The opening day of PMA Fresh Connections in Cape Town laid emphasis on the need for companies in the fresh produce sector to function collaboratively within an ecosystem, in a world of rapidly changing technology.
MC Michael Jackson, Tommie van Zyl (outgoing PMA South Africa Council Chair), Craig Bond of Absa and John Oxford, PMA Global Board of Directors Chairperson (Photo: Anthea Davison)
A major focus of the Produce Marketing Association (PMA) is on global connections, and John Oxford, chairperson of the PMA global board of directors as well as President and CEO of L&M Cos. Inc. said that Mexico and South Africa are two countries of particular interest to the PMA. “South Africa is a jumping off point to Sub-Saharan Africa and Africa as a whole and the fresh produce industry is an increasingly global industry.”
“The opportunity to grow markets overseas is massive but we need an aggregate effort. You can’t do it on your own, you need an ecosystem. Since we’ve joined the PMA, we’ve been able to leverage the skills and knowledge needed to grow the products sought after abroad. It has absolutely helped us to raise our standards and the development of talent is also very important in the South African context,” said Tommie van Zyl, CEO of ZZ2 Farming Operation, outgoing chairperson of the PMA South Africa Country Council. He will be succeeded on Friday by Brian Coppin, CEO of Food Lover’s Market.
Cathy Burns, the global CEO of the Produce Marketing Association, gave a dense and insightful overview of the trends in the fresh produce sector, from changing consumer tastes to the rise in branded products as well as the increase of plant-based protein in Western diets, projected to account for 43% of protein consumption by 2020. “One of the PMA’s key roles is to help our members to identify the technological trends both within and outside the industry to see where the opportunities are,” said Ms Burns. Her presentation was an overview of all such trends, like smart kitchen appliances. “It’s the convergence of agriculture and technology. We’re seeing more robotics coming to our industry, like drones used for pollination.”
There are attempts to reshape the customer experience, like Amazon’s pilot in Seattle of a check-out free supermarket (“just walk out” technology), or in China where the brix levels of individual oranges are tested and labelled, so that customers can choose their oranges based on their brix levels.
“What bright ideas for innovation could you take back to your business after Fresh Connections?” she asked of the audience. “How are you re-imagining your products?” Personalised nutrition is a key trend, driven by technology that automatically puts customers in touch with nutritionists in front of the fresh produce shelf, or apps that take an individual’s nutritional data and suggests weekly groceries that might be best for the consumer. There is even a growing trend of doctors prescribing fruit and vegetables as medicine for their patients.
“We’ll be able to make fruit and vegetables more tasteful and aromatic through genomics. The ability to taste actually begins in embryo – so that’s another huge marketing opportunity for us, right? Marketing of fruit and vegetables to pregnant mothers would influence the future generation,” Ms Burns continued.
People really want to know where their food comes from
“Consumers really do want to know how their food is grown,” she pointed out, an observation illustrated by an anecdote of Colette Shannon, head of communications at Spinney’s Supermarket in the United Arab Emirates. Ms Shannon told of the enthusiastic response by their customers to a short video clip showing how their Christmas trees were offloaded from the container. She reiterated Ms Burns’ point – that the provenance of fresh produce is of increasing concern to customers.
“At Spinney’s you’ll find fresh berries on our shelves 365 days of a year,” Ms Shannon said. “We’re in the desert but you’d be blown away by our fresh produce presentation. We have quite snobby customers, with a large expat community and our customers love new varieties. We actually offer a good opportunity to test new things out on an international audience.”
She emphasised the importance of sharing knowledge with customers (“Be revealing”), for instance by not only reducing packaging, but also telling the customer that you’re doing it.
Maryla Masojada (Photo: Anthea Davison)
Retailers are increasing fresh produce floor space
Maryla Masojada, a South African retail trade analyst and managing director of Trade Intelligence described a retail industry that has undergone fundamental change over the past decade, specifically the blurring of channels and the disappearance of pure wholesalers.
It is estimated that the South African food industry is worth R557 billion, the majority made up by corporate and independent formal retail (R335 billion), followed by formal independent hybrid/wholesale at R120 billion and then there is the great unknown: the informal trade sector, growing yearly, reckoned to be worth between R31 billion and R192 billion (she personally puts it at around R168 billion).
She made reference to the emergence of informal ‘spaza’ shops, usually in black townships, as part of the global convenience trend, also illustrated by the fact that some of South Africa’s major retailers are investing heavily in forecourt or express (convenience) stores at petrol stations.
“Retailers are decreasing floor space for groceries and increasing shelf space for fresh produce,” she said. “Every single retailer has ‘best in fresh’ somewhere in their mission statement.”
There is currently a massive investment in the supply chain. “It’s the last frontier and whoever cracks it, will be the winner of the future. If you get it right, the margins will come.”
Ms Masojada stressed the importance of collaborative thinking between retailers and suppliers and a longterm strategic alignment between the two. “There can be phenomenal results if they collaborate and it’s driving behaviour into the future.“
You need ethical and sincere contacts to do business in Africa
Andy Connell, logistics consultant at A-bar-C Service, gave the audience an entertaining but optimistic account of doing business in Africa. Africa’s agricultural potential is widely recognised but many agricultural projects have failed because of the difficulty of getting product out of the country. “It can be very frustrating standing at the quayside. Sometimes you need time-lapse photos to notice progress. Handling equipment is not what we’re used to and there can be a lot of impact damage to containers on the lower tier. Equipment often suffers abuse,” he explained. “Health and safety doesn’t exist. Container yards are rarely tarred and they get bogged down in the rainy season.” Port congestion often means a change of sea routes.
However, he is not in the least disparaging of the possibility of doing trade in Africa. “You need to know it's not the same as other markets. You’ve got to toughen up.” He strongly advised the cultivation of sincere relationships with local politicians and the diplomatic corps. “You can be harassed and if things get tough at the port, you can find yourself up the creek. You need to understand the rules of engagement and you need to pack a sense of humour.” Successful trading in Africa is not possible, he said, without an appreciation of local protocols and customs.
Zyda Rylands, Woolworths CEO (Photo: Anthea Davison)
"It's about doing the right thing"
The day was ended by a presentation of Woolworth’s CEO Zyda Rylands and, as MC Michael Jackson put it: “When Woolies speaks, the industry listens.”
Woolworths has been exceptionally successful in linking the producer to the customer, through their Farming for the Future initiative and its commitment to play a role in reducing poverty, unemployment and food wastage while effecting positive social change. “Seventy percent of what we serve is fresh. People ask: how do you keep it fresh? It’s not magic. It’s our unwavering pursuit of quality. Customers have to believe that if things go wrong, you’ll tell them,” she said. “We’re really proud that some of our suppliers have been with us for more than fifty years. A priority for us is to support small and micro suppliers owned by black women. We cannot enrich ourselves when others are getting poorer.”
"When we removed the sweets from the checkout aisles in our stores, I was often asked about the financial impact but it's not about the financial impact, it's about doing the right thing."
She finally referred to credit agency Fitch’s prediction that retail will change more in the next five years than over the past 30 years.
For more information:
PMA Southern Africa General Manager
Tel: +27 79 497 1594