How should the French grocer, Intermarché, set prices for ugly produce?

Source: http://www.treehugger.com

At least one third of fresh produce is discarded, according to estimates from the United Nations Environment Programme (see “Students from France, Mexico and United Kingdom Recognized for Taking up Fight against Food Waste,” United Nations Environment Programme, December 16, 2014, http://www.unep.org/newscentre/Default.aspx?DocumentID=2814&ArticleID=11110&l=en .)

Some of the produce is discarded because it is less than perfect in appearance, or “ugly.” A French grocer, Intermarché, launched a campaign to sell ugly produce. A video of the campaign can be found on Vimeo at http://vimeo.com/98441820 (length 2:30 minutes).  Basically, Intermarché would purchase the ugly fruit and vegetables from local growers and would sell it for 30% less than the “perfect” counterparts.  Intermarché provided juices and soups made from the ugly produce in the store for consumers to sample to help to ease any fears that the ugly appearance would impact the taste of the produce. The campaign was a success – the ugly produce sold out.  That store also experienced a 24% increase in overall store traffic.  Intermarché has since rolled out the ugly produce to all 1,800 of its stores in France and competitors have followed its lead.

Questions

1. Who are the stakeholders involved with ugly produce? What benefits are gained by using ugly produce?  Who experiences these benefits?
2. Would Intermarché be considered a price-setter or a price-taker with respect to ugly produce? How should it set the prices for the ugly produce?
3. From the retail store standpoint, what are the possible risks of selling ugly produce?
4. Think about the local growers of the ugly produce. What risks are there to the growers if they sell ugly produce?
5. What is the lowest price for which the local growers should sell the ugly produce? (The response should be conceptual, not quantitative.)

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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