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Occasionally, a really unique variety comes up and, indeed, retailers complain about the producers and marketers in control of such varieties, demanding potentially illegal tying arrangements in which the power of the seller is so great he can demand that the buyer purchase other products in order to secure the desired product.
Mostly though, the grape industry has not been successful at getting the consumer loyalty that would compel retail loyalty. This is not to say that many retailers don’t have strong prefer- ences. They may do their own taste tests or just prefer to work with certain producers. The licensing model that is prevalent in the grape industry has led to massive and global investment in new varieties. But it is weaker on the branding side than, say, the Driscoll’s model on berries — so retailers tell us they feel compelled to stock Driscoll’s — but are much more flexible on grapes.
Breeders are torn. On the one hand, most want their growers to succeed and recognize that allowing too much production or production in competitive regions is problematic. Yet, most make their money by allowing additional plantings.
It is more than the volume of planting that is at stake; it is the very role of proprietary genetics and branding that is under discussion. A producer in a country with a license for a desir- able variety and the right to use a brand name may learn that a nearby country, with identical or overlapping seasons, is getting into grapes. This producer is not worried though. He has the desired variety and brand.
What this shipper wants is to use the variety and the brand as a kind of moat protecting his market share. He wants to be able to say to a retailer who is threatening to move to the new producing area, “Well, you can buy grapes there, but you can’t buy the variety and brand that your customers love because they do not have a license.”
The breeder, though, is very likely to think that its variety has an X% market share and it wants to maintain that market share. So, if a new producing area is being planted, the breeder will want to plant there too.
Retailers have a similar issue. They not only want to carry tasty produce, but they also want to carry items that will give the retailer an advantage in attracting and retaining customers over other retailers. In the past, this has typically taken the form of short-term exclusives when a variety is just coming into mass production or a geographic exclusive or class of trade exclusive.
But, perhaps, retailers might want to own desirable varieties and use them to anchor private label programs. Indeed, Costco, with chicken, and Walmart, with beef, have recently decided to experiment with setting up their own supply chains. Is it so crazy to think that produce could follow this model in the future?
These are just a few of the issues confronting the modern table grape industry. There are other issues, of course, such as bringing robots into harvesting and packing, and there are many trade issues too.
My family used to export quite a few grapes to the UK from California. Now, Mexico and Egypt have replaced California in the early season in the UK. Peru has replaced California in the late-season market. Peru has duty-free status, and California pays
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significant duties. An issue with Brexit: during the EU season, the duty is 17%, so if the UK is out of the EU, what will happen? Will the UK continue to treat Spain and Italy more favorably than California? Why would they do that?
In North America, Sun World recently announced that it was broadening its roster of licensed importers and, in fact, it was doing so at the request of its southern hemisphere licensees. So, now, Camposol Fresh U.S.A., Inc., The Oppenheimer Group, Dayka & Hackett LLC, Divine Flavor International LLC, Dole Fresh Fruit Co., Fresh Flavor International, Inc.; North Amer- ican Produce Buyers Limited CCPC, Summit Produce, Inc., Vanguard Direct LLC, and, William H. Kopke Jr., Inc./Southern Fruit Import Co. are all licensed to import and market the Sun World varieties such as AUTUMNCRISP, MIDNIGHT BEAUTY and SCARLOTTA SEEDLESS.
It is not surprising that producers would like more choice. After all, these producers already have importers they work with; they have varieties from several sources and would like to work with one importer. Plus, some of these importers have loyal customers difficult to access if you don’t work with them.
Choice is considered a good thing. But there is a question to be answered here: Will having multiple importers raise or lower prices? We don’t know the answer to that. Perhaps having a roster of powerful importers can push through volume and that will lead to higher prices. Some would argue, though, that having multiple importers means they will undercut each other to get the business and that having just one importer would maximize pricing.
One of the “Big Four” breeders recently sent a notice to its licensees explaining that, although in the past it was “very flexible and accommodating” when it came to the use of trademarks and the interpretation of quality standards, now the breeder is going to “provide more guidance and structure.” How, exactly, will this be carried out? If product is sub-stan- dard, no breeder wants it under its branding. So the breeder may recommend it be sold as a generic seedless grape. But some varieties have distinctive taste profiles, and consumers will object if they buy some generic black grape and find out it is licorice-flavored.
The issues are many, and the stress is palpable. When we launched Produce Business magazine back in 1985, we committed to an identity — that our role would be to “Initiate Industry Improvement.” To help the industry wrestle with issues such as these, we launched a new event, the Global Grape Summit and co-located it with The London Produce Show and Conference. The idea, as with our Global Cherry Summit, was to gather the best and the brightest thought- and practice-leaders of the global grape trade to share information, ideas and build a brighter future for the industry.
It was an assemblage of speakers never seen before, and the attendees included thought- and practice-leaders from across the global grape community. Contributing a crystal ball to the event were four major grape breeders: Sun World Innovations, SNFL Group, IFG and Grapa Varieties. Each brought cutting-edge knowledge of what the future holds for grapes.
All of those who participated are defining the future of the global grape industry. pb
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