Success in the 21st century depends not only on what an individual company does but, crucially, on how a company interacts with other members of the supply chain. Delighting consumers, ensuring food safety, having sustainable values that inform the development, growth and marketing of a given product and, of course, knowing that traceability is intrinsic in the supply chain all depends on a variety of players who handle their jobs with integrity and support other members of the supply chain.
Success in the 21st century also depends on utilizing modern technology to transform our businesses.
Finally, success in the 21st century depends on innovation — on doing what others have not yet done.
One of our goals at the Global Trade Symposium, the “Ideation Fresh” Foodservice Forum and The New York Produce Show And Conference is to help attendees position themselves for success by reorienting their businesses to capitalize on modern technology, by helping them to see how alliances across the supply chain can be crucial to succeeding and by exposing them to new ideas and new people who can serve as a font for innovation — all these things serve as a kind of toolbox for success in this highly competitive world.
David Marguleas, Executive Vice President at Sun World, has lived his career at the locus of these trends — high-tech breeding programs, proprietary varieties, brand-building, global outreach and more — so when he offered to put together a panel that would provide a kind of case study as to how to do business effectively on a global scale, utilizing modern tools, we leapt at the opportunity.
We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Q: It is great news that you will be leading a panel at this year’s Global Trade Symposium, co-located with The New York Produce Show and Conference. You will be sharing the stage with Dudu Ivri, Chief Executive Officer of Tali Grapes in Moshav Lachish, Israel, and Zeina Orfali, Buying Manager-Fruit at Marks & Spencer, headquartered in London, UK.
Are you working on a collective venture? What is the genesis that brings you together at this international forum?
A: Describing how the relationships between Sun World, Tali Grapes and Marks and Spencer came to be represents a jumping off point for a much broader panel discussion, which we’ve agreed to title, “Innovation As A Business Driver: A Global Produce Industry Perspective.”
I wanted to help create a panel furthering the enlightening discussion that arose at last year’s Global Trade Symposium exploring the complexities and successes of a program built on a globally aligned supply chain. [Editor’s note: you can read more about that panel session here]
Q: In that context, could you provide a preview from Sun World’s perspective…
A: Just as a starting point, Sun World’s main business is farming, packing and marketing table grapes and a number of other products. We develop new table grape varieties, which we plant and farm on our own vineyards in California. Then we sell and market those grapes under different brands to U.S. retailers and export clients around the world.
Q: Isn’t Sun World rooted in a rich family history going back generations?
A: My family was one of the founders in the mid-1970s. Prior to that, my grandfather ran a produce distribution system in the business, so I’m a third-generation member in the produce industry. My family is no longer involved in Sun World, but the business is similar to how it started out. It is owned by a private equity company on the East Coast of the U.S., as part of a business model to innovate and offer customers ground-breaking products.
Q: In a commodity-heavy, non-branded business, did Sun World take this avenue to separate itself from the fray? What strategies need to be employed to balance the risks of developing a steady stream of both atypical and saleable products in the produce industry?
A: Sun World started a breeding program in the 1980s and 1990s, which launched seedless watermelons, seedless grape varieties, the DiVine Ripe tomato, sweet-colored peppers, a line of specialty stone fruit with unique flavor profiles, fresh market apricots, and peach, nectarine and plum varieties with distinctive flavor profiles as well.
All these examples were an effort to differentiate Sun World and its customers and to offer consumers something unique.
Q: What are the proprietary components of such endeavors?
A: We set out 15 years ago to share unique varietal development with other growers and marketers around the world. This lead to development of a robust licensing business in the mid to late 1990s, where by we send our table grape and stone fruit varieties to growers in South Africa, Chile, New Zealand, Australia, Israel, throughout the Mediterranean countries, Brazil and Mexico, etc. So growers in those 10 or 11 countries produce Sun World varieties and are also licensed to use brand trademarks to market those fruits.
The process involves forming multiple partnerships. For example, we work with Capespan and Dole in the grape region of South Africa. Those are exporters that are traditional marketers of a number of fresh fruit types, and they are licensed to market Sun World varieties that are grown in South Africa and exported to the United Kingdom and other markets around the world.
For the Global Trade Symposium panel, I reached out to one of the retailers particularly innovative and supportive of introducing new fruit varieties in the UK, and that is Marks and Spencer, and one of our more aggressive and innovative licensees, Tali Grapes from Israel. Tali Grapes grows Sun World grape varieties in Israel and also happens to sell a number of varieties to Marks and Spencer, as do we in California and as do other licensees in other countries as I mentioned.
We’ve done the same with Wal-Mart, Dairy Farm, Carrefour, Safeway and Kroger, among others, working to make sure they have access to our unique varieties from both the northern and southern hemispheres and from countries that are both able to grow quality fruit and are located in a geographically favorable location to supply when needed.
So I identified a couple of grape varieties that we market under specific brands, which we grow in California, and Marks and Spencer has championed as top varieties. A black seedless grape, called Sable Seedless, has a very unusual tropical profile and is grown in the southern hemisphere December through April, the northern hemisphere the first of June through September, and in Brazil October and November — almost year round.
Q: Is year-round availability an important component? And how challenging is it to provide consistent product and manage your extensive network?
A: This is an integral part of our strategy, not only to offer unique varieties for retailers, but also the ability to source on a year-round consistent basis; growers having the same common specifications and marketers bringing fruit to market under common brand names.
Another brand featured at Marks and Spencer is Scarlotta Seedless, a late-ripening red seedless grape, with a beautiful flavor profile, and high brix with high natural sugar levels. This impressive berry and bunch size is currently being featured at Marks and Spencer from Israel. It is a good example of innovations Sun World brought to commercial industry.
Q: Would you categorize Sun World as a pioneer in this respect? Do you face heady competition? How common are companies with missions like yours?
A: Companies like ours are becoming more common, but we’ve been breeding seedless grape varieties for 20 years.
There are certainly other efforts to introduce new varieties and there are exceptional grape and other fruit varieties that others have produced. The concept of sharing these varieties with others is a serious commitment for us.
We reasoned for us to produce two to three months a year gives us a competitive advantage in California but to take our business to the next level, we need to ensure product is available on a year-round basis, produced by leading growers and sold to leading marketers on different continents.
Q: Where are you in reaching this goal?
A: Now you can find our products about 10 months a year, in some 40 licensed markets in six continents. This global licensing platform has changed the way grapes are grown and marketed and certainly the availably for progressive retailers around the globe.
Q: Could you tell us more about the panel platform?
A: Joining me are Zeina Orfali, buying manager-fruit at Marks and Spencer in the UK, and Dudu Iviri, CEO at Tali Grapes in Israel. Dudu will talk about how he has produced innovation from an export perspective in a fairly non-traditional part of the world where table grapes are grown and marketed.
Marks and Spencer is one of the more innovative supermarket companies, known for introducing unusual, high flavor varieties. Zeina will share the approach as a retailer in bringing these varieties to consumers.
Q: How vital are these varieties in boosting overall sales in the produce department? Are these generally specialty in nature that appeal to targeted niche markets? What is the range?
A: Hopefully, these are enhanced and improved versions of varieties. They are not niche items in the case of the black grape variety Midnight Beauty. We have another variety, Sophia Seedless, sold under the Sophia brand, a green seedless grape with Muscat flavor particularly appreciated on the continent of Europe. Italia is a seeded grape with Muscat flavor and aroma, and we introduced the seedless version.
The flavor traits and other characteristics of these varieties are the easy part. The real challenge is taking varieties grown in California and adapting them to other growing environments and regions.
Q: How complex is the process and how long does it take from seed development to retail shelf?
A: We have a full team of tech advisors who develop practices to insure the same taste, flavor and texture. It’s an incredibly long-term and expensive process that takes about 10 years; from a grape variety with one trait we find desirable and another variety of a certain color characteristic or size, resulting in crosses of hundreds of offspring. We cross tens of thousands of seedless options and produce tens of thousands of offsprings, and then we identify a few varieties from there…
Q: A lot can change in 10 years…Doesn’t this require great consumer trend forecasting, as well as a leap of faith?
A: We have to have a bit of a crystal ball and imagination of what consumers will like in 10 years. It takes five to seven additional years to introduce a new variety to other countries, with the phytosanitary issues and other trading and logistics hurdles that may exist. So a variety a grape grower in Chile might see on one of our experimental farms in 2012 won’t make it to Chile for production for many, many years.
Q: So a company bent on the idea of entering this field will require more than an entrepreneurial spirit as Sun World continues to build on its international stronghold with its well-established expertise…
A: Fortunately, we got started in this work many years ago, so varieties we developed 10 years ago are being produced now in many countries around the world. There are sizable risks to entry, complexities and uncertainly as to a lot of costs.
Q: Could you provide a better understanding of the financial investments required?
A: We’ve spent many tens of millions of dollars developing fruit varieties for our customers, retailers and consumers around the world. Our aim is to provide consumers with better tasting table grapes. There is all of this work to develop new varieties and distribute around the world and assign brand names that resonate with consumers, but at the end of the day, if the flavor and quality profiles don’t meet consumer desires, we haven’t accomplished anything.
Q: With such widespread distribution, are there issues with protecting your property rights? Do you find many instances of copycats or counterfeiting?
A: We have plant patents and trademarks. You could copy one of our patents, but you would have to appropriate plant material. In today’s world, growers have a healthy respect for rights. We’re seeing less and less infringement and more embracing of intellectual property and the novel traits these varieties bring to the marketplace.
Q: How important is the marketing aspect?
A: It’s critical. Several steps back from marketing phases, we have to understand what consumers like today and make judgments on what they will like a decade from now.
We do extensive research and consumer focus group work, and a good deal of retail evaluation with U.S. and British supermarkets in particular to get feedback. We collect weekly evaluations of varieties in California and send those to retailers in other countries, and we take their feedback and use that to help guide our priorities in channeling new varieties. We work closely, for instance, with Marks and Spencer to identify characteristics and traits.
The real heavy lifting comes after we develop the varieties identified with traits for customers in the U.S. and Europe and Asia… designate brand names and seek protection. Then we deal with the tough reality of introducing the products to retailers and the marketing, packaging and promotions to help with the launch. We provide graphics, photography, and marketing materials so we can have similar, consecutive launches of products.
Q: Aren’t there different cultural nuances that necessitate adaptation in marketing concepts and promotional campaigns? For instance, in the case of the Cotton Candy grape program, the variety was appropriately named for its uncanny flavor similarity to the kid-friendly, sugary carnival or circus treat in the U.S. However, it turned out that British consumers wouldn’t be familiar with the term Cotton Candy because their equivalent product is called Candy Floss. To accommodate, Cotton Candy grapes were marketed in the UK as Candy Floss-flavored.
A: There are definitely cultural distinctions to consider. We rely on our international partners and marketers for introductions as they are a lot more sensitive to cultural differences than we might be on the West Coast of the U.S.
Tali Grapes has a very keen understanding of Israeli consumers. Dudu Ivri knows what consumers are looking for in grape varieties and what marketing efforts will work. We provide the tools and then Tali Grapes customizes its programs.
Q: Where do you consider the biggest areas of growth going forward?
A: Certain varieties have more potential depending on what part of the world. We have a tremendous presence in South Africa where growers have embraced innovation and work extensively in planting our varieties. We see strong growth in countries like Chile, Brazil and Australia. We already have numerous licenses in Australia and are introducing brands throughout the Far East. And then, of course, we are planting a number of grape and stone fruit varieties in our own farms in California.
This is just the first of three pieces we will be publishing on this important panel. Look forward to interviews with Dudu Ivri and Zeina Orfali in the days to come.
And make sure you come to the Global Trade Symposium at The New York Produce Show and Conference so you can be a part of this intriguing and business-building workshop.
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