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Awareness of greenhouse vegetables is growing throughout North America. Though consumption is still not as high as it is in Europe, North American consumers are increasingly buying premium greenhouse produce. For a grower, this can be a tricky time; hold back on expansion and you risk losing market share, but expand too fast and you could be left with product that the market doesn't want. Increasing competition from Mexico and Central America adds another wrinkle to the situation, so although increasing consumption of greenhouse produce offers opportunities, the way forward is not always clear. For Ontario-based Topline Produce, the way forward involves focusing on the pillars on which their company has been built: consistent quality, consistent pricing and consistent supply.
"It's becoming increasingly difficult to distinguish oneself from the competition," said Topline's Jimmy Coppola. "By far, the most difficult challenge we face has to do with pricing." He explained that competing products from Mexico, and now Guatemala, come into the market at lower costs. That could tempt them to respond with lower prices themselves, but Coppola noted that that typically ends with market prices hitting levels from which it's very hard to recover.
"If everyone's just trying to be cheaper, then you're asking for trouble," he said. "There's always going to be somebody cheaper." Simply aiming for low prices is not a sound marketing strategy for Topline, and rather than trying to go cheaper when faced with competing product, Coppola said they focus on the things that have driven their sales so far.
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"We distinguish ourselves through our consistent great quality, our consistency of supply and our consistent pricing strategies (where you can be sure you will have consistent competitive pricing all year round)," he said. "Those have been Topline's main pillars." Retailers prefer suppliers who can provide a full line of produce without interruption. While year-round production is not as feasible for growers in Canada due to the costs associated with winter growing, TopLine fills the gaps in their supplies during the winter through partnerships with growers in regions where growing through the Canadian Winter is more efficient. Whether they grow the produce themselves or acquire it from partnered growers, the high-quality standards remain the same, and while that focus on quality means they can't always compete on price, they work extensively with retailers to find price points that work for retailers and consumers alike.
"We work with a lot of partners and we have great forecasting to ensure we have a steady supply of produce," explained Coppola. "This is great for retailers because they can work in advance." Looking at historical market data helps Topline predict what the market is willing to pay, and that works well for retailers who can plan accordingly. Coppola noted that planning is important, both when working with retailers as well as when deciding which markets to pursue. He pointed to the specialty produce market as an example of where jumping on a hot trend too quickly can spell trouble.
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"We're always looking for new items, especially in the specialty category," said Coppola. "But there are usually bigger costs and lower yields associated with those items, and consumers aren't always willing to pay the extra costs. So you have to know how much to grow, and you have to really work with your retail partners to make sure you can market what you're planning to grow. There's an abundance of specialty items right now, so there's some demand there, but it's a matter of finding a product that's going to work for you."
The same kind of due diligence is necessary when it comes to physical expansion. Coppola noted that the amount of produce they ship to the U.S. makes an investment in greenhouse facilities there, above TopLine’s packing/shipping facilities which already exhist in the USA, an attractive option. The move would cut transportion costs when shipping to major markets on the eastern part of the U.S. But, as with everything else, finding the right fit is what's important.
"We've thought about expanding in the United States," said Coppola. "It's definitely something that would be beneficial, but it's expensive, and it's tough finding the perfect spot that has the right climate and all of the other things necessary for a greenhouse." Aside from the logistical challenges of expansion, he also pointed to larger issues concerning how much product the North American market can handle.
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"Market conditions right now are not as good as they have been in the past, and that happens when there's a lot of product and the demand is not there," said Coppola. "Acreage keeps going up, so there's more product, and competition from Mexico keeps growing, so you have to make sure that what you're supplying matches the demand that's there." The worry is all the more acute because Topline doesn't export outside of North America as of yet, so they can't offset a low market at home with shipments overseas. That being the case, they have to focus on providing a consistent supply of a quality product to their retail partners.
"You have to stick to what you can manage," said Coppola. For now, that means growing the products that consumers want. Coppola noted that their seedless cucumbers and seedless mini cucumbers have been doing very well, and focusing on that and growing that market is the right move.
"Both the U.S. and Canadian markets are starting to turn around in that they're looking for a more balanced diet/lifestyle and eating more vegetables to accomplish that," he said. "At first, it was hard to market the seedless cucumbers but as time progressed more and more consumers have accepted them and now they are a staple item, we want to follow in those footsteps and now we're growing with the mini cucumbers and baby vegetable lines, and feedback from consumers show they like those products. The market is starting to accept them and demand is picking up in those categories as well."
For more information:
Jimmy Coppola
Westmoreland Sales
Tel: +1 (519) 322-2351 ext.247
Fax: +1 (519) 322-1988
jimmyc@westmorelandsales.com
www.westmorelandsales.com