What's happening to produce these days? Quite a lot, it seems, judging by several news articles and features in this week's SN. And much of what's happening centers on the fact that produce is beginning to behave as, and be treated as, a packaged-goods product. Let's start our quest into produce with a look at Page 1. The news article at the bottom of the page shows that two Kroger subsidiaries in California sent a letter to produce suppliers asking them to help offset the retailers' costs associated with opening a new warehouse and converting some newly acquired supermarkets.
Vendors were offered three options, involving either in-kind contribution of product, or some sort of cash contribution, with the latter option based on the amount of business vendors do with the retailers.
Vendors and brokers of consumer packaged goods have long received demands of a similar kind involving the contribution of product or labor associated with a multitude of retailer activities, such as special promotions, store openings, demonstrations or warehouse openings. And, in the main, these contributions have been viewed -- unhappily -- by vendors or brokers as a cost of doing business.
The current situation caused an uproar because produce suppliers haven't been exposed to the tradition of vendor
contribution to retailers' costs, and interpret it as little more than ill-disguised extortion. That viewpoint is a little hard to refute, although retailers argue that their facility upgrades generate new operational efficiencies and sales, which confer benefits on all participants -- vendors and retailers alike -- so why shouldn't vendors participate in backstage costs such asset improvements require?
And, perhaps because these matters are new to produce vendors, the furor surrounding the issue spilled out into the consumer press, sparking a number of articles in major California newspapers, including the Los Angeles Times.
Rarely do the internal workings of the industry provoke such public exposure, although the somewhat similar issue of slotting fees has done so lately in connection with Congressional hearings into the practice.
Apart from that situation, there are a number of weighty news features in this week's SN concerning produce. On Page 35 is a review of some items to be on the agenda of the United Fresh Fruit and Vegetable Association, which is to convene in Phoenix Feb. 26. Included is an overview of food-safety audits, trade practices (including the practice mentioned above) and others.
Finally, take a look at the feature starting on the same page that assesses the merits of produce shipping containers made of two competing materials: recyclable corrugated cardboard or returnable plastic. Each material has a forceful constituency in the industry. And, arcane as the arguments might seem, this is an issue that holds the potential to substantially change the entire logistical premise of produce shipping and merchandising.