UNITED STATES and CHINA - Last Friday saw something of a domino effect as both the U.S. and Chinese parties stood by previous declarations for round two of their respective tariffs. Unfortunately, more produce items have been caught in the eye of the storm, continuing to target popular items and even reaching the more premium corners of our industry.
The circle of Chinese tariffs now encompassing U.S. fruits and vegetables include:
- Avocados
- Mushrooms
- Truffles
- Cherries
- Apples
- Farming potatoes
To see a list of these items and more by categories affected between the two opposing sides, click here.
CNBC previously reported that the Chinese State Council's commission on tariffs and customs said in an online statement that a 25 percent tariff would take effect July 6 on agriculture products, automobiles, and "aquatic products," countering the United States Trade Representative's announcement earlier that day that the U.S. would initially impose an additional 25 percent tariff on 818 Chinese imports worth about $34 billion on July 6.
Both sides held to those statements, leaving those in the supply chain to determine whether to absorb the additional cost or to add it to the end pricing, as well as looking to consumer demand to help balance the scales.
For those of us who might have a taste for a little liquid courage to see us through this current standoff, I am sad to report whiskey has also made the list. It is early yet, however, and with operators and shoppers alike hoping for a quick resolution, AndNowUKnow will continue to follow this story for the latest.
SAN DIEGO, CA - Organics Unlimited has welcomed fourth-generation family member, Daniella Velazquez de León, as its new Logistics Manager.
“It’s so exciting to be working at a place that’s truly making a difference,” said Velazquez de León in a company press release. “I’m genuinely passionate about what we do here and about our GROW social responsibility program. We have so much potential ahead of us as a company, and to finally be here, I am where I’m meant to be.”
Joining the family business wasn’t a set expectation for Velazquez de León. Her parents wanted her to find her own way, but this eventually led her back to Organics Unlimited.
“I’m obviously extremely happy to have my oldest daughter, Daniella, join the company that we’ve built over the past 18 years,” said Mayra Velazquez de León, President and CEO. “She’s going to be learning the ins and outs of what we do here on every level, from logistics to accounting and sales to marketing. We’re proud to have her on board and passionately giving it her all.”
Prior to joining Organics Unlimited, Velazquez de León worked in a number of roles for Amobee (and Adconion Direct, prior to it being acquired by Amobee). While at Amobee, she began overseeing social media campaigns and moved on to work on display, mobile, and video ads, all of which she integrated into digital components for client campaigns. She also has background in broadening advertising channels through Pinterest and Snapchat.
Velazquez de León is a graduate from the University of San Diego with a Bachelor of Business Administration in Marketing and Finance degree. She has worked on a wide range of campaigns for Fortune 500 companies like Airbnb, among others. In her new role, she plans to foster a fun company culture and pursue opportunities to innovate Organics Unlimited. As she sees a chance for growth development in organic produce, she said she plans to keep an eye on trends and ensure consumers know why organic is the best option.
“My dad always encouraged me to follow my heart and that advice has led me here,” said Velazquez de León. “I don’t know where my path is going to take me, but I trust the process of following opportunities along the way. I still have so much to learn, but I’m very excited.”
Congratulations to Daniella Velazquez de León on this new chapter in her career!
MINNEAPOLIS, MN - After months of tensions between activist investor Blackwells Capital and management, SuperValu seems to be nearing a referendum of sorts, with shareholders expected to elect a new Board of Directors on August 16, 2018. In anticipation of the election, the company sent a letter to its shareholders this week urging investors to vote for “all of SuperValu’s highly qualified Directors” and to reject Blackwells’ recent nominees.
“At SuperValu’s upcoming Annual Meeting of Stockholders on August 16, 2018, you will be asked to make important decisions regarding the composition of the Company’s Board and the future structure of your Company, which we believe will impact the value of your investment,” the company noted in its letter. “Blackwells Capital, a New York-based alternative investment firm, is trying to seize control of your Board by proposing to replace six of nine directors. Blackwells’ attempt to seize control of your Company, without paying a premium to all stockholders, is highly disproportionate to its actual ownership stake in SuperValu.”
The letter goes on to state that SuperValu believes Blackwells’ plan to present “significant risk to the important progress the Company is making in executing its ongoing strategic plan.”
“Any claim Blackwells could make to act on behalf of SuperValu's stockholders is belied by the fact that, through short sales of call options and the purchase of put options, Blackwells’ exposure to the Company is substantially less than it represents,” the letter goes on. “In fact, while Blackwells claims that it has a 7.7 percent ownership interest in SuperValu, analysis of the detailed information it has provided in its filings shows that, taking into account its various options contracts, Blackwells’ exposure to the Company’s shares is materially lower than 7.7 percent.”
The company goes on to detail the various ways in which SuperValu “has taken major steps to position SuperValu as the grocery wholesale supplier of choice, while also ensuring that certain of the Company’s well-positioned retail assets are strategically used to add value to the overall business,” achievements including:
- The completion of the sale of Save-A-Lot for $1.3 billion in December of 2016
- The “dramatic” turnaround of SuperValu’s wholesale business, which added $5 billion in sales on a run-rate basis to the Wholesale business in just two years—a growth rate of over 60 percent
- Monetizing a significant portion of our owned real-estate portfolio through the sale and leaseback of eight distribution centers, totaling nearly six million square feet of space—a transaction expected to generate net proceeds of approximately $445 million
- The reduction of SuperValu’s retail footprint, the completion of the sale of a majority of our Farm Fresh retail stores and pharmacy assets for a total of $53 million, and the selling a minority stake in a multi-store Cub Foods LLC that generated proceeds of $14 million
The company also urged shareholders to vote for its proposal to restructure SuperValu as a holding company, a step the company said it expects to "enhance [its] competitive position within the changing food industry, strengthen [its] balance sheet, and most importantly, to position the company to deliver long-term value to all stockholders."
To read SuperValu’s letter in its entirety, click here.
RIVERSIDE, CA - Index Fresh is continuing to push through its avocado season, marketing both California and AvoTerra by Index Fresh avocados from Mexico, Chile, and now Peru. Dana Thomas, President and CEO of the company, recently highlighted the company’s Peruvian operations, which cover the season from May to September.
“We cover the full season by geographically spreading our sourcing from north to south,” Thomas explained. “We work with packers in Peru that are food safety-certified. We set up programs with Peruvian fruit that deal with promotions, timing, forward pricing, and allow us to supply customers consistently throughout the season.”
This year, the Peruvian deal had a late start due to La Niña, the company shared in a press release. La Niña “manifests itself in cooler weather and delayed maturity. We will see shipments into the United States into September,” Thomas said, noting that Peruvian fruit is extremely important in supporting counter-seasonal demand in the U.S. market. Peru provides a significant amount of fruit in that May to September period, filling retailers’ needs for programs during the summertime.
“We first visited Peru back in 1998 and started building relationships,” said Thomas. “I think that one of the benefits that Index Fresh offers is that we have strong relationships with both the exporters and the growers in Peru.”
Thomas shared that Index Fresh is proud of its position be one of the first avocado companies to participate in the Peruvian deal. How will the rest of the season pan out in the face of regional weather changes? AndNowUKnow will continue to report on updates.
SOUTHERN CALIFORNIA - At this time of year, Californians can expect some fairly crazy weather, but the latest reports take the cake. Over the weekend, amidst a heat wave that reached 113 degrees, strange weather reigned. According to a report from SFGate, marble-sized hail pelted mountains near San Diego; lightning and heavy winds whipped around the San Bernardino mountains, and mudslides slid down onto Highway 38.
"We're seeing quite a few monsoonal showers and thunderstorms pop up in San Diego, Riverside, and San Bernardino counties," stated the National Weather Service on Twitter. "[There is also] frequent lightning and even hail in the Big Bear area."
As temperature records were broken in Santa Ana, Newport Beach, Vista, and Riverside, thunderstorms formed over the mountains, bringing with them the potential for flash flooding, forecasters reported.
Along Highway 38, rainfall mixed with the ongoing Valley Fire created mudslides. In some areas, such as Riverside, where the temperature hit the record-setting 113 degrees, people reported thunder and rain that evaporated before it reached the ground.
During this time of the year, honeydew, avocados, and mushrooms are in season, but no reports have surfaced regarding the weathers' effect on these crops.
AndNowUKnow will continue to report throughout the season with weather updates on important growing regions.
RIO RICO, AZ - Nearly upon us is this year’s Organic Produce Summit, and SunFed® has much in store for retailers looking to maximize freshness for their organic-loving consumers. The company is introducing a new modified atmosphere and modified humidity grab-and-go style bag for its Organic Persian Cucumbers, ensuring that they make it to the kitchen in the best condition possible.
“At SunFed our mission is to ensure we are getting the freshest produce into the consumers’ hands so they have a great eating experience, plus the resealable technology bag keeps the cucumbers fresh and tasty for several days,” Gretchen Kreidler Austin, Director of Marketing and Business Development, tells me, “While the grocer is certainly our customer, we aim to make the consumer happy. We want them to have a pleasant experience and come back looking for SunFed Perfect Produce.”
The bag not only lengthens shelf-life and encourages maximum convenience by being ready to grab, but it also offers an extra layer of protection while in the store.
“The modified atmosphere and modified humidity bag extends shelf-life of our Persian cucumbers, but it also reduces the amount of handling by people sorting through the cucumbers on the shelf that can cause extra bruising,” Gretchen shares.
She adds that SunFed packs its Organic American Slicing cucumbers and its Organic European Cucumber in a master MA/MH bag as well, and that these are just a few of the many things to check out when visiting booth #716.
“SunFed’s full line of Organic Hothouse Cucumbers are cut and sent to us within a day, so we are receiving and shipping true fresh-cut product,” Gretchen says, adding that the company is also expanding on its previous organic band that launched to ensure cashiers know to ring ‘organic’ at the register. “We continue to grow our new MA/MH overwrap for our organic cucumber, yellow squash, and zucchini under our Perfect Organic® label, which will be available at OPS. At SunFed we like to be fresh, but having fun is a priority too and this graphic really shows that in the form of The Perfect Organic Love Bus!”
In addition to the new wrap, wraparound labels, and year-round OG Cucumber line, SunFed offers core organic items in a “Perfect Fresh Pack”—cucumbers, yellow squash, and zucchini in a 16-count bulk box for retail to help the store turn through the case quicker and not carry extra inventory.
The Perfect Fresh Pack items are available at a fixed price instead of fluctuating with the market. And if that’s not enough to keep your head spinning, Gretchen tells me the company is already eyeing some fun offerings for OPS 2019.
“Currently we are looking at offering organic eggplant,” she tells me excitedly. “Eggplant being one of our core items, it just makes sense for us to add that to our organic line.”
With much in the works and growing its organic offering to meet rising demand in any and all categories, mark SunFed booth #716 as a strong stop on your floor plan for OPS.
LOS ANGELES, CA - I recently had the opportunity to talk to Joel Montminy, Founder, President, and CEO of CREO | Montminy & Co., to learn more about the M&A (mergers and acquisitions) market as it relates to fresh produce. As a panelist in a recent educational session at the Viva Fresh Expo, held in San Antonio, Texas, this April, Joel offered a variety of insights into how to research, approach, and execute private equity investments in the produce industry. Joel was gracious enough to share his insights on market trends, major acquisitions, and more.
Q: At Viva Fresh, you mentioned the ways in which produce has historically not been an active M&A market and two trends that are driving increased M&A activity in the industry; can you tell me a little about the reasons we're seeing increased buying and selling?
Joel Montminy: For one, healthy eating trends are here to stay, and the strategic players know it. The rise in consumer demand for healthier and organic products has driven major consumer groups to reshape their product portfolio and/or use M&A deals to expand into this fast-growing segment. At the same time, we’re seeing more conglomerates narrow down their business focus through buying/selling divisions to meet changing consumer preferences.
Big companies need growth vehicles that connect to consumers. One example is Pepsi’s recent acquisition of Bare Snacks, which stood out in the retail aisle alongside fresh produce. This strategy does not always work for strategics. In 2015, Campbell’s reorganized into three divisions, creating the Campbell Fresh unit after combining what was a Packaged Fresh division with soups sold to supermarket delis. But Campbell Fresh struggled, resulting in a two-year decline in organic sales. For larger strategics, effective execution of a fresh strategy remains the holy grail.
Second, as valuations have risen, many private equity firms and strategic acquirers have moved down market. As they do, lenders follow, providing financing options more readily available for smaller deals. In addition, family offices, the hot new buyers in the lower middle market, are offering a longer-term, conservative approach to growth that often resonates with the entrepreneur/founder mindset.
Q: Do you think produce companies moving from a commodity-focused approach to an increasingly product/brand focused approach—with value-added items becoming predominant across many categories—is changing the way produce companies are valued, bought, and sold?
JM: Generally, yes. All else being equal, a branded product mix typically commands a higher multiple than a pure commodity business due to the brand control/IP value. This can also create some healthy channel tension. Growers, for example, may find an opportunity for their product to be sold directly to retailers, versus utilizing value-added distributors or marketers. At the end of the day, what matters most to drive interest and valuations up, is customer diversity (e.g., type, geography, channel) and the depth and tenure of customer relationships, be it via distributors, marketers, retailers, or DTC.
Having said this, in the consumer's eye the perceived quality gap between branded produce and private label has faded. So with a generally lower price point, private label products over the past few years in retail grocery and online have outpaced branded sale. Additionally, not all brands are equal, and if the produce company is not willing and able to devote substantial resources to building and supporting a sustainable platform, the desire of a buyer to own, integrate, and accelerate that brand will not materialize and thus impact valuation in a sale.
Q: You mentioned how acquiring companies, in some respects, like to see inefficiencies or areas in which their acquisition targets can be improved; can you elaborate on what that might look like? What is a good inefficiency to have, so to speak, in this respect?
JM: There are exceptions of course, but generally speaking, acquirers like businesses that are a 7 or 8 out of 10. A perfect company has little room for improvement and therefore purchase price synergies, and a broken company could drain too many resources to repair. Acquirers look at ways to improve operational efficiencies such as consolidation and optimization in purchasing, facilities, and transportation. In more sophisticated businesses, buyers seek a path to digitization, focusing on customer engagement by connecting with their consumers in new ways. While the produce industry has historically lagged other industries in certain trends, these are example of what we expect to see within produce over the next few years.
Q: What are some of the mutually-beneficial arrangements that companies can enter into beyond a wholesale acquisition? How might these options better fit certain prospective buyers and sellers?
JM: Outside of a pure acquisition, we often structure alternative arrangements that help both parties accelerate their respective or combined business such as a recapitalizations, joint venture, or strategic alliance. There are pros and cons of each, namely around capital allocations, term, contribution and risk sharing, ownership, and future optionality. Overall, these structures can be a great way to build a new produce business and enter new markets when two organizations lack the capabilities to do it on their own.
For more on private equity, mergers and acquisitions, and the financial options open to those in our industry, keep reading AndNowUKnow.
GONZALES, CA - In an effort to expand its organic brand and provide customers with even more options and on-trend flavors, Misionero has announced new additions to its Earth Greens line. The company is introducing new items including Little Gems and Butter Lettuce to help shoppers embellish their salad bowls.
“Over the years, we have cultivated the Earth Greens product line to include a spectrum of products that lend a hand to people searching for organic salad mixes they can trust,” said Joe Merenda, President. “We seek to evolve this product line as consumer trends shift in order to maintain our commitment of providing products that people can feel good about.”
According to the company’s press release, Misionero has been growing a wide range of organic products sold under the Earth Greens label to include traditional salad mixes and wholesome salad mixes since 1997. The company added Little Gems and Butter Lettuce products to its existing Earth Greens line based on consumer trends and as a means for customers to capitalize on on-trend options that add color, crunch, and flavor to healthy dishes.
New Earth Greens organic products are available in pack styles for retail and foodservice, and will be making a debut at the Organic Produce Summit New Produce Showcase this week—July 11-12 at booth #317.
For more fresh produce news, stay tuned to AndNowUKnow.
CINCINNATI, OH - Expanding its reach and interest in Kentucky, Kroger announced it is investing $17 million in ramping up production for its Florence, Kentucky-based distribution center.
"This significant investment in the distribution facility and our associates will allow us to more efficiently reach our customers and help to deliver on new ways to shop with Kroger, as we redefine the grocery customer experience through Restock Kroger," said Frank Bruni, Vice President of Supply Chain and Logistics. "We have long appreciated the support from Boone County and the state of Kentucky, and look forward to growing together."
In addition to boosting production, the investment will add an estimated 250 new jobs, the majority of which will be full-time positions.
Now spanning 674,000 square feet, the distribution center currently employs 80 associates. It opened in October of 2017, after Kroger invested $60 million in the replenishment center to service the company's direct-to-store distribution centers across the eastern half of the country, as well as Kroger's growing e-commerce and digital business, according to a press release.
The project is supported by a Kentucky Business Investment (KBI) incentive of up to $1 million over 10 years. The company noted its annual eligibility for the performance-based tax credit is linked to investment, job creation and retention, and average hourly wage targets.
"It was less than a year ago that Kroger opened its distribution center in Boone County, and it is clear from this additional investment that the company recognizes Northern Kentucky as the best possible location for further success and growth," said Kentucky Governor Matt Bevin. "Distribution and logistics is a thriving industry in the commonwealth, and this announcement is just the latest confirmation of that fact. We greatly appreciate Kroger's confidence in the Northern Kentucky region and its ongoing commitment to investing and growing in our state."
Kentucky Senator John Schickel, of Union, said Northern Kentucky is on an economic development roll and Kroger's investment builds on that success.
"We are grateful to Kroger for this huge investment of nearly $18 million into our local economy in Boone County," said Senator Schickel. "Employment is on the rise in Northern Kentucky, and these 250 new jobs will keep our economic momentum going. Thanks to Governor Bevin and the folks at the Cabinet for Economic Development for making this expansion possible and for continuing to create a strong business climate in the commonwealth."
Kentucky Representative Sal Santoro, of Florence, Boone County Judge-Executive Gary Moore, and Judge-Executive of Kenton County and current Northern Kentucky Tri-ED Board Chair Kris Knochelmann all applauded the move.
The distribution facility will start to expand its team in September, accepting candidate applications here.
WILMINGTON, DE - We have entered the grape zone, folks, and to really rev up its national grape category program, Forever Fresh, LLC has brought industry veteran Vince Gambero on board. He will head the company’s grape program and expand its West Coast operations. Gambero brings 30 years of industry experience to the Forever Fresh table, where he will join in on the vertically integrated sales and marketing company’s work.
“Forever Fresh represents new challenges, but also an opportunity to represent an outstanding group and family of growers that is focused on quality and building true partnerships with their customers—San Francisco and Verfrut represent the best of the best,” Gambero shared.
At Forever Fresh, Gambero will manage the company’s West Coast offices and expand its West Coast operations to also include imports through the Port of Los Angeles, according to a press release. Further, Gambero’s role will tackle the addition of domestic products to the company’s commodity mix. In his new role, Gambero will work alongside exisiting team members to cultivate business opportunities for the company’s commodities, while also drawing on his industry expertise in the grape category as he manages the development of the grape program to nurture new customer relationships. Through these measures, he will add value for Forever Fresh grower-owners Verfrut and San Francisco.
“In a global marketplace it is important to focus on experience and talent in the sales department equal to that of our growers.” General Manager Evan Myers stated. “Vince’s long tenure in the industry provides him with deep understanding of not just the grape category, but a variety of commodities that are critical for our success as we grow and expand our domestic and global footprint."
In Gambero’s down time, he enjoys working out, staying in shape, and spending time with his wife and three children.
Congratulations to Vince Gambero and the whole Forever Fresh team. We look forward to seeing how this new addition to the team will add to your company.
For more fresh produce news, stick with us at AndNowUKnow.