SMALL IS BEAUTIFUL-HOW ABOUT COMPETITION?

Most small scale and home based food industries fail when it comes to marketing their products and facing the heat of competition from the organized brands is their "Achilles heel". But in a small town in the US the micro enterprise operating entrepreneurs have found a way to compete with national brands through their products with some USPs, most important one being their local credentials. Though their prices are higher because of their disadvantage vis-a-vis "economy of scale", this handicap is more than made up with quality and uniqueness of the products made by them. In stead of placing their products in national super market chains, they largely sell through local and regional retailing outlets. Here is a take on this interesting phenomenon.

"Country Day products are among more than a dozen locally manufactured foods found in many area grocery stores. Small, independent local producers compete with the behemoths of the grocery aisle such as Kraft, Tyson, ConAgra and Smithfield. "What gives them their edge is their quality and their uniqueness," said Joe Fasula, co-owner of Gerrity's Supermarket, which has nine regional stores. "It comes down to setting yourself apart. You have to compete on price or some intangible quality about yourself. These guys hold their own."

Probably there is a lesson to be learned from the above example for thousands of micro enterprises in other parts of the world and that is not to depend on large retail chains but use smaller stores for selling their products. Of course there still could be problems regarding credibility of their products for which sustained efforts need to be taken to instill confidence in the local population. Quality will ultimately sell and combined with assured safety products from small local enterprises can out sell even the best brand in the local market. 

V.H.POTTY

http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

FALLING FOOD PRICES-THE GERMAN CONCERN!

While rest of the world was reeling under the inflationary pressure on food prices, Germany seems to be facing a slash down of food prices due to reasons not related to supply-demand factors. In a bid to attract more customers during the recent economic melt down, major retailers are reported to have engaged in a price war, benefiting the consumer to no end. But the government is worried about such a situation as reflected by the anguish expressed by the agriculture minister of that country.

"Even as the world's largest fair for food, agriculture and horticulture was set to open, more fuel was being poured onto the already heated debate over food prices and quality.This week, a number of food discounters in Germany - led by market leader Aldi - continued an ongoing price war with yet another round of cuts, this time on items ranging from vegetable oil to breakfast cereal to snack chips. There were 12 such major price reductions over the course of 2009. Speaking at the fair, German Agriculture Minister Ilse Aigner said she was "very concerned" about what she saw as "acrimonious competition" as the discounters vied for market share".

Probably the government was worried that the prices at which foods were offered cannot be sustainable and might result in heavy operational losses for the players involved, even leading to eventual bankruptcy with unpredictable consequences to its economy. What is not understood is how any competition can be snuffed out in a democracy and if the warring retailers get together to fix reasonable prices for those products commonly offered by them, it could be construed as an unfair trade practice. What government has to ensure is that such price wars do not result in compromise on food quality and safety.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com