Nike’s competitive advantage is not in its products but in its brand. Nike spends most of its time and energy putting together ad campaigns featuring the swoosh. A generic gray shirt might sell for $10, but the same shirt made in the same factory with a swoosh printed on it sells for three times more. The price difference reflects customers’ willingness to pay a premium for a piece of clothing to associate themselves with the image created by Nike’s ad campaign.
The Driscoll’s business model is in many ways akin to those of Nike and some of its neighbors in Silicon Valley. Its niche isn’t to grow the strawberries but to breed, brand, and transport them and rake in profits from everyone else’s sweat. A senior vice president at Driscoll’s summed up this philosophy, pointing out that “[berry] growers are sort of like our manufacturing plants. We make the inventions, they assemble it, and then we market it, so it’s not that dissimilar from Apple using someone else to do the manufacturing but they’ve made the invention and marketed the end product.”
Although Driscoll’s does not farm the berries it sells, it maintains control over the fruit throughout the process. Driscoll’s likely dictates how the fruit is grown and, of course, sets the price it will pay to the farmers. This model of production has deep roots in American agriculture. Professor Douglas H. Constance refers to it as the “Southern Model,” emerging in chicken production in the South in the 1940s. Under this model, a corporation controls almost every aspect of the production chain. In the case of chicken, the corporation owns the breeding, hatching, feed mills, transportation, and processing plants, meaning that it does everything but raise the bird, which it usually contracts out because it is the riskiest part of the production process. The farmer, meanwhile, is required to use the corporation’s hatchling and feed and then sell the bird back to it. “Contract [chicken] production is but a formalized form of sharecropping,” Constance writes—“a remnant of slavery in the U.S. South.”