Dr' David Hughes

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Succeeding in the 21st Century Market Place

• Dr. David Hughes
• Emeritus Professor of Food Marketing
• 2009 Vegetable Industry Conference
• HAL and AUSVEG
• Melbourne Convention Centre
• Melbourne, Victoria
• Wednesday, May 6th, 2009

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WalMart in International Markets
Brazil
Canada
Argentina
Japan
China
Costa Rica
Mexico
UK
UK
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Tesco in International Markets
Thailand
USA
Czech Republic
South Korea
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Aldi and Lidl in International Markets
UK
Belgium
Germany
Holland
UK
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Aldi Expands Offer in Fresh and Premium in UK
Dont change your lifestyle change your
supermarket.
TV Chef Phil Vickery cooks up some fabulous food
with award winning Aldi produce
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Shoppers are Provided with Lower Priced
Alternatives when Shopping On-Line with Tesco,
even when the Lower Priced Product is not a Tesco
Brand
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Driscoll Jubilee
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Some Retail Issues for Consideration in a
Recessionary Environment

• Shopping behaviour changing in the face of budget
  squeeze for many households fewer, more planned
  shopping occasions. Need to work out how are
  customers changing their early-week, weekend, big
  basket, and top-up shopping?
• Erosion of buying power will make shoppers
  nervous and keep focus on value shopping
• Private (retail own) label expanding, but only at
  a pace that shoppers understand and demand.
  Introducing tertiary brands (e.g. Tesco) can
  bring unwanted shopping complexity for customers
• Markets for food commodities will be very
  volatile over next 3 years exacerbating
  nervousness in the supply chain. When to buy,
  when to sell? How much inventory to hold?
• Manufacturers may seek longer term supply
  relationships to ensure food ingredient
  availability

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Some Retail Issues for Consideration in a
Recessionary Environment (continued)

• Pressure on margins leads to corner- cutting and
  increase in food scares
• Reduced international sourcing because of
  transport cost component, citizen concerns about
  food miles, and concerns about integrity of
  foreign supply chains
• Retailers increasingly concerned about building
  and protecting the value of the retail brand.
  Role for fresh produce suppliers in protecting
  retail brand integrity
• Trade liberalisation falters as net importing
  countries re-evaluate security of food supply
• Retailers work closer with supply chain partners
  to minimise waste and inventory along the supply
  chain
• Recessionary environment brings genuine
  opportunities e.g. to take share from food
  service (cheaper to eat-out in!), to launch
  healthy, budget food products

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Key Concerns of Retail and Manufacturer
Decision-Makers, CIES Top-of-Mind Survey, 2009
Source CIES, 2009
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Hunter PR Reveals Results of USA Food Editors
Top 2008 Food Stories

• Rise in food prices around the world
• Melamine in Chinese milk scandal continues
• Salmonella outbreak in raw tomatoes
• Supermarkets offer more locally-grown food
• New COOL labelling laws
• Big food companies adopt nutrient standards
• Jalapeño peppers test ve for salmonella
• Paul Newman dies
• NYC restaurant regulations on trans-fats
• Salt intake alarm GRAS removal for salt?

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Food Has Never Been Safer
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Reasons for paying more for food and drink
Thinking about food and drink that you are
willing to pay more for, what are the most
important reasons for doing so?

• Key Findings
• As many as 1 in 7 (14) shoppers are willing to
  pay more for organic food
• 1 in 10 are willing to pay more for ethically
  produced goods and a similar number (9) for
  goods that are better for the environment .

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Marks Spencer Heads for Carbon Neutral in 2012
the 400 million Eco-Plan A (no Plan B!).

• Five Principal Elements to The Plan
• Climate Change
• - carbon neutral by 2012, energy reduction
• Waste
• - reducing/recycling waste
• Sustainable Raw Materials
• reducing pesticides, MSC fish sourcing
• Fair Partner
• ETI, random checks on suppliers
• Consumer Health and Well-Being
• nutritional traffic lights, reduce salt

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Sustainable Technology Fund
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Juice, Spain
Milk, Italy
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In the UK, How Do Consumers View the Supermarket
Shopping Experience?
Source Harris Interactive, 2006
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What Sort of Value Chain?

• Ideal Short
• Fast
• Transparent
• Seamless
• Collaborative
• Too Often Complex
• Price-driven
• Confrontational
• Disjointed
• Opaque

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Emerging from the Swamp!

• often, unaware who our customers are-
• - a few buy a lot?
• - a lot buy a few?
• or who our competitors are (other vegies,
  anything imported,Unilever?)
• often, price highest when quality lowest and vice
  versa
• frequently, quality and availability is
  inconsistent, we disappoint as often as we
  delight. Yet, we dream that branding is the
  answer!

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Emerging from the Swamp!

• product development often focuses on agronomic
  and supply chain benefits (e.g. extend
  shelf-life, GM, packaging, reduce variety to
  lower unit costs). What about consumer benefits?
• with lifestyle changes and demographic trends
  often, we deliver
• 1) the wrong product 2) in the wrong form
• 3) at the wrong price 4) in the wrong location
• we must learn quickly from world class
  competitors. But who are they?

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The 21st Century Grower
Its not what you grow Its what you know!
Fundamentally, your business revolves around
understanding what your customers, and your
customers customers value and are willing to pay
for. Then, its simply a matter of delivering
what your customers value at a sufficiently low
cost that you can make a good profit!
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Proprietary Technology and Demand Chain Squeeze
Life Science Companies Ownership of Genetic Rights
nursery people growers/farmers distributors manufa
cturers etc. get squeezed!
market power polarised
Major Global Food Retailers and Food Service
Firms Ownership of Information on Shopping
Behaviour
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Principal Characteristics of the 21st Century
Fresh Produce Firm

• five year vision and strategy for getting there
• staff who share the vision
• food company not a produce trading company
• volume and value growth to underpin investment
  and staff professional development
• operational excellence with effective performance
  measurement systems
• outstanding supplier and customer relationship
  management
• innovation in everything products, services,
  business systems
• continuous investment, despite increasingly tight
  margins

Confront the brutal factsyet never lose faith
(Jim Collins)
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715957 fax [phone] mobile [phone]
558276
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