U.S.: 'Buy local' won't affect SH growers, says DiPiazza - FreshFruitPortal.com

U.S.: 'Buy local' won't affect SH growers, says DiPiazza

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U.S.: 'Buy local' won't affect SH growers, says DiPiazza

With U.S. retailers like Wal-Mart, Safeway and Supervalu pushing to boost their 'locally-grown' food offerings, debate has ensued about what this implies. While North American companies look to reduce food miles and and cater to consumer 'sustainability' preferences, could this be a red flag for Southern Hemisphere fresh produce exporters? Bob DiPiazza thinks not.

Bob DiPiazza

The former senior VP of Wal-Mart Sam's Club says the trend will likely have a greater affect on U.S. growers than those in South America, Oceania or southern Africa.

"If you've invested in infrastructure, land and packing houses to grow broccoli in California, and all of a sudden the retailers are only going to buy locally-grown from August until the first frost, youā€™ve got a problem," he says.

"I think 'locally grown' is much more of an issue for domestic production than for somebody thatā€™s in the Southern Hemisphere; there's nobody who is going to grow clementines in the winter, or peaches or nectarines or cherries. It's not going to happen.

"Itā€™s going to be hard to buy local in January in the United States."

The low U.S. dollar has had serious effects on fruit exporters from Santiago to Sydney, Trujillo to Te Puke, while global sharemarket jitters have continued to raise fears about tough economic times ahead. If the dollar were to devalue further the consequences for export profitability in the Southern Hemisphere could also take a turn for the worse.

But for DiPiazza, growers are far from the 'incremental penny' of market exit and still have opportunities to benefit from the 300 million-strong U.S. market.

"I think, like anybody else theyā€™re going to have to look at their businesses, they're going to have to find efficiencies, streamline, find better ways to manage supply chain costs, increase productivity.

"Every business in general is going through that now and I donā€™t think production agriculture is any different. Everyone's looking to do more with less."

Value adding and the grape tomato home run

DiPiazza highlights the success of packed salads and pre-cut vegetables, but packaged fruits have struggled even though sales have been high.

"I think the best pre-cut fruit programs are the ones done at store level where they make sure theyā€™re only cutting up mature fruit, but thereā€™s a lot of packaged fruit and it depends on the item," he says.

"Pre-cut pineapple is great, it's growing and it's a big item. You get disappointed sometimes with the melon category - canteloupe, honeydew, sometimes it's not at the brix level it should be and the ripeness it should be.

"Tomatoes has been a category that's really exploded. Every now and again a 'home run' as I like to call it comes along and grape tomatoes were a home run; it's so easy, you put them in the colander rinse them off, no slicing, no dicing, and put them in the salad."

From the growers perspective this begs the question, 'who's up next to bat and will they too hit over the wall?' With varying outlooks for different categories, the former Produce Marketing Association (PMA) chairman gives his fruit-by-fruit verdict on what's to come.

Clementines

The consultant fully recognizes his interests are tied to the success of the clementine and believes the fruit could be the next great success in the industry. Growers are taking notice, with Chile's easy peeler harvests rising by more than 10% this year while South Africa's soft citrus planting area rose by around 2% in 2010/11.

"They're grafting the success of the California clementines, because itā€™s creating more year-round demand for the product, introduced more customers and it's an easy product to eat; itā€™s very easy to peel, itā€™s just the right portion size for kids, itā€™s seedless so itā€™s got all the attributes that make it very acceptable, and the demand just keeps growing

"For years I sold the Spanish (clementines) as that's all we had, and I said if anyone ever figures out how to grow that here in the U.S. itā€™s going to be a huge success and it has been.

"The Southern Hemisphere import deal is benefitting from the inroads weā€™ve made with the domestic product in the U.S."

Pomegranates

In a similar way DiPiazza feels Southern Hemisphere growers could ride the wave of Paramount's success with pomegranates in the domestic market.

"Pomegranates were a pretty obscure item in the U.S. - Paramount took pomegranates and branded them as the Wonderful brand, they grew a nice large size pomegranate and started to gain some traction at retail, but again it was a holiday item.

"Then they came up with POM juice and now they even do the value-added seeds so you don't have to mess with the whole pomegranate.

"They've taken this item with a lot of health claims and built it to be a national brand, and have grown the pomegranate business considerably. Iā€™m sure that people are looking at that success and thatā€™s why theyā€™re growing it."

Berries

There aren't many people in the industry who would question the 'explosion' of the berry category over the last eight years.

"Strawberries just continue to grow as the availability continues to broaden, because weā€™re practically year around. We get some rain in the winter and we might get a gap, you know everybodyā€™s figured out how to extend their seasons and get more availability.

"Of course thereā€™s been positive effects from health benefits, the antioxidants of blueberries; the categories have just exploded, and while value adding probably took a little bit of a hit from the economy, people's lifstyles really havenā€™t changed and value added is still important to a time starved consumer."

Avocadoes

While a lot of reports point to the U.S. Hispanic population as a big driver of recent avocado market growth, DiPiazza says the trend goes much deeper than that.

"The Hispanic population is absolutely growing leaps and bounds, but the biggest thing is that when we figured out you have to sell avocadoes ripe, the business took off - it's possible to consume more avocadoes in salads, guacamole, in recipes, itā€™s very popular in egg rolls now.

"The consumer doesnā€™t have time to wait for something to ripen, so the whole thing on conditioning avocadoes has opened up that market, and of course the avocado commission and people like Calavo have done some good advertising; they advertise into the Superbowl which is one of the most expensive events that you can advertise on in the U.S.

"It's been growing nicely, and then we went through the transition where we weeded out some of the varieties that were less desirable and really focused on the Hass variety, which is the best tasting - with the global economy now you can have Hass year round, so thatā€™s helped it too."

Melons

While pre-cut melons may have had difficulties recently, the fresh fruit itself is 'going fine'.

"Youā€™ve seen products that have been able to differentiate themselves do well. Over the last few years the mini refrigerator size melons have gained in popularity, and theyā€™re doing a better job in growing them so theyā€™re mature."

Apples

DiPiazza notes the success in specialty apple varieties in recent years.

"The Honeycrisp and some of these club variety apples have been hot on the apple side; Honeycrisp is fetching really good prices in the stores and customers are paying it.

"Iā€™ve seen retailers sell it for over US$2 a pound in some cases and the consumers are paying it. Jazz is another good one."

Stonefruit

DiPiazza says stonefruit have recovered from the days of poor flavor through specialty breeding programs and marketing of different varieties.

"Weā€™ve made some progress with the universities involved in developing taste again, because there was a period in time in the produce business where you just couldnā€™t find stonefruit that really ate well, other than the top varieties like Elegant Lady, and patented varieties like Red Jim.

"I think tonefruit started to recover after a few years of not really focusing on flavour, and I see it now. We had a bit of a shakeout in the U.S., there were just too many producers, they didnā€™t make money, thereā€™s been some fallout, and that happens from time to time in the industry. I think theyā€™ll end up being a stronger industry as a result of it."

Grapefruit

Grapefruit are not going well in the U.S. and not enough has been done to promote them.

"Theyā€™ve never figured out a way to get young people to eat it, theyā€™ve never marketed it to young people, so consumption continues to decline.

"I would never call the U.S. an emerging growing market, they canā€™t sell what they produce, and in the summer they can get California grapefruit.

Kiwifruit

He says kiwifruit are popular in terms of taste preferences, but there have been quality problems and people often don't want to take the time to peel them.

"The American consumer will never peel kiwifruit, theyā€™ll never do it, but they like kiwifruit if somebody does that for them; if you watch them go up to a salad bar or hotel buffet, they go to the kiwifruit right away," he says.

"In the U.S. we sell rocks, rock-hard kiwifruit, immature fruit and retailers have lost interest in it as itā€™s not one of the more productive items in their assortment.

"The retail buyers' perception in the U.S. is that New Zealand is best in class on kiwifruit - I would say other producing countries are going to have to work very hard to overcome that perception.

"Like anyone else they (New Zealand) have a season, and if the kiwifruit is not as quality-oriented for the six months theyā€™re gone, that certainly doesnā€™t help build consumption."

Photo: PMA

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