Archive for 'Supermarket – produce'

The Winter’s Tale

seeka_kiwifruit_industries_limitedOnce upon a time, there was “an integrated kiwifruit orcharding and post-harvest company” called Seeka Kiwifruit Industries Ltd, which ran a pretty tight ship in a sector of the produce industry the business understood really well – kiwifruit. That was not a surprise to anyone because one would expect kiwifruit growers to understand everything there is to understand about kiwifruit. And if there was something about kiwifruit the kiwifruit growers who owned the orcharding and post-harvest company did not understand about kiwifruit, they could always ask the good people at Zespri who understand the marketing aspects of kiwifruit really well. Because unlike the orcharding and post-harvest company, Zespri really understands everything there is to understand about dealing with kiwifruit retailers and their needs, demands and quirks.
Being a kiwifruit grower has had its ups and downs in recent years, but the kiwifruit orcharding and post-harvest manager in question sought NZX listing and developed a strategy which can be found on its website. The strategy says that the company wants to be “New Zealand’s premier produce business”, and that “developing complementary business” will add to the company’s prospects for future growth. As one would expect from a kiwifruit orcharding and post-harvest company, it already packs a complementary crop, avocados, and the 2013 Annual Report states “limited volumes of Kiwiberries will be handled…in 2014”.

No big surprises so far – and the fairly ambitious statement about wishing to be the country’s premier produce business could be seen as a bunch of Bay of Plenty growers having gotten carried away at a strategy & vision session.

And then there was this announcement recently:

Seeka Kiwifruit Industries Limited advises that it has agreed to purchase Glassfields (NZ) Limited“.

I beg your pardon?

Did I get this right?  A kiwifruit orcharding and post-harvest company is buying a banana importer which exists at the grace of Countdown?

Apparently, I did understand correctly.  The purchase was completed on 17 April.

Now, adding a banana importing and ripening interest to one’s produce business activities is a significant undertaking in anyone’s book.  Well, almost anyone’s.  Here is how Seeka classified its move:

“Glassfields is a small but important step in Seeka achieving its strategic goal of becoming New Zealand’s Premier Produce Company.”

A small step? I don’t think so.  Bananas are the ultimate big league product. Kiwifruit are important to the extent that we manage to fill whole reefer vessels here in New Zealand and send them to the world’s markets.  But within the context of the global fruit trade, Kiwifruit are one of many ‘also run’ sub-tropical products on offer on the world’s fruit & vegetables shelves and any supply issues or disruptions at store level is at best of nuisance value. Woe behold though, if a supermarket experiences a banana supply problem and be it ever so small. Produce shoppers judge the state of the whole  produce department on the quality of the bananas for sale and any deviation from the norm in terms of volume, ripening stage, shelf life or size will lead to pretty hefty “Please explain” requests being issued by agitated banana category managers, and depending upon the severity of the deviation, more senior supermarket managers will fairly rapidly become involved as well. An attention level not afforded to Kiwifruit, Avocados and Kiwiberries I might add.

fortune favours the bold

I am sure Countdown doesn’t think that step is all that small.  Although Countdown has started to diversify its banana offer in recent months, Glassfields was after all started to facilitate the supermarket’s ability to break free from having to purchase bananas from the global brands such as Dole and Bonita and their local supply partners.  Glassfields manages the logistics of getting Countdown’s Gracio bananas (a Sumitomu brand) into the country and into the retailer’s stores.  ‘Manages’ as opposed to buying, as Countdown has a direct supply relationship with Sumitomu, as well as with its new Ecuadorian supplier, of course.

So – whilst the whole banana supply scene has become more diversified as the result of advances in  container shipping technology and practices, I would still call it a bold step for a kiwifruit orcharding and post harvest company to leapfrog to banana ripener and distributor status in its quest to grow, diversify and secure its business. One can only wish Seeka well in their endavour.

By the way, did you  figure out why the story is entitled ‘The Winter’s Tale’?  You might want to check this page. The first paragraph will suffice.

We Would Not Want The Truth Get In The Way Of A Good Story

As I mentioned in blog entry “The Grocery Fullfilment Conundrum”, there was a second element in that NZ Herald article  of 3 August 2013 which caught my eye. Here is the offending paragraph…”Our survey showed some fresh fruit and vegetables were cheaper at Countdown than at an independent fruit shop but Fox said they would likely not last as long. She said the best place for fruit and veg was a Saturday morning market. There, people could buy in bulk and it would be fresher and better quality.”

There is absolutely no denial that visiting  markets is a very popular Saturday morning pastime for many city dwellers the world over. And if the image displayed in this blog is anything to go by, then we need to get used to Farmers Markets not being a passing phenomenon. They are here to stay alright. (The image is the back cover of the NZ Herald’s most recent weekend magazine and it is actually an advertisement for a radio station.Farmers market image) But none of that means that wild statements made by people with little knowledge should be allowed to go unchallenged. What industry and industry observers like myself are used to is the unrelenting negative commentary on supermarket pricing by people who have no comprehension of the intricacies of the fresh produce supply chain. So when Countdown then gets reported as having cheaper fruits and vegetables than independent greengrocers, what happens? Instead of letting that fact speak for itself, we need to immediately find some opinionated commentator to offer a negative angle, because the facts don’t suit the editorial direction. To imply that produce that reaches the consumer through the supermarket channel “will not last as long” as that purchased from an independent fruit shop is an outrageous piece of misinformation. Yes, there are some Saturday markets where indeed fruit & vegetable growers  are offering their produce direct to the consumer. In many cases that produce can be fresher if it has been harvested the night before or early the same morning. But to expect that to be the case with all produce sold at all markets  is based on a romantic myth fed by a lack of knowledge, a fair degree of ignorance, an unwillingness to put in the hard yards to establish the facts and an unfortunate tendency to generalise. It has been my experience that supermarkets take freshness and quality far more serious than journos give them credit for. Could they do more to increase awareness? Sure. Do they at times get it wrong? Sure. But give me a UK newspaper anytime. Their journos still know how to write an objective story.

The Grocery Fullfilment Conundrum

The local Auckland paper, the New Zealand Herald, recently published an article discussing supermarket pricing.  That in its own right is not a surprise, newspapers tend to pursue this topic when there is no other news about. This article differed though from others. In the first instance, the focus of the article was not the usual supermarket fare, food and FMCG consumables, but the journo offered opinions about the wisdom of buying typical non-supermarket items such as stationery, slug pellets and medicines from supermarkets.  The verdict? It could well be cheaper than buying those items where one would usually buy them. Ok, one would expect that though from a supermarket, wouldn’t one?  The question NOT asked is even more interesting. WHY are supermarkets moving into all sorts of other product? Answer – With consumers increasingly shifting towards online grocery buying, brick and mortar store operators need to figure out what else to put onto their shelves in order to keep the turnover going.
amazon feshSupermarket companies like Woolworths here in New Zealand may well be very successful with their on-line activities but they face a dilemma. Right now, on-line customer fulfilment occurs via a number of selected stores where ‘personal shoppers’ take the groceries from the shelf. The problem with that approach is that the goods come attached with the costs of getting them onto that shelf in the first place. Then adding the ‘personal shopping’ and distribution costs makes the whole process a fairly unattractive financial proposition. The smart solution is therefore to pick the goods at a distribution centre where the cost of getting into the store and the cost of the retail environment itself don’t figure in the cost of sales. The trouble with that approach is that individual unit fulfilment cannot be run out of distribution centres geared to dispatch goods by the pallet load. Pursuing that approach will lead to having to build dedicated distribution centres. Not the kind of thing you want to do if you already own stores which make money by stocking goods on their shelves for people to buy….and we are back to square one.

That’s why we need to sit up and listen very carefully if companies like Amazon suddenly decide to enter the grocery fray...particularly, the FRESH arena.  They are not encumbered by stores and dated paradigms.

There was another point of note in that article I mentioned at the beginning of this blog entry, but that will have to wait until tomorrow.

Turners & Growers and the Potato Washing Debacle

By the early eighties, Foodtown had made some inroads into direct supply of green leafy vegetables, tomatoes, kumara and a number of other crops.  Kumara were in fact one of the early crops which were  100% directly supplied – by no other than the late Gary Blundell.  When it came to potatoes though, Foodtown had a bit of a problem.  One of my predecessors hat come back very enthusiastically  from PMA in the US, having been introduced to the concept of washed potatoes.  We might takes these for granted these days… but that was not the case 30 years ago! 

Foodtown, naturally, approached Turners & Growers, its potato supplier, to suggest that potato washing should get onto the company’s agenda.  The answer was somewhat surprising…”it could not be done”, said Turners & Growers.  The reason given was the soil condition in Pukekohe which would defeat any effort one could undertake to get potato washing under way.

Luckily, Foodtown chose not to take NO for an answer and started a conversation with a large potato grower in the area, A. S. Wilcox & Sons  and the ingenuity displayed by Lex, Henry and Ross Wilcox sure enough got washed potatoes onto Foodtown shelves within a year.  And they have remaind there ever since.  Direct from the source from Day 1 and no longer supplied by Turners & Growers. A further chink in the relationship….

To be continued

Look How Far We Have Come

An industry colleague with more gray hair than I have, turned up at a recent United Fresh meeting with a copy of the June/ July 1982 issue of what was the Grower magazine. He thought might interest me.  Yeah right!

Ten points for those who guessed correctly: yes, that is me on that cover.

While not wanting to dwell on the mistakes I have made over the years, it was a good trigger to take some time and think about what has changed in the industry since this issue was published in 1992.

Those price tickets you can see behind me on display were preprinted centrally but without the price. The produce department staff then put the prices on the tickets as per instruction, using stickers.

Inside the magazine, colour is the exception not the norm.  Casting my eye over the contact details for contributors and in advertisements and what jumps out at me?  There is not an email address or web URL in sight and mobiles were not common enough – nor were the call rates cheap enough – to warrant any mobile numbers being included.

Now? If you are not web enabled while mobile, you might as well be dead (or so anyone under 20 will have you believe).

So what does that mean for the fresh produce industry going forward in terms of technology?  Can we afford to invest in further technology, given that produce values in real terms are going in the wrong direction?  Can we afford not to invest?  How much technology do we need?  So much that horticulture becomes an open air food factory process with minimum labour inputs?  Or do we scale technology back to aid Government’s (regardless of who is in command of the Beehive) efforts to find jobs for the unemployable elements of society?

As I get older, and I do, judging by the picture, my ability to ask questions as opposed to finding answers appears to be increasing.  This is a good thing really, as questions drive action.