Ep. 18. Loss Leaders. When Your Product Becomes the Bait

Ep. 20. The Entropic Sector. Why Does Your Fresh Produce Business Drift Towards Chaos?

Allow me an analogy that I believe captures the essence of many of our problems. Imagine that your fresh produce business is one of those sandcastles you build (with your children) right at the water’s edge on a beach day. You built it with effort: perfect towers, well-defined walls, an elegant moat. But you're on the beach, and the waves keep coming. Every wave that breaks erodes the walls a little, blurs the outlines, drags sand away from the moat. There's no malice in the waves; they simply do what they do. And if you sit back and admire your castle without doing anything, within a few hours nothing will be left but a shapeless mound. To keep the castle standing you need to be constantly rebuilding, reinforcing, adding sand where it's been lost. You spend energy nonstop just to maintain what you already had. Not to improve it, mind you: simply to keep it from getting worse. This is the reality of the fruit and vegetable sector. The waves battering us are many: shifting climate, mutating pests, fluctuating markets, worker turnover, information that goes stale, processes that degrade. And our castle, our business, requires constant rebuilding effort just to remain standing. That's entropy feasting on our business. The Second Law of Thermodynamics, as this principle is formally known, tells us that the entropy of the universe always increases. That creating order requires investing energy. That maintaining order requires continuing to invest energy. Disorder, by contrast, is free. The universe, ironically, gives it away. But here's the crucial nuance: not all sandcastles are built equally close to the water. Not all businesses are equally entropic. And the fruit and vegetable sector, due to an accumulation of specific characteristics, is built practically right on the shoreline. In this episode know "the type of waves" that hit our business and how to mitigate their impact.

Ep. 19. The Omnivore’s Dilemma. Why Is It So Hard to Innovate with Fruits and Vegetables?

Welcome to a new episode of Freshconomics Podcast.  [https://open.spotify.com/show/3lrQke4AZy7ciyu8Qi12zX?si=Il3WfjPpSUCY6Fudq2Gu7g]Today we’re going to talk about how our prehistoric hominid brain explains one of the biggest challenges facing the modern food industry: the immense difficulty of innovating in the produce sector. And that “prehistoric something” is known as the omnivore’s dilemma. It’s a concept that anyone involved in food innovation should be familiar with. It was a man named Paul Rozin, a psychologist at the University of Pennsylvania, who coined the term for this evolutionary dilemma. Given that it’s one of our species’ oldest conflicts, I’m surprised it isn’t better known. As omnivores, humans have a huge competitive advantage: we can eat almost anything. Plants, animals, fungi… our diet is incredibly varied. This allowed us to colonize virtually every corner of the planet, from the Arctic to the tropics. But that flexibility comes at a very high price: constant uncertainty. And our brain, shaped by millions of years of evolution, developed a default answer: food neophobia. In this episode, discover how this concept connects to the challenges of innovation in our industry.

Ep. 18. Loss Leaders. When Your Product Becomes the Bait

One of any retailer’s central obsessions is getting people through the door.This is what the trade calls “footfall”, the frequency with which customers visit the store. The underlying theory is disarmingly simple: if we can just get you inside, you will end up buying something. And probably quite a lot of something. Many strategies exist to achieve this, and one of the most powerful is the Loss Leader Pricing Strategy. The implementation is straightforward to describe and somewhat brutal in practice. You take a “Leader” product and you sell it at a very low price -below market price- sacrificing your margin, and quite often selling at an outright loss. Hence the name: a product that leads the consumer in, sold at a loss. For the trick to work, the product has to meet two conditions at once. It must be relevant enough that people genuinely want it, and it must be offered at a price so unbeatable that it creates an irresistible pull - an exaggerated perception of value in the mind of the consumer. “Fifteen pence for two kilos of potatoes? I am running to the store now. The retailer is perfectly willing to lose money on that single line, in the firm belief that the loss will be more than recovered through everything else you drop into the trolley once you are inside. Welcome to a new episode of Freshconomics Podcast, [https://open.spotify.com/show/3lrQke4AZy7ciyu8Qi12zX?si=Il3WfjPpSUCY6Fudq2Gu7g]dedicated to the consequences of the Loss Leader Pricing Strategy!

Ep. 17. Statistics, Surveys and other Lies

Quite some time ago I remember reading a viral tweet from an American dentist that made me laugh out loud. If I recall properly, the dentist was sarcastically replying to the typical press story of: “9 out of 10 dentists recommend…”. The dentist said something along the lines of: “I’ve been in this profession for 20 years and nobody has ever asked me anything… and the thing is, I talk to my colleagues at the conferences, and I’ve never once met a single dentist who was asked anything either.” I think my automatic, almost involuntary laugh came from realizing that every industry is dealing with the same issues. It also made me realize that I tend to read news about surveys, trends, and market research in our own sector with a mixture of amused disbelief and skepticism. And I couldn’t help but start wondering since when, and how, all this happened to me. How did I go from being a marketing believer in market research and the power of data to a sarcastic sceptic? This is a story that spans the replication crisis in Academia, the erosion of trust in the Press and Media, and, ultimately, the challenges of building reliable knowledge from data in our sector.

Ep. 16. Our Weakness is Our Strength

Today I want to talk to you about something that sounds like a contradiction: the idea that our greatest weakness, as a sector, is also our greatest strength. To get there, I’m going to use a few concepts borrowed from operations management, economics and even a little bit of physics: efficacy versus efficiency, supply-driven versus demand-driven industries, Just-in-Time, Lean Management, Kanban, the efficiency paradox, oversized production assets and local supply chains. And I’m going to ask you a question that I think every professional in this business should be able to proudly answer. How is it possible that during the pandemic the powerful, modern, sophisticated industries — carmakers and so many others — had to stop their production lines, while the fresh produce sector not only kept working but dealt with a spectacular surge in demand? What is so special about this sector that it can do what is impossible for others? The reason is this: “our own weakness becomes our most resounding strength” when we face volatility. Let me explain why, because it is not pure luck. It is an industry structure built up by means of incentives. And once you understand it, you’ll never again let anyone look down on this business with a condescending smile.