June, 1993

Fruits of Thought

Will Green Giant Stand Tall?

Green Giant Fresh sent an announcement to the press quoting Jeff Scholl, the 43-year-old vice president and business manager, saying, “I fully expect that our branded produce line can capture 10-15 percent share of the enormous $18.0 billion fresh produce category.”

Anyone with the pocketbook of Grand Metropolitan, PLC (the parent company), the food industry experience of Pillsbury (the food subsidiary), a brand such as Green Giant and aspirations to take 10 to 15 percent of the produce industry has to be paid attention to.

But a little skepticism is in order too. If you look at the history of most food companies’ involvement in the fresh produce industry, you find that they were big stars for a short time, and then gave up.

Will Pillsbury succeed where others have failed? Well, Green Giant Fresh has been active for a few years, specifically with a fresh potato deal out of Idaho. That’s the first hopeful sign. Pillsbury didn’t jump into everything without some experimentation first.

Second, the Green Giant modus operandi gives any observer a lot of confidence because Green Giant is working with some pretty heavy hitters in the business. Green Giant brand fresh oranges are being produced by Waverly Growers Cooperative and marketed by DNE World Fruit Sales. Celery and sweet corn are being produced and sold by Pioneer Growers Cooperative. Sweet potatoes are being produced and marketed by Wayne E. Bailey Produce Co. Apples and pears are being produced and marketed by Haas Fruit Co.

These are top companies, with real selling skills and quality produce. Their involvement holds the hope for success for Green Giant. But their involvement also is a bit peculiar, and whether their involvement can be sustained may be the big question that determines the venture’s success.

I say that their involvement is peculiar because this is not the method that Green Giant has used to build its fresh potato business. If you want Green Giant Fresh potatoes, you don’t call a third party, you call a Green Giant Fresh sales office in Shelly, Idaho. It seems that in its expansion to new items, Green Giant Fresh is departing from the procedures that have given the company some success in fresh potatoes.

The idea behind the Green Giant effort is really very simple. The company claims it to be a big advantage that it is not a grower/shipper. As they put it, “We do not have to sell what we grow, good or bad.”

But this makes Green Giant seem like a broker, free to sell anyone’s product. But that is not the way the operation is set up. Green Giant is committed to its growers. If Pioneer’s celery happens not to be the quality of Duda’s one week, Green Giant cannot shift the business to Duda. In effect, Green Giant is as locked into Pioneer as if it were Pioneer.

Green Giant’s other claim is that it doesn’t simply put its label on any of its grower/partner’s produce. Instead, they explain, “…we select only produce that meets our stringent Green Giant grading and quality control standards. We can pick the cream of the crop! We can select the best and market the best.”

But can they? One wonders what its growing partners, all of whom have much more production than Green Giant takes, would actually say to a customer who called and asked, “Is it true that Green Giant gets all your best stuff and if I buy your own brands, I’m only getting stuff they rejected for quality reasons?” I somehow doubt that the grower/shippers Green Giant is working with would buy into that scenario.

Now for the moment, of course, it is possible that Green Giant is doing what it says, taking the cream of the crop. But if it is, it is only because its business is still small, so a grower/shipper can send a bit of the crop and still have a lot of other high quality produce to ship to customers.

But if Green Giant gets anywhere near 15 percent OF THE WHOLE FRESH PRODUCE INDUSTRY, the growers they are working with would have to give all their best fruit to Green Giant and have all the flawed product to sell themselves.

Now, that is possible too, if Green Giant just wants to license its label to growers and take a small licensing fee. But this would put Green Giant more in the licensing business than the produce business.

In general, quality conditional arrangements haven’t worked well in produce. There is the tendency for big company inspectors to get eagle eyed when markets are bad, thus leaving most of the crop for growers to sell themselves at a loss. But when the market is strong, the inspectors become blind and everything passes quality control, leaving the growers with nothing to sell at a big profit.

Green Giant needs to look at two big issues: First, in the effort to obtain top quality, is the company going to create quality control standards that are objective or that are variable? In other words, is Green Giant going to say its produce will always exceed particular grade standards by X amount, and if it can’t get produce that meets this standard, then is it going to stop shipping?

Or is Green Giant simply going to say that its produce is always going to be in the top 20 percent of quality for product that is shipping at the time? Of course, this might mean shipping disappointing product sometimes and thus sullying the Green Giant name.

The other question is what Green Giant is going to do when, as its volume demands increase, its grower/partners start saying, “Sorry, I can’t give you that much of my best stuff.”

I wish Green Giant a lot of luck. The produce industry can use the professionalism and marketing savvy of firms like Grand Met. But for Green Giant to really succeed, it may need to work with growers on a much more in-depth level. Green Giant must realize that the growers’ total return is what matters. So Green Giant must find a way of helping those growers not only move the “cream of the crop” but the whole crop. Otherwise, the growers will withdraw from this arrangement and Green Giant will be back to square one.

As far as getting 15 percent goes, that’s going to be pretty tough. Maybe before it is truly a Jolly Green Giant in the fresh industry, it will need a few years as a growing, little green sprout.     pb