Fresh State of Affairs Issue 13

Will rents weigh us down?

ISSN: 1838-7829

augu

st 132012

Relocation: Government decisions that impact your future.

Fresh State CEO:John [email protected]

Editor / Advertising:Sonja van [email protected]

Contributors:Sally Piper [email protected]

Design:Flying Dog Designswww.fddesigns.com.au

Photography:Michael Lamond [email protected] Casamento www.casamento.com.au

Print:King Printwww.kingprint.com.au

Distribution:Fresh State of Affairs is produced by Fresh State Ltd and is a free publication.

2 | What’s on

3 | President’s message

8 | Market history

16 | Moraitis multicultural day

20 | Gala ball 2012

21 | Top 10 feature

24 | Calendar of events

26 | MMCS

CONTENTS

18 The Australian Chamber: Benefitting from a raise in profile with its members and the fresh produce industry.

Published by:

www.freshstate.com.au tel: 03 9689 3233

1410 Fresh Connections 2012: The most successful conference to date in the industry.

Around the markets: Delegates from Fresh Connections conference 2012.

4

22 Wholesale Vertical Integration: Successful partnerships between growers, wholesalers and retailers.

25 Q&A – Tony Nigro: Fresh State’s equivalent to the ‘gold watch’ handed to Tony for his 25 years of service.

issue 13 august 2012

cost of doing business

annual through-put

president’s message:

03

We did not agree with all the details but have since had constructive talks to try and resolve those issues. FSL was given the opportunity to express its’ concerns, and the results seem positive.

This brings us to the subject of business balance, where sales are sufficient enough and costs are

reasonable enough to make a profit. Both can move together in the same direction either up or down. But if sales are dropping and costs are going up, business balance is lost and it is only a small step to “exiting left via the back door”.

The warning bells are starting to toll for our members businesses. Though put value (sales) has been declining over the last number of years, whilst

fewer retailers use the market and costs have continued to rise.

The Government need to heed the warning and reanalyse their proposed cost structure and the impact this will have on their tenants!

Fresh Connections turned out to be a great conference with just on 900

industry attendees. It had the best trade show yet and was an ideal opportunity to network with fellow wholesalers and the broader industry. All the details are in this issue.

The conference was also a new phase for the Australian Chamber and highlighted its importance and influence on the national stage. My congratulations to Andrew Young, Brisbane Markets CEO, on being

winner of the Meritorious Service Award and our own Callum Cormack from Moraitis for being the recipient of the Young Achievers Award.

Also in this issue is the next chapter in our history series; information on our new bad debt fund; and a Q & A on someone celebrating 25 years of employment with one firm and 41 years in the market!

Shane Schnitzler President Fresh State Ltd.

Fresh State Ltd makes this magazine available on the understanding the users exercise their own skill and care with respect to its use. Before relying on, or altering any business practices, users should carefully evaluate the ac-curacy, completeness and relevance of the information for their purpose and should obtain appropriate professional advice relevant to their particular circumstances. This magazine contains views and recommendations that do not necessarily reflect the views of Fresh State Ltd.

Fresh State does not in any circumstances accept respon-sibility for the accuracy or suitability or otherwise of any in-

formation published in Fresh State of Affairs. Fresh State Ltd specifically disclaims all and any liability for loss or damage of any nature whatsoever and however arising, whether due to accuracy, error or omission or any other cause.

In addition, by using the information in this magazine, each user waives and releases Fresh State, its staff and agents from any and all claims relating to the use of this document. In no event shall Fresh State Ltd be liable for any consequential damages resulting from using the information in Fresh State of Affairs.

© Fresh State Ltd 2012

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior permission from Fresh State Ltd. Requests and inquiries concerning reproduction and rights should be addressed to:

The EditorFresh State of Affairs MagazineMarket Box 113, 542 Footscray RoadWest Melbourne VIC 3003

Disclaimer:

From the President

Shane Schnitzler

But if sales are dropping and costs are going up, business balance is lost and it is only a small step to “exiting left via the back door”.

The Allocation Paper has washed up since the last issue of Fresh State of Affairs!

Incorrectly published in Issue 12 June 2012,

Page 5 in the Relocation story, the bottom table

of Form Responses to Store Allocation: +/-15

percent in point 4, 34% do not support, and

point 5- 34 % do NOT support No Graduated

Threshold.

04re

loca

tion

:OF AFFAIRS issue 13 august 2012

The Government recently

released for comment their

Rent Discussion Paper.

The main premise within the paper was to raise $30m in revenue a year to operate the market and service debt. It stated that rents for stores, stands (f & v and flower) and warehousing are required to raise approximately $22m or approximately 70% of the $30m.

Included in the discussion paper were broad funding parameters for the new market. They provided rent scenarios based on options that result in different outcomes for different market segments and they seek

our views on rent options including relativities between market segments.

Listed were parameters around State funding (incorporating public funding, MMA capital contribution and Treasury Corporation of Victoria (TCV) debt funding (being a maximum of $120m).

THE STATE’S POSITION

Government Decisions that Impact Your Future

05relocation:

For the record, Fresh

State and its members

rejected all options in

the discussion paper

and submitted an

alternate proposal that

demonstrates that

wishful thinking and

needs are two entirely

different things.

FRESH STATE’S VIEW

However to assess any rent option, it can’t be viewed as a singular component. The changing face of the industry must be considered in the context of the cost of doing business and the need to maintain business balance.

Businesses aim for a balance. This is where sales are sufficient enough and costs are reasonable enough to make a profit – i.e. the difference between the two!

What’s happening at a wholesale level?

Industry is undergoing structural change. Vertical and horizontal integration of industry has been occurring especially over the last five years. This type of integration or consolidation is similar to many agricultural based industries in developed countries.

However we are seeing two further areas of structural change. The two largest supermarket chains announced that they have taken the direction to bypass the central markets to buying directly from producers. They account for approximately 45% of retail ‘in-home’ fresh produce. And since the mid 1990’s we have seen the independent retailers decrease by two thirds in number – you can’t sell it to someone who is not in business anymore!

Coupled with the decline in prices over the last twelve months, the drop of through-put values passing through the Melbourne Markets is in the order of around 30%.

Businesses aim for a balance. This is where sales are sufficient enough and costs are reasonable enough to make a profit – i.e. the difference between the two!

1993 1998 2002 2012 2013 20152006 2010

800$mil

1200$mil

1200$mil

1000$mil

1300$mil

1500$mil

1600$mil 1600$mil

Melbourne Market Through-put

06re

loca

tion


Vertical and horizontal integration of

industry has been occurring especially

over the last five years. This type of

integration or consolidation is similar

to many agricultural based industries

in developed countries.

This is unsustainable and it is no surprise Fresh State

has rejected the State’s rent options.

Cost of Doing Business

The cost of doing business has signifi-cantly changed for wholesalers over the last few years. Although improve-ments in the use of mechanization have contributed to greater produc-tivity, especially the use of forklifts, significant changes to other costs have occurred. These include electricity for refrigeration, council and water rates, normal business running costs plus freight and packaging.

One significant cost increase has been for labour. The cur-rent start times (3.30am and 4.30am) continue to inhibit the industry where labour availability is scarce and often unskilled. The labour scarcities, coupled with the current hours of operation, have seen labour costs escalate to questionable levels.

Together with fewer inde-pendent green grocers, it is not surprising that wholesal-ers have been attempting to have the hours of operation changed to a later commence-ment time. The cost of labour and the decline in the cus-tomer base bring into focus needed change.

Business costs together with escalating rent trends force wholesalers to focus on their business models and viability. Rents have a large bearing on busi-ness viability, and have been rising at an imposing rate and do not relate to the decline in through-put value.

Rents

Rents for stores have increased by over 30% in five years. Rents will increase by approximately another

20%+ from 2012 dollars to 2015 – yes that is right, over 50% in 8 years!

The 10 year lease as outlined in the rent discussion paper and commenc-ing on relocation at Epping in 2015 contains a 4% annual compounding increase each year for ten years.

Conclusion

This is unsustainable and it is no surprise Fresh State has rejected the State’s rent options.

The move from Queen Victoria Market to the Footscray Road site in 1969 high-lighted the impacts of rent increases over and above the industry norm at that time. Approximately 35 merchants

were forced out of business in a few short years following the move, primar-ily due to the imposing rent increases.

But this is just the tip of the iceberg. It is expected that a further down turn of through-put will occur. As well, members have to still work out what their costs will be for fit out to their

stores at Epping, including air handlers and alterations; fit out for the offices; fit out for warehousing and returning the Footscray Road stores back to their original condition.

cost of doing business

annual through-put

WARNING SIGNS

1993

$123

2001

$164

2005

$189

2012

$273

1998

$147

2015

$331

2025

$539Rents will increase by approximately

another 20%+ from 2012 dollars

to 2015 – yes that is right,

over 50% in 8 years!

Average Store Rents – per sq metre

It’s time to start planning your move…When? Tuesday 11 September 2012, anytime from 9am-12pmWhere? Fresh State Offices Melbourne Market

542 Footscray Rd, West Melbourne

Leading property developer, MAB Corporation, can provide flexible warehousing for any business size from a small local operation to a large national distribution facility.

Book

Call

Melbourne Wholesale Fruit & Vegetable Market

CBD

Hume Freeway

Cooper Street

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But back at the new market in Footscray Road, a settling-in process was occurring …

There were traffic problems along Footscray Road as buyers and sellers adjusted to the new site, internal unrest between market user associations regarding rules and regulations and concerns over the markets losses. Added to this was the controversy over market hours, failure to enforce trading laws and the lack of facilities for wholesalers. Once again all sounding very familiar to similar issues the market faces in 2012.

“The events of the 70’s were arguably the most important era in the wholesale market” says Dom Dimattina, a past wholesaler and Market Trust member.

“The problem was that there were five wholesale organisations in the market all fighting for their own needs,” continued Dom. “The Melbourne City Council could not police hours or

implement by laws because it just

couldn’t keep each organisation happy”.

The five organisations consisted of the Victorian Chamber of Fruit & Vegetable Industries, Vegetable Merchants Association, Commission Agents, Hard Produce and Independent Traders.

A solution was to gather the five organisations together into the one group. This eventually led to the creation of a sixth group called the

Victorian Fruit and Vegetable Wholesalers Association which incorporated all five groups. This was a positive move as it meant one unified voice could go to council with proposals however it only represented the wholesale body.

There was still conflict with buyers and growers to get the changes the newly formed Association wanted.

The Advisory Committee at the time was made up of all groups including growers and buyers but they struggled to make decisions.

“Once a decision was finally made, the proposal went to the Council Market Committee, then if that was passed

11111199700 – 1199799 Melbourne’s

The seventies saw

Australian perspectives

on immigration, war,

sexual morality, the

role of women and the

environment undergo

radical change. In 1972,

Australian troops were

withdrawn from Vietnam,

1973 saw the introduction

of metric conversion and

the White Australia Policy

was scrapped in 1974. In

1975, the nation

was rocked by the

dismissal of Prime

Minister Gough

Whitlam.

Victorian Fruit and Vegetable

ions s s

s, and alers. f l

implemeby laws because it just

In

09

it would go to a full council meeting and the complete process would take three to four months” continued Dom. “It was very frustrating for everyone in the market”.

In order to try and have more control at a council level, wholesaler Joe Wilson, partner of Kevin Silk who’s business is still operating today, was elected onto the council after a strong campaign largely supported by a solid market focused electorate. So successful was the campaign, that wholesalers and growers were approached by other candidates eager to be elected and they were also infiltrated into the council chambers.

Despite the council’s attempts to keep charges at the market to a minimum, many wholesalers were finding rents and parking fees too expensive.

“Wholesalers had to invest heavily in infrastructure such as cool rooms and

office space” said Dom. “They also had to sustain substantial increases in rent compared to the Queen Vic Market. Approximately 30 odd wholesalers didn’t move across to Footscray Road at all and others found they couldn’t afford to operate at the new site with ten to twenty either closing or selling their businesses.”

The Government set up a State Development Committee to investigate the administration and operation of the Wholesale Market which took two years to examine.

However it was largely the strong wholesale/grower dominance at council level and the long length of decision making by the council that led to the push by market users for the council be removed from governance over the market.

When the State Development Committee Report was finally released, it outlined faults together with financial and administrative errors to be the issue. It recommended that control of the Wholesale Market be removed from the control of the Melbourne City Council and vested in a Market Trust.

At the time of the transfer to the Market Trust, there was over $1 million of accumulated losses. The Trust was required to reimburse the Council for these losses by 1981 and had to accept

capital liabilities of over $8 million. However no other compensation was payable to the council.

The members of the first Market Trust were appointed on 22 June 1977 and the market came under its control on 1 April 1978.

The Trust reported directly to the Minister for Agriculture and consisted of three government officials and three market users:

1. Official – Chairman Rod Kefford Deputy Director of Agriculture, Victoria

2. Official – Jack Valentine Accountant

3. Official – Jack Gaffney Barrister

4. Grower – Len Cochrane

5. Merchant – Dom Dimattina

6. Buyer – Jo Trainer

A Wholesalers Advisory Committee was then appointed on 16 August 1978. It consisted of six members (five of which were Directors of the Victorian Chamber at the time) and this group reported to the Market Trust.

Market History

Top left: Activity in the grower’s market, Footscray Road. c.1970.

Top right: 700 Greengrocers boycott the new market. December 1969.

Source: Melbourne Markets (1841-1979).

A solution was to gather the five organisations together into the one group. This eventually led to the creation of a sixth group called the Victorian Fruit and Vegetable Wholesalers Association.

With record participation from

delegates, sponsors and exhibitors, the

conference has been widely regarded

as the most successful to date in the

industry which is pleasing to see.

“We couldn’t be happier” said Sonja van

Eijk, Executive Officer of the Australian

Chamber and a member of the Fresh

Connections Organising Committee.

“Australia is a small producing

country compared to our overseas

counterparts. It makes sense for us to

streamline industry conferences and

encourage more interaction from all

parts of the supply chain so that we

can ultimately meet consumer demand

and keep up with world trends.

We want consumers to source their fresh produce from Australia first and foremost and in order to do this we have to provide the latest, greatest and freshest produce. This is why Fresh Connections as a complete industry conference is so important”.

This year saw a dramatic shift in the willingness of successful companies to provide useful and often guarded information.

“The committee received a lot of positive feedback from delegates regarding the information being shared with them from high profile businesses. This is really good news and something we want to encourage for future conferences” continued Sonja.

OF AFFAIRS issue 13 august 2012

Delegates enjoyed a tractor ride through the brassicas at Fresh Select to witness caulis being harvested.

Itt mmaakkes seense foor uus tooo ssttreammmlinne iinnnddusttrryy coonffeerrencees aannd enncouurraagge mooore intteeerracttioonn frroomm aall paarts oof thee suupppply cchaaain so ttthat wwwee caan uulttimatelyy mmmeet coonnssuummerr demaannndd anndd kkeeepp uup with wwworrldd treenndds.

PRODUCERS TOUR SETS THE SCENE

With a choice of a Retail or Producers Tour setting the scene for the conference, delegates were well and truly warmed up for the two day extravaganza.

Delegates on the Producers Tour were surprised to learn that a $10 million facility such as Parwan Valley Mushrooms existed and to such a professional and well oiled extent.

The outfit at Boomaroo Nurseries was no less impressive with the group hanging on every word owner Eric Jacometti had to say.

Fresh Select was an unexpected highlight with a tractor ride through the very wet fields to see harvesting one on one and the group finished off with a tour of the Nufarm chemical plant in Laverton.

Earmarked to ‘Grow the Industry’, Fresh Connections 2012 took another vital step to do just that in late June in Melbourne.

Fresh Connections

26-28 June 2012

fres

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12:

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A fresh new look thanks to floral company the Lynch Group made sure the stage was set for some informative and captivating Plenary Sessions. New trends in the industry, social media and produce marketing campaigns were only a snapshot of some of the key topics covered.

Our Market Wholesalers spoke to a packed house in their concurrent session on Vertical Integration which is covered in more detail on page 22.

Avanti’s Lukasz Gorajek (pictured above left at Parwan Valley Mushrooms) really enjoyed the produce tour and the conference sessions especially the debate that came out of wholesaler themed concurrent session led by Shane Schnitzler.

“For me, the take home message from this session was that while there seems to be opportunities in vertical integration, careful consideration needs to be taken as to which is the best avenue to go down.” Said Lukasz.

INFORMATION OVERLOAD!

FRESH CONNECTIONS

A highlight of the conference included The Australian Chamber Trade Show which was jam packed with the freshest of fresh produce from micro herbs through to processed potatoes. Wholesalers and growers featured their products in this display which added interest, colour and most of all business and networking opportunities to those involved.

“It is difficult to put an exact finger on a point that defines this events’ value. Some things you don’t realise you have picked up on until days or weeks later when the thought or recollection pops into your head.”– Fresh Connections Delegate.

TRADE SHOW IS BROUGHT TO LIFE

12 OF AFFAIRS issue 13 august 2012fr

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26-28 June 2012

Fresh Connections 2013 which includes the Australian Chamber Conference to be held on 11 to 13 June 2013 in Sydney.

Organic Growers Group Manager, Jennifer Osborne, was the only representative displaying organic produce in the Fresh Produce Section and recognises that Australia is around nine years behind other countries in embracing organic produce.

“Displaying our produce at Fresh Connections is another step in getting the organic name out to Australian buyers” she said. “It is important that we are at these events flying the organic flag and showing the industry the high quality of organic produce”. And this sentiment echoed across the fresh display area.

The Fresh Produce Display Area certainly bought colour, vibrancy and freshness to the trade show.

This was backed up with cooking demonstrations and more product tasting throughout the exhibition area than what we have seen in previous years. “The mango shots were delicious,” a delegate was overheard commenting.

“We want more of this type of interaction in the Trade Show” says Sonja. “ Each year we get more and more support from the industry as they see what is possible and how they can display their produce and attract more business.”

Jenny from Fresh BerryJennifer from Organic Growers Group

It is important that we are at these events flying the organic flag and showing the industry the high quality of organic produce.

FRESH CONNECTIONS

James from Flowerdale Sprout Farm

The Australian Chamber honoured Andrew Young, CEO of the Brisbane Market by awarding him with the prestigious Meritorious Service award.

Fresh State’s very own Callum Cormack General Manager Sales Victoria at the Moraitis Group and member of the Fresh State Young Executive Team

receives the Col Johnson Young Achiever Award.

MORE SOCIAL EVENTS THAN EVER BEFORE!

AND THE AWARD GOES TO …

13

Callum Cormack, General Manager Sales Victoria at the Moraitis Group and member of the Fresh State Young Executive Team was thrilled to receive the Col Johnson Young Achiever Award.

“I was honoured to be presented such an award in front of fellow Team Members, Industry Leaders and friends. I’m very proud to be part of a great company, Moraitis Pty Ltd and a great Industry.”

“The conference was good for getting a perspective on different markets and judging our performance against other participants in the same industry.”

– Fresh Connections Delegate.

You can run but you can’t hide at Fresh Connections! With more social events than ever before, delegates could network at a variety of occasions including the Welcome Reception, Conference Breakfast, Young Professionals Reception and Closing drinks.

The popular Conference Gala Dinner held at the Docklands did not disappoint with ventriloquist Darren Carr keeping the crowd captivated and in fits of laughter for the duration of his performance which he shared with his alter ego, Darrell.

Rachel Palumbo from Monsanto enjoys a canapé created by Courtney Roulston from Masterchef Series 2 at the Welcome Reception.

14 OF AFFAIRS issue 13 august 2012

6.

1.

5.

15fresh connections 2012:

FRESH CONNECTIONS 26-28 June 2012

2. 3.

4.

7. 8. 02. Vanessa Kennedy (BML) and Debbie

McPhee (Barkers Melbourne)

03. Joe Brancatisano from VB Fruit

04. Harry Karpiris (Kapiris Bros), Daniel Scavo

and Joe Palumbo (Young Sang)

05. Jay and Joe (Tripod Farmers) with

John Roach (Fresh State)

06. Vince Brancatisano (Prestige Produce)

07. Robert and Alan from Red Gem Packers

08. Wes from Great Australian Mushrooms

01. Veli and Catherine Velisha

(Veli Velisha)

“We have 25 different nationalities that work here” said Ivica Petrlic, HR and WHS Manager at Moraitis. “But every-one speaks the same language when it comes to food.”

Multi Cultural Day was the brainchild of Ivica who thought it would be a great idea for all employees to bring a signature dish representing their nationality. With assistance from Sarah Cullhane and Anh Cao, the team cre-ated a two hour event that was vibrant, memorable and brought more aware-ness to the cultural diversity within the workplace. “There was a great buzz on

the day and everyone was happy and relaxed” continued Ivica. Such was the success of the day that it looks like this event will be an annual fixture on the Melbourne calendar for Moraitis.

With a large Muslim employee base, halal was high on the menu with Chef for the day Ashiq Hashim in charge of the bbq. Each dish had a card denoting who made the meal, its place of origin and whether it contained pork, making the selection of food easy for everyone.

The day also recognised the Moraitis Employee of the Month Antonio Mara-

fioti, who received a $100 Woolworths voucher plus a $50 Hoyts Cinema voucher in recognition of his hard work.

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2COMM12535

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Moraitis dishes up tasty treatYou name the food and it was on the menu at the Moraitis Multi

Cultural Day on a chilly Melbourne winters afternoon in July.

18

Registered as a company limited by guarantee in 1994, The Australian Chamber has been kicking goals on a number of fronts.

Its Annual Yearbook provides a com-prehensive overview of the year and is an interesting snapshot of key events.

“The Yearbook continues to be a valued communication tool to our members and the broader industry” says Shane Schnitzler, The Australian Chamber President.

“Our aim is to make this publication as informative as possible, drawing attention to key events such as our highly successful Pit Stops and the many fundraising events that the State Chambers initiate benefiting worthwhile causes inside and outside the central markets”.

Shane further notes that the magazine acts as a conduit to all State Chambers and their members so they are aware of issues, policy changes and what’s in store for the year ahead.

“The Pit Stops would have to be our most successful in house event to date” continues Shane. “Around 900 participants have gone through the Pit Stops overall which have taken place now in four central markets”.

The Pit Stops are a preventative health campaign targeting men and is based on the concept of car maintenance whereby men check aspects of their health by assigning it to a particular aspect of a car’s engine.

The Australian Chamber Executive Board have been passionate in their desire to unite the fruit and vegetable industry and cut down on duplication.

The Australian Chamber has enjoyed a renewed energy in the last few years with the national body lifting its profile with its members and the fresh produce industry.


Wholesalers in each of the Central Markets operating in Adelaide, Brisbane, Melbourne, Newcastle, Perth and Sydney are collectively represented by individual Market Chambers.

Each of these Market Chambers then comprise the membership of the Australian Chamber. Fresh State Ltd is the Melbourne representative Market Chamber and secretariat to the Australian Chamber.

The operations of the Australian Chamber are overseen by an Executive Board comprised of seven members consisting of a President, Vice-President and five Directors. Members of the Executive board collectively represent each market Chamber, while the Chief Executive Officers of each Chamber also play an important part in progressing issues being addressed by the Australian Chamber.

THE AUSTRALIAN CHAMBER: A SUMMARY

19

The Australian Chamber Executive Board have been passionate in their desire to unite the fruit and vegetable industry and cut down on duplication.

Our aim is to

make this publication as

informative as possible, drawing

attention to key events such as our highly

successful Pit Stops and the many

fundraising events that the State

Chambers initiate benefiting

worthwhile causes inside

and outside the central

markets.

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See how Cooltrax can work for your business

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1. Better shelf life

2. Increase profits and performance

3. Real-time management

4. Greater transparency

5. Meet regulatory requirements

6. Future proof

It is with this passion, that the decision was made for The Australian Chamber Annual Conference to combine with PMA’s Fresh Connections Conference for the first time in 2012. “This makes perfect sense to us” says Shane. “The industry cannot sustain dozens of these conferences each year, Australia is not big enough.”

A result of the consolidation meant that Chamber delegates enjoyed a wide variety of conference topics, selection of tours and networking op-portunities with the entire fresh fruit and vegetable supply chain.

At the same time they were able to address key issues directly relating to the Australian Chamber which were worked into the program.

20

Met with resounding success, it is no wonder that this new conference collaboration will remain a fixture in the horticultural calendar in 2013 and beyond.

However The Australian Chamber will not be resting on their laurels any time soon.

“The direction of the Australian Chamber going forward is to focus on business development including Fresh Test” says Shane. “As well, national campaigns such as Pit Stop and our Forklift Challenge in each central mar-ket which will be rolled out with the support of our strategic partners”.

OF AFFAIRS issue 13 august 2012th

e au

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The direction of the Australian Chamber going forward is to focus on business development including Fresh Test.”

TABLES OF 12: $140 PER HEAD PLUS GST.

PLEASE CALL THE FRESH STATE OFFICE ON 9689 3233 TO SECURE YOUR TABLE NOW!

Fresh State together with Toyota Material Handling Australia is proud to be hosting the Annual Wholesalers Gala Ball. Join us celebrating innovation, excellence, character and enthusiasm at the Carousel in Albert Park on FRIDAY 5 OCTOBER 2012, 7PM UNTIL LATE.

Enjoy a fine dining experience in one of Melbourne’s most iconic venues and be entertained by the fabulous The Tequila Brothers.

top

INNOVATIONS BOOSTING RETAIL SALES

top 10 new feature:

1. Quick easy grab produce:

“It’s all about quick and easy - strawberries, mandarins, broccoli etc” says Chris. “We target the busy mum” says Nick. “Our competition is fast food so our produce needs to taste good and be easy to prepare and eat”.

2. Taste, ripeness and super fresh:

“This encourages repeat sales and moves stock quickly” says Chris. “It is difficult for customers to develop good will if they purchase old produce” continues Nick.

3. Cooking ideas in store:

Nick feels cooking shows encourage cooking. “Our customers are looking for ideas and suggestions. We have found recipes in store are highly motivational and encourage more sales”.

4. Heirloom varieties:

“Such as baby beets, carrots etc which are featuring on the cooking shows. It is a niche market but certainly a growing trend” says Nick.

5. Mystery shopper:

Chris employs mystery shoppers for each of his stores to test staff knowledge and to get a feel of how overall business is going.

6. Regular Staff Communications:

Both Chris and Nick encourage staff to try produce and provide regular staff newsletters to advise of seasonal availability of produce.

7. Story behind the produce

“Consumers want to hear the story behind the produce whether face to face or via websites” says Nick. Chris often encourages growers to visit the store to engage with customers which has a dramatic rise in sales.

8. Customer service:

Nick encourages his staff to learn three new customers’ names a day to encourage relationships. “Fundamentally basic things about knowing your customer are important.”

9. Themes, cross merchandising and demos:

Chris groups lines together such Asian vegetables and then groups groceries with the produce lines. Tasting demos

are also effective as long as the demonstrator has a really good knowledge of the produce and is passionate about what they are doing.

10. Making the most of technology:

Nick believes the use of a website is critical to consumers being able to find out more

information about the produce. He includes a market report once a week for customers, has an online store and provides a Facebook page for interaction. “Our average sale is 150% greater than an in store sale” he says.

Chris Scicluna from Scicluna’s Real Food Merchants in Melbourne and

Nick Nikitaras from Hill Street Grocer in Tasmania were recent presenters

at Fresh Connections 2012. Both imparted their knowledge and experi-

ence to the audience on their TOP TEN innovations at boosting retail sales:

THE STAND OUT TRENDS:

Scicluna’s Real Food Merchants has been operating for 19 years.

They have five stores in Victoria located at Tooronga Village Shopping Centre in Glen Iris, Scicluna’s Mentone, Scicluna’s Sorrento, Blairgowrie Food and Liquor incorporating Scicluna’s Fruit & Vegetables and Scicluna’s Wholesale Division, Dromana. They proudly support Aussie farmers, and produce and products are sourced from local suppliers and growers.

Hill Street Grocer’s have three stores in Tasmania located at West Hobart, Lauderdale and New Town together with a strong online store.

Hill Street Grocer’s believe in sourcing as much local produce as possible, supporting the growers and producers within the community and keeping food miles down, with an emphasis on the quality and value for their customers.

22

Speaking to a packed house, wholesalers, Shane

Schnitzler, Chief Executive Office of Kapiris Bros,

George Haggar, Chief Operating Officer at Costa

Exchange and Tristan Harris, Director Buying

and Marketing at Harris Farm Markets gave the

audience something to think about at Fresh

Connections 2012.

The take home message regarding wholesale vertical integration was to set up your business to reduce risk and ensure supply twelve months of the year.

OF AFFAIRS

Why are the wholesale central markets important?

– Supply and demand pricing

– Reach the little guy

– Offer sizes & quality

– Product reputation/branding

Is there room for the middle-man?

– Value

– Exposure

– Competition

– Balance between percentage grown and agency

Managing Interface:

– Our farms v wholesale

– Other farmers’ products

– Wholesale pricing

– Retail outlets

– Import and export

Managing risk:

– Farming undercover v outside

– Value recovery

– Production cycle

– Export and import

– On time payments

Cost of meeting demands:

– Quality assurance systems

– Freight

– Packaging

– Equipment / machines

– Labeling requirements

– IT / hand helds

– Warehousing systems

– GPS systems on farm and freight

– People – finding and developing a good team!

KEY OUTCOMES Wholesalers

integratingto remain competitive

VER

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23

“The buzz word is without a doubt vertical integration in this industry,” says Shane. “It is happening across the board and this session focused on the wholesaling element of the supply chain which proved very popular.”

The take home message regarding wholesale vertical integration was to set up your business to reduce risk and ensure supply twelve months of the year.

Harris Farm Markets moved into vertical integration by implementing a wholesale business to add to their successful retail chain.

“Dad had a wholesaling business on a small scale years ago” says Tristan, “However the real move into wholesaling came about after Cyclone Larry when it was difficult to get bananas. We realised we needed to secure a broad base banana supply and went from there”.

The shift into vertical integration has proved very successful for the family based business. “We have a well resourced buying team and a good shed with the capacity to expand the wholesaling arm much more easily than expanding retail,” continues Tristan.

In comparison, Costa Exchange and Kapiris Bros both have farms to compliment their wholesale

businesses. Not only does this ensure

supply but they have also

streamlined their lines to focus on quality rather than a large variety of produce.

“It’s a juggling act to get the system right but once it is running smoothly it is well worth the effort,” says Shane at Kapiris Bros. Kapiris also owned retail businesses until recently when the decision was made to focus on production and wholesaling and do them well.

“So far this is paying off and we are investing heavily into our core lines to meet consumer demand for quality produce and to ensure supply” continues Shane. “We have set up our business strategy so that we reduce risk and remain competitive moving forward”.

Vertical integration provides many opportunities; there are still pitfalls for young or naive players. “Dad was lucky to have some experience in wholesaling and a good networking base before we started which helped

us move into the wholesaling space with our eyes wide open,” says Tristan. And the same can be said for wholesalers moving into the production side of the business.

“Becoming a grower/wholesaler makes a lot of sense but if you don’t have experience at farm level it won’t be as successful as it could be,” continues Shane.

“Joint ventures can fill this void and be very successful if you find the right fit. “ In many instances, the growers have the land and expertise whereas the wholesaler have marketing relationships – a win-win partnership.” he says.

The reality is that with vertical integration, consolidation and joint ventures happening across the industry it could possibly be harder for the smaller player whether you are a retailer, wholesaler, producer or

anywhere in between.

The growers have the land and expertise whereas the wholesaler have marketing relationships – a win-win partnership.

does this ensure supply but theyhave also

Tristan, George and Shane with Facilitator Tony McFadzean from Woolworths.

wholesale vertical integration:

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Grant Austin DisplaysProud supplier of Fresh Produce Bins

& Displays for PMA Conference 2012.

Manufacturer and supplier of

fresh produce displays -

tubs, trays, produce bins, ramps,

signage, steps, etc.

3 Main St Beverley SA 5009

Ph: 08 8347 4880

Fx: 08 8268 7971

[email protected]

www.grantaustindisplays.com.au

ADVERTISMENT

FRESH STATE AGM:

Featuring the lamb king Sam Kekovich back by

popular demand.

Laureate Room, Etihad Stadium, Melbourne

Wholesale Company of the Year

A business that is viewed by its peers as a role model for your business and others. It is professional, pro-active and delivers its promises with integrity, loyalty and honesty.

2011 Winner: Flavorite Marketing

Wholesale Personality of the Year

A person whose individual traits have endured over the past year

2011 Winner: Harry Kapiris, Kapiris Bros

Young Marketeer of the Year

A young person who contributes their time and talents for the good of the industry, and is willing to encourage others to participate.

2011 Winner: Mark Lorenzetto, Avanti Fresh Produce

NOMINATIONS OPEN FOR 2012 FRESH STATE AWARDS:

FRESH STATE GALA BALL:

Twirl the night away at The Carousel in Albert Park. Plus the presentation of 2012 Fresh State Awards.

Tickets on Sale now …

ALLIANCE BUSINESS PARK INFORMATION SESSION:

At Fresh State Office between 9am and 12pm.

Call 8681 2291 to book an appointment.

Fresh State Office: 542 Footscray Road

TwiCarPluFrF e

TTTick

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FeSa

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Brainwave is Australia’s only paediatric charity dedicated to supporting children with brain illnesses and injury.

Since its inception in 1994, Brainwave has delivered much needed care programs and

mobility equipment to children and their families.

Ticket Sales: http://brainwave.org.au/events/fundraising-events/2012-melbourne-gala-dinner/

BRAINWAVE VICTORIA GALA DINNER:

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Wholesale Company

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ALLIANCE BUSINESSA

25

Fresh State’s equivalent to the ‘gold watch’ handed to Tony for his 25 years of service.

25Q

&A

:

Works:

Price Reporting Officer at Fresh State.

Lives:

Vermont South.

Most of my day is spent:

Wandering around the market collecting prices, exchanging information and having cups of coffee.

The football team I barrack for is:

Melbourne Football Club.

My favourite Melbourne Market moment is:

I love the atmosphere of the market – I wouldn’t be any good in the outside world as I have been here too long. (Sounds like you have been in jail Tony! – Ed.)

The quality I respect most in a person is:

Honesty and being straight forward.

As I have grown older I have learnt:

To deal with pressure – my mantra is that things happen for a reason.

If I described my business to a stranger I would say:

A service provider to the fruit and vegetable wholesale industry.

The qualities I most enjoy about Melbourne Market are:

The Melbourne Market is the perfect example of multiculturalism in practice – people of various backgrounds and beliefs all working harmoniously together (no political correctness needed).

The pets I have are:

Mia – a Maltese Shitzu who I love to bits!

In my spare time I enjoy:

Getting together with friends for a coffee or good food.

My first job was:

Apprentice Fitter and Turner (only lasted three months)!

My fondest memory is:

Watching Melbourne FC win the 1964 Premiership against Collingwood at the MCG – I won’t see another one in my lifetime!

My business associates would say that I:

Love full cream milk – that light stuff tastes like crap!

When I was a child I wanted to be:

An actor but I had no talent.

The place in the world I would most like to go is:

France and Italy.

The thing a lot of people don’t know about me is:

I am Fresh States’ resident media megastar and have appeared on several news programs and in print media particularly during the Queensland floods of eighteen months ago.

My favourite fruit or vegetable is:

Kensington Pride Mangoes and bananas.

My favourite food is:

South Italian provincial cooking (wog food)!

Tony is a man of tradition and much

loved member of the Fresh State

Team and wider Market community.

Tony likes his routine and is known

for having a pizza lunch with friends

every Monday without fail and a

tuna toastie every Friday evening in

front of the football.

Tony adapted to market life like a

duck to water. He started in the

markets 41 years ago as an Office

Manager for MacCrostie & Growers/

Agrep Freight Company. With the

company on its last legs, he was

approached by the Chamber to set

up a similar operation known as

Market Freight Management.

These days Tony works as the Price

Reporting Officer at Fresh State, a

position which he ‘reluctantly’ took

over at the time but has enjoyed

ever since.

He was recently recognised for his 25

years of service to the company by

the Fresh State Board and Staff with a

special gift, heart felt messages from

the market community and special

lunch of, you guessed it – pizza!

Tony N

igro

26m

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ervi

ce:


26

The Bad Debt Fund is to pay sellers for

losses suffered as a result of financial

failure of a registered buyer with

the MMCS. Although many people

believed that the Credit Service did

guarantee their funds in the past, this

was not the case.

“This is something that is tangible for

our sellers in an area that continues to

haunt the industry”, says John Roach,

Fresh State CEO.

“We are seeing an increase in

businesses going bust especially

outside of the Credit Service. These

businesses often owe a lot of money

and it doubly hurts when times are

tough like they are now. To give users

more peace of mind and to encourage

greater use of the Credit Service, the

Bad Debt Fund has been established”,

explained John.

Members endorsed the Board’s

initiative for the establishment of a

Bad Debt Fund in March this year with

formal commencement on 1 July

2012. And the Board, in a show

of support, assigned half a million

dollars ($500k) to establish the Fund.

To be eligible to receive any monies

from the Bad Debt Fund sellers

must demonstrate support on an

ongoing basis. This is by contributing

a percentage of funds to the Bad Debt

Fund each time you transact business

with the MMCS.

The Board, at the conclusion of each

financial year, will discuss and decide

the level of “unrecoverable” amounts

experienced by sellers for allocation

so as a distribution of funds from

the Bad Debt Fund can occur. The

Board’s objective is to pay all the

“unrecoverable” sums and only those

eligible can receive funds.

“Most sellers have jumped on board

and when you think about smart

ways to minimise your exposure to

bad debts, this is a no brainer”, stated

John.

New Bad Debt Fund for MMCSThe Melbourne Markets Credit Service (MMCS) has unveiled its latest benefit (or should we say protection) for registered sellers. To provide them with greater peace of mind, the MMCS has established a ‘Bad Debt Fund’.

To be eligible to receive any monies from the Bad Debt Fund sellers must demonstrate support on an ongoing basis. This is by contributing a percentage of funds to the Bad Debt Fund each time you transact business with the MMCS.

Want to Know More?

To become a MMCS User or for more information jump online at:

www.melbmcs.com.au or contact us on:

T: 9687 7333 E: [email protected]

Have your say and write to the Editor at [email protected]

SPEAK TO HIM ABOUT GROWING YOUR BUSINESS.

Scott is part of a team

with a wide range of

specialist knowledge in

taxation, accounting

and financial planning.

Scott loves visiting his clients

and is a regular at the wholesale

market. He takes pride in OHM’s

attentive and individualised

service. This combination of

expertise and attention to

detail has created long lasting

relationships with OHM’s clients,

enabling them to grow their

business and wealth.

Call Scott on

03 9500 0911

www.ohm.com.au

Scott works hard to make the tax system work for you.

Fresh State of Affairs Issue 13

Documents

Transcript of Fresh State of Affairs Issue 13