This article first appeared on perishablepundit.com.
We often like to have speakers who have just vacated important positions. If they are still in the fray, they are often close-mouthed. If they have been out of position long, their information often gets dated, and quickly. So, when he heard Jacqui Green left her position as CEO of Berry Gardens, we wanted to grab her up quickly.
With sales of close to half a billion US dollars, the company is a berry giant in the UK. Berry Gardens also has an exclusive arrangement with U.S. berry firm Driscoll’s, tying them into a large breeding and marketing program. We asked Gill McShane, Contributing Editor at ProduceBusinessUK.com, to get a “sneak preview” of Jacqui’s presentation at the recent New York Produce Show and Conference::
Former CEO of
Berry Gardens Ltd.
North London, UK
Q: Jacqui, you have an impressive resumé, having worked for a number of global fresh produce companies at a senior level, including Berry Gardens, Bakkavor, Capespan, International Produce and Teresa Hermanos.
You describe yourself as having led teams to deliver double-digit growth, redefined business models and shaped sustainable cultures, and, until very recently, you served as the CEO of Berry Gardens, one of the largest berry companies in the UK. Can you give us a brief overview of your background, experience and achievements in the produce business to date?
A: Most recently, I was the CEO at Berry Gardens, and, prior to that, I was the Sales and Procurement Director. Berry Gardens is a cooperative, which is interesting as it gives you the ability to be the grower and the supplier all at once, which is really empowering. One of the two punctuation marks in my career at Berry Gardens was achieving huge double-digit growth on berries, having shifted to a consumer-led approach from production-led.
I invested the team into quite a large insight function and consumer research. We bought a lot of data from Kantar and IRI to support the company’s movement in the direction of what the future consumer is looking for. In the past, British agriculture has suffered a little from growers just growing what they’ve always grown, so that was a big growth trajectory based on a real cultural shift.
The latter part of my time at Berry Gardens was punctuated by the discounters becoming more troublesome to the big four retailers in the UK. In response, the retailers have been getting into newer models of working more directly with the growers. That model is putting pressure into the system, which is good in many ways but, unfortunately, it runs the risk of affecting innovation and investment in the future.
Prior to Berry Gardens, I worked for Wingland Foods, which is one of the prepared-salad and ready-meals factories within the Bakkavor Group, supplying exclusively to Waitrose. There, we experienced great growth, teeing into all consumer preferences for convenience, health, online, and the younger generation’s desires.
That was a really interesting experience to understand how to extract value from convenience products, up to the point where it goes too far (for example, a product like pre-chopped onions). Also, it raised the question of whether you need a great big food factory for lower-risk prepared food, or if can it be done without all the investment. It’s really interesting times, and I think this will play out in produce. I feel there’s a middle ground still to emerge.
Q: At the Global Trade Symposium, you talked about the own label (retailer private label) market, how to retain competitive advantage, and how to communicate with consumers. Is that a fair assessment?
A: The premise is that for fresh produce in the UK,half (at least) of the lines are sold in own [retailer] labels. As consumers become more demanding, it is all the more critical that messaging of why own label is the right choice becomes loud and clear — and right now there is a distinct dumbing down of any such message. So, my talk is from a personal perspective where retailers could move to keep/gain the consumer loyalty (across all generational sets) and, in turn, suppliers get to stand out.
Q: Can you give us a rundown of what your presentation will entail, and the topics that you will cover?
A: I’ll start with an explanation of private label. I’ll talk about UK consumers; the different generational types and what’s important to them. I’ll provide a snapshot of the UK produce marketplace and illustrate with photos how it looks now. Then I’ll talk about how retailers and suppliers in the UK might respond to what consumers want, and how they can do that better.
Q: Whare are the learnings for global produce and retail executives?
A: Private label is a really interesting topic. In the US, about 20% of produce is sold under private label, but not in every retailer. In China, meanwhile, it’s only 5%. It’s a really interesting trend. Europe is where private label came from, which means it’s well advanced here, so there are learnings for everyone.
I don’t know all the global retail players well, but my understanding is that all retailers are pushing to have more private labels. All retailers have their own initiatives on sustainability, planet and people; they have a lot to shout about.
Q: How does private label work for fresh produce?
A: Effectively, private labels were designed by retailers to gain control of the supply chain, and to be able to control the pricing and margins that they derive from selling products. Brands have huge power over retailers, so private labels give retailers scale, the ability to personalize, and the quality is pretty good. The retailers were able to write the quality standards and literally put their name to it. In terms of food safety, the UK has a very legislative-heavy production model, so we have fewer food scares and issues than other global markets. Generally, private label has mostly upsides.
The downsides, and there are some, are that you do lose innovation. It’s hard for one retailer to warrant spending what a big brand would spend. Also, and a retailer would disagree, but removing competition from the marketplace isn’t necessarily healthy, as it probably doesn’t foster new entrants who make everyone ‘up’ their game. Then comes the sad bit; it can become a race to the bottom with the retailers in control of the supply chain, and all parts thereof. There is the risk that if there isn’t a margin in each area of the supply chain, then people will cut costs and corners, which can lead to food safety and security issues.
I do think it could end up with a reversion to a product that is just ‘good enough’, with no incentive for producers to produce something novel or better. The risk is that produce will end up being a commoditized market because everything will be about the lowest possible cost. I think that’s sad because a lot of the market growth for products like tomatoes, berries, grapes and even some veg has come from innovation, through the introduction of new varieties, intense flavors, etc.
On the upside, there can be great innovation. For example, let’s say, Tesco pioneers a brand-new packaging material that allows us to remove plastic. It has far more chance of landing in a meaningful way if that material is used throughout Tesco’s private label. That would have much more impact than if, for example, Mars discovers the material and uses it on one confectionary item. There is a big piece around those initiatives being more impactful through private label.
Q: So, what is the current situation with private label for produce in the UK, and where is it going awry in your opinion?
A: There’s a disconnect in the UK where a very high percentage of produce is sold under own label, while the retailers are doing amazing initiatives (like Marks and Spencer with its eco and ethical program, Plan A, or Sainsbury’s 20 x 20 Sustainability Plan), but they’re missing a trick in terms of letting the consumer know what is happening behind that label with sustainability, heritage, quality, food safety, etc.
There’s been such a dumbing down of any provenance stories. For example, the other day I bought a punnet of strawberries, with a film lid on the top and white print that reads ‘Sainsbury’s strawberries’. It was so uninspiring, and I know they’ve done it to pare it back and reduce costs. But I think we’re going to end up having, for instance, a branded Florette ‘Vitality’ salad pack that looks amazing sitting next to, say, a Sainsbury’s own label salad which is fairly plain.
What I want to talk about is how the retailers have got really good stories to tell, but they’re not doing it very effectively. You’ve got to recognize the value in what you’ve got.
Q: Do you feel this disconnect has come about because of the sheer volume of produce that is sold under private label in the UK? If retailers don’t have to compete alongside many brands, is the issue simply that they feel they don’t need to try that hard?
A: Yes, it does feel like that but, equally, it’s happening not just in produce. For example, own label non-meat sausages in Sainsbury’s have quite nice, bright packaging and look funky, but sitting right next to them is a branded version in the most beautiful packaging. So even when they are competing side by side, retailers are still not getting it quite right.
Q: If the private label drives out the marketing and R&D costs, who is going to produce the innovative products and build demand in the future?
A: If retailers don’t get their finger out, there will be lots of private, branded companies. Although I don’t think there will be a big player, like Unilever,stomping in, retailers do need to be mindful that the little sub-brands are really appealing. The younger generation actually quite likes brands; they like the niche brands, as it’s all visual for them.
Retailers need to think about how they are talking to those generations. However, the one caveat is that fancy packaging alone is not the answer; fancy artwork and cardboard sleeves are not going to work with the younger generation. It’s going to have to be dramatically different from anything the retailers have ever done, which is why I think the story of their credentials will really chime with what’s important to future generations.
Q: Is the potential for new brands why it’s becoming more critical for retailers to make loud and clear why own label is the right choice for consumers?
A: The critical thing for the retailers is that their competition is going to come at them in the likes of online retailers; small, niche brands; and home delivery schemes, like Able and Cole or Hello Fresh. Little by little, these tiny players might destabilize things. If retailers don’t get their voices heard quickly, in terms of the initiatives they’ve been championing for years, they risk losing out. It feels like they have to move quickly to demonstrate their credentials before these small independents start to gain ground.
What’s interesting is that the younger generations are going to become quite distrusting of the big brands, so there’s an opportunity for the retailer brands to become really trusted and loved. Retailers need to think about how they are viewed by this skeptical generation. I think a lot of what they’re doing already really does put them ahead of the big brands.
The tragedy will be not getting that message right. Personally, if I didn’t know that each of the retailers has very meaningful and credible objectives surrounding sustainability, planet and people, as a consumer I would be very cynical about private label. But I do feel our retailers have just missed the opportunity to tell consumers.
Each retailer and their respective clients have a unique set of expectations, and by using own label, that retailer is able to really target what their consumers want. If we look at brands, more often than not, they are appealing to a mass market, and not appealing to a more niche customer at, say, Little Waitrose, or an Aldi store outside of urban estates, or The Co-operative on the high street.
Private label offers a level of personalization. Everything consumers buy in stores has the retailer’s name on it; the retailers are in control of their supply chain, quality standards, auditing suppliers. To have that power really gives retailers the ultimate credibility with their consumers.
Q: So, how can retailers gain the loyalty of consumers? What’s your advice when it comes to building trust in private labels?
A: It’s about communicating their initiatives to consumers. That might be in store; it could be online, on pack, or by using technology in store, such as digital markers. For example, Florette has a beautiful website all about them and the growers. Whereas, if you search for ‘Sainsbury’s mixed salad’ you get a photo of the bag and a bit of nutritional information.
The point is why wouldn’t you have that own label product linked to your credentials for sustainability, environment, water, people etc.? That, for me, is the biggest miss at the moment. But this isn’t irreparable; there is a huge win to be had without having to do very much. Produce ticks all the boxes when it comes to health, quality and convenience. We’re really are in a good place to respond.
Q: Taking packaging as an example, what could retailers do to make their own brand more communicative? You say fancy packaging is not enough…
A: It’s difficult. Retailers need to call out the things that are important to consumers, but they have to be so ‘broad church’ to suit the different generations. At the very least, they could start to educate consumers about their initiatives with perhaps a logo that sits on the pack. So, anything from M&S would show a ‘Plan A’ badge. Of course, Tesco had its Nurture standard logo but no one knew what it was.
People don’t have time to read a lot of information on pack, nor do they have time to stand and read boards or posters in store. It’s about educating them when they’ve got the time to listen, and making that message cue up again at the fixture or online. Online, there’s nothing stopping retailers from making a really big deal about it, or it could be a strapline across the page. Or, it could be more of an experiential thing, like inviting customers to meet the grower via the loyalty card scheme.
Q: Do you think social media is the most effective way to engage with today’s time-poor consumers?
A: Yes, I do. Social platforms are the quickest, easiest way to communicate with anyone born this side of the Millennium. Why wouldn’t you share your manifesto on the environment, find an ambassador, and get people talking about it? It’s all about investing for the future. The younger generations need a bit more sign posting as to what retailers are all about. They are quite cynical of big organizations.
Q: What about produce suppliers? How can they communicate with consumers via private label, and how can retailers ensure the growers’ voices are still getting through?
A: I think that’s still very relevant when you look at what consumers want. They want the stories behind the product and the growers but, really, it’s the retailers’ job to get consumers up to speed. The grower’s voice has to be with the retailer, and, ideally, the retailer will shout about them; for example, by making a documentary about them, or describing them as ‘the best tomato grower in the world’. Definitely, there’s still a voice for the grower through the retailer.
As a supplier, you sign up to a retailer’s codes of conduct and manifestos almost as if it was a pseudo brand. The point is that you don’t sell out on your own voice. Rather you would argue that if you over-deliver on a retailer’s expectation you’d be rewarded with more growth. It should become a self-fulfilling prophecy because more and more growers with the right mindset are producing more for the retailer.
Q: Are there any other messages that are important for retailers to get across in order to strengthen their private label?
A: Health. Every one of the generational groups rates health as an important factor for different reasons. So why aren’t we making more of the fact that everything in the fresh produce fixture is inherently healthy? I feel we’re missing a trick in terms of communication. Everyone knows that fruit and veg are healthy but, collectively as an industry, we could do a whole load better, and to miss out on making that point is concerning.
Look at some of the products that have managed to get into the marketplace that are pseudo healthy — it all comes back to brands because the branding is really clever. So, how do we educate people that that isn’t good for you? The difficulty with produce is that you can’t make the health claims like with other products because produce isn’t an ingredient. You can only say it’s ‘rich in Vitamin C’ etc. Maybe this is a question for legislative change — how can we make bolder health claims to help people realize what’s good for them? I think we’re quite conservative as a nation in the UK. This might be an area where retailers could step up and be a bit braver.
Q: Overall, what is your overarching message through your assessment of private labels?
A: We must recognize that the world is very small now, so any learnings from around the world will have resonance and relevance in another marketplace. Private label for produce is one area where the UK is very different to the rest of the world. But every marketplace has its own specific dynamics.
Anywhere where the industry has started out as branded, and now moving to private label will encounter resistance because there’s the perception of a loss of power, and the introduction of competitors. But the critical thing we all have to remember is that we’re all about the future consumer.
Ultimately, we’re producing a healthy product that will nurture people for the future from both a health and an ethical, sustainable point of view. We need consumers to understand what retailers and growers are doing, and to support that. Our focus should be on healthy consumers for the future, and raising consumption globally; maybe taking head on some of these pretend healthy products, and, for now, disregarding brand wars. We know the younger generation is very skeptical about brands. It’s about moving with the times, and being consumer-focused.
We find the whole issue of private label in produce somewhat problematic.
Fundamentally retailers like private label for three reasons:
- They want to eliminate the ability of branded companies to use consumer pressure to make them carry items.
- They want to increase margins or reduce consumer costs or both by eliminating the investments that branded companies make in R & D and marketing.
- They want to bring produce into alignment with the other departments, so there is branding consistency.
Of course, we have had experience with what happens when a UK-type private label program lands in the US. We wrote quite a bit about Tesco’s efforts to Come to America as Fresh & Easy.
Tesco came into America and did much of Jacqui talks about. They set up unique standards, down to how long the stem of an artichoke should be or how many grapes in a clamshell.
They had all this produce produced to its specifications, then they brought it into a common facility for packaging with no reference to any producers.
All of the sudden, the retailer learned that these Category Champions, who grew and packed to the rigorous standards that Tesco had established, were not always the cheapest guys on earth. They also learned that many consumers seemed to place no value on these traits that were so expensively specified.
So, the dedicated producers, who had bet on Tesco’s success in America and spent time and treasure to produce what was requested, were more than a little peeved when they came into the stores and suddenly saw pallets of standard competitive product bought as a kind of “opportunity buy” from brokers, other shippers and terminal markets and displayed at prices undercutting the product produced to spec.
Of course, many of the best shippers never got involved at all. Driscoll’s itself walked out of a vendor meeting, announcing that this private label approach was inconsistent with its own goals!
The reason private label has so much trouble in the American produce industry is that for most companies there is very little in the way of R & D or marketing to “save,” so there are no “savings” to hold as increased margin or to pass on to consumer savings.
That is why if you go into an Aldi, for example, you are likely to see produce from most of the top brands.
To insist on everything under a private label would both add costs in terms of labeling differently and preclude the retailer from taking advantage of market opportunities.
We actually see a kind of counter-private label trend brewing… The retailers want private label so they can walk away from any supplier who wants what the retailer perceives as too much money. But now, with genetics being tied to branding, the producers have a chance to turn the table.
If a retailer wants to sell Cotton Candy Grapes — and they do because their customers want them — the retailer has limited numbers of people to deal with.
So far, big berry growers in the UK have gone along with the retailers’ desire for private label. But that might not last forever.
In the end, producers want to have distinctive genetics, which they want to brand so that consumers will demand the product and be willing to pay for it. It is a big power shift in the produce industry, and retailers may not like it very much.
In any case, the role of private label in produce — what retailers should be trying to accomplish and what producers should be trying to accomplish — is a big issue.