Mike Knowles

The fresh produce trade has come under such huge pressure from ethical and environmental lobby groups during the past two decades that the need to convey a huge number of different qualifications to the general public has potentially left the consumer faced with more trademarks and labels than he or she perhaps knows what to do with. Carbon and water footprints, indicators of good agricultural practice, geographical specifications, Fairtrade and organic marks, airfreight warnings: these are just some of the many labels vying for the consumer’s attention.

For the fresh produce business, however, there is an opportunity here to embrace still increasing public demand for social and environmental stewardship among suppliers and retailers. Of course, many in the business are already doing this and marketing their green credentials prominently – just take Chiquita’s well publicised work with the Rainforest Alliance as an example, which contributed to it being presented with a sustainability award in January.

Many companies are finding they can use best practice and corporate responsibility as a means to refine and improve the way in which their own brands are perceived. As reported in our Brand Dossier (Eurofruit Magazine, February issue), Fresh Del Monte has revamped its website to include a wealth of information about its sustainability programmes, the idea evidently to convert all of the goodwill such projects generate into additional brand equity. For the likes of Del Monte and Chiquita, the ultimate aim is for each of their labels alone to represent all that is good about the business – a ‘one brand fits all’ approach that reduces the need for consumers to be on the lookout for a vast range of different stickers to reassure them.

Last month, South African topfruit, stonefruit and grapefruit exporters officially launched their first joint campaign since deregulation, harnessing the country’s image as source of ‘beautiful’ fresh produce. The rainbow nation’s flag is arguably one of the most respected ethical labels anyone could imagine.

Mike Knowles

Now I’m not one to blow my own trumpet, but back in March 2007, I suggested that, at some point in the future, the world’s largest food retail group might end up being Tesco-Ahold. In fact, without wishing to create an unfortunate mental image, I was blowing someone else’s trumpet; talk of such a merger has been around for at least a decade, with analysts pointing to the British and Dutch retailers’ "highly complementary geographical spread". The thing about recessions is that these theories about mergers and acquisitions tend to resurface (as the Tesco-Ahold one did last month), particularly if the companies involved is thought to be struggling – just take a look at the planned fusion of British Airways and Iberia and you’ll see what I mean.

As you can tell from our front cover and several of the key interviews we have put together for you on the pages of the January issue of Eurofruit Magazine, consolidation is a phenomenon we firmly believe will be here to stay in all parts of the fresh produce supply chain over the coming decade. More and more companies are going to find themselves having to organise better in order to survive in an increasingly consolidated marketplace. To extend the musical analogy, if that means joining a larger ensemble to orchestrate sales more effectively, so be it. Taking the lead is all very well, but the repercussions of being unable to drum up trade because you’re playing second fiddle to a more finely tuned competitor are likely to be severe.

In fact, consolidating is precisely what many companies in this business are doing. While modern retailers become more and more powerful, suppliers like Univeg, Total Produce, Unica and VOG to name just four are strengthening too, as are many of the industry’s service providers. Zespri may have come under fire in the past few weeks for its monopoly on New Zealand kiwifruit exports, but several of the country’s apple exporters have told me they support that kind of consolidation and feel it’s something they lost after deregulation in their own sector. Conducted in the right way, much like an orchestra, consolidation can result in individuals becoming worth more than the sum of their parts. Good luck in 2010!

Mike Knowles

As we approach the end of what has been a memorable year, a look back at my editorial comments in the previous 10 issues of Eurofruit Magazine is pretty revealing: only two of those comment pieces didn’t mention the global recession. And now I’ve gone and mentioned it again. The trouble is, very few things in this world – let alone this industry – are truly independent of the international financial system. Even if we are now heading out of recession in Europe, so much of the fresh fruit and vegetable business is linked to markets, spending, demand, investment, banking, loans, confidence, cash flow…

The list goes on. The fresh produce trade has been changed irreversibly by the economic downturn. As our lead news story on p5 of the November/December issue of Eurofruit Magazine about Tesco’s drive towards increased direct sourcing confirms, supply relationships have come under pressure as retailers seek to trim costs in the value chain. Producers and growers, having witnessed dramatic price decreases amid rising costs, now want to meet that demand and cut out the intermediate stages that some in the trade feel add an unnecessary layer of extra cost. In the next year, it is likely that alliances and marketing partnerships among rival producer groups will continue to make a comeback, restoring a more unified approach that, in stark contrast to consolidation within the retail sector, has been missing over the past decade. Importers and marketers, as a consequence, will be compelled more than ever before to justify the role they play in the chain and underline the value they add.

Every consumer trend has been shaped by the recession. In some instances, such as price, the effects have been obvious: who would have predicted, for example, that high-end retailers would suddenly begin to extol the virtues of their value proposition instead of distinguishing their products on the basis of terms of things like taste and provenance? Elsewhere, changes have been more subtle: interest in ethical sourcing has grown, despite the premium placed on Fairtrade. As we head into the next decade, all we can predict for certain is that this trade will never stand still.

See you in 2010!

Mike Knowles

You join us here at the Retail Arena for what promises to be a compelling game between Sporting Fresh Produce and the Food Industry Giants. Bit of a mis-match, of course, given the big names playing for the Giants; with Ronald McDonald offering quick distribution up front and Pepsi Cola giving the team its fluidity, this expensive outfit is likely to provide a tough test for the fresh faces in the Produce team. Huge sums of money have been pumped into the Giants, and if it was simply a question of how large their marketing budgets were then this competition would be over before it even started.

The fresh team may have to make one or two changes to its line-up in order to prevail. Up front, we’ve witnessed the emergence of several attack-minded players with an eye for goal. Sometimes tricky to deal with, these players have to be kept on side even when off-field issues like contracts are causing friction. Just look at that Dutch centre-forward: the way he got it on the deck, controlled it and got it past the opposing shopkeeper was superb.

In defence, you’ve got plenty of players who start things off with a simple pass, sending it through the air or keeping things on the ground. But midfield is where most of the action still takes place. Here, the team needs dynamic players who know exactly where the goal is but who are also excellent at tracking back. These players can set up a move and get the ball rolling, but are also able to deliver the telling pass and hit the target when it matters.

Finding the winning combination has a lot to do with getting the balance of the team just right. Local, home-grown talent is key, naturally, and many of these will have been nurtured from an early age through the youth academy, but there is also a lot to be said for throwing a number of foreign imports into the mix. In many cases, these guys offer big-match experience and are aware of things like having the right kit and how to keep the referees on side.

Ultimately, it’s all about pleasing the people who will pay good money for a high-quality product, provided they go home happy. If this team works well together, then the players can still emerge as winners.

Mike Knowles

Thank goodness for that! The recession is finally over… Well, sort of. New figures published in August suggest Germany and France have turned the corner, economically speaking, while even the credit crunched man of Europe, the UK, showed signs of a return to fiscal health as the September edition of Eurofruit Magazine went to press. As leading economic theorists Slick Aguilar and Mickey Thomas once said, nothing’s gonna stop us now.

But wait, what’s that I hear you say? You don’t want the recession to end? Well, I’m sorry, but the time for those two-for-one deals at restaurants, free wi-fi connection in hotels and a whole raft of special offers down your local supermarket must cease forthwith now that we’re back on track. The light at the end of the tunnel is back on, and someone has to pay for the electricity.

Or do they? Some might argue that this recession has changed things forever, that it’s been a blessing in disguise. Of course, recessions are dreadful, particularly where jobs are lost, homes repossessed and businesses that took people years to grow suddenly fold overnight. But there are positives too, and emerging from an economic downturn depends partly on a willingness to believe once more in the potential for things to grow. My belief is that all recessions have a positive side and this one has been no different. The excesses of the housing boom have been curtailed, deceptive and downright immoral banking systems are coming under greater scrutiny, and short-term, short-sighted speculation has been exposed for the sham it is. Balanced budgeting is in, wild wagering is out. As Joseph Schumpeter suggested in his book Capitalism, Socialism and Democracy, recessions are indeed a necessary evil for capitalist societies, safety devices which can stop economies from over-reaching themselves and, at the same time, generate new potential in terms of investment opportunities.

When we do finally emerge from our economic funk, it will most likely be to a different kind of prosperity.