Following the sale of its auditing division to its former director of auditing operations, Primus Group is now looking to expand its service offerings.
While the Primus Group Inc. is best known for auditing, the firm’s core services actually include microbiological testing offered from seven facilities based in the United States and Mexico, data management, pesticide residue analyses and a service offering supply chain review for fresh produce suppliers.
A new Data-Driven Counseling Services Division is being shaped to help buyers of fresh produce leverage the virtues of the new Foreign Suppliers Verification Program.
This service will harness all of the data generated in the company’s various departments as well as data from other certifying bodies, testing laboratories and consulting firms to provide clients with information that will assist them in their attempts to develop, maintain and confirm safe production and handling practices.
Robert Stovicek, chief executive officer of PrimusLabs, believes that the new division will provide the fresh produce industry with a service that no company anywhere in the world is currently supplying.
“We have long played the role of ‘info-mediary’ between buyers and suppliers,” he said in a press release. “Since Primus Group now possesses the greatest wealth of understanding of any business worldwide about how best to act on data to improve food safety, we are positioned to enhance that role. Therefore, the end product of our Data-Driven Counseling Division is to provide services that will assist all interested retailers and food service companies in implementing best practices that our new division identifies.”
If two trade associations, representing their respective industries, are right, the 152,000 convenience stores in the United States might soon help this nation increase its collective consumption of fresh produce and help stem the tide on the country’s obesity issue.
The United Fresh Produce Association and the National Association of Convenience Stores recently collaborated on a primer designed to build the business case for produce sales at convenience stores.
At first glance, the effort appears to potentially be a win-win-win for convenience stores, the public and the fresh produce industry.
Jeff Lenard, vice president of strategic industry initiatives for NACS, and United Fresh Vice President Jeff Oberman in separate interviews both told The Produce News that this primer is just the first step in helping convenience stores sell more for fresh produce.
It was developed with the help of more than two dozen retailers, distributors and produce companies, who were charged with the idea of creating best practices for growing produce sales at the convenience store level.
Lenard said establishing the business case is the first step to generate interest by all necessary business partners: retailers, suppliers and the all-important distributors.
“It has to include distributors,” said Lenard. “It’s not going to get done without distributors.”
It is not an overstatement to call distributors the lifeline of the convenience store industry. In general, those stores take items in very small quantities and are not a logical target for extensive direct store delivery. Distributors connect these retailers with the suppliers.
Lenard said the idea of significantly increasing produce sales at convenience stores has great interest to this group because it basically allows convenience stores to shift from a problem-maker to a problem-solver.
“Over the last year the conversation about convenience stores has changed,” said Lenard. With regard to the obesity epidemic, he noted that “there is real interest in becoming part of the solution.”
The more than 150,000 convenience stores can largely be defined as gas stations with stores attached. That represents about 84 percent of them. They sell 80 percent of the gas utilized in the United States.
The other 16 percent would typically be standalone convenience stores, like 7-11 or other national chains, or even a corner store in an urban environment. More than 18,000 of these convenience stores are located in what are called food deserts, where residents have no access to conventional supermarkets.
Because convenience stores typically sell high-calorie, relatively unhealthy packaged goods, they have been targeted as a main contributor to the nation’s obesity epidemic. Lenard said convenience store operators would like to alter that image and they also see that declining gas sales puts them in need of finding new sales opportunities.
United Fresh agrees.
Oberman said as with the salad bar initiative, United Fresh’s interest in this concept is to increase the consumption of fruits and vegetables by developing alternatives for delivering fresh fruits and vegetables to consumers. Just as the salad bar effort is designed to get more fruits and vegetables in school cafeterias, this plan is designed get more fruits and vegetables where America spends a significant amount of its snack dollars.
“We continually look for opportunities in new channel development,” Oberman said.
Lenard said there are many challenges to overcome but there are convenience store operators that have done a great job of adding fresh produce to their mix, and so there are case studies on which best practices could be developed.
The biggest challenge is keeping fresh produce “fresh,” Lenard said, noting that most convenience stores get a single delivery each week.
“If you are going to carry fresh produce you need at least two to three deliveries per week, and maybe daily,” he opined.
For a distributor, making a delivery costs money and their efficiency standards demand that they send full trucks out the door, not ones loaded with a few produce items.
While this is a monumental challenge, Lenard said this effort was established because there are ways to succeed. Including distributors in all phases of this plan has been key, as he is confident solutions will be found.
Oberman said some convenience store operators have already done a great job adding fresh produce to the mix. He noted that Kwik Trip, a chain of convenience stores, is selling a tremendous amount of bananas in each store on a daily basis. He added that convenience stores typically sell dairy products, so they have some experience with limited shelf life products and multiple deliveries per week.
Oberman believes collaboration between produce suppliers and broad-line distributors could be the key to success.
Lenard said there is great incentive to make this work as fresh produce represents an opportunity for increased sales at a very good margin. He said that while gas sales typically account for about 70 percent of a convenience store’s revenue, they account for less than 30 percent of profits.
Though a gallon of gasoline has sold from $2-5 over the last few years, a convenience store operator typically only makes three to five cents per gallons. Other big revenue makers, such as cigarettes and lottery tickets, also have very small margins.
That has never been an issue with fresh produce. Conventional retailers typically operate on a margin of 30 percent or more on fresh produce. One need only look at a carton of lettuce that typically retails for about $25 to see the numbers can make sense for any convenience store operator.
Lenard and Oberman believe that initially the addition of value-added items at the convenience store level make the most sense. And Oberman said the regional chain convenience stores, with multiple stores under one umbrella, might have the best opportunity in the short run to solve some of the supply chain management issues.
The new publication is the first deliverable from the partnership that NACS and United Fresh formed in June 2014 to identify best practices to grow produce sales in convenience stores.
“We have seen a dramatic increase for customer demand for fresh produce at convenience stores, and this resource was developed to communicate the huge opportunities for everyone in the distribution chain, from farm to store,” NACS Chairman Steve Loehr, vice president of operations with La Crosse, WI-based Kwik Trip, said in a press release from the two organizations. “A recent NACS member survey reaffirms the importance of produce; 62 percent of members say that produce is important to their business plans in 2015.”
In the same press release, United Fresh Chairman Ron Carkoski, president and chief executive officer of Four Seasons Family of Cos. in Ephrata, PA, said, “Through contributions from NACS and United Fresh member companies participating in this effort, we have identified solutions in the distribution and merchandising of fresh produce, which ultimately will lead to new opportunities for produce suppliers, distributors and convenience store retailers to grow sales.”
Oberman said follow-up documents developed by the two organizations and their members will deal with supply chain issues and developing a blueprint for success.
He said it is important that convenience store operators manage their expectations surrounding this new opportunity and allow sales to grow naturally.
He noted that this is already a growth area for convenience stores and without doing anything, produce sales at convenience stores will double in the short term. In the next five years or so, Oberman said sales 10 times greater than they are now is not an unrealistic goal.
WASHINGTON — Just weeks after the U.S. Department of Agriculture deregulated two varieties of genetically engineered Arctic apples, the Food & Drug Administration announced that Arctic apples are safe for consumption, along with six varieties of Innate potatoes genetically engineered to lower the potential for acrylamide and black spot bruising.
Based on company documents, FDA found that food and feed from the GMO crops are not “materially” different in safety, nutrition, composition or any other traits from apples or potatoes on today’s market.
Okanagan Specialty Fruits Inc.’s Granny Smith and Golden Delicious varieties are genetically engineered to reduce levels of enzymes that can cause browning. Last month, USDA cleared the way for the company to grow and propagate the trees and the company said it would begin test marketing the products as early as 2016.
The U.S. apple industry is not a fan of the GMO varieties and says consumers will make the ultimate choice in the marketplace.
UDSA also cleared J.R. Simplot Co.’s Ranger Russet, Russet Burbank and Atlantic potatoes for commercial planting in 2014. These products are genetically engineered to lower the levels of asparagine and reducing-sugars, thus lower the potential for acrylamide during heating, and to lower the level of endogenous enzymes that reduce the potential for black spot bruising.
“The potato industry supports a strong regulatory and food-safety review for new technologies before they enter the market place," said Steve Holton of the National Potato Council. "The FDA announcement concludes a thorough review of this new potato variety. We have confidence in the conclusions of that review. Our industry is committed to providing consumers a range of choices in varieties and characteristics of potatoes consistent with their preferences including genetically modified or non-genetically modified.”
Potato growers have been looking for an answer to concerns about acrylamide in french fries, though it’s unclear whether the new technology would disrupt trade or be on McDonald’s menu as the fast-food giant announced last year it had no plans to source GMO potatoes.
Consumer group Center for Science in the Public Interest said there’s no reason the GMO potatoes and apples would pose any food-safety or environmental risk, but said the process for reviewing these new crops is flawed.
“What has happened in the case of these two products is a voluntary consultation ‘encouraged’ by the FDA,” said CSPI Biotechnology Director Gregory Jaffe. “No regulatory process should have to rely on the voluntary acquiescence by the regulated party.”
Jaffe called on Congress to pass legislation that would require new biotech crops to undergo a mandatory approval process before foods made from those crops reach the marketplace.
Jaime Chamberlain expects Mexican produce exports to North America “to evolve and grow faster in the next 10 years than we have in the last 50 years.”
Chamberlain, president of the Nogales, AZ-based J-C Distributing Inc., shared these thoughts March 3 in Yuma, AZ, at the University & Industry Consortium Conference.
Chamberlain is a former president of the Fresh Produce Association of the Americas in Nogales and holds several key leadership positions in Arizona.
“Technological advances in seed breeding, soil conditioning, grafting, fertilization, pesticide use, packingshed automation and greenhouse ag growth have brought Mexican agricultural practices into the 21st century, while making them competitive with first-world economic powers in productivity and quality,” he said.
Chamberlain indicated that U.S. imports from Mexico have “reached historic record highs of 387,000 truckloads of produce through all 47 of [U.S.] Southwest border ports of entry with a value of $8.3 billion for the 11.4 billion pounds of produce. The total value was just $4.9 billion in 1997. Our Mariposa Port of Entry in Nogales crosses 37 percent of all the Mexican fruits and vegetables consumed in the U.S. and Canada. The Mariposa port is the most modern facility of its kind in the United States with a recent government investment of over $215 million for its complete reconstruction.”
Mariposa has the capacity to process over 4,000 trucks a day, “yet we only have the manpower to process the 1,600 to 1,800 trucks a day we currently cross. U.S. Customs & Border Protection is understaffed by almost 400 agents at our port alone. In fact almost every land port, seaport and airport in the U.S. is understaffed. This creates an inefficient and slow process for foreign goods coming into and out of the U.S. Recent studies show that each Customs officer adds $2 million to the U.S. gross domestic product.
“The reason I point out this specific challenge of our ports of entry is because Mexico is poised to grow exponentially in the realm of greenhouse-protected agriculture,” he added. “Of the estimated 800,000 hectares of protected agriculture in the world, Mexico ranks fifth, behind China, Spain, Turkey and Italy. Mexico’s 20,400 hectares (50,400 acres) of greenhouse infrastructure are worth over $7.1 billion. This greenhouse sector of Mexican agriculture generates over 280,000 direct and 350,000 indirect jobs for Mexico. In comparison, the U.S. and Canada combined only have 5,000 hectares (12,350 acres) of greenhouses currently in production.”
Mission Produce Inc. has promoted Robb Bertels to vice president of marketing. Bertels has been with Mission for two years, serving as director of strategic marketing for the Oxnard, CA-based global avocado supplier.
Bertels has been involved in the produce industry for over 25 years, including stints with agriculture-based advertising agencies.
Bertels will replace Dave Austin, who is retiring as marketing director after 18 years at Mission Produce.
"Dave will certainly be missed," Ross Wileman, Mission’s senior vice president of special initiatives, said in a press release. "He was instrumental in Mission’s growth across North America and was a key figure in the implementation of Mission’s Ripe Program.”
Bertels will report to Brian Miller, senior vice president of sales and marketing, as the company further develops its sales and marketing efforts.
“Over the past two years Robb has had in-depth involvement with all phases of Mission Produce’s global operations, and is ready to lead our marketing efforts both domestically and around the world," Miller said in the press release. "His background with the produce industry, marketing communications and brand strategy will strengthen our approach as the company continues to grow.”
“Brian is putting together a team that will help take Mission to the next level, and Robb will work with closely with him and Ron Araiza, our VP of sales, as we continue to build our business around the world,” Steve Barnard, Mission’s president and chief executive officer, said in the release.
“It’s an exciting time to be involved with Mission Produce, and avocados,” said Bertels. "We’re in a period of unprecedented growth in the category, and Mission is leading the way. Our new facilities in Oxnard and Peru put us in an outstanding position now, as well position us for future growth. Mission is a great company, and I’m very happy to be involved in our future.”