THE NEW MATH OF PRODUCE IS A TWO-SIDED EQUATION

Robert Vosburgh

There was a time when the produce business was a fairly straightforward endeavor: Grow it, buy it and sell it. In its simplest form, the idea was to take the entire crop, no matter how large, and to keep sending it down the pipeline until all of it was gone. From grower to retailer, every effort was devoted to finding ways of moving the entire amount into the hands of consumers. It was a formula that emphasized price, because that's what produced the best results.

Today's blueprint is infinitely more complicated. Fresh produce has become Big Business to retailers, who've come to rely on the department for its strong contribution to the profit side of the ledger. That's not necessarily a new development for produce, but it does reflect the new, increasingly intricate relationship between supply and demand.

This shift in the balance is a hot topic right now within produce circles because it's redefining the way grower/shippers and retailers interact. Consolidation and related business forces were the primary factors compelling buyers and sellers to reassess their relationships.

But a key point that's just emerging, now that consolidation has transformed the entire industry, is that the consumer is dictating what is grown, bought and sold -- a fundamental change from what characterized business in the old days.

What grower/shippers and buyers are bottom-line struggling with is the concept that consumers are a shared responsibility. It's one of those epiphanies that seems obvious after it's experienced, but frustratingly elusive up until that point. And, it can be difficult to accept because it means admitting the simple buy-sell formula is horrifically outdated and ineffective. It means working under a more sophisticated consumer-based model that emphasizes category development, where the focus is no longer on price, but value.

For example, the challenges of moving fresh produce from the source through the store to the consumer has always been complicated by the simple fact that the past is often a poor indicator of future activity -- particularly in produce, with all the variables of nature. Nevertheless, until fairly recently, there really hasn't been a better way to calculate future demand without relying on past prices and net returns. And that's been a big part of the problem in getting suppliers and retailers to think in terms of value, because that formula is based on an entirely different set of elements.

This whole emerging subject is going to be part of a day-long conference, organized by the Perishables Group, this Friday in Orlando at the annual convention of the United Fresh Fruit & Vegetable Association. One of the basic tenets of the program is that consumer demand for value is compelling suppliers and retailers to join forces and to share the burden of the sell-through. Progressive grower/shippers are answering the call with a strong program of after-sale support, by examining the selling environment, visiting stores and sharing the retailer's selling goals.

In other words, the question grower/shippers should put to retailers when they say, "This is what we want to do..." isn't "What?" -- but "Why?"