Adding Value to Produce
De-commoditization is an area yet to be fully explored in the produce industry. Mike Meinhardt, executive vice president of sales at Provision Analytics believes not only is this an opportunity of untapped potential, but also may help add value back to growers to solve other operational and profitability issues.
Meinhardt… “From a grower/packer/ shipper standpoint, what can we do in produce to decommoditize a commodity, and what that does is it motivates and inspires consumers to pay more money for the product. If the consumer is motivated and inspired, the retailer will be able to charge more, be willing to pay more, and then you start to create that profitability gap which may help you handle other problems like water and labor. But if you’re getting squeezed, squeezed, squeezed on every end and then you’ve got other problems at that end, the water, labor, and other things, it’s tough to solve problems when you’re being squeezed financially, so that’s what I look at.”
Produce first experienced this when the interest in organic commodities became popular. Since then, they’ve seen a fall in organic sales, so Meinhardt believes the industry must establish a long-term strategy.
Meinhardt… “You can use that example in wine and in beer and you can go through so many different products and find, what are we doing in produce to get there? Short-term solutions are packaging, sponsorships, who’s going to be the official orange of the NFL or produce company of the NFL, like there are some short-term kind of plays, but really it’s got to come from product; a better product that tastes better that is noticeably different.”
Meinhardt adds that understanding a consumer’s food priorities and communicating that throughout the supply chain is the first step for successful implementation.