Sometimes a corporate announcement raises issues of broader industry significance. So it may be with this pronouncement made at the United Fresh convention:
THE SHOLL GROUP II ANNOUNCES SALE OF LICENSING RIGHTS OF GREEN GIANT FRESH BUSINESS TO GROWERS EXPRESS, LLC
The Sholl Group II to Focus on Green Giant Fresh Value-Added Products
The Sholl Group II announced today the sale of the licensing rights, including the marketing and distribution rights, of its Green Giant Fresh commodity produce business to California-based Growers Marketing, LLC, an affiliate of Growers Express, LLC, which was formed to be the operating unit to manage this venture. The key element of the transaction is the Master Trademark License Agreement with General Mills, Inc., the owner of the Green Giant brand, for fresh produce. Potandon Produce, LLC, is not involved in this transaction.
The Sholl Group II will continue to offer Green Giant Fresh value-added products under a new sub-licensing agreement with Growers Marketing, LLC. The company’s current co-packing agreements, key employees and extensive network of regional processors will remain in place with no interruption in service expected. The Green Giant Fresh valued-added line includes:
• Green Giant Fresh Steam Line consists of vegetables with chef-created sauces that come in a unique steaming bag which allows consumers to steam them perfectly in a microwave in about two minutes;
• Green Giant Fresh Stir-Fries, fresh vegetables with delicious sauces already included in sauce packets so consumers can choose how much sauce they want to use and they have the flexibility to add chicken, shrimp or beef;
• Green Giant Fresh Cut Vegetables, fresh cut vegetables in a steaming bag, making it easy for consumers to create their own vegetable trays, mix into salads, add to pasta, or eat on their own; and
• Green Giant Fresh Patio Grillers, grill kits complete with fresh cut produce, chef-inspired sauces and a recyclable, no-mess grill tray.
All Green Giant Fresh products can be found in the produce aisle of grocery stores.
“The Sholl Group team has increasingly turned its attention and efforts to developing a value-added Green Giant Fresh business. We recognized that Growers Express, a long term important part of the Green Giant Fresh commodity business, would bring increased focus to the licensing business,” said Jeff Sholl, founder/president/principal owner of The Sholl Group. “Growers Express has proven strategic strength, leadership and expertise in the fresh produce business. They know and understand the entire fresh produce business cycle, from farm to retailers. We expect a smooth transition and look forward to working with them in this new capacity.”
“We are excited about this opportunity to work closer with all of our Green Giant Fresh partners as well as our respective customers to further develop this brand which has one of the longest and most respected legacies in the retail sector,” said Jamie Strachan, CEO and president of Growers Express, LLC. “We have been very proud to be a licensing partner of Green Giant Fresh branded products, and we look forward to further leveraging our fresh produce expertise. Our organization is well positioned to grow the Green Giant Fresh line of products and leverage the tremendous brand equity of the Green Giant brand throughout the fresh produce category.”
Woody Johnson, a longtime veteran of the produce industry and senior vice president of Growers Express, LLC, will serve as general manager of the venture. Johnson brings more than 35 years of industry experience, including key management roles in fresh vegetables, tropical fruits and value-added produce.
We wish Jamie, Woody and all the owners and associates at Growers Express well with this new acquisition as we wish the folks at The Scholl Group II good fortune now that they are free to focus more closely on their value added business.
For the industry, however, the significance of this acquisition speaks to two real questions of industry interest:
A) What is the future for non-transactional produce companies, and
B) What is the future for brands that transcend fresh?
In this situation, Growers Express was already accounting for the bulk of the sales covered under this license (Potandon has a separate license covering potatoes and onions). This made Growers Express lead dog in every joint promotional effort. It also gave Growers Express the interest and motivation to try to get cooperation from General Mills.
In a sense, the taking on of the role of Master Licensor by Growers Express is a rejection of the non-transactional model. Growers Express is a seller of produce and, obviously, believes its heft in being the lead seller under this license gives it added ability and motivation to add value to this license.
What is unclear is whether this finding is speaking to this particular agreement or to non-transactional produce companies as a whole.
When companies franchise restaurants, for example, the typical model calls for the franchisee to pay two separate fees: One is to the franchisor and is the franchisor’s to use for funding his responsibilities and profit. There is also a second payment going to an entity to fund advertising and marketing. Often the advertising funds can be managed by a franchisee board.
In contrast, most of the licensing fee arrangements in produce have no such requirement. So, if there is going to be a booth at a major convention or advertising in trade media, for example, it requires a negotiation between the licensees on different commodities. These negotiations can be cumbersome and the different commodity licensees will likely have different attitudes toward marketing and promotion. In general, these obstacles lead to less coherent marketing than might be desirable.
Growers Express, working with a pre-existing license, is moving to make it more valuable by seizing leadership. One wonders if future licenses could be structured differently so as to ensure a more uniform and comprehensive marketing approach.
The other issue raised by this acquisition is whether Growers Express will be able to persuade General Mills to spend some of its funds promoting fresh. Right now General Mills is missing a major opportunity; it likes the fresh business to grow because fresh produce has high turns and those high turns mean lots of consumer impressions. It also likes getting a royalty fee. Its focus, though, is certainly on its frozen and canned items, and that is where it spends its ad money… that is the place it invests on the web, etc.
What General Mills is missing is that the best way to enhance its brand would be to promote its fresh line. Marketers and psychologists call this the “halo effect,” and it explains why a company such as Ocean Spray continues to sell fresh cranberries although it is an insignificant part of the business and a source of much heartache with customers on allocation, lawsuits, etc.
Using a brand across different forms — such as frozen, fresh and canned — is both a plus and a minus. On the one hand, a brand such as Green Giant is one of the truly iconic brands in American marketing. It was so successful that the old Minnesota Valley Canning Company changed its name to capitalize on the Giant’s popularity. Leo Burnett, who later became an icon himself, was just a sprout when he developed the concept, long before he had his own agency. So Green Giant earns instant recognition and credibility.
The challenge is that the message can get confusing. VPs of produce at retail want to know that a brand is promoting fresh because that is their area of responsibility.
The big win for the industry in this acquisition will be if Jamie and Woody can persuade General Mills to focus its TV, couponing and other marketing on promoting fresh, with an expectation that the halo effect of being know to consumers for producing fresh fruits and vegetables will automatically help its canned and frozen sales.
That is quite a mind shift and will surely take some time. But these things always do. Even the Jolly Green Giant himself didn’t spring forth as the friendly ho-ho-ho guy we now know. Take a look at one of the early Green giant commercials:
Congratulations to all concerned. We are sure everyone involved has a big future ahead.