Wholesale marketing of food

Last updated
In the fruits and vegetables sector of the Rungis International Market, France. MIN Rungis fruits et legumes.jpg
In the fruits and vegetables sector of the Rungis International Market, France.

The consumption and production of marketed food are spatially separated. Production is primarily in rural areas while consumption is mainly in urban areas. Agricultural marketing is the process that overcomes this separation, allowing produce to be moved from an area of surplus to one of need. Food reaches the consumer by a complex network, involving production, assembly, sorting, packing, reassembly, distribution and retail stages. In developing countries the linkage between the producer and the retailer is still usually provided by assembly and wholesale markets, where wholesale marketing takes place using a variety of transaction methods. Recent years have seen an expansion of wholesale marketing in European and former CIS countries. On the other hand, the growth of supermarkets in many regions has seen the development of direct marketing and a reduced role for wholesale systems.

Contents

Types of wholesale market

Wholesale markets can either be primary, or terminal, markets, situated in or close to major conurbations, or secondary markets. The latter are generally found only in larger developing countries where they are located in district or regional cities, taking the bulk of their produce from rural assembly markets that are located in production areas. The distinction between rural assembly markets and secondary wholesale markets is that secondary wholesale markets are in permanent operation (rather than being seasonal in nature or dealing in specialized produce), larger volumes of produce are traded than at the rural assembly markets and specialized functions may be present, such as commission agents and brokers. [1]

Terminal wholesale markets are located in major metropolitan areas, where produce is finally channeled to consumers through trade between wholesalers and retailers, caterers, etc. Produce may also be assembled for export. In some countries, such as India and China, terminal markets also supply other parts of the country. For example, New Delhi serves as a distribution centre to the south of India for apples grown in the Himalayan foothills. The problems of terminal wholesale markets are usually ones of congestion caused by an unsuitable location or by an inappropriate mixture of wholesale and retail functions. Traditionally, wholesale markets were built adjacent to city centres, located at a focal point of the inter-city transport facilities and close to the main retailing areas. Population growth, changes in urban land-use patterns and the development of modern transport systems have all influenced the suitability and functionality of existing sites. [2]

Transaction methods

Wholesale vegetable market in India. India - Koyambedu Market - Market 03 (3987093932).jpg
Wholesale vegetable market in India.

Wholesaling facilitates the economic function of buying and selling (usually termed as "price formation") by allowing the forces of supply and demand to converge to establish a single price for a commodity. The wholesaler may also perform storage and warehousing functions, as well as allowing economies of scale to be obtained in the transportation of produce from farm to market. The people involved in wholesaling can act simply as merchants, buying and selling produce, can be brokers dealing in orders rather than goods, or can be commission agents. Prices are normally established by negotiation but some wholesale markets use the auction system. The auction is compulsory in all wholesale markets in big cities in Japan. A comparison of the Japanese system with that in Brisbane, Australia, found that prices moved more frequently and with a greater degree of volatility in Japan than those at Brisbane. [3]

Haikou wholesale vegetable market, China. Haikou wholesale vegetable market - 05.JPG
Haikou wholesale vegetable market, China.

Wholesale markets develop in a number of stages. They start as general markets, then become more specialized by trading in specific types of products. A later stage is to transact only graded and well-packaged produce. A recent trend in Western Europe and the USA is for large retailers to by-pass the wholesale market system. Direct links are created between producers and supermarket chains, often by means of contract farming arrangements or through the use of preferred suppliers. Following the collapse of the iron curtain a large number of markets were developed in Eastern and Central Europe in the 1990s and early 2000s. Examples include markets in Warsaw, Gdansk, Budapest, and Bucharest. In other parts of the world, new markets have been built in Amman, Cairo and Mumbai, among many recent developments. Very few new wholesale markets have been built in western countries in the last decades, although old markets have been relocated to new sites (e.g. the new Covent Garden Market relocated to Nine Elms in London and Rome's new wholesale market, relocated from the centre to the east of the city). Those that already exist have tended to also attract warehouses for integrated food distribution, changing their role to "food centers" (in the USA) and including other non-fresh food products. Wholesale markets still have a role in the marketing of horticultural produce but the traditional fresh meat and fish wholesale markets, particularly those dealing with wholesale live produce, are generally being closed down in major urban centres. In developing countries, changes in work patterns, particularly the employment of women, and the impact of technological innovations in post-harvest handling, food processing and storage, including the use of domestic refrigerators, tends to encourage the development of one-stop shopping at supermarkets, often on a once-a-week basis. The challenge for wholesale markets in such a trading environment is to retain turnover, both by providing new services to supermarkets and by developing services to the non-supermarket trade and the growing hotel and catering sectors. [4]

Representative bodies

The World Union of Wholesale Markets (WUWM) aims to represent wholesale markets internationally, and promote the exchange of information between them for mutual benefit. [5]

See also

Related Research Articles

<span class="mw-page-title-main">Supermarket</span> Large format of grocery store

A supermarket is a self-service shop offering a wide variety of food, beverages and household products, organized into sections. This kind of store is larger and has a wider selection than earlier grocery stores, but is smaller and more limited in the range of merchandise than a hypermarket or big-box market. In everyday U.S. usage, however, "grocery store" is often used to mean "supermarket".

<span class="mw-page-title-main">Grocery store</span> Retail store that primarily sells food and other household supplies

A grocery store (AE), grocery shop (BE) or simply grocery is a foodservice retail store that primarily retails a general range of food products, which may be fresh or packaged. In everyday U.S. usage, however, "grocery store" is a synonym for supermarket, and is not used to refer to other types of stores that sell groceries. In the UK, shops that sell food are distinguished as grocers or grocery shops.

<span class="mw-page-title-main">Distribution (marketing)</span> Making products available to customers

Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider or by using indirect channels with distributors or intermediaries. Distribution is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.

<span class="mw-page-title-main">Food distribution</span>

Food distribution is the process where a general population is supplied with food. The Food and Agriculture Organization (FAO) considers food distribution as a subset of the food system. The process and methodology behind food distribution varies by location. Food distribution has been a defining characteristic of human behavior in all societies, and recordings of food distribution date back for thousands of years. Most governments and societies are highly shaped by the systems created to support food distribution.

Agribusiness is the industry, enterprises, and the field of study of value chains in agriculture and in the bio-economy, in which case it is also called bio-business or bio-enterprise. The primary goal of agribusiness is to maximize profit while satisfying the needs of consumers for products related to natural resources such as biotechnology, farms, food, forestry, fisheries, fuel, and fiber.

An Agricultural Produce Market Committee (APMC) is a marketing board established by state governments in India to ensure farmers are safeguarded from exploitation by large retailers, as well as ensuring the farm to retail price spread does not reach excessively high levels. APMCs are regulated by states through their adoption of a Agriculture Produce Marketing Regulation (APMR) Act.

In the Republic of Ireland, the retail sector provides one of the largest sources of employment in the economy, representing over 12% of the workforce. As of 2017, approximately 40,000 wholesale and retail businesses employed almost 280,000 people in Ireland, with the Department of Enterprise, Trade and Employment reporting that 90% of these businesses were Irish-owned.

Japan's service industries, including trade, are the major contributor to gross national product (GNP), generating about 74.1 percent of the national totals in 2004. Moreover, services are the fastest growing sector, outperforming manufacturing. The service sector covers many diverse activities. Wholesale and retail trade was dominant, but advertising, data processing, publishing, tourism, leisure industries, entertainment, and other industries grew rapidly in the 1980s. Most service industries were small and labor-intensive but became more technologically sophisticated as computer and electronic products were incorporated by management.

<span class="mw-page-title-main">Wet market</span> Market selling perishable goods, including meat, produce, and food animals

A wet market is a marketplace selling fresh foods such as meat, fish, produce and other consumption-oriented perishable goods in a non-supermarket setting, as distinguished from "dry markets" that sell durable goods such as fabrics, kitchenwares and electronics. These include a wide variety of markets, such as farmers' markets, fish markets, and wildlife markets. Not all wet markets sell live animals, but the term wet market is sometimes used to signify a live animal market in which vendors slaughter animals upon customer purchase, such as is done with poultry in Hong Kong. Wet markets are common in many parts of the world, notably in China, Southeast Asia, and South Asia. They often play critical roles in urban food security due to factors of pricing, freshness of food, social interaction, and local cultures.

<span class="mw-page-title-main">C&S Wholesale Grocers</span> American wholesale distributor

C&S Wholesale Grocers is a national wholesale grocery supply company in the United States, based in Keene, New Hampshire. In 2021 it was the eighth-largest privately held company in the United States, as listed by Forbes. C&S owns the Piggly Wiggly grocery brand, which is independently franchised to store operators, the Grand Union supermarkets brand, as well as several private label brands, including Best Yet.

A marketing channel consists of the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption. It is the way products get to the end-user, the consumer; and is also known as a distribution channel. A marketing channel is a useful tool for management, and is crucial to creating an effective and well-planned marketing strategy.

<span class="mw-page-title-main">Retailing in India</span>

Retailing in India is one of the pillars of its economy and accounts for about 10 percent of its GDP. The Indian retail market is estimated to be worth $1.3 trillion as of 2022. India is one of the fastest growing retail markets in the world, with 1.4 billion people.

<span class="mw-page-title-main">Agriculture in Benin</span>

Benin is predominantly a rural society, and agriculture in Benin supports more than 70% of the population. Agriculture contributes around 35% of the country's gross domestic product (GDP) and 80% of export income. While the Government of Benin (GOB) aims to diversify its agricultural production, Benin remains underdeveloped, and its economy is underpinned by subsistence agriculture. Approximately 93% of total agricultural production goes into food production. The proportion of the population living in poverty is about 35.2%, with more rural households in poverty (38.4%) than urban households (29.8%). 36% of households depend solely upon agricultural (crop) production for income, and another 30% depend on crop production, livestock, or fishing for income.

<span class="mw-page-title-main">Agricultural marketing</span> Process of moving agricultural products from the farm to the consumer

Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. These services involve the planning, organizing, directing and handling of agricultural produce in such a way as to satisfy farmers, intermediaries and consumers. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing and packaging, transport, storage, agro- and food processing, provision of market information, distribution, advertising and sale. Effectively, the term encompasses the entire range of supply chain operations for agricultural products, whether conducted through ad hoc sales or through a more integrated chain, such as one involving contract farming.

Market information systems are information systems used in gathering, analyzing and disseminating information about prices and other information relevant to farmers, animal rearers, traders, processors and others involved in handling agricultural products. Market information systems play an important role in agro-industrialisation and food supply chains. With the advance of information and communication technologies for development (ICTs) in developing countries, the income- generation opportunities offered by market information systems have been sought by international development organizations, non-governmental organizations (NGOs) and businesses alike.

Shree Chhatrapati Shivaji Market Yard, known locally as ‘Market Yard’, is a wholesale market for agricultural produce like vegetables, fruits and flowers in Pune city. It is located near Gultekdi in Maharshi Nagar and close to Swargate. It is an important commercial area.

The horticulture industry embraces the production, processing and shipping of and the market for fruits and vegetables. As such it is a sector of agribusiness and industrialized agriculture. Industrialized horticulture sometimes also includes the floriculture industry and production and trade of ornamental plants.

Texvalley is an integrated textile wholesale and retail market located in Erode, Tamil Nadu, India.

<span class="mw-page-title-main">Markets in Benin</span>

Fresh (wet) markets occur in most towns and villages in Benin, usually surrounded by large numbers of small shops selling foods, consumer items, imported foods and goods, clothing, household goods, etc. With a large portion of the population producing much of their own food, particularly for starches, open markets are where the diet is rounded out with items not self-produced. For those with higher incomes, more of the food consumed is purchased at market. Most vegetables are in villages and town markets, which usually have a major day, or multiple days, where traders and retailers are active in selling perishables in particular. Fish, meats, staple starch crops, legumes, soy and milk cheeses, fruits, and vegetables are available in the market every week of the year in most places with significant variations in the quantity supplied. Staple crops are usually sold to retailers by wholesalers, who obtain them from the producers. Meat is sold by the butchers who source from the producers. The source of vegetables depends on the season. Regional trade keeps a selection of vegetables available, with price and quantity fluctuations depending on the season. Visits to markets in the Parakou and Nikki areas observed avocados from Lomé in Togo and red onions from Niger. Eastern border markets have many Nigerian traders coming into Benin to purchase fruits and vegetables for sale in Nigeria. Most of these transactions are not captured in either of the countries' statistical records. Vegetables traders/retailers obtain their products either from the intermediary traders or directly at the farm gate if possible. For many items there are unwritten agreements that producers will sell to retailers, not directly to consumers. Intermediaries buy at the farms and transport the products directly to their various market destinations. Women dominate the role of vegetable retailers at these open markets. Vegetable producers market much of their produce in bulk at harvest time because of the highly perishable nature of their products. In general, producers conduct all of their sales immediately after harvest. The long marketing channel of vegetables in the larger peri-urban and urban areas involves several types of intermediaries, from local traders to wholesalers. Studies by INRAB have shown that producers are more inefficient in marketing than in production. There is a lack of market participation of farmers and current barriers to entry by farmers limit their access to markets.

The retail format influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains.

References

  1. Tracey-White J. "Wholesale markets: Planning and Design Manual". Rome: FAO. Retrieved 19 April 2017.
  2. Densley R.; Sánchez Monjo E. "Wholesale market management". Rome: FAO. Retrieved 18 September 2019.
  3. Kobayashi, K. and Vining, G. India Comparison of wholesale vegetable prices in Japan-auction market and Australia-negotiating market.
  4. Shepherd A.W. "The implications of supermarket development for horticultural farmers and traditional marketing systems in Asia" (PDF). Rome: FAO. Retrieved 21 April 2017.
  5. Greg I. Johnson; Katinka Weinberger; Mei-huey Wu (2008). The Vegetable Industry in Tropical Asia (PDF). Asian Vegetable Research and Development Center. p. 26.