Over the past week I developed a two page briefing regarding Dole Iceberg Lettuce for my class “If Products Could Tell Their Stories”. As I’ve noted on my previous posts, I have selected this product as the topic of my Life Cycle Analysis project. Here is an overview of the assignment along with my response:
Assume that you work for ITP Benevolent Corporation, a newly formed company that seeks to provide products and services that improve human life, and the environment. We will be reviewing a number of potential products to offer, that happen to be the products you’ve chosen. But before we start offering these products, we need to understand the current situation for each – what are the key financial, regulatory, public relations, and consumer drivers. Create a 2-page briefing is to follow the following outline
- The product you’ve chosen
- Financial drivers (how does the company make money and how do they innovate)
- Key regulatory issues (how does the government legislate this industry)
- Activists/NGOs (what issues are advocacy groups targeting in relation to this thing)
- Consumer drivers (how have consumer behaviors shifted with regards to this thing)
Dole Iceberg Lettuce Briefing
Dole was founded in Hawaii in 1851, and is currently the world’s largest producer and marketer of fresh fruits and vegetables. The Company does business in more than 90 countries where it sources and sells over 200 products and employs more than 36,000 full-time employees and 23,000 temporary employees. In 2008 Dole delivered revenues of $7.6 billion and held assets worth $4.4 billion.
There are several core capabilities that drive Dole’s profitability:
- Marketing: Dole has a strong brand and visual identity that is recognized across the United States. The Dole brand is viewed as a symbol of quality by many consumers and is the number one brand of iceberg lettuce.
- Asset Base: Dole has a valuable portfolio of assets beyond their brand including large farms, processing plants, transportation facilities, and other land holdings. Dole’s Iceberg lettuce is produced in California and processed in Ohio.
- Operational Infrastructure: Dole has state-of-the-art production, processing and distribution infrastructure that enables it to produce, transport and deliver perishable products around the world.
- Low Cost Production: Dole’s asset base and operational infrastructure enable it to be a low-cost producer of most products categories in which they compete. Iceberg lettuce is one of the products where Dole has a low-cost producer advantage
There are several areas of focus for Dole’s innovation efforts:
- Value-Added Products: Dole has increased its focus on development of value added products over the last several years. These products include salads and fruit bowls in new packaging, which provide higher-margin opportunity.
- Operational Efficiency: Dole continues to focus efforts to increase the efficiency of their operation by investing in the design of machinery and process, and the implementation of capital improvements.
- Sustaining and Improving Yield: Dole examines agricultural practices in all phases of production to develop specifically adapted plant varieties, land preparation and fertilization methods, cultural practices, pest and disease control and more.
- Partnership with Retailers: Dole has sought to strengthen relationships with large retailers through value-added services such as banana ripening and distribution, category management, and establishment of long-term supply agreements.
- Sustainability and Accountability: More recently Dole has begun to develop programs and processes to drive greater accountability and sustainability across the organization. This has been in response to consumer concerns and demands.
Key Regulatory Issues:
Dole’s agricultural operations are subject to a broad range of evolving environmental and food-related laws and regulations in the United States (and all other countries where it operates). The primary government agencies responsible for overseeing the various aspects of Dole’s business and enforcing existing laws and standards are the the US Food and Drug Administration and the Environmental Protection Agency.
Here is a list of the relevant environmental laws and legislations: Food Quality Protection Act of 1996, Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, Federal Insecticide, Fungicide and Rodenticide Act, Comprehensive Environmental Response, Compensation and Liability Act.
The FDA also enforce standards regarding the labeling and safety of food products, establishes ingredients and manufacturing procedures for certain foods, defines standards of identity for foods, and determines the safety of food substances in the United States.
One interesting feature of regulation in this industry is the existence of “marketing agreements” or “marketing orders” that allow industry to create regulations that are then enforced by government auditors. These voluntary programs have recently been used to impose safety requirements to address concerns regarding frequent outbreaks of e-coli between 1996 and 2007. This has been the greatest area of concern for government regulators.
It is possible that future developments, such as increasingly strict environmental laws and enforcement policies, could give rise to new government regulations and standards.
Activists and NGOs:
Dole is a large corporation that has faced many issues with activists and NGOs throughout a long part of its history. The most well-known recent cases involve working conditions and use of toxic pesticides on banana plantations in Latin American countries.
That said, since the focus of my research is on Iceberg Lettuce, I will not delve into the specifics of those cases. In regards to production of iceberg lettuce and other leafy greens, Dole has been engaged in the following conflicts with activists and NGOs:
Organizations such Food & Water Watch have raised concerns over the recent government approval of irradiation to kill e-coli and other pathogens. These organizations advocate that the government should do more to police food companies rather than approve a method that may negatively impact the flavor and nutritional value of leafy greens.
Safety and consumer advocates with organizations such as the Consumer Federation of America have been calling for an end to the reliance that this industry has on marketing orders (described above). “We want every inspector to be paid by and owe their loyalty to the people who eat, not to the owner of an unsanitary produce packing operation. You can’t work for both.”
Dole’s operations in Soledad California has also recently been featured on an online video about safety issues and the ineffectiveness of OSHA (Occupational Safety and Health Administration). Check out the video here at the SoCal connected website.
Over the past several years, consumer behavior has shifted considerably in regards to food in general. From a overall standpoint, consumers have become more concerned about their health and more specifically obesity. This has led to an increased demand for healthier foods, including in the areas of snacks where consumers are demanding convenient and healthy options.
Another general trend is that consumer’s growing access to information regarding the production and distribution practices of large food companies has led to an increased sensitivity in regards to the production practices of large agricultural conglomerates. In response, many companies such as Dole have increased the scope of the corporate social responsibility (CSR) initiatives.
Another important consumer specifically related to leafy vegetables is a share rise in concerns regarding the safety of our food system. This has been exacerbated by the frequent outbreaks of e-coli infection since the mid-90’s. These events have created regulatory pressure that led the FDA to send letters to the largest distributors and growers of vegetables.
The industry itself has also created their own standards for production and distribution of these foods (e.g. the “marketing orders” discussed above). As can be expected, most consumers don’t trust the industry to regulate itself so there are still calls for increased government regulations and oversight.
Many consumers have begun to look for access to locally grown foods through organizations such as farmer’s markets, co-ops and CSA (consumer supported agriculture).