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Opinion: How your produce business can seize strengths and limit weaknesses

The European fresh produce industry is witnessing a significant shift in companies adopting specific roles to sustain their success.

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With increasing competition and growing supply chain transparency, companies are faced with a crucial decision: should they become specialists, focusing on a few products that can be consistently supplied year-round to large-scale retailers, or should they embrace a more generalist approach, diversifying their offerings to cater to various — often ad hoc — customers in different segments such as foodservice, wholesalers or processors?


As with any business challenge, one needs to start with a traditional SWOT analysis, exploring the strengths, weaknesses, opportunities, and threats associated with each category.


Commitment to Niche Excellence

In Europe, I am seeing an increasing number of specialists in fresh produce place their bets on a clearly defined sourcing and marketing plan for a smaller range of products. They commit to a small group of growers and customers, focusing on one or two, at the most three products, that they can consistently deliver throughout the year.


In this strategy, a specialist can gain extensive product expertise and become a leader in its chosen category, enabling superior quality to be delivered and specific customer needs to be addressed effectively. The key issue is that specialists can build enhanced supply chain efficiency by working closely with a select group of growers. In the process, they create improved coordination, reduced costs and better quality control.


Most importantly, specialists develop loyal customer bases who appreciate the consistent product offerings and expertise. This loyalty helps any specialist maintain a steady market share and facilitates secure long-term partnerships.


However, being positioned as a specialist also brings certain weaknesses and threats, such as vulnerability to market fluctuations, unexpected weather changes resulting in delays, or disease outbreaks specific to the chosen product(s). Often, I also see specialists struggling to meet customer demand and catering for changing consumer preferences due to their limited product range. This lack of adaptability might limit the growth potential and competitiveness of specialists.


Nonetheless, in my opinion, being a specialist can really put a fresh produce trader in a great position in the market. Often specialists achieve higher profit margins by focusing on consistent quality that demands premium prices. Specialists also forge strong collaborative partnerships with growers to leverage shared knowledge, innovation and achieve mutual growth.


Generalists and Market Agility

On the other hand, generalists have the flexibility to adapt and cater to a broader array of products and customers, aligning their supply with market demand daily.


The generalist approach offers several strengths, the most important one being market adaptability. A generalist can quickly respond to changing customer demands and markets by having a broad product range. This definitely maximizes opportunities, albeit on the spot market. It also reduces the risk of being overly dependent on a single product.


By working with a wide network of growers and suppliers, generalists can redistribute supply in case of any production issues from a single source. This helps mitigate the impact of such disruptions on their operations. Furthermore, serving a wide range of customers, regardless of size, segment or location, allows generalists to tap into a larger market potential. This mitigates the risk of relying too heavily on a few key customers and ensures a more stable revenue stream. Moreover, the exposure to a variety of products fosters a culture of innovation and the potential to identify market trends before specialists.


However, generalists face very real threats. Dealing with a wide range of products and many different suppliers often dilutes the depth of staff knowledge, leading to an insufficient level of quality control. This can impact the level of customer trust and satisfaction. Managing diversified supply chains, including various products and growers, can be operationally complex and requires robust infrastructure and skilled personnel. And that is a key issue in European fresh produce. The availability of skilled personnel is reaching crisis levels, with demand outstripping supply by far.


Choosing the Right Path

The choice between being a specialist or a generalist in the fresh produce industry ultimately depends on various factors, including long-term company goals, local market dynamics and available resources, including staff. While specialists can establish themselves as industry experts and enjoy customer loyalty, generalists have the advantage of market adaptability and risk diversification.


There is also a third option, and that is to combine the depth of specialization in a few strategic products with the flexibility to adapt to evolving customer needs by expanding the product portfolio over time. I am currently involved in such a project. It requires extensive strategic planning, the ability of the entire team to think creatively, and a company owner who looks beyond the immediate financial performance of the business. Watch this space to see how it unfolds.


About the Author: Nic Jooste is an independent advisor on sustainability in fresh produce. He is based in The Netherlands.


Source: Produce Business UK

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