At this morning’s Thought Leaders Breakfast Panel at The Amsterdam Produce Show, industry players from South Africa to Norway discussed how innovation was driving value for fruits and vegetables.
We hear a lot about innovation in the produce industry, but very often it is in the form of new products or packaging. In today’s breakfast conversation, Perishable Pundit Jim Prevor sought to delve deeper into a more macro-oriented, structural definition of the term.
What conditions are necessary to encourage and promote innovation?
This is not a question that can be answered quickly in an event like this, but the panel of experts from varied backgrounds and geographies gave insights tackling the issue head-on by sharing real-world examples and experience.
For Rune Flaen, CEO of Norwegian retailer Bama Group, it was about providing stability in the supply chain so that growers could feel confident to invest more in their operations and offerings. And on the retail side, he highlighted how the introduction of salad bars was raising fresh produce department turnover by 20% in some stores.
“Fast, healthy and sustainable – that’s really the mega-trend everywhere,” Flaen said.
The executive added that research showed 38% of Norwegians were throwing away less food this year than last year, underscoring the importance of addressing food waste.
“Food waste is top of mind everywhere now,” he said.
It’s a topic that’s certainly top of mind for Drees Peter van den Bosch, who founded Willem & Drees with a service that delivers food boxes to consumers with product sourced directly from local farmers.
“We want to set up a new example of the food chain where farmers and customers are really connected, and we also think that when it comes to how people will eat in let’s say the coming decades that we have to be more self-sufficient within certain regions,” van den Bosch said.
“One of the main challenges also is that we have to do something with all the waste we have in the food chain.
“For example, I met my pumpkin farmer a couple of weeks ago and from his six hectares of pumpkins, more than 40% came up with some green spots.”
Now Willem & Drees is buying all those pumpkins and processing it into a fresh soup.
“So for the coming winter we’re putting these soups into our meal boxes and we do the same with our tomato growers…what we try to do is innovate also making money on waste production,” he said.
Albert Heijn senior sourcing manager Michiel van Zanten told participants it was, however, a mistake that many consumers believed imperfect produce just ended up in the bin.
“They’ve always been going to industries that will be making products from it, but I think for the retailer it’s first of all the objective to increase the value of those products and that raises turnover, but also nowadays consumers embrace those products and actually we have a shortage,” van Zanten said.
“I think consumers have forgotten where their products come from, and they really like to be informed – they want to have everything transparent.
“Actually we have set ourselves the target to get the farmers or the growers in the shops, so make pictures of them and sometimes invite them in the shops. And consumers really like that.”
The retailer actually had a campaign last year where consumers could buy seeds and see how “damn hard” it was to grow vegetables. Now Albert Heijn has taken that engagement a step further by offering them the opportunity to harvest.
“We actually invite consumers to cut off their own herbs and weigh them themselves and then go to the checkout, and they like it,” he said.
“It’s still a concept that we have to improve and develop further and further, but it already connects with new technologies in the chain like vertical farming, but it’s smaller and it’s closer to the current growers I believe, and also closer to the experience of the consumer.”
For James Lonsdale, national fresh produce manager for Spar South Africa, the imperfect produce issue isn’t as much of a priority. But in the South African context – a country where produce needs to travel enormous distance for consumers across the income spectrum – the most obvious areas for innovation have been in logistics and distribution.
“We’ve invested in both ends of the spectrum in terms of innovation, in terms of high-tech farming as well as low-tech farming, and that’s really to just cater for the profile of customers that we deal with,” Lonsdale said.
“Traditionally in retail, supply chains in fresh produce have been very long where you have product being grown in a rural area, transported to a major city centre where the distribution centre is and then sent back to the rural area the next day, travelling a whole lot of kilometres.
“One has to question, is that the right way to do it? Is centralised procurement the right way to do it? Spar said no, and we decided to start looking at shortening supply chains.”
The result was a concept known as “rural hubs” with assembly points set up in areas that in some cases are thousands of kilometres from a major city.
“From those centres we then distribute produce into the local stores,” he said.
“We have invested back into the farmers that are involved in that process, whereby we’ve tried to incorporate small-scale farmers so we’ve had to do a lot of training and development of those farmers.
“But there’s also technology that goes with that – we’ve looked at hydroponic and that type of thing to try and improve their production.”
Peter Hoijtink, European sector leader of Agrifood at PwC in the Netherlands, also highlighted the importance of acquisitions of European companies by large Asian players, for example, ChemChina’s takeover of Syngenta.
“Many of the players more upstream in the value chain are being acquired now by Chinese companies, with basically the main reason to also create Chinese-based large agri-food companies and that will probably shift the power balance of global trade which I think will probably be a good thing as it spreads things out more.
“What I want to add is that obviously with the consolidation on the retail side and partly on the supplier side, there may be even more of an imbalance.
“I think one of the scenarios how we look at it to the future is you will have a much more fragmented demand and also supply in products and segments and categories. If that happens we will also have much more possibilities for players like Drees…a much more local and regional role. That opens up opportunities.”