Archive for July, 2014

The high cost of low prices

A few weeks ago we had the PMA Australia New Zealand Fresh Connections Conference here is Auckland. An all-round success in terms of attendance.  One of the industry stalwarts I bumped into there was Lex Wilcox, retired potato and onion grower/packer/shipper from Pukekohe and one of the brains behind the success of AS Wilcox Ltd in his day.  Lex has earned his retirement through decades of hard work for his company, the Pukekohe Vegetable Growers Association and the Vegetable & Potato Growers Federation, one of the predecessors of Horticulture New Zealand.

Catching up with Lex reminded me that he had sent me a 2006 article from the Sunday Start Times recently, entitled, “The high cost of low prices”, together with a philosophical statement by John Ruskin on the common law of business balance. Ruskin’s authorship of this ‘law’ can not be verified.  The one sentence version is “There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey”.

Lex sent the article in response to my blog entry on “Supermarkets, Growers and Food Prices” which introduced an earlier Guardian article on the topic.  Long before the supermarket bread war kicked off last weekend.  Lex’s article makes interesting reading – as does the longer version of the Ruskin quote.

It is an interesting social dilemma that is being played out.  Supermarkets compete for market share on the basis of product/price specials. Nothing wrong with that.  Consumers have come to expect ‘hot deals’ every week.  And they’d better be good or they vote with their feet.  Should suppliers contribute to supermarkets lowering their retail prices to attract more shoppers through their door? I don’t see why not, as long as the consultation process is alive and well, suppliers are not expected to produce loss leaders on a scale that threatens the viability of their overall business and when accompanied with a ‘give and take’ attitude.

These bread wars are not the last product/price action we have seen.  The game is changing. Online shopping is gaining favour with consumers globally.  Brick and mortar investments into new stores are getting harder to justify and being caught in the middle is not a pleasant experience any longer.  Tesco is the perfect example right now.

I Spy Something You Don’t See And It Starts With ‘C’

AFREA wordle from 7 cooperative principlesI have England on my mind.  I am all for the Europe concept but do we really need to have the Tour de France starting in the UK?  It’s a bit like Kent becoming a wine growing region. Well known paradigms are suddenly getting challenged. England gave us a lot of things and lots of them started with the letter ‘C’. Colonialism, Cricket and Coronation Street come to mind – and, of course, the Co-Operative model. Now there is something we can relate to in this industry of ours. Co-Operatives. Many of ours growers use MG Marketing, a Co-operative, to market their fruits and vegetables. Foodstuffs, the parent brand of Pak’n Save and New World supermarkets is also based on the Co-Operative Model.
Co-Operatives are not the norm these days and typically face stiff competition from their corporate counterparts. In this example that would be Turners & Growers and Freshmax in the produce industry,for example or Countdown in the case of the retail competition.
Well, here is a link to another one of those fascinating Guardian articles. It seems ye olde the Co-Operative model is under a fair bit of pressure in the UK and in need of saving, no less. And what are the champions of the co-operative model advocating? Back to the roots old chaps!  No point of trying to emulate those who are not you!  So, it would be worthwhile checking out this link, where one can find the Rochdale Principles of 1844, the mother, grandmother and greatgrandmother of co-operative movements around the world. And if the movement really needs saving, then lets put a bit of Kiwi flavour into it as well. No point of leaving it all to the Poms!