that is necessary to produce food safety, sustainability, economy — any value at all.
Fourth, also at The New York Produce Show and Conference this year, there is a special program titled the IDEATION FRESH Foodservice Forum, and working with institutions such as The Culinary Institute of America and Keynote Speaker Farmer Lee Jones, the focus is on identifying practical ways the industry can move consumption toward the half a plate that the USDA has idealized on a health basis.
The key focus coming out from this search: Innovation, Flavor, Quality, Cooking and Communication. Innovation to excite people, flavor to make each bite deeply satisfying, quality to avoid disappointing people, cooking to make each item as good as it can be and to provide variation so people can enjoy the items at various meal times and, finally, communication so that both consumers are aware of the item and its attributes and so that the story of the item can enrich the experience.
The big question is how do we take these ideas and values and scale them. Cooking aside – although as volume increases there is no reason they can’t use these grapes to create unique pastries, etc. — the story of the Cotton Candy grape is really an attempt to stay true to these same values on a commercial scale.
Fifth, our biggest concern is that the industry is putting too great a burden on flavor. When Jim Beagle says “It only works if it’s a great flavor product so retailers can charge the premium and turn the product around fast, and it can be a point of differentiation” – he is undoubtedly correct. Maybe, though, we need to rethink. Should the normal offering be “rock hard fruit, bright colors and no shatter”? In other words, fruit selected for appearance and retail risk-reduction, not flavor or long term consumer satisfaction.
One wonders if, in the future, some retailer won’t be able to build a reputation whereby its norm is to provide innovative, top quality, flavorful fruit?
We are very much looking forward to this presentation and hope to have an opportunity to find out.