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of ces around the world, including U.S. oper- ations in Philadelphia; Wilmington, DE; Miami; McAllen, TX; and Los Angeles.
Alcaino believes direct global procurement is better suited to high-volume commodities.
“Grapes, blueberries, apples, these have bigger volumes,” he says, adding he doubts the approach would work as well in lower- volume items such as some stone fruit, and if so, it would be very limited.
With more retailers trying their hand at going direct to source, does this present a threat to importers?
“To some extent, yes, if it replaces what they do,” Alcaino replies. “However, importers also add value by doing quality sorting and selling fruit that doesn’t arrive in perfect condi- tion for the program in question.”
“Many importers are service providers who do that for a lower xed fee, but they barely nance anything, and they don’t run risks. So, it’s attractive for them too.”
BIG BRANDS THROW
A WRENCH IN THE WORKS
“Kroger does some direct business; not to say it’s all direct, but a good portion is direct,” he adds.
Having started with Sam’s Club from the buyer side, more recently DiPiazza’s work with Sun Paci c ts into a parallel trend where grower-shippers integrate upstream to secure their place in the supply chain.
In this speci c case, the shipper may not grow the counter-seasonal fruit it procures from overseas, but what it lacks in owning land, it gains through its brands – the house- hold name Cuties in clementines, as well as Mighties in kiwifruit.
Why this is so relevant is because branded produce is in direct opposition to the private labeling trend that dominates Europe, the retail market that set the tone for direct sourcing.
If North America is to follow Europe’s lead, this ultimately begs the question of what part brands will play in direct programs vs. private labels.
“In my experience we saw several retailers try it [private labels], and on their own, they slowly withdrew,” says DiPiazza. “I see private-label programs in potatoes and onions, in veg and salad kits; private-label is certainly something that retailers want to make work whenever possible, and especially when there’s no clear dominant brand.”
But Cuties is one of the dominant brands in the easy-peeler market, and there are many similar examples in the industry, whether it be Driscoll’s and Naturipe in berries, or the likes of Mission Produce, Calavo, Camposol and Westfalia in avocados.
Bob DiPiazza
Bob DiPiazza of DiPi- azza Consulting Services in Chicago is now retired but until recently was the president of major Califor- nian citrus and kiwifruit grower-shipper Sun Paci c Marketing, Pasadena, CA.
In a previous life as senior vice president of Walmart’s Sam’s Club, DiPiazza was very involved in setting up the
group’s direct sourcing from Chile.
“I think we’re seeing an increase in dealing directly with importing, but there are some con nements,” he says. “You need to have some scale to effectively import directly, and it layers on additional work that needs to be
completed.”
“You now get into the area of having to
manage the freight-forwarding, inspections, phytosanitary [aspects] ... it opens up a whole other area of responsibilities, so you have to maintain your records by grower.”
DiPiazza echoes Alcaino’s comments that certain commodities are more appropriate for direct programs than others.
“I don’t think you’re going to nd too many retailers today that say, ‘let’s go import kiwifruit direct’, because the volume compared to other categories is building, but it’s not there yet,” he says.
He adds SuperValu was one of the pioneers early on, while Costco also has been involved indirectsourcingformanyyears.
Roberta Cook
“If the retailer tried to cut out a Mission Produce, I can’t imagine how the company would succeed, because there are so many services a California avocado shipper carries out for a retailer,” says Roberta Cook, Emerita
26 / DECEMBER 2018 / PRODUCE BUSINESS
faculty member of the University of Califor- nia-Davis Department of Agriculture and Resource Economics.
Aside from the ripening services to the technical aspects of packing in Mexico, there is also the weather to contend with, as well as Mission’s global supply chain sourcing from Peru, Chile, and more recently, Colombia.
So if a grower-shipper is already set up at a source of origin, bringing with it all the ef - ciencies of scale and experience, what case then is there for setting up a sourcing of ce in that country?
“What we always have to remember