April 7, 2007

Harvest FreshCuts Pioneers Fresh-cut ‘Down Under’

“Find a point of difference that delivers a consumer benefit; build a robust supply chain; define convenience as ease of decision making at the point of purchase.”

That continues to be one of the personal philosophies of Rob Robson, founder and CEO of OneHarvest, the group of companies that bore Harvest FreshCuts Pty Ltd. Harvest FreshCuts is the processing arm of the group, based in Brisbane, Australia. Over the past decade, this fresh-cut fruit and vegetable business has blossomed from little more than a dream to become Australia’s largest, national fresh-cut produce organization.

OneHarvest has been at the pioneering edge of fresh Australian produce for more than 30 years. Raised in his father’s wholesale fruit trading business, Rob and his siblings worked alongside their father through school. Upon completing a university education, Rob established a wholesale produce operation based in the Brisbane markets with his brother in 1975. Since then, his people have led the way for Australian fresh produce innovation.

Foreseeing Future Trends

In the late 1980s and early ’90s, Rob saw the traditional produce supply chains in the U.S. and Europe changing from a centrally-based market system to direct supply to customers from the source. He knew it was only a matter of time before the Australian produce industry would follow suit. At the same time, Rob’s travels introduced him to the world of fresh-cut salads and vegetables.

Minimally processed vegetables were fast becoming a significant proportion of produce department sales at retail in overseas markets. This was the opportunity to revolutionize the fresh produce departments of supermarkets throughout Australia by introducing value-added, fresh-cut salads and vegetables.

Since starting production in September 1995, Harvest FreshCuts has grown its Australian market share to secure approximately 75 percent of the fresh-cut market and currently supplies all major chains and independents in Australia. The company employs more than 500 people in two processing plants – Brisbane, QLD and Bairnsdale, VIC – and is the most technologically advanced fresh-cut processor in Australia. In fact, it is Australia’s only national fresh-cut provider.

In 2003, Produce News and the International Fresh-cut Produce Association (IFPA) acknowledged Rob’s achievements and his processing business with the International Fresh-cut Processor of the Year accolade.

Rob’s foundation business, The Harvest Company, has strategically created a small innovative niche in the Australian horticultural industry as a professional supply chain manager. The Harvest Company partners with suppliers and customers to meet consumers’ demands for value-added products. Harvest successfully markets the majority of Calypso mangoes, seedless watermelon, fresh asparagus, Shepard avocados and guaranteed sweet fruit. By establishing a significant point of difference for these products in the marketplace and managing all parties in the chain, The Harvest Company is a true horticultural supply chain manager.

In Australia, OneHarvest is synonymous with innovation.

Today, the organization is a 100 percent Australian owned, third-generation family business. Rob’s fresh-cut produce operation could be described as a blend of U.S. ideas and European technology with a unique, Australian way of doing business. Much of the innovation in his business models and strategic planning are definitely unique to this entrepreneur.

Recognized ‘Value-added’ Potential

Rob’s first fresh-cut plant was built in Brisbane in 1995. Two years later, Harvest FreshCuts merged with its largest competitor, Vegco Pty Ltd., located on the southeast coast of Australia in another state-of-the-art, larger plant. These two facilities help cope with the Australian season change and expanse of country. Between the two plants, Harvest FreshCuts services most of Australia with its value-added produce; the exception is the western region which is separated by hundreds of miles of terrain with little in between.

In the early day, when Rob first embarked on his value-adding journey, knowledgeable experts in fresh-cut production were non-existent in Australia. This forced him to look to the U.K., Europe and the U.S. for this expertise. Rob cites Dennis Gertmenian of Ready Pac as one of his inspirations in the value-added industry. After all, both Dennis and Rob started their businesses in the wholesale produce trade.

Over the past 10 years, Rob has sponsored more than 15 professionals from the U.K., France and South Africa to join his venture and bring much needed technical experience and knowledge to his business. They have been involved in everything from deciding what kinds of equipment to use and how to operate it to establishing and maintaining the high food quality and safety standards that the company insists upon. They also advise on cost accounting.

An example is Dom Gondzik, a native of the U.K., who heads the Order Fulfilment process (from manufacturing to logistics to planning). He joined the business two and a half years ago. Prior to coming on board, Gondzik spent 12 years working in Geest’s fresh-cut salad operations in his homeland and has experience with both bag and bowl-type packaging.

Recognizing early the importance of quality packaging, Rob obtained exclusive rights in 1994 to Scalime’s salad processing technology for Australia and New Zealand. Scalime offered a European approach to the types of bagged salads the company would use for many years.

According to Robin Poynton, chief operating officer, the most significant change to the company’s packaging program is a strategic partnership with Amcor, a leading-edge supplier based in Australia. The arrangement helps ensure that the company gets the best possible packaging choices for its broad product offerings.

“We have set out to put a bag on the shelf that has great presentation, with great clarity, no fogging and fabulous seals that meets the shelf life expectations of the product,” states Poynton. “We now have one base film that meets all of our requirements with short supply chain response times. This film has a wide band of sealing capability so we can achieve high levels of ‘right first time’ and fast bagging rates, which, of course, means greater efficiencies and lower costs.”

Like all typical Australians, Harvest FreshCuts is a good mixture of a lot of ideas from other parts of the world.

Growing a business in Australia has its challenges, Rob admits. The population is small (just reached 20 million), and the continent itself is large. Logistics can be a problem.

Product quality and shelf life are essential, according to Gondzik. Distribution must be flawless. Compared to Europe, weather conditions can be riskier.

Importance of Adapting to Change

“We have learned to be fleet afoot and quickly respond to changing demand,” he smiles. “Here, we must master short runs while, at the same time, be prepared to deliver when there is a 300 percent increase in demand (anticipated through increasing consumer uptake).”

In terms of addressing consumer needs, the Australian fresh-cut produce market today is where the U.K. market was in the early 1990s, Gondzik believes. However, the gap is closing fast, and what took 10 years to develop in the U.K. is expected to take place in Australia over the next five years. Lessons learned in Europe and the U.S. are quickly being put to practice. High quality products are already in the marketplace, and more innovative entries are being launched.

One of these is Jungle Snacks™ a line of fruit and vegetable snacks recently released for school-age children. These snacks include carrots, celery, apple slices, grapes and fruit chunks ? an assortment of options expected to open new windows of opportunity. Fruit products, in particular, are showing great promise and are a formidable platform to combat the growing issue of childhood obesity.

Major growth opportunities for Harvest FreshCuts over the past couple of years have been in baby leaf lettuce. New entries in the higher veggie range – baby spinach and arugula, for example – and baby Asian greens have proven popular with Australian consumers.

More than 60 percent of the baby leaf production is grown under protective netting and is harvested using custom-built ‘lawn mowers’. Harvested just six weeks after planting, these tender, succulent leaves have moved from the tables of fine restaurants to the dinner plates of thousands of Australians.

Raw materials are sourced from more than 50 suppliers spread along the East Coast of Australia, with the geographic diversity of the country allowing for 52-week production of most ingredients.

Managing Increasing Demand

The Brisbane production facility produces and distributes close to a third of the company’s fresh-cut salads and vegetables. There are two wash lines and two packing lines on site.

For the moment, all “ready” meals are also processed in Brisbane. Included are salad bowls, sandwiches and stir fry trays, all of which are manually assembled.

The Bairnsdale facility is the larger of the two, with the majority of production capability, including 100 percent of fresh-cut fruit products. Two wash lines and four packing lines presently meet the salad and vegetable requirements.

Bairnsdale is also home to the company’s potato line. The company offers a range of “par-cooked” potato products cooked just enough to put them in a microwave.

Combining both plants, Harvest FreshCuts has seven machines to handle its plant bagging needs; maximum output is estimated at 300,000 bags per day. The potatoes lines handle up to 15,000 bags per day, while the fruit lines can move through 50,000 bags per day. The sandwich/salad bowl output is 25,000 per day. Current demand across all product lines is 204,000 per day – so the opportunity to maximize the existing capacity of the facilities in itself is immense.

Distribution Channels

The Australian retail environment also presents challenges. In a country that is the size of the U.S., with such a very small population, there are two major retail grocery chains. Coles and Woolworths control around 60 percent market share across some 1,600 stores. These chains are Harvest FreshCuts’ major customers. There is no middleman in between. Pre-cut products are delivered directly to the chains’ distribution centers.

This environment also means that 80 percent of all products processed and marketed by Harvest FreshCuts are private label, that is, they are branded with the retailers’ brand.

While the focus in the past has been on retail, Harvest is also issuing new fruit product introductions and “ready” meals to tap into foodservice and other new markets.

Redefining Convenience

After a decade of gracing Australian tables, Harvest FreshCuts has taken a whole new look at the way it is doing business, according to Rob. As in the U.S., Australian consumers have redefined the meaning of “convenience.” It is no longer good enough to provide a convenient ingredient. Today’s consumer wants us to take the time out of the thought process.

“They want us to decide what meal they’re going to have, what ingredients they will need and how they are going to prepare it in less than 20 minutes from packet to plate with minimal effort,” he said.

Looking at providing “fast, fresh and flavorsome” solutions, Harvest FreshCuts has redefined its category map, offering three ranges of product quality:

Good– entry point products designed to attract new users to the category and entice them to shop more frequently. These retail at everyday low prices, represent good value and, because of their flavor profile (familiar and popular ingredients), they have family appeal.

Better – introduces a wider variety of ingredients, is priced a level above and are typically used to create a meal that would be shared with family members or close friends.

Best – premium priced products that deliver a restaurant quality dining experience in the comfort of the home. Meals that would be shared at home with a partner, instead of going out, or used for entertaining and impressing guests.

“With 80 percent of supermarket purchase decisions in Australia made at the point of sale, we got smart with our packaging and POS material,” said Rob. “Our packaging is the critical link with the consumer. It has to act as an in-store salesperson. Everything about it, from design, color and copy, needs to speak to consumers in their language. It needs to be contemporary and credible.”

The packaging is color-coded to help consumers quickly identify which range of product to purchase, he explains, depending upon the purpose of the meal. A consumer might purchase any one of the three, depending upon the purpose of the meal. The “good” range incorporates a red color band, the “better” a blue and the “best” metallic gold (producing a premium look and feel).

Recipes are provided with all three product quality ranges. In addition, products in the “better” and “best” ranges have full color photographs of the plated meal on the front of the pack. Tests have shown a much higher consumer uptake of recipes when a photo of the finished meal is included.

Secondly, the photo assists in breaking down the “great wall of sameness” that has snuck into fresh-cut displays around the world, Rob said. The company is also using POS materials to bring life to the category in the retail setting.

Employee Programs

Internally, Rob has long recognized the importance of his employees and continues to place emphasis on open communication, consultation and team-work. Formal consultation forums are held regularly. Joint Consultative Committees (JCC), composed of employee-elected representatives and management representatives, meet to discuss industrial relations matters, employment conditions, negotiate collective employment agreements and major workplace changes. These JCCs have been so effective that in 2003-04 both major manufacturing sites successfully negotiated collective employment agreements. Employee approval was over 90 percent.

All sites have safety committees in place. These are composed of employee-elected representatives who meet monthly with management to discuss safety initiatives, plant safety performance and report audit results.

The organization also supports a popular reward and recognition program, entitled “Character First.” The program recognizes employees on the basis of character. Employees are honored in front of their peers on their birthdays and recognized with a small gift and certificate. They also are kept abreast of company performance.

Across all facets of the business, Rob also invests in a wide range of professional and skill development programs, including traineeships in food processing, financial services, office administration, frontline management, leadership development and university degrees.

The Future

So what does the future hold for this Australian entrepreneur and his organization? OneHarvest (the group of companies) will continue to operate and strengthen its position in three major value streams in which it now operates, Rob explains.

The processing arm, Harvest FreshCuts, will incorporate salads, vegetables and fruit and encompass a range of convenience store healthy alternatives for the C-store market and the above mentioned fruit and vegetable kids snacks. Major extensions to the iceberg, romaine and baby leaf category are also in the cards.

The company will continue to trade fresh produce on a national domestic basis and export through The Harvest Company, Rob said. Included will be a range of exclusive genetics ?Calypso™ mango, seedless watermelon and ‘guaranteed sweet’ melons.

His newest venture, Oolloo Farm Management, completes the vertical integration of the supply chain with long-term agreements with investors to manage farms producing the exclusive genetics. This new value stream provides a new source of revenue while moving any potential agronomic risk to outside investors.

Rob affirms that he has never been more excited to be in the business. And, with the driving factors of taste, convenience, health and nutrition, he has certainly put himself in the driver’s seat. 



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