Archive for 'Thoughtpieces'

I had planned for some time now to use the days between Christmas and New Year to put some light hearted reflection pieces onto this blog.  Partially based on impressions gained  or photographs taken during the year but never processed at the time, partially on ‘hey, 2011 is coming up, shouldn’t we think about some New Year resolutions’, and partially on aspects about the produce industry which are worth exploration beyond a quick mention on the day they appear topical.  Add to this the fact that I have a tendency to get into ‘deep thinking’ mode this time of year anyway, given my birthday is on the last day of the year and one could expect a right little mix at this point in time.

So, that is where I had got to by the time I opened this morning’s Herald. Two articles leapt out at me amongst all the post Boxing Day sales hysteria advertisements.  The first one was an article on consumerism and choice on the lead page of the business section.  Just as I said to myself, “blimey, that looks like a serious piece of journalism, what is happening at the Herald?”, I spotted the by-line.  “From the Economist”, it said.  In other words, Granny Herald is still on holiday and can’t be bothered.

The second article was a lot shorter, actually started with a photo on the front cover and announced the death of Dennis Dutton.  Many of you may not have heard of Dennis Dutton.  Amongst his many claims to fame is that he was at some stage the Chairman of the New New Zealand Skeptics Society.  He addressed a Horticulture New Zealand conference in that capacity some years ago which is where I became aware of one his other passions, his website, Arts & Letters Daily.  This website is a gem and if you have not visited it before, do it now.  You might end up loosing yourself in it, because its intellectual pull and power is incredible – but as you emerge you will know that you have learned something as a result of visiting the site.

I will still go ahead with my plan for the blog over the next couple of weeks. In the meantime though, R.I.P. Dennis Dutton; thank you for the inspiration.

Well, I am not too sure about that but at least the title grabbed your attention!  What is an undisputed fact however is that we are nearing the end of yet another year in the Gregorian calendar – and whether we believe in the jolly old red fat fellow or not, we are likely to start reflecting about the year that has been and what we want to achieve in the one that is about to come. 

I spent part of my last twelve months being a member of the Horticulture New Zealand Implementation Task Force.  We met about half a dozen times during the year.  The purpose of the task force in plain English is “to promote and champion the adoption of the Strategy, provide advice and thought leadership on how the industry can effectively implement the Strategy and remove barriers to adoption of the strategy and measure and monitor Strategy adoption and implementation.”  (10/2020 Taskforce Terms of Reference).
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I received a letter in the mail from Tony Gibbs today.  Not that I was the only one who was privileged in this way.  Every shareholder of Turners & Growers would have received the same letter.  Yes, you have heard right, Sauerkraut likes to keep his nose close to the wind and therefore invests in produce companies.  Not that you will find my name on the share register – John Key and I both manage our investments through trusts.  There are two significant differences though.  Firstly, John Key has access to a smidgen more capital than Sauerkraut and therefore tends to purchase slightly larger share parcels– and secondly, there is nothing blind about Sauerkraut’s trust!

Bu t I digress.  Anyway, this letter arrived today inviting me to the Turners & Growers AGM.  A couple of proxy forms were also floating around in the envelope and then there was this other letter.  A letter from one Howard Cedric Zingel.  If you now want to know who Howard Cedric Zingel is, you are asking the wrong cabbage head.  A quick Google search reveals that Howard Cedric Zingel lives in Tauranga and seems to be someone who invests in the share market from a position of knowledge, being a longtime member of the NZ Shareowners Association Inc.  So we have to assume Mr. Zingel takes his investing serious.

And serious investor that he is, Mr. Zingel intends to propose a Motion at the 2010 Annual General Meeting of Turners & Growers Ltd on 24 June 2010.  If you are interested in reading the Motion in full, you can satisfy your curiosity here, and if you want to know what Tony Gibbs thinks of the Motion you can check that out here.

The short version goes something like this:

Mr.  Zingel wants Turners & Growers to engage the services of Price Waterhouse Coopers  in order to establish whether shareholder dividends and capital could be maximized if “the growing assets of the Group could be split off and the worth thereof returned to shareholders.”

Alan Gibbs’ letter inviting me to the meeting and advising me that I get to vote on Howard Cedric Zingel’s Motion gets straight to the point.  “The Board,” says Tony Gibbs, “does not support this resolution on the basis that the retention and growing assets is consistent with the long-term strategic objectives of the group.”

So there you have it.  As the Board votes the majority of the stock, Mr Zingel’s Motion will be handsomely defeated.  And this is where this story could stop.
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What comes to your mind when you see a vehicle like this?  Brightly coloured, two front bits and no rear end, a re-engineered middle and a ruddy great banana on the top of the roof?

I don’t know about you, but what comes to my mind is that this very cleverly put together promotional vehicle reflects the state of our produce retail  industry.

The two front bits represent respectively the supermarkets – Foodstuffs (New World, Pak N’ Save) at one end and Progressive (Countdown/Wooolworths/Foodtown)  at the other.  The ‘bit in the middle’ is the rest of the retail industry – the urban green grocers, the fruit shops at the edge of town, the gate sellers, the farmers markets, the opportunitists at the roadside selling produce from their vans, the office fruit bowl stockists and the internet ‘box of stuff’ vendors.

There are several questions that play on my mind in connection with this state of the retail industry:

• How big are the two front bits, i.e., the supermarket produce share, really?
• What is a realistic level for the supermarket share of produce sales before it disturbs the industry value chain equilibrium?
• To what extent is ‘the middle bit’ dependent upon the two ‘engine drivers’ for its well being as opposed to being in control of its own destiny?
• How will the local New Zealand model be impacted by international trends in the next five years?

Let me start with this observation.

Fruit and vegetable ranges stocked in supermarkets are continuing to reduce, driven by item based shrink and profit consideration at both merchandise and buying office level. Buyers and category managers whose performance is judged by the profitability of narrow product categories are not prepared to gamble by stocking niche products.  Store staff with insufficient training are not best placed to sell non-mainstream produce.  So if I am looking for whitloof, fennel and red currants, I know that I will not find those in the supermarkets.

This thread will be continued over the next few weeks and comments are as always welcome.