May, 1988

Fruits of Thought

Proprietary Produce

This issue features an important interview with Jim Rinella, president of Sun World International. The interview is important because it focuses on Sun World’s efforts to develop “proprietary produce,” produce with some unique feature nobody else can offer. The idea behind this type of program is interesting because it may be the key to understanding how the produce industry can build a profitable future.

Marketing and differentiation of product are the keys to profitability. The reasons for this are obvious: If a seller doesn’t have a product that is different — or at least one he can claim is different — what does he have to bargain with aside from price? Nothing. And that is why growers have such a tough time making a buck.

This means that the possibility of making good money on shipping standard, commodity-type crops is not great. This being so, they key is to have a product that is one of two things: either a unique item that no one else can offer, or a commodity-type product differentiated from other, similar products by the service and image that come with it.

It is clear that the produce industry is following these paths. The move to branding by Dole, Chiquita and other market leaders is a way of transforming a commodity product into something special. If you buy this type of branded produce, you buy not merely a commodity, but a bundle of services as well, and you associate your company with a certain image.

Marketing a parity product is not a new thing, and not unique to produce. For many years, Exxon, although selling gasoline that chemically is virtually identical to other gasoline, has persuaded many people for many years that its product “puts a tiger in your tank.” This image caused people to go out of their way and pay a premium price to purchase from Exxon.

Another key method of selling a parity product is to sell the services that go along with it. That is why telling people, “You can trust your car to the man who wears the star” is a successful slogan for Texaco. It is a reason for people to buy a product from Texaco and not a guy who sells it cheaper.

But of course it is asked: Don’t gasoline companies still have price wars? Isn’t price crucial to marketing gasoline? Indeed it is. Price is a major factor in the sale of gasoline and of virtually every item, but there is a big difference between price being a major factor in the sale of gasoline, and virtually the only factor in the sale of most produce.

If the move to branding is one way of profitably marketing a parity product, Sun World’s proprietary produce program is another approach. Here the trick is to actually develop a product that is, in and of itself, different from what is available in the marketplace. Sometimes the differences are substantial, for example, seedless watermelons vs. the seeded types. Sometimes the advantages are not clear. A Le Rouge Royale pepper is not unanimously held to be superior to a Dutch hothouse red pepper. But the point is that nobody in the world can sell you a Le Rouge Royale pepper except for Sun World or their agents. And this changes the nature of the price discussion.

The big problem in the produce industry today is that too many producers say they cannot make money. This leads to calls for import restrictions and government assistance. What is really required is for the producers of every product, including produce, to get up every day thinking about how they can transform each product into something an end consumer will want and be willing to pay a decent price for. Now perhaps everyone can’t build an enormous brand like Dole or Chiquita, nor can everyone have a collection of boutique produce items a la Sun World. But the world is filled with opportunities and a lot can be done. It is astonishing how few people have licensed well-known trademarks to put on their produce, instantly gaining the recognition associated with these trademarks. It is embarrassing how few importers and shippers have gotten involved with sampling, co-op advertising support, field merchandising, private labeling and substantial trade promotion.

Part of the problem is that many growers rely on a marketing agent to sell their crops and then choose a marketing agent based on who will advance the most money, or who will charge them a percentage point less. If you walk into Lawson Bartell’s office in Fresno, California, you’ll find it decorated with the results of many thousands of dollars of trade advertising — a not-so-subtle reminder to current and prospective Bartell growers that they consider things other than making phone calls to be vital parts of marketing.

But in the end, it’s the growers’ money, and they have to take responsibility. Growers must sit down with their marketing agents or their sales staff and start thinking about how they can gain an edge, and what they can do to differentiate their products and marketing from the competition.

This type of program, of course, is likely to cost a lot of money. It also depends on a change in the grower’s thought process from a production orientation to a marketing orientation. I can sing the praises of marketing all day, but what will drive this change is what drives most change: necessity. The people who stick to old production-oriented thinking are going to find themselves with their backs against the wall. Those who will innovate and differentiate their produce will, at least, have a chance at success.

Those who insist on maintaining the ancient production-oriented ethos of the farmer may take solace in knowing they shall occupy an honored footnote in the history of agriculture.  pb