Know where your customers are headed - and get there first - The Bottom Line

Have you ever noticed anything odd about apple displays in supermarkets?

Apple producers bend over backward to baby their produce. Apples are handled as gently as possible, kept in controlled-atmosphere refrigerated storage, packed in cardboard trays to prevent jostling and bruising, and shipped in air ride trucks.

The logical final step at the retail level would be to treat apples like lettuce: small displays in produce coolers to ensure the consumer receives the freshest and least-handled product possible.

And what do they get? Massive piles of apples sitting at room temperature.

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The old saw “know your customer” is easy to say but a lot harder to practice: customers are definitely fickle creatures.

But understanding customers is critical to the success of Bay Growers Co-operative in Clarksburg, Ont. It started up a dozen years ago when 22 local growers jointly built a storage facility, but its watershed moment came when it zeroed in on what its customers – grocery retailers – were doing.

“We could see the writing on the wall,” said co-op president John Ardiel.

“There were fewer and fewer retailers and the next logical step was that there would be fewer and fewer suppliers. We decided we had to be vertically integrated – that means everything from growing and storing to packing and marketing.”

Hold on a second. These guys knew that the ranks of packing houses were about to be decimated and yet decided that was the time to build one? What were they thinking?

Look again at those piles of apples, artfully arranged in nice looking pyramids. Every apple is the same size and colour. Consistency in appearance is huge in produce retailing and Bay Growers realized those with the latest in packing technology would have a leg up.

The technology is called pre-sort. Apples are floated out of their bins by water, bob along a network of canals and pass by electronic eyes that sort them according to size and colour before sending them into atmosphere-controlled storage.

The alternative is bins of mixed size and colour. To get a specific size or colour, commit-to-pack plants must empty these mixed bins on the packing line, where apples are waxed, dried and put in cartons or bags. To get one bin of large, bright red Macs, you might end up with four bins of other sizes and colours that must be sold no matter how poor prices are at the moment.

Actually, thanks to an unending flood of cheap American and Chinese imports, pretty much all apple prices are terrible these days, so it’s critical to squeeze out every extra penny per pound.

Bay Growers searches the world for buyers willing to pay a bit extra for certain characteristics. It exports half of its apples to major customers such as Great Britain and Mexico and even as far away as India and Madagascar.

“This is where the pre-sort system really shines,” said Jim Dolmer, the co-op’s general manager.

“Markets like Britain are very, very fussy and they demand the highest quality. Our system works much, much better in serving that kind of market.”

Added Ardiel: “I don’t like to think where we would have been if we hadn’t gone the route we did.”

It’s a funny world and not always a logical one. For example, growers put considerable effort into hand thinning trees to produce big apples. But when buyers come along offering premiums for small apples – and a surprising number do – no one at Bay Growers argues with them.

It’s easy to fall into the trap that you know quality and therefore that you know what’s best for your customers, but that’s not what we’re talking about here.

As Ardiel so aptly put it: “You can tell them you have all the quality in the world, but they want what they want and it’s up to you to deliver that to them.”

Glenn Cheater is editor of Canadian Farm Manager, the newsletter of the

Canadian Farm Business Management Council. The newsletter as well as archived columns can be found in the news desk

section at www.farmcentre.com.