Archive for 'Uncle Sam'

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.

Horticulture & The Trans-Pacific Partnership

Fruit Logistica, Berlin

Fruit Logistica, Berlin

By default, blogs are global in nature.  The topics discussed may at times be quite parochial but I, for one, see no sense in using a tool with instant access to the world for the purpose of discussing local issues.  If I have a local gripe, I write a “letter to the editor” at the local rag.

And yet…

Today is one of those ‘and yet…’ days.

Today, I want to discuss what I have read recently in a USDA publication and put it into a New Zealand perspective.  Pretty local, eh?

The matter on my mind is trade and specifically the potential ramifications of the  Trans-Pacific Partnership proposal involving Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the USA and Vietnam.

Whenever someone mentions trade opportunities in New Zealand, and tariff reductions, one thinks ‘agriculture’.  The next branch of that thought stream are dairy, beef and lamb, as many New Zealanders  still haven’t got a clue continue to be slightly challenged when it come to naming other export success stories.

Kiwifruit gets a mention from time to time – although recently more in connection which how one should not go about managing one’s market access issues and the real adventurous amongst us might fondly remember the perceived hold ENZA had on the global market apple market but other than that, horticulture rarely gets a mention in despatches.

Behold!  We are not alone in feeling neglected…here is how the US Department of Agriculture views that matter.

“One subsector of U.S. agriculture, the sometimes overlooked horticulture industry, shares a strong interest in the outcome of both negotiations, as fruit and vegetable trade patterns continue to be influenced by a range of trade-distorting policies. The horticultural sector faces a large number of high tariff rates as well as tariff-rate quotas (TRQs), some of which are characterized by cumbersome administrative procedures and over-quota tariff rates at trade-prohibitive levels. Moreover, phytosanitary and technical measures have affected trade by limiting or blocking imports of select horticultural products into world markets.”

Oh, really? All sounds familiar, doesn’t it?  So, being able to articulate the problem so well, might our American colleagues also have a solution to the problem?

Well, before they attempt that, they actually do a good job at scoping the challenge further.  They identify “four key long term factors” they hold responsible for the increase in global horticultural trade we have seen in recent years;

A growing middle class in emerging countries – and we sure have observed that as well, in China, India and Indonesia to name a few of our markets.

Technological innovation in transport and communication – yes, well, I can’t argue with the communication perception, I am writing this blog for all the world to see the instant I post it.  Transport? There is increased containerisation; bananas being a classic example and the container vessel are getting bigger….in fact too big to berth in New Zealand

Global consolidation of the grocery trade – yes, most certainly a trend that is not showing any signs of slowing down. And it does, of course, create supply chain efficiencies.  But as we are dealing with produce that comes in all sorts of perishable shapes, flavours and sizes and not light bulbs or Pinot Noir, “ueber-effeciency” in supply chain optimisation has the habit of producing nasty side effects.

The various trade agreements put in place since 1995 – true, but we still publish an annual report in this country on how the remaining tariffs limit our ability to move forward the way could if we were let loose.

The USDA report then analyses the US export and import position for horticultural products in some detail to reach a general conclusion of sorts — that an increased demand for US fruit and vegetables should be expected in the prospective partner economies, ours included.

Where to from here then?

Well for starters – have we looked at the impact of the TPP negotiations on New Zealand horticulture?  What are we likely to see entering the country as a result of these?  Any Biosecurity considerations we might want to consider?!?

What can we sell that we are not selling already?  Whom to? In what quantities?

Here is a fact sheet on the New Zealand horticulture industry, just 12 months old.  A good starting point for anyone interested in looking for opportunities.

Good luck.


The Benefits of Size & Scale

There are times when one wishes one’s national  industry was bigger than it can realistically be, given the size of one’s country.  One of those times is when one discovers that there is such a thing as a Produce Industry Credit Council in the US!

Garlic anyone?

Yes, of course, garlic is part of the produce department. It doesn’t matter whether I go to a supermarket or greengrocer, I will always be able to find garlic somewhere near the onions – and that sort of attitude is exactly why we do not always maximise our sales opportunities in this country.  In recent years, jars of pressed garlic have found their way into some of our produce departments but as a category, garlic is underperforming.  As a category, I hear you ask?  Since when is garlic a category on its own?  Well, the only roadblock seems to be our imagination.

A SERIOUS Garlic Display!

Time to get serious I reckon, there are dollars to be made here. 

Cherry Pie Flavoured Cherries Anyone?

Well, yes, it does not get more bizarre than that.  Having dried cherries for sale is obviously no longer cool.  The flavour needs to be enhanced.  What might we be able to use?  Ah, yes cherry pie sounds plausible, doesn’t it?

Whatever next?

And silly me – I always thought raisins are added to sweet breads to enhance the flavour and not the other way around?