Archive for March, 2013

Turners & Growers – Timeline & Fruit Distributors Ltd

So, where are we at in the lead-up to Easter 2013?  That’s right… The CEO who was not going anywhere, did indeed go off somewhere in search of a new home a short week later.  The talent which had exited Turners & Growers prior to the now exorcised ex-CEO tripping himself up is happily finding new homes across the road at Freshmax and I presume elsewhere.  The Noboa shareholding is wondering whether there will be any more Fyffes banana imports anytime soon  and the staff left in situ are running a book on when the next restructure will occur.  In the meantime it is business as usual at Turners & Growers. Or is it?  I guess, that depends on how one defines this phrase…business as usual.

[Rykers, Leslie Bertram Archibald], 1897-1976 :Turners & Growers Ltd. Auckland city markets [ca 1931].  Alexander Turnbull Library

[Rykers, Leslie Bertram Archibald], 1897-1976 :Turners & Growers Ltd.
Auckland city markets [ca 1931]. Alexander Turnbull Library

 

If one visits the Timeline on the Turners & Growers website, one quickly discovers that, at least in Turners & Grower country, time appears to have stood still between 1959 and 1993.  Nothing happened here, Sir!  Nothing to report… Business as usual.  Business as usual, my foot. Any observer with the rational thought ability of a seven-year old child is able to deduce that a whole bunch of things occurred between 1959 and 1993…and that Turners & Growers must either have been in a deep slumber  a la Snow White after eating her poisoned apple (now here is a thought) or the events of those years must have had such a dramatic impact on the company that the decision was made to simply pretend that those years did not exist!

In order to understand the Turners & Growers of today, one needs to start a little earlier though.  In 1936 to be precise.  That was the year when Michael Joseph Savage, New Zealand’s first Labour Prime Minister won the general election.  He radically started to change the country’s economic drivers.  One of the consequences was the establish of a government import monopoly for fresh fruit, managed by the Ministry of Internal Affairs.This state monopoly stayed in place until 1949 when the incoming National Government decided to set up a company in cooperation with all the produce merchants in the country, for the purpose of managing the importation of tropical fruit from a commercial perspective.  (What does that remind you of by the way… an early version of a State Owned Enterprise by any chance???)  The new company  was called Fruit Distributors Ltd (FDL) The company still exists by the way.

In order to get a feeling for what  happened next, a visit to this very informative page on the Auckland Retail Fruiterers Association website would not go amiss.

What the Fruiterers site does NOT spell out in detail is that Turners & Growers during the 1950s and 1960s became the majority shareholder in FDL through acquiring the key produce merchant companies across the country, all of which had been allocated a shareholding in Fruit Distributors at the outset.  What is not entirely clear today is whether the merchant company acquisitions yielded the shares in FDL by fortuitous happenstance or whether the desire to own FDL drove the competitor buyouts.

…to be continued.

 

 

 

England Leads The Way…Yet Again

England has always been the place to go.  Whether it is for a Kiwi’s OE, whether it is to get a sense of empire (yeah right) or whether its for thereal ale…. The global supermarket industry always had a fourth reason to go to England…that’s where the new trends emerge. Tesco, Sainsbury, Marks & Spencer and Waitrose are the acknowledged trendsetters in that industry.

therell alway be an england

Yes, Walmart is a big beast and the Yanks have invented scale and upsizing…but they are not so shit hot lag behind a bit when it comes to developing new trends. The latest trend coming out of the UK is that big is no longer necessarily beautiful.  The Observer recently carried a very intelligent piece on the future of brick and mortar supermarketing.  Well worth a read. Our English cousins haven’t quite reached Fritz Schumacher’s 1973 economic masterpiece,  ”Small is Beautiful- a study of economics as if people mattered” yet; but hey, an acknowledgement that the whole supermarket model might need rethinking should not be sneezed at either.

Turners & Growers Front And Center

T&G logoWell, it is not often that a produce business makes the front page of the National Business Review (28 March 2013 Edition).  As a company listed on the New Zealand Stock Exchange, Turners & Growers could reasonably expect to feature in the NBR at some time or other but I am sure that every board member regardless of whether they are based in New Zealand, Germany or Ecuador would prefer making news for all the right reasons…

Turners & Growers have been on shaky grounds since 8 May 1989.  That day heralded a change of Tsunami proportions for the company and the consequences of what happened on that day have either directly or indirectly driven every decision the business has taken since, even if the current crop of directors, with the exception of one, is not aware of what I am talking about.

On 8 May 1989, Progressive Enterprises Ltd, which then operated Foodtown and Three Guys supermarkets, stopped bidding for fruit and vegetables at the Turners & Growers auction and started buying all its domestic produce directly from growers and packhouses.

The key consequences this decision contributed to in the years which followed were these:

  • The auction system collapsed
  • Turners & Growers relocated from the waterfront in downtown Auckland to Mt Wellington
  • The fourth generation Turner family shareholders no longer agreed on the direction of the business and sold out;
  • MG Marketing turned from being a behind the eight ball Wellington/Christchurch based “wannabe” into a very serious nationwide competitor, capable of giving Turners & Growers a run for their money;
  • Other strong competitors emerged in the merchant sector, such as Fresh Direct (ironically owned and operated by Jeffery and Peter Turner following their exit from the family business) and Freshmax;
  • Grower/packers such as NZ Hothouse, AS Wilcox, Meadows and Sutherlands emerged and/or became key direct  suppliers to the supermarkets, thus significantly reducing volume and value of produce moving across merchants’ trading floors.

Where do I get the notion from that this is the way it was?  Well, the guy who walked the Progressive buying team out of their cosy Turners & Growers supplied buying offices back in May 1989 and into its own Produce Distribution Centre was I.

Anyone with access to “One Hundred I’m Bid”, the centennial history of Turners & Growers can check out the board report excerpts dealing with the events of the time…and over the next few weeks, while we wait with baited breath for Mr Hipkins’ successor to emerge, we might just chat a little here about produce industry strategy in general and the role Turners & Growers have played over the years in particular.

ACT Has A View On The Future Of Kiwifruit

Act has discovered a new topic.  Well, it is not exactly new but it is new for Act.  Or is it?  Didn’t John Thompson, ACT’s erstwhile connection with the produce industry blow that particular trumpet some years ago? He might well have….but one can’t make much progress on John’s ACT page . The content appears to have been written in some kind of secret ink, only visible to ACT party members….

110908kiwifruitBe that as it may, ACT now would like the Government to deregulate the kiwifruit industry.  Deregulation does, of course, have its merits and, yes, the Zespri model is a anachronism in a country that has made deregulation and market forces supremacy the ultimate objectives we should all strive for. But if kwifruit deregulation brings us behavours akin to the one we have just seen with respect to Hawkes Bay apples….who needs it?  And in the current PSA environment, the kiwifruit industry needs to work together and not be let loose for growers, packers and coolstore operators to tear each other apart, I would have thought.

 

What Value Do We Put On Fruit?

New Zealand Apples, by Edward Cole, ca. 1925-1935. Alexander Turnbull Library. Eph-E-FRUIT-1930s-01

New Zealand Apples, by Edward Cole, ca. 1925-1935. Alexander Turnbull Library. Eph-E-FRUIT-1930s-01

Apples for 9 cents in Hastings.  It does not get much cheaper than that.  What do we think?  Right or wrong?  Well, actually both.  Consumers will, of course, be happy.  Cheap fruit, hurray, like the good old days. All the ancient  images come to mind. Families consisting of Mum, Dad and the two kids, living on their quarter acre paradise, spending the weekends in the garden….to quote Tui Breweries…”Yeah Right”.

What a load of crock.  What did the consumer say interviewed in the paper?  “I get the good ones out and use them for juicing…”  Oh yeah, what state are the other ones at then?  Yes, supermarkets based in a key production area should use their buying power to offer consumers good deals.  And if there is an association between store owner and orchardist – even better.  But to offer fruit where the best of the lot is just good enough for juicing to consumers who are looking for a genuinely better deal for their fresh fruit and veg is just a cheap stunt.  Bad move guys.  All this does is to bring the whole apple category into disrepute. Not good in the long term.  Not good at all.