GRAHAM YOUNG, MANAGING DIRECTOR AT BARFOOTS OF BOTLEY
In the last 12 months, sales growth has been impressive and all targets have been achieved within budget performance. The biggest challenge for us last year was the retail challenge and the very competitive situation in the high street, which has been visited on the supply base as well as the retailers. The main success has been for the consumer who is getting a hell of a deal at the moment.
We have seen Cornutopia, our mobile catering unit enterprise, take flight and that’s been transformed into branded goods. We have moved away from the franchising of that and into field marketing, which looks set to be very promising this year.
Along with all that is the success of our team, which has achieved budget performance, and met the retail challenge and sales growth very, very well.
The main disappointment has been that prepared veg hasn’t really taken off, but we see 2006-2008 as being much more important for us in this area. Potatoes are just putting their toes in the water and we believe this will generate momentum in the next three years.
Our expectations for next year are that we will undergo more expansion and more unit-cost reduction in order to survive in the next few years. We are putting millions into labour savings but rather than losing staff we will actually create positions in the new factory that will open mid-2006. It sounds like a bit of a paradox but it is a true one.
The old factory will be focused on prepared veg and the new one will be used for unit-cost reduction. We are expecting an upsurge in prepared veg based on the fact that our unit costs are lower than our competitors.
STUART SYMINGTON, CHIEF EXECUTIVE OFFICER OF THE FRESH PRODUCE EXPORTERS’ FORUM IN SOUTH AFRICA
The rand has remained stubbornly strong for exporters over the last few years. For importers, it has been a dream - a strong reminder that one man’s meat is another man’s poison. China is globe-trotting on the cheap, forcing everyone to reconsider the way they do business. Official access to China for our citrus fruits was closed in 2005, and the industry is still at loggerheads as to why this happened. Was it our administrative error, Chinese bureaucracy or something else? We sincerely hope that this will be rectified by the start of the 2006 citrus season.
Our South American competitors have upped their ante into our markets as well. Many of them have shifted a percentage of their product from the weaker, dollar-based markets to the stronger euro-based markets, putting undue pressure on South Africa’s volumes into Europe. It seems that more fruit is available to the global consumer year-on-year, and one wonders sometimes if there is simply too much fruit in the world today. Time will tell. But in the meantime, our members and their producers will need to find very creative solutions to the dilemmas they face in their international markets today.
Many of our members are faced with producer groupings that have decided to market their own product. The South African government is looking to intervene in the marketing of its agricultural products again. And competition law is effectively trying to prevent exporters from co-operating too closely. Our ever-changing “fruitscape” never lets up on us, more so now because capitalism doesn’t seem to have ready-made answers for our members anymore. It is as if new solutions to old problems need to be found from a completely different platform of thinking.
There are massive market forces at play in our business - internally and externally. As an individual and as a company, one has very little control over these forces. One can only hope to be sensible and responsible in the way one conducts the business around these forces. I keep telling the industry that, when all is said and done, it is not about the fruit - it is about the people. Forging long-term business relationships with like-minded people is a key to successful trading.
Each successive year gets tougher in the business. There is a concentration of supermarket power, an over-supply of fruit (new countries coming on the block and increased plantings in existing suppliers) and a commoditisation of most fruit kinds. Prices will continue to suffer on the whole.
Yet despite this, there are always opportunities being found by the lean and mean, and by the innovative and more cost-effective suppliers. That is what makes it a fascinating industry to be in.
YEHUDA REICHMANN, AGREXCO UK MARKETING MANAGER - FLOWER DIVISION
In terms of the overall performance of my division, I would say that generally things have been good, but we can still see wholesalers feeling the pressure from the ever-increasing presence of the Flying Dutchman and the supermarkets.
Despite this we are still holding our share in the wholesale market and increasing sales year-on-year. We are constantly striving to improve our quality and service and feel this is something we are achieving.
The main challenges have been the ever-increasing competition from Africa, Europe and even South America. The increasing rises in transportation costs and the exchange rate have put a lot of pressure on us. But we have succeeded insomuch as customer faith in us is getting stronger season after season as we are still yet to let a customer down on any agreements or contracts.
The quality is improving on a par with our customers’ expectations, which is why, in a very competitive market, we are still seeing an increase in turnover and sales.
Another massive challenge Agrexco has undertaken has been to attain EurepGAP accreditation for all of its growers, which is something it continues to work towards.
After 50 years of exporting fresh cut flowers we feel we are always learning and changing to achieve the requirements and expectations of our customers and are never surprised at the speed at which the business is developing and changing.
We are expecting the flower industry to be as competitive as last year in 2006, if not more so, and we feel the business as a whole will become more streamlined in order to survive and grow, with more competition coming into the UK from places that might not have been such a factor previously.
We want to be as strong a force in the industry as we have been for the last 50 years and will strive to survive by increasing our service and quality and relationships with our customers.
DAVID TAYLOR, CHAIRMAN OF PERTH MARKET AUTHORITY, WA
2005 was a successful year for Perth Market Authority (PMA). The market maintained its position as the principal venue for distribution of fresh fruit and vegetables in Western Australia, while contemporaneously making ground towards meeting the market’s longer term aim of becoming the preferred market location for the broader WA foodservice industry.
PMA’s successes have been borne out of meeting two major challenges facing the market during the year. The first challenge relates to the strategy of the two major supermarket chains in Australia to bypass wholesale markets and source directly from the grower. This challenge was responded to in two ways:
PMA placed emphasis on improving the education of independent supermarkets and speciality greengrocers - the main customers of our wholesaler tenants. This has seen more sophistication emerging among these retailers in terms of product knowledge, merchandising and general marketing practices, which has assisted them to compete more effectively with the majors.
Some wholesaler tenants have also successfully illustrated to the major supermarkets that they can deliver certain fresh produce lines more effectively than direct sourcing from growers, particularly exotic speciality product. This has seen wholesalers win back some of the major business (of course in WA the ‘tyranny of distance’ from eastern states’ suppliers is helpful to the argument!)
The second major challenge was the increase in the direct importation of fruit and veg from developing countries in Asia at substantially lower prices than local product, with sources unbeknown to the consumer. As Australians are most comfortable with locally grown produce PMA was a participant in a campaign to extend country of origin labelling to fresh produce. Such labelling subsequently became mandatory ensuring consumers were more informed. This outcome was beneficial to the independents which focus on supporting local product and largely source that product from wholesale markets.
2006 will see central wholesale markets continue to face similar challenges as 2005.
PMA’s planned response is consolidation of the strategy embarked on this year with a focus on developing the business of the markets by helping our customers (retailers) be more successful.
The markets will also be moving more decisively to attract value-adding tenants to broaden the appeal of the market as well as provide an additional on-site market for the produce of our wholesalers.
We hope to see greater diversity of food products. We are on course to deliver this objective, which will in turn further entrench Perth markets as a principal player in the broader food supply chain.
2006 will also herald a PMA sponsored tertiary education programme with an emphasis on food market management. This is another initiative by PMA to enhance management sophistication and thereby underpin future growth of the market.
DAVID MACAULAY, RECRUITMENT CONSULTANT AT REDFOX EXECUTIVE SELECTION
We are very happy with how things turned out in 2005. We have grown as a business and as a team with the addition of Jacob Aldrin, a specialist recruiter in the hospitality and catering industries, and the HR and training side of the business, headed up by Daryon Eldridge, is also gathering pace.
As an industry, I think we have evolved; yes there has been consolidation within the supply base but I am confident that the industry is getting its act together in order to maximise sales of fresh produce as consumers become more aware of health issues and the benefits of fresh produce.
It is a real challenge for Redfox to maintain business. We serve a fantastic industry that we are very passionate about, but it has consolidated rapidly so our challenge for 2006 is to build on the success we achieved in 2005 and keep working with the best clients and candidates in the industry. I suppose the only disappointing element for me has been the lack of companies prepared to develop young talent. Our industry is fast-paced and sometimes hectic and its recruitment often mirrors that speed.
I completely understand why companies need experienced people but I would love to be placing more graduates into companies that are happy to invest in the future mds and industry leaders of tomorrow.
The main thing I have learned is that it is all about marketing and creating awareness. Both Redfox and the industry have to communicate in an appropriate style to the target market and use media that addresses consumer behaviour. It is not enough nowadays to be well-connected or have a great sales patter. Our clients expect a thorough and professional approach and you need the systems and tools in place to deliver that. At Redfox, we have these in place but we need to be more innovative with all aspects of the business, never rest on a reputation and always go further for our clients.
Let’s be honest, 2006 is going to be tough. The industry is shrinking, good candidates are leaving and we operate in an unbranded market but Redfox isn’t going anywhere; it just means that we work harder for our clients, we are as honest as always with candidates and we get more effective and efficient in the way we operate.
I would love to see the industry invest more in the training and development of their teams - ideally with Redfox of course! - but across the board.
We need to attract and retain the best people in the food industry. We can rival any industry on the potential salaries that can be earned but we need to support that with investment in personal development.
