Industry’s future ought to include pared-down USDA - The Packer

Industry’s future ought to include pared-down USDA

03/13/2002 12:00:00 AM
Larry Waterfield

You can get a little glimpse of the future by studying the fight between the Florida Department of Citrus and Sunny Delight, the fruity drink the department claims is a collection of chemicals masquerading as some kind of orange juice.

Florida doesn’t want a giant company, Procter & Gamble Co., Cincinnati, to cash in on its reputation for producing real orange juice from real oranges.

There will be other fights like that in the future as the produce business tries to protect its pristine image from the commercial coattail hangers or even government agencies bent on building up regulatory empires by magnifying any food safety incident.

The produce industry is going to be challenged to protect its family jewels, its golden brands, whether they be Washington apples or Idaho potatoes or Texas onions or a hundred others.

Another challenge will be to save some kind of business relationship between growers and mid-size shippers and the new global food companies now forming. The prime example is Royal Ahold, the Zaandam, Netherlands-based giant that is now the world’s first global food retailer.

Ahold operates in a couple of dozen countries, under 36 chain store names, with $70 billion in sales, and now has thousands of stores in the U.S. and 9,000 worldwide. Its strategy is to “act globally, think locally,” but it is beginning to consolidate its produce buying in the U.S.

At the same time, company officials say they want to preserve a relationship with growers and produce suppliers. Ahold has been meeting with groups of suppliers, sometimes hundreds at a time, to explain company policies and practices.

Ahold says it wants to retain local relationships, such as its “Locally Grown” program for its Food Giant stores in the Washington, D.C., region, that features local growers. A lot of people will be watching to see whether hugeness and localism can live side by side. If not, then suppliers will have to consolidate or go out of business.

Another constant challenge is going to be finding ways to compete in a global market. George E. Smith of Midsummer Marketing in London, which represents U.S. produce companies, says Europeans don’t need U.S. produce — they have many other choices. They will buy American only if items become “fast-moving consumer goods,” or FMCGs, and not just commodities. An example is Washington apples, which are backed by promotions and contests to create consumer excitement. That takes work, money, coordination, attention to detail and deep knowledge of local markets.


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