For any producer eyeing the shelves of local retail stores as a potential market, it’s crucial to understand the minimum quality standards required by these establishments. These standards not only ensure consistency and quality for consumers but also serve as a benchmark for producers to meet.
In a recent conversation with industry expert Trevor Abrahams, a deciduous fruit farmer and mayor of Witzenberg local municipality, we explored the intricacies of these standards and the implications they carry for producers.
Legislative framework
According to Abrahams, compliance with minimum quality standards is not just a matter of preference but a legal requirement.
The department of agriculture often sets these standards, mandating specific criteria for products ranging from deciduous fruits to fresh produce. These standards encompass various physical and aesthetic factors, ensuring that what reaches the shelves meets certain quality thresholds.
“Major retailers Woolworths, Freshmark, Food Lovers Market, Spar, Checkers or Shoprite have their own set of quality standards that may be more specific than national or industry standards. These may include parameters for sugar levels, colour, and pressure for fruits,” Abrahams explains.
Accessing standards
Finding these standards isn’t a daunting task either. Retail giants like Woolworths typically accredit packhouses that adhere to their requirements. So, producers intending to supply to such retailers often engage with accredited packhouses to ensure their products meet the necessary criteria.
These packhouses serve as invaluable sources of information, guiding producers on the specific standards required for different markets.
“Producers often need to work with accredited packhouses to ensure their products comply with retailer-specific standards. Packhouses possess the expertise and infrastructure for sorting, grading, and packaging produce to meet retailer specifications,” Abrahams adds.
Producers may need to undergo additional accreditation processes by the retailer to become qualified suppliers. This process typically involves facility audits and product sampling to verify adherence to quality standards.
Local sourcing prioritisation
Local retail stores generally prioritise locally sourced products, especially during peak seasons.
While they may resort to global sourcing during off-seasons, the emphasis remains on supporting South African products whenever feasible. However, stringent standards, especially for organic products, necessitate careful adherence to regulations surrounding herbicides, pesticides, and fertilisers.
“To supply food products to retailers, producers must navigate a maze of legal requirements. This includes registrations with tax authorities, compliance with labour regulations, and obtaining product-specific licences and accreditations,” Abrahams says.
“Standards such as South African Good Agricultural Practices (GAP) certification and certification for packhouses further ensure adherence to quality benchmarks.”
While product liability insurance is not mandatory, stringent testing protocols serve as a form of assurance for retailers. Producers undergo rigorous testing for residue levels, especially concerning pesticides and herbicides. This testing, conducted by accredited laboratories, provides a level of confidence to retailers regarding the safety of the products they stock.
Price determination and payment terms
Price negotiations between producers and retailers are a nuanced process. While producers strive for profitability, retailers are cognisant of maintaining competitive pricing.
Payment terms typically range from cash on delivery to a standard payment period of 21 working days. However, designated small-scale producers often benefit from shorter payment cycles, facilitating smoother cash flow management.
A cash component also exists in the form of local retailers who take cash on delivery (COD). Upon delivery, the product will be examined, and you will get payment for the total amount discussed over the phone or via email, Abrahams adds.
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Marketing and promotional support
According to Abrahams, local retailers actively engage in marketing and promotional activities to drive sales, especially during peak seasons. These efforts include seasonal promotions, bulk discounts, and collaborative marketing initiatives with producers.
Such support not only boosts product visibility but also enhances consumer engagement, ultimately driving sales. This support can take the form of:
- Collaborative promotions: Joint marketing efforts to raise consumer awareness for specific produce.
- Discounts: Collaboratively offered discounts to incentivise consumer purchases.
- Branding initiatives: Incorporation of producer branding within the retailer’s marketing materials to enhance brand recognition.
“Presenting products to retailers involves leveraging branding opportunities such as Proudly South African and Local Lekker initiatives. These branding efforts resonate with consumers, emphasising the local origin and quality of the products. Producers also have the flexibility to negotiate additional branding within retail stores, further enhancing product visibility,” he says.
Regulatory constraints
Local retailers operate within a framework of stringent regulations, particularly concerning ethical standards. Prohibitions on child labour and protections for pregnant women within the workforce underscore the industry’s commitment to social responsibility and ethical sourcing practices.
“If you make use of child labour, your product is not welcome in stores,” Abrahams explains.
Supply chain and distribution
Understanding the dynamics of the supply chain is critical for the efficient distribution of produce to local retailers.
Common distribution models include:
- Centralised distribution centres: Some retailers operate through centralised distribution centres that receive produce from various sources and then distribute it to individual stores.
- Direct sourcing: Other retailers may prefer direct sourcing from producers, eliminating the intermediary step of a distribution centre.
“Understanding and meeting minimum quality standards is important for producers aiming to supply local retail stores,” Abrahams concludes.
“By navigating regulatory requirements, embracing marketing opportunities, and tapping into niche markets, producers can establish mutually beneficial relationships with retailers while delivering quality products to consumers,” Abrahams says.
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