National promotion concept debated at PMA
by Tim Linden | October 08, 2009
ANAHEIM, CA -- With speakers on both sides of the issue, the concept of a generic national fruit and vegetable promotion campaign was debated during a workshop held during the Produce Marketing Association's Fresh Summit International Convention & Exposition, held here Oct. 2-5.
The amount of money being proposed for this effort appeared to be the hot topic of conversation during the so-called town hall meeting, which took place Oct. 3.
Most of the panelists seemed to be in favor of the concept, or at least in favor of continuing to move the discussion forward to allow more produce industry members to become familiar and even comfortable with the idea. One dissenter, however, was Rick Antle, president and chief executive officer of Tanimura & Antle Inc., based in Salinas, CA.
Mr. Antle had forewarned a much larger PMA crowd at the opening luncheon of his thoughts a day earlier, when he used part of his time at the podium as a sponsor of the event to express his reservations about the national promotion program. At that luncheon meeting, he warned the industry to take heed of the past demise of the separate industry boards that were charged with promoting Washington apples and California lettuce.
A quick survey of longtime PMA convention-goers revealed that no one could recall sponsor time being used before to speak for or against an industry issue.
Interestingly, the following day, Rainier Fruit Co. spokesperson Suzanne Wolter also took a bit of her time at the podium to discuss the national promotion board as well, saying that Rainier supported the promotion effort. During the town hall meeting, Mr. Antle was on the panel, and he suggested that the idea was dead in the water because it does not have broad industry support. He cited a survey by the Produce for Better Health Foundation, which is sponsoring the national promotion board dialogue, showing that only 22 percent of industry respondents supported the effort with 38 percent opposed and 40 percent undecided.
The T&A executive said that even if all who are undecided voted in favor, the idea still would not reach the 70 percent approval figure that is considered to be the threshold the U.S. Department of Agriculture needs to move forward with what would be a national marketing order funded by mandatory assessments.
Mr. Antle said that he wasn't opposed to spending the money, but he intimated that the amount of money being considered would be insufficient to have an impact. He noted the $30 million expenditure being proposed and mentioned that it paled in relation to the lofty figures spent on promotion by many other groups and organizations.
For comparison sake, he cited the $1.3 billion annually spent by Kraft Foods, the $1.2 billion spent by General Mills and the $350 million spent on the "Got Milk" campaign.
The T&A president said that a cultural change is needed to increase consumption, and he expressed skepticism that it could be achieved through this relatively small promotion program.
Others disagreed that $30 million was too small to make a difference. Paul Klutes, director of brand sales for C.H. Robinson Worldwide Inc., based in Eden Prairie, MN, and the current chairman of PBH, believes that a $30- million annual budget is enough to drive sales if it is spent properly. He said that two of the national brands used through a licensing agreement by C.H. Robinson -- Tropicana and Welch's -- maintain a national presence with less than a $30-million annual budget.
Speaking for C.H. Robinson, Mr. Klutes did not specifically endorse the promotion board but said that his firm is interested in keeping the dialogue moving forward and helping the industry determine if this is where it wants to spend its money. He called it a "resource allocation issue."
Frank Ruppen, a consultant in the branding arena and president of Forward Associates LLC in Fort Lauderdale, FL, agreed that $30 million would not be enough money to carry on a program that relied on mass-media advertising, but he said that it is enough money to make a difference if it is spent wisely. He suggested a grass-roots effort that relied completely on what he termed an "outreach effort."
Economics Professor Harry Kaiser of Cornell University also supported the belief that $30 million is sufficient to make a difference. He said that he was neutral on the concept but said that the level of expenditure "is above the minimum threshold that you need to have an effect on consumption."
Dr. Kaiser added that many industry promotion boards in the country spend far fewer dollars and do create a return on investment of $5 to $10 for every dollar spent. He said that if a program is developed, it should be multi- faceted and should include an advertising component. Dr. Kaiser noted that diversified programs tend to be more successful.
A strong advocate for the program was Maureen Torrey Marshall, chief executive officer of Torrey Farms Inc. in Elba, NY, whose family farm grows vegetables on 6,900 acres and also operates a dairy.
As part of the dairy industry, Ms. Marshall said that her company has to pay an assessment equal to 20 cents per day per cow. When it first got into the dairy business, Torrey Farms was opposed to the assessment, but Ms. Marshall has become a believer. She said that the promotion of dairy products over the last couple of decades has increased consumption by 15 percent in that time period. Of course, she also revealed that production has increased 10 percent in the last four years, putting the dairy industry in a current crisis condition.
Dr. Kaiser has studied the relationship between promotion that increases consumption and the increased production that follows the change in demand. He said that while there is a connection, history shows that promotion tends to increase demand at a faster rate than increased production.
Robert Keeney, deputy director of the USDA's Fruit & Vegetable Programs, was also on the dais. He assured the audience that the high level of debate and pros and cons being discussed are not unusual in these early stages of program development.
Mr. Keeney said that the USDA will not take a position on the issue, but it is fairly common that it takes an industry a long time to work through the idea and develop industry consensus.
Mr. Klutes said that PBH will meet at the end of October and will determine how to move forward. He indicated that the PBH board could consider continuing the dialogue longer before determining if there is enough industry support for the next step, which would be requesting USDA to start the formal marketing order development process.