Ever since inflation began heating up in 2021, Earl’s Organic Produce has tackled the challenge head on, bolstered by its strong relationships and communication with growers and customers.
Earl's Organic new hand-drawn logo
“There was a little bit of denial from growers and retailers in the beginning because we haven't seen this kind of inflation since the seventies and early eighties,” said Drew Knobel, director of sales and marketing for the San Francisco-based wholesaler. “But once they recognized the current reality, we started talking about what we could do about it.”
Drew Knobel, Director of Sales and Marketing, Earl's Organic Produce
Knobel said new strategies were definitely needed as consumers began changing their shopping behavior due to tighter budgets.
“High-end local organic peaches that had garnered a lot of money in the past would literally rot on the shelf,” said Knobel, recalling some of the feedback he heard from retail customers. “So we had to go into solution phase and have conversations about that with the grower (who doesn't talk to the retailer per se), letting them know their market has changed, that there’s going to be limits to the amount of money that they can get for certain items. The current reality is that there's only a certain price point now that you can sell organic peaches at.”
“There was a little bit of denial from growers and retailers in the beginning because we haven't seen this kind of inflation since the seventies and early eighties.” - Drew Knobel
Knobel said Earl’s first plan of action was to make sure its growers and customers were on the same page in terms of reasonable expectations. “We're not going to beat last year's overall numbers, so put that idea out of your mind,” he told them. “Growth just doesn't keep growing all the time. We're in a different environment. The whole market shrank anywhere from 10 to 20 percent on the unit side.”
From there, Knobel said the Earl’s team worked to come up with the best pricing for both growers and retailers in the new environment, which at times involved establishing contract pricing for stability. “We brokered the information and the conversation on a business level and fleshed out the needs for both parties—and then got agreement and executed that plan. And we did that over and over again.”
GreenBelle organic strawberries
Through this ongoing close communication with its growers and customers, Earl’s has been able to weather the inflationary storm with relative ease—and Knobel noted that there have even been some categories that have shown significant growth.
“Strawberries are a high-volume mover, and we have good partnerships on both ends, so we put those together, and our numbers for strawberries were substantially up year over year,” Knobel said.
“We're not going to beat last year's overall numbers, so put that idea out of your mind. Growth just doesn't keep growing all the time. We're in a different environment.” - Drew Knobel
Another growth category for Earl’s during inflation has been bananas. Knobel said the increased growing costs, which first emerged during the pandemic and were later exacerbated by inflation, forced all banana companies (even the big conventional ones) to raise prices, essentially shattering the paradigm of the ultra-cheap “loss leader” banana. This in turn led Earl’s customers to be more open to its organic banana program, which is Fair Trade Certified and therefore more highly priced.
“We've been able to grow our banana program in double digits on units, which has been great,” said Knobel, noting that Earl’s detailed ripening services have also helped contribute to the growth.
Coliman organic Fair Trade bananas
“Most of our customers are now at $1.19 minimum and all the way up to a little over $2 per pound. And in every single case where our customers raised their banana prices, none of them had any detriment to their sales on the units.”
In addition to tackling inflation, Earl’s rolled out its brand refresh last year, the first one in more than three decades. “Earl’s has a new website, hand-drawn logo, and truck-wrap illustration by a local artist that highlights our heritage and authenticity, communicates our values more strongly, and stands the test of time,” said Marketing and Social Media Manager Susan Simitz. “Our website is rich in content and features many of the stories behind our growers as well as a handy resource page to help our customers share when and where their produce comes from. Earl’s is committed to quality, sharing our expertise, and delivering produce that inspires.”