Tag: Consumer

The Nonsense Continues

I had the weekend edition of the NZ Herald sitting around on the dining room table all weekend, pondering whether I should add my 5 pence worth to the article entitled Fruit, vege bargains at supermarket in theweekend edition. Then I sat down to watch the 6 o’clock news tonight.  First up –the milk price again. The Minister of Agriculture, David Carter,  now suggests that a Parliamentary Select Committee should investigate milk prices.  The CEO of the Consumers Institute made ridiculous comments on camera about a “secret manual” she alleged Fonterra uses to set milk prices and a TV One reporter found that supermarkets sell 2 litres of milk for $3.60 compared to $5.20 at a dairy and $5.60 at a service station. Doh.  Oh really?  Ah, there is a story that has gone off the rails.  That does not fit the intended direction –because we all know its supermarkets which engage in price gauging right?  Carter, luckily for him, was interviewed on Q & A this morning, rather than in the evening.  His “I never buy my milk at the supermarket and I would encourage consumers to shop around” wisdom therefore went unchallenged.  Let’s get some of the facts straight.  Supermarkets are in the volume business which works really well for them with processed food; milk for example.  Milk will always be cheaper in a supermarket  than in a dairy or service station, so please stop wasting time during the news bulletin and instead report the real issues we want to hear about.  When have you last seen a super market chain advertising  milk or bread at special prices or even as a loss leader?  The answer is “you have not” as it simply does not happen. The same goes for eggs by the way. They could, but they typically do not!  Accusing supermarkets on price gauging on those products is therefore an exercise akinto shooting oneself into one’s foot!  Back to the Herald’s fruit & veg story.  At a time of extreme shortages, you can rely on supermarkets to exert pressure to keep the prices down. Not because they want to be good citizens but out of self interest.  They have worked out a few years back that consumers have a pain threshold. When cauliflower prices go beyond $3.99 per head retail, consumers pull the hand break.  Tomatoes at $20 is pipe dream territory of unheard proportions.  Food & Grocery Council CEO Katherine Rich also has a thing or three to learn about the fresh produce value chain, judging by her comments in the NZ Herald story.  Of course, the produce will be fresher at a farmers market – if it has been locally grown and is being sold by the grower himself.  And of course, supermarkets are subject to greater controls and attempt to offer produce of greater uniformity.  And where do we think the produce supermarkets does not buy disappears to, hm? Whilst it is great that we as a society are focusing back on the basics, i.e., the quality and availability of our food and its price, there is a lot of nonsense being talked out there and the sooner that changes the better.

Railway Waggons, TV Shows & Produce

A couple of news items on National Radio caught my attention this morning.  The first one related to Kiwi Rail’s intention to buy more rolling stock from China instead of having the waggons built from scratch in its own workshops in Lower Hutt and Dunedin .  The second item concerned the intended sale of TVNZ’s Avalon Studios.  They also are in Lower Hutt.  Predictably, the supporters of those facilities are getting ready to head for the barricades, suggesting not building one’s own railway waggons or not producing one’s own TV shows makes no economic sense whatsoever, given that a) the competence exists and b) the economic necessity to preserve as many jobs as possible should be obvious to even the most dimwitted inexperienced politician. The counter argument suggests that it makes perfect economic sense to buy goods and services offshore if one’s own capacity is insufficient or if one’s own cost of production cannot match cheaper labour sources offshore.  Chuck a couple of accusations related to xenophobia into the mix, interview a minister or two and the debate takes on a life of its own.

As I was pondering what I was hearing, I could not help but think that there is a connection with the produce industry.   The old colloquial term of market gardener, for example, implies something doesn’t it?  It implies that the individuals concerned produces his or her produce for a market.  Where could one traditionally find market gardeners?  Around the towns.  Where were the markets located? Inside the towns!  Being a market gardener therefore suggests a degree of proximity to the locality where the produce meets the consumer.

Is This Really The Solution?

At the beginning of the 20th century Auckland’s market gardens used to be where the Ellerslie racecourse is today.  As the city grew the gardens shifted to Mangere.  Evidence of that can still be seen between the airport and the Manukau motorway. After the second World War, Pukekohe increasingly gained in importance as Auckland’s fruit and vegie bowl.   These developments played out all across the country to a greater or lesser degree.  A lot of Wellington’s vegetables used to come from Otaki initially.

The produce supply scene is changing on two planes.  Firstly, the corporate supply chains at wholesaler or retailer level distribute parcels of produce around the country based on what is the most efficient source on the day.  Gisborne lettuce can be found all over the country as can South Auckland tomatoes. Growing produce locally is therefore no longer a necessity. Secondly, the volume of imported produce, particularly imported vegetables destined for the process industry, is rising drastically.  On the other hand I saw a Turners & Growers press release recently which announced the company is now the largest exporter of Peruvian asparagus into Japan.

What does this mean?  Ask an economist and he will suggest that the sensible way of going about business is to produce goods and services in the most cost effective way.  And if that is China, so be it.  Sociologists will argue that basic functions like food production need to conducted within spittting distance of the people the food is intended for.  Governments are beginning to to grapple with the concept of Food Security.  History tells us that as societies progress, its members no longer want to perform the more basic job function but are looking for more complex tasks to take on.  Germany invented the term Gastarbeiter in the sixties, guest workers, for the mainly Southern European unskilled labour force which was imported to do the jobs Germans no longer wanted to do.  The Communist regime suffered from the same malaise.  East Germany brought in thousands of North Vietnamese workers for exactly the same reasons.  New Zealand did the same with Pacific Islander in the seventies – and today our industry has the RSE scheme for very similar reasons.

Helen Clark called agriculture and horticulture sunset industries ten years ago and substantially reduced government investment into our industries, wishing us to concentrate on developing high tech export solutions instead.  And yet – horticulture and agriculture are part of the very fabric of our society.  We need to eat to survive.  We need food. How much responsibility do we need to take for this individually apart from doing our hunting & gathering in the local supermarkets? 

The answer, I suggest, lies somewhere in between. As a country we cannot afford to be too reliant on commodity exports.  Yes, prices might be good for a few consecutive weeks, months or even years – but low entry barriers, over- supply and changes to demand will always create a  roller coaster effect .  It is just a question of “when.”  Conversely we cannot afford to go exclusively high tech altogether and import all our food. We can afford this neither financially nor as a society.

What we need then is a mix of sensible commodity production, value adding processing industries and mechanisms which allow us to generate, harvest and market intellectual property along our entire value chain.

Sticker, Sticker On The Wall, Yesterday On Fruit & Today In The Mall

Once upon a time, there was a banana company.  After a chequered career using different names, the banana company settled on  a new name, which it has stuck with now for many decades.  That name is Chiquita. For many years Chiquita then focused on its banana business and eventually they thought, “wouldn’t it be nice if we put little Chiquita stickers on every banana leaving our plantations in Honduras, Panama and elsewhere?”  So they did.  Every once in a while they asked themselves the question again, which why one can now buy Chiquita pineapple, Chiquita mangoes and Chiquita ‘god knows what’, depending on which part of the world one lives.  In recent years Chiquita has been asking itself a few other questions which are captured as captions under the three photos that follow.  (Photos taken in Frankfurt, early February 2011)

How About We Take The Chiquita Sticker Into The High Street And Stick It On The Front Door?

What Else Could We Sell Our Adoring Public? Particularly In Winter?

And If We Provide Some Nice Bright Yellow Chairs, We Might Even Sell Some Bananas For Dessert!

The concept employed by Chiquita has a name – brand migration. It is often played at the corporate level and usually with mixed results. Companies engaged in playing the game usually end up learning a few hard lessons such as

  • Success depends on consumer perception and not on player desire
  • The rules of the game differ between supermarket aisles
  • PRODUCT marketing strategies and SERVICE marketing strategies are different beasts altogether

Nevertheless, success can be sweet.  I wonder how long the potato grower queue is who want to discuss supply agreements with Chiquita!?

It is not 1 April but…

Supermarkt Shopping - The Only Place To Be For The Modern Hunter/Gathererer

“Ye Olde NueZelnd Herald” has yielded another little gem; a reference to US based Better Food Solutions, an organisation which is convinced the solution to the food miles challenge could be overcome by building glasshouses on top of supermarkets. An interesting thought to ponder as I prepare to fly to Berlin for Fruit Logistica. A leisurely pursuit of Better Food Solution’s website comes up with several highlights, amongst them;
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Has Walmart Become A Respectable Produce Merchant?

Still don’t know how serious consumers take their produce shopping these days?  Can’t get your head around whether organic produce offers work? Well, in the absence of intelligent news reporting in this country, we have to revert to this other place where English is spoken, the good US of A.

When a shopping reporter (or was that reporting shopper?) spends his time inspecting the produce displays of Walmart and compares them with those of his local icon Whole Foods, you know America is on the move. And where America leads (having followed the UK), we in turn follow.  Eventually. To a point.  But nevertheless.

Especially when the themes sound  familiar.  Locally sourced, organically grown, attractively merchandised, survival of the small grower.  Now, where have we heard this before?