The Fifth Annual GlobalTrade Symposium, Produce Import & Export: The Disruption of Established Markets, at The New York Produce Show and Conference focused on the rapidly changing produce supply chain. As traditional produce outlets evolve and outside disruptions occur, grower/shippers, packers, and brokers are forced to conduct business differently. The perspectives of esteemed speakers from the industry offered key takeaways for retailers on ways to give consumers what they want when they want it in today’s changing environment.
“Our speakers looked at disruptions from three perspectives — changing dynamics that create new paradigms, paths to success amid change, and opportunities created by disruption,” said moderator Jim Prevor, chief executive and editor-in-chief, PRODUCE BUSINESS.
Adapt To Dynamic Changes
“In the U.K., supermarket price wars make sustainable supply less plausible,” explained Simon Martin, sales and marketing director, QV Foods Group, Spalding, England. “With a higher proportion of produce being sold to supermarket chains at or below the cost of production, more suppliers are operating on slender margins. Furthermore, discounters such as Aldi and Lidl and new retailers have powered into the market.” Martin named convenience markets, low-cost restaurant dining, and online grocery shopping as additional forces putting pressure on prices.
He also noted “fresh sales are losing share to prepared meals and meal solutions. We are seeing a massive reduction in potato volume, for example, because of cooking times.” Martin added the entire industry is being hurt by abundance. “Too much product being grown, too much capacity, too many facilities, and too many companies doing the same thing,” he said.
“Work together with others, build long-term relationships with suppliers, and engage with what consumers want,” advised Martin. “For example, we now sell less bulk, more smaller packs, and added-value items such as ready-to-roast potatoes and vegetables already seasoned. Customers want easy to cook, shorter cooking times, and cost-effectiveness.”
Less-than-truckloads (LTLs), are becoming a “necessary evil” to better meet the needs of today’s consumer, said Steve Gabrick, manager, Complex Account Group, Sourcing North Region, C.H. Robinson, Minneapolis. “Supply chains are changing to smaller orders more frequently, delivered to different people in different places. We have to meet the customer where the customer wants to buy — inner city stores, small format stores, Fresh Direct and others.”
He said smaller, more frequent LTL deliveries could meet needs throughout the supply chain. “Small and local farmers create a massive LTL marketplace, retailers want freshness and convenience, and Millennials shop for health and convenience. Expanding categories such as ultra premium juice, fresh-cut fruit and vegetables, and single-serve convenience items can be delivered in smaller quantities, more frequently, and with greater visibility.”
Gabrick also noted, “Retailers are demanding more freshness, longer shelf life, and less shrink. We can do this with smaller orders more frequently.”
Seek Paths To Success
It’s important to turn disruptions into paths to success, noted Johan Dique, group managing director, Capespan Group, South Africa. “During deregulation of the South African market in the mid-1990s, we made assumptions that didn’t work out. We believed that our market share of exported fruit would not drop below 80 percent, our relationships with retail were strong, and high hurdles to entry would discourage competition. We were wrong.
“Market share dropped, competition came from growers, and low barriers to entry led to increased competition. Retailers welcomed this, and they preferred having access to a greater number of focused suppliers rather than fewer general suppliers. Retailers make the rules, and suppliers need to adapt in order to add value for retailers.”
Capespan adapted to retailer needs by expanding counter-season and year-round global procurement and installing cold storage and packing facilities at the farm level to reduce costs and increase efficiency. Dique advised the audience to “never allow the competition to play your game.”
Look For New Opportunities
“The wholesale sector is not dying, even when facing disruptive forces such as globalization, competition from expanding foreign markets, legislation that leads to increasing costs, recessions, more competition from traditional wholesale products, and market relocations driven by changes in land values,” said Richard Thompson, director, Gilbert Thompson (Leeds) Ltd., Yorkshire, Great Britain.
Thompson’s company continues to look for new opportunities to diversify. “We created GT Prep, our own prepared-food business, to cater to changing customer needs. We are moving to 24-hour trading. Supermarkets will be able to order online through our website. Supermarkets dictate our business.”
Key Takeaways Benefit The Supply Chain
“Do not be paralyzed by fear of the unknown. Tackle disruptive forces by believing in the pure goodness of fresh produce,” advised Nic Jooste, marketing director, Cool Fresh International, Ridderkerk, The Netherlands. “Be creative, innovative and daring. Search for change. Understand the customer so well that the product sells itself. Look at how consumers buy and bring your product to them. Don’t ignore clear signs from the marketplace. Finally, build a dedicated brand and have a passionate love affair with your products.”
In concluding the panel, Prevor noted, “Whatever the obstacles, the challenge before us is to apply intellect and abilities to transformation. The greatest risk is not doing anything. The path to success is to understand difficulties, challenges, and opportunities, and then go into a world where you can be inspired to find those opportunities.”
Source: PerishableNews.com