I had a chance to chat with Steve Lutz on May 19. Lutz is vice president of the Perishables Group. West Dundee, Ill.
3:36 p.m. Tom Karst: Thanks for taking time to do this Fresh Talk chat. Steve, take us back to the days of Washington State University and immediately after — how did you get your start in the produce business?
3:44 pm. Steve Lutz: I was in the National finals of a collegiate student advertising competition. In looking for a way to differentiate our presentation
from the other 13 college team finalists, we decided to link to apples as a visual. I contacted Joe Brownlow, then the President of the Apple Commission, about getting images for our presentation. He said he would be delighted to work with me on one condition; that I come back after the competition and let him know how WSU did. I came back from Washington, D.C. to meet Joe and he offered me a job on the spot. I started the following day. So much for the post-college vacation! I worked in a variety of jobs for the next six years at the Apple Commission before leaving to take a job with an advertising agency.
3:48 p.m. Tom: Wow. I did not know that. What an ideal introduction to your future employer. Was Joe still there when you returned to the commission? How many years did you spend with the advertising agency?
3:49 p.m. Steve: No, Joe actually retired while I was still at the WAC. I worked for Tom Hale for a year. He was the one who hired me back. I spent
four years with the agency and two years with Nutri/System.
3:50 p.m. Tom: What was the highlight of your work at the Washington Apple Commission? How do you contrast what you do now with The Perishables Group to what you did as an executive with WAC?
3:54 p.m. Steve: For me the highlight was in being able to be one of the pioneers in produce category management along with Chiquita and T&A. Our three organizations actually partnered to launch these initial retail quantification efforts at the same time the PLU numbering system was being introduced. The payoff was in our ability to make very strong fact-based recommendations to the retail trade on shelf space, promotion activity, merchandising approaches, etc. We do a lot of that now with PG....just at a much more advanced level
3:56 p.m. Tom: We talked earlier in the day about the first quarter retail produce department performance. Would you consider this an unprecedented period of challenges for retailers and suppliers, or would you say every year brings its own share of challenges?
4:00 p.m. Steve: The beauty of the produce industry is its complexity and constant change. Even the same product will fluctuate based on supply, quality, price and available substitutes. That said, the past six months really are unprecedented because of the economic crisis. We know from our consumer research that shopping behavior has fundamentally changed. So the complexity, challenges and overall importance of understanding consumers and their shopping preferences has increased.
4:03 p.m. Tom: I have a tough question for you. Considering the apple category, do you think growers would be better off if the domestic promotion arm of the WAC still existed? Does the need for such generic promotions depend on crop size, or perhaps do today’s shippers have enough sophistication that they an effect similar outcomes that WAC promotions used to provide?
4:16 p.m. Steve: I don’t know if "better off" is the right way to frame the question because there is really no easy way to quantify it. I think it comes down to a function of resource allocation and where the growers and shippers want to focus their limited marketing dollars. My observation is that nearly all of the marketing dollars being spent by the apple growers is focused on taking market share from each other. If you a savvy marketer, that’s a pretty good strategy. Conversely, the job of the commodity program was to use generic promotions to help increase overall product demand. I really don’t think it’s a question of sophistication, as many apple firms have strong marketing capabilities. The problem is they lack the scale to effectively wage a battle for market share while also investing to build consumer demand. It’s more a question of priorities and right now the industry has decided to focus on the share battle. That said, my belief is that the apple category is worse off without the Washington Apple Commission domestic program..
4:18 p.m. Tom: Very good insight. I have kept you a while. One more question: what do you think you would be doing if you weren’t in produce?
4:22 p.m. Steve: Hard to say. In the advertising business my primary clients were K2 Ski Company, and several national wineries. I had my chances to pursue both of those paths, either one of which would have made for really fun careers. But my heart was in produce and that’ the path I chose. And I certainly have no regrets.
Tom: Steve. Thanks again for your time and insights. I appreciate it.
Steve: No problem.