Silver in some dark clouds

The international marketing magazine for fresh produce buyers in Europe
Chris White



Silver in some dark clouds

As consumers and businesses alike tighten their purse strings, some companies are ideally placed to benefit from the current economic climate

Silver in some dark clouds

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Google them and you’ll get a combined score of over 30m mentions, so it’s a surefire bet that ‘credit crunch’ and ‘subprime’ are going to be among the first new words and phrases to feature in the English dictionaries due for publication next year.

Very quickly, these words have become part of our lingua franca – and not only in the English-speaking world – as collectively we tighten our belts for a very bumpy ride. It’s a perfectly human reaction in the face of an expected economic downturn: we spend a little less and look to save a little more.

Of course, behaviour of this kind only aggravates our economic problems, because as we all spend a little less we help to reduce the supply of money that circulates around our economy to make economic recession something of a self-fulfilling prophecy.

The theory goes that our business is better placed than many others to weather the storms ahead. Fresh fruits and vegetables are among those staples that have avoided the price hikes that have affected other categories like bakery and dairy.

Indeed, it seems that some supermarket operators are using their key fresh produce lines to lure wary shoppers into their stores. Fresh fruits and vegetables are being promoted on price to prove to shoppers that food remains cheap.

At the same time, the dark clouds of economic recession are certain to have an impact on the shape of our sector. For example, Tesco is reportedly looking in its home market of the UK to counter the sudden surge in sales for hard discounters such as Aldi and Lidl by bringing out its own super-discount brand that undercuts its existing ‘value’ brand. In Germany, Edeka can barely contain its glee at the news that it has been given the green light by the country’s competition authorities to integrate the Plus discount chain it acquired from Tengelmann six months ago into its Netto operation. These and other changes in two of Europe’s big consumer markets will have an impact through the supply chain.

But fresh fruit and vegetable businesses have prospered in recent years because they’ve been able to withstand the challenges thrown at them by the market. They’re better placed than most to face up to the new challenges we face.

They heeded the advice of a famous Wall Street investor whose obituary was written last month. Sir John Templeton, who died in early July at the age of 95, built a fortune by making any number of canny investments in his lifetime.

“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell,” said Sir John. His philosophy, summed up neatly by the Financial Times, is that if 90 per cent of people are selling something it is probably undervalued; that you should look to do business in countries where other people aren’t looking; and that you should look to do the opposite of others.

So in this time of maximum pessimism, cash-rich companies that are bold and better suited to withstand the credit crunch are going to be making their moves. The dark clouds of economic recession are certainly gathering, but some people out there know that there is also a silver lining.

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