By John Pandol, Director of Special Projects, Pandol Bros.
Much energy in the grape world over the last decade has been investing in the pursuit of the so-called new varieties. Life should be good. Most of us have spent time, money and energy evaluating the new varietal offerings, negotiating IP agreements, learning how to grow these miracle grapes, and developing novel commercial strategies.
These varieties were to be easier to grow with better yields, less problems and characteristics that would excite consumers. Having the right variety was the magic key to business with those well-paying preferred retailers. These varieties would sell themselves. Consumers would recognize and demand specific varieties. With the new scannable bar code bags, retailers now had the ability to offer multiple red or white seedless varieties at different price points. E-commerce offered the possibility to offer even more varieties.
Fast forward 10 years. The grape supply is now 30% or 40% or 50+% new varieties depending on the origin. Are grape growers making more money now? Are retailers knocking on your door begging to buy every box of the new varieties? Are stores selling and consumers buying significantly more grapes, either in dollars or volume, than 5, 10 or 20 years ago?
Ever heard of the Forrester effect? Also known as the bullwhip effect, in long supply chains, demand signals get amplified and create larger supply distortions and misallocation of resources the further away from the original demand source. A retailer who wants a program with certain characteristics, tells his several suppliers. who in turn each tell multiple growers. An initial demand for 10 units ends up creating supply of 50 a few years down the line.
There’s a premium for a period, either higher prices or access to the business (the premium is the sale), then it’s simply part of the supply and then it’s part of the oversupply.
I’ve made 10 trips in 10 weeks. Things change fast in our world and it’s important to always be attentive. This summer I saw a new proprietary variety in a United States wholesale market and an extreme value supermarket, plain packed in the cartons of a company no longer in business with a label with an invented business name. What? That’s like buying a Rolex at a gas station.
In our area we see this variety does not get harvested 100%, many perfectly good bunches abandoned on the vine for lack of demand. Three or four years ago, it was a premium offer, stocked in addition to the seedless of that color. Then it was accepted simply as that color. Then some retailers began to prohibit this variety.
The fall from premium grape to an off channel, patch buy grape took only 3 or 4 years. How many growers planted that variety based on the original premium offer? How much surplus offer of this new variety is in production or coming into production?
Since 1 July 2021, I’ve visited at least one hundred stores in 10 states, plus 6 wholesale markets, and a few tradeshows, industry meetings and golf tournaments. Generally, growers sell by variety but the public buys a commodity. A buyer may have preferences or be indifferent or have a blacklist of prohibited varieties, but consumers buy red or white seedless. Printing the name of the variety on the bag or clam shells doesn’t mean the consumer is acting on that information. Country of origin labeling has been required on fruit, vegetables and seafood for over 10 years and it really changed nothing.
The biggest change from pre-Covid times of 2019 has been the increase in retailers using retailer brand or third-party private labels or have clear bags with minimal text and no graphics. At this time of year, stores are stocking a lot of the specialty grape varieties, and promoting them, but sales are slow, and shrink is high. I found clamshells of a specialty variety in a club store that were 110 days old. As for sustainable packaging, I’m reading a lot of articles but not seeing much change at the store, not in grapes anyway.
Most readers of this editorial analyze supply statistics, look at sales and price data and create an image of ‘the market’. Our industry is fond of charts and graphs of export volumes. Publications are full of headlines announcing the increase in some new variety or species or market. But do we truly know how much “demand “there is? That theoretical number of how many units’ consumers would purchase?
What is the demand, for example, for the 2021-22 southern hemisphere – north American season, and how do we know this? Soon we will have an idea of the supply but what is the demand for grapes, new varieties and traditional varieties? There are many efforts to ‘increase demand’ yet, how do we know we increased demand, if we can’t state what demand is? One can’t manage what one can’t measure.
For last year, it is known that Chile exported 65 million grapes, but how many of those grapes were consumed? It is well known many grapes were lost to repack or outright dumped. Substantially less volume higher to new varieties, yet weak demand. Are we data rich but we are information poor?
The supply of new varieties will continue to increase, but is that increase a response to true demand or simply future oversupply as the Forrester effect would model?
New varieties are like popular music. What is now classic rock was the vanguard of its epoch. Elvis is good but would you advise a new musician to do exactly what Elvis did? My father did good business with Cardinals planted in the 50’s and Calmerias introduced in the 60’s……and Flames in the 70’s and Red Globe in the 80’s.
Food is not going back to earlier eras any more than agrochemicals, or medicine or communications are. But new varieties are not an attribute in and of themselves. New varieties are tools to deliver a reliably better, cheaper grape and that is how we should utilize them.
