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nature of the produce industry. When he passed, we wrote about the founder of Sun World in a piece titled, Looking Upward at Howard Marguleas. Yet, for all his innovation, we think it unlikely that when Sun World was launched, he imagined that the day would come that a sophisticated player such as Renewable Resources Group would one day look at Sun World and see the value not in countless acres of land, packing houses and plant- ings but in intellectual property, brands and a licensing network.
For as long as we have records, the food business has been changing in ways that have displeased the growers. On the one hand, a smaller and smaller percentage of the amount consumers pay for food has been winding up in the farmers’ hands. What government statistics call “marketing” but in reality is everything beyond growing — packing, processing, transport, advertising, etc. — each decade takes a higher percentage of the consumer’s expenditure on food, leaving farmers with a smaller percentage (although not necessarily smaller dollars, as higher value foods are more common, whether due to more processing, as in fresh- cuts, or higher-value varieties, as in grapes or berries).
At the same time, the cost of inputs continues to rise, not only because the price of labor and whatnot rises, but because the nature of growing changes. It might be the need for controlled environments or the need to pay license fees for the best varieties.
In just one month, we will launch a new event for the grape industry — the Global Grape Summit. This event in London gathers thought- and practice-leaders from around the world to assess the industry of today while creating the industry of tomorrow. As we have spoken to leaders in the California deal, we have gotten some not particularly optimistic feedback:
1) California’s minimum wage law raising the cost of production.
2) Worldwide overproduction of grapes.
3) Mexico on the front end and Peru on the back end, eliminating the once profitable shoulder seasons.
4) Many new varieties not delivering on a promise of better taste, but still costing in royalties and licensing fees.
5) Consolidation on the buying end of the business, allowing for great pricing pressure to be put on producers.
6) Spain and other producers competing for Asian business
that once was exclusively a market for California grapes. So, in a sense, one can see in the Sun World deal an expecta- tion that time and money will produce better returns invested in the Sun World Innovations business than in growing grapes
in California.
Yet, for every seller there is a buyer, and anyone who knows
Berne Evans and the Sun Pacific story would have nothing but expectations of success.
FROM PERISHABLEPUNDIT.COM
Even as we chatted, in what is really a pinnacle moment of his career, he seemed especially happy that with Sun Pacific moving forward and their having taken on Sun World’s Jason Fuller to run sales for the new entity, the future was very bright.
“It is certainly true that when we California grape growers get together, we might worry about many of the points you raise. In the end, though, the higher quality of the new varieties of grapes leads to more consumption, and high-quality growers know how to deal with the obstacles ahead.”
Though Merrill is too modest to say so, the issue is not invest- ment in genetics and breeding and branding vs. growing and selling grapes. If you look at the various problems confronting growers in California and around the world, it is hard to imagine anything other than superior genetics, breeding and branding that will allow growers to overcome these issues. You need higher-value fruit to cover higher costs; you need breeding to make sure the fruit is optimally timed; you need better taste and more interesting options to boost consumption, and you need proprietary product and branding so growers can reshuffle the deck when dealing with big buyers to make sure consumers know what is worth paying up for.
Merrill continued: “It is hard to be best at everything. We feel confident we have found a good home for our land, our vineyards and many of our people and that this transaction will allow us to focus our time and resources on the incredible opportunities that exist for our Sun World Innovations unit.”
Merrill said he expects to stay through the California grape season, making sure customers, vendors and employees tran- sition smoothly.
Then he expects to stay with Renewable Resources Group, whose executives, he notes, are very excited about this space. They hope, and expect, that Sun World Innovations will find opportunities to make a difference in other specialty crops and thus help growers become more prosperous while enticing consumers to eat more produce.
Fortunately, Sun World Innovations has at its helm David Marguleas, scion of the founder of the company and, even while serving as this year’s Chairman at PMA, a secret giant in the industry who has virtually built the model that most of the global trade relies on in bringing better genetics to the world of produce.
So today the industry can celebrate, for although it remains obvious that we depend on great growers to produce the fruits and vegetables that feed the world, it is also obvious that our industry has reached a level of sophistication in which science and marketing are as
much a key to success as anything else.
So, as Sun World splits, it is not like two ships passing in the
night; it is two separate ships steaming side by side, each with its own dedicated design and crew, optimized to its own sector, jointly working to elevate the consumer experience. Jointly working to boost the sale and profitability of the crops we bring to market. Jointly enticing consumers across the globe to sample more, buy more, consume more... and enjoy more.
This is the future of Sun World and the global produce industry.
Merrill Dibble
As we thought about this piece, we had the opportunity to chat with Merrill Dibble, chief executive and president of Sun World International LLC. He was brought in by the Renewable Resources Group people when they acquired Sun World. He is a soft-spoken man and, in studying his career, he has been particu- larly concerned at every stage about the human cost of corporate actions.
David Marguleas
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