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1 Of all trades..?! Research on cooperation and value creation in the Fresh Chain Initiated by: Jan-Willem Grievink, EFMI Business School July 2013

2 Challenges in the Fresh Value Chain 2

3 Internal and external influences on the value chain DEVELOPMENTS IN AND AROUND THE FRESH CHAIN INTERNAL AND EXTERNAL POWERS 1 The Fresh Value Chain in (r)evolution SUPPLIERS DIFFERENT TYPES OF MARKETS FARMERS AND PROVIDERS ORGANIZATIONS DIFFERENT MODELS OF COOPERATION 2 CONSUMERS 3 4 TOMORROW S COOPERATION CONCLUSIONS AND MANAGEMENT IMPLICATIONS 3

4 3 Drivers of Change External influences CONSUMER SHORTAGE (re) POSITIONIN G TOOLS NGO s Laws Citizen Etc.. 4

5 Driver of Change 1: Consumer pushes chain towards cooperation 90% of the respondents think consumers more often want to know WHERE their food comes from. There is plenty of space for added value concepts Goedkoop Cheap Convenience Gemak 78% of the respondents think development of FOOD TRUST is of major influence. Conscious Goed Gedrag FOODTRENDS Gezondheid Care Genieten Culinary 66% of the respondents think MEDIA coverage is a big influencer. Advantage relatively important 65% of the respondents think the need for TRANSPARENCY IN THE CHAIN will be a big influencer. 65% of the respondents think NGO activities will be of major Influence. Added value buyer SWITCHER 22% BELIEVER 22% SAVER 36% SEARCHING CONVENIENCE 20% routine buyer 56% of the respondents think SOCIAL MEDIA will be a big influencer. Advantage relatively not important 5 Source: EFMI Shopper Monitor

6 Driver of Change 2: Increasing shortage turns around game of supply and demand 67% of the respondents think the INCREASING DEMAND from emerging markets will be of influence ,9% p.j % of the respondents think ACCESS TO THE RIGHT QUALITY RESOURCES/FRESH PRODUCTS will be of influence ,7% p.j % of the respondents think the IMPORTANCE OF THE ABILITY TO PURCHASE FRESH PRODUCTS BY MAJOR S will be of influence Prijs Index Eten en Drinken (2005 = 100, inclusief granen, plantaardige oliën, zeedieren, suiker, bananen, sinaasappelen, koffie, thee en cacao prijs indices) Algehele inflatie (Wereldwijde Consumenten Prijs Index, 2005 = 100) 6

7 Driver of Change 3: Supermarket organizations look for distinctive character Kerst 2003 Relatief voordelig Kerst 2012 Relatief voordelig 100 Balance of way in which respondint to 5C s offers better opportunities to increase value of products 75 Relatief lage service graad Relatief hoge service graad Relatief lage service graad Relatief hoge service graad Relatief onvoordelig Relatief onvoordelig Christmas 2003 Christmas % of respondents think COMPETITIVE PRESSURE of supermarket organizations will be of influence 33% of respondents think CONSOLIDATION will be of influence

8 Different types of market DEVELOPMENTS IN AND AROUND THE FRESH CHAIN INTERNAL AND EXTERNAL POWERS 1 DIFFERENT TYPES OF MARKETS 2 SUPPLIERS FARMERS AND PROVIDERS ORGANIZATIONS CONSUMERS DIFFERENT MODELS OF COOPERATION 3 TOMORROW S COOPERATION CONCLUSIONS AND MANAGEMENT IMPLICATIONS 4 8

9 innovation Added value A model to systemize different types of markets MAINSTREAM B. DEDICATED CHAIN A. VOLUME MARKET 4 different types of markets with different systems, possibilities and models of cooperation CONSUMER ISSUES Bulk/commodity Big volumes Price based on negotiations D. EXCLUSIVE CHAIN Bulk/commodity Big volumes Price based by supply/demand 33% 50% C. NICHE MARKET Unique products / concepts Small volumes Price based on negotiations Unique products / concepts Small volumes Price based on negotiations SMALLSTREAM 9% 8% EXCLUSIVE MARKTEN OPEN transparency cooperation 9

10 Volume market is getting smaller More dedicated chains and niche concepts B. DEDICATED CHAIN 33% A. VOLUME MARKET 50% B. DEDICATED CHAIN 1 2 A. VOLUME MARKET 41% 33% D. EXCLUSIVE CHAIN C. NICHE MARKET 9% 8% D. EXLCUSIVE CHAIN 1 3 C. NICHE MARKET 15% 11% CONSUMER SHORTAGE DISTINCTIVE CHARACTER 10

11 Possibilities in cooperation DEVELOPMENTS IN AND AROUND THE FRESH CHAIN INTERNAL AND EXTERNAL POWERS 1 DIFFERENT TYPES OF MARKETS 2 SUPPLIERS FARMERS AND PROVIDERS ORGANIZATIONS CONSUMERS DIFFERENT MODELS OF COOPERATION 3 TOMORROW S COOPERATION CONCLUSIONS AND MANAGEMENT IMPLICATIONS 4 11

12 4 basic models of cooperation SUPPLY CHAIN INTEGRATION I. INDIVIDUALCHAIN LINKS LIMITED FARMERS/ PROVIDER ORGANIZATION II. SUPPLY PARTNERS FARMERS/ PROVIDERS ORGANIZATION III. INTEGRAL COOPERATION FARMERS/ PROVIDERS ORGANIZATION IV. DIRECT COOPERATION SIGNIFICANT FARMERS/ LOGISTIC SERVICE PROVIDER ORGANIZATION 12

13 Possibilities in cooperation DEVELOPMENTS IN AND AROUND THE FRESH CHAIN INTERNAL AND EXTERNAL POWERS 1 DIFFERENT TYPES OF MARKETS 2 SUPPLIERS FARMERS AND PROVIDERS ORGANIZATIONS CONSUMERS DIFFERENT MODELS OF COOPERATION 3 TOMORROW S COOPERATION CONCLUSIONS AND MANAGEMENT IMPLICATIONS 4 13

14 Concluding There are several types of markets in which links in the fresh chain (different parties) can be active Every type of market has its own systems, possibilities and different models of cooperation The 4 basic models of cooperation each have their own advantages and disadvantages. In the future further and more intensive cooperation is to be expected, especially because of developments regarding consumer, shortage and the quest for distinctive character Dedicated chain and smallstream concepts offer most chances for added value and the introduction of sustainable products and processes. Open market will always exist, the system of supply and demand will stay applied there Implications differ for every link in the fresh chain. Some examples: Overall, a full chain approach is important Farmers and growers need to know who is the customer Providers need to have a clear added value Supermarket organizations have a responsibility to communicate on the state of affairs in the fresh chain 14

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