The Business of Everyday Things: How Oranges became a Consumer Good
When you walk into a supermarket, you find oranges all year round. Oranges are one of the staples of the food retail business in Europe. For this to happen, the costs of production and distribution have to be covered by the value that the fruit provides to us as a good. Through the history of the orange, we see the economic systems changing, let’s see how this came to be.
The market today is not the same as it used to be.
The story of the orange begins in a completely different economic environment than we are familiar with today and ends in the supermarket we know. Today, we live in what is called economies of scale. Meaning increased production, and optimized processes aim at saving costs. This model benefits us, as consumers because it makes lower prices possible. For most of human history, the production output of economies was limited, goods were scarce and only available to the aristocracy, this is what we call subsistence economies. Let’s track the development of the orange from its trait as a luxury good to the plantages in South America to bulk containers and supermarkets.
Although the orange has been known and cultivated in China for more than 1500 years and had grown in India and Turkey for almost as long, the fruit appeared much later on the European continent in the 11th century. At that time, Europe was not part of the existing global trade system, the Silk Road. Today, the European Union is the largest single economic market and an integral part of global trade, but for most of history, Europe was not.
European traders participated in the Silk Road trade, but the main trade routes were between China, India and the African West Coast — not Europe. On top of that Silk Road trade was neither institutionalized in the form of international treaties or global organizations like today’s trade is nor a continuously physical network of roads or pathways, therefore information and goods traveled slowly. Silk Road merchants participated in “relay trade” in which goods were exchanged many times before reaching their final destinations — this is very different from today’s trade.
Today, goods on the global market are mainly sold in bulk containers because bulk trade is easier, cheaper and more efficient since goods are kept together as long as possible. In Silk Road times, it was luxury goods that were being exchanged on a global scale, but in much smaller quantities than today’s containers. Luxury goods, such as dates, saffron powder, and pistachio nuts traveled from Persia to China. Glass bottles came from Egypt, frankincense, aloes, myrrh from Somalia and sandalwood from India. In exchange, the caravans sent back bolts of silk brocade, lacquer-ware, and porcelain from China.
In short, the appearance of oranges in Europe took centuries because the exchange of goods was difficult and slow, trade was not institutionalized and transporting fresh fruit via one and a half continents was close to impossible.
The exchange of goods must be easy, and collaboration simplifies this.
Let’s take a detour from the story of oranges and take a more recent case where we see how institutionalization and collaboration changed the exchange of goods: the Iberian gauge system. The case of the Iberian gauge system is similar to our main question of how the value in use changes with time.
Most European rail networks used incompatible gauge systems between each other. In 1845, Spain introduced the Iberian gauge to prevent French invasions from using Spanish rail networks. Until 2013, trains crossing borders to Spain had to change to machines suitable for the Iberian gauge. In 2013, Spain opened the first non-gauge-break rail line between the two countries and today passengers and freight can stay on the same train because the countries use the Standard European gauge system.
So what changed? By 1986, France, Portugal, and Spain were all members of the European Union aka. little threat of invasions left. Now, the value of different gauge systems was lower than a fast and seamless exchange of goods, and reduced costs in time and money due to delays in border-crossing. Imagine the difficulty of exchanging goods on the Silk Road in the 11th century, where neither physical roads nor institutionalized trade existed. The orange had to enter Europe from points where the costs of distribution were covered by the value it provided to its consumers.
Unsurprisingly, the European entry points of the orange had well-established trade links with the Silk Road trade network and had wealthy consumer groups covering the costs of distribution:
Italian city-states and Al-Andalus, the Moorish Caliphate in Spain.
Gateways introducing the orange to Europe.
In the 11th century, most of Spain was part of the Muslim Caliphate Al-Andalus which itself was part of a greater Islamic empire stretching from Spain to the African East Coast. Parts of the Islamic empire trade network were integrated into the Silk Road trade. From there, the orange spread across the continent all the way to the Iberian peninsula. As a luxury good the fruit was traded along the empire’s internal networks which provided an established exchange network for luxury goods to satisfy the needs of the Caliphs, who were located in a decentralized manner throughout the empire. Let’s keep this orange gateway in mind while jumping 100 years forward in time to another European place.
A hundred years later, another entry point of the orange fruit was Italian merchant cities. Around the mid 13th century, the edible orange appeared in Florence and Venice. The cities’ maritime trade networks had connected Italy and Northern Europe with the Silk Road, the global East, and the African North and West Coast. Trade made the cities’ merchants rich and increased the demand for an influx of luxury goods. Around that time, Italian merchant cities were the entry point for many luxury goods, among them porcelain, mirrors, spices, flowers like the tulip or hyacinths, and the orange fruit.
Meanwhile, in the mid-1300s on the Iberian peninsula, the orange tree had been integrated into Muslim garden aesthetics with its irrigation systems, ponds, and canals. The Caliph’s gardeners preserved the domestication process and documented the fruit’s growing cycles in their writings. After the conquering of the Caliphate of Granada in 1492, the Spanish monarchs got hold of all the sexy orange gardens of the Caliph. The Spanish monarchs were as fond of the luxury fruit as the Caliphs. Ferdinand II of Aragon and Isabella I of Castile gifted orange trees on special occasions, like weddings or to befriended European nobles.
Through Spain and Italy, the orange found its way to France. The French king Francois I. himself brought the first orange tree to France from Spain. Later, Catherine de Medici brought orange trees from Italy [Florence] as gifts upon her marriage with Francois I.
Today the orange does not seem to be valuable, after all, it’s one of the most common fruits in supermarkets, but for 15th-century nobles, the orange was a treasure — scarce and new.
Nobles’ decided what to grow and what to consume.
In the 16th century, Europe was primarily a subsistence economy — meaning that few small groups dictated what was traded and what was produced. Keep the concept of subsistence economy in mind, because it’s drastically different from today’s mass-market economy, where brands and products tap into unfulfilled needs of large consumer groups. In contrast, a small aristocracy was the primary decision-maker in the 16th-century, so they dictated their needs to the economic agents of that time. The other economic agents, such as merchants and peasants, responded correspondingly to fulfill the needs of the aristocracy.
By the mid-1500s, peasants began growing oranges for their landlords in Southern France. However, naturally arable land suitable for growing oranges is limited in Europe and the production output of oranges remained small. Growing the orange fruit in Central and Northern Europe was technically possible, but required costly greenhouses, which were called “orangeries”. The cost of indoor orange production was too high for a large scale, therefore it remained a luxury only available to the highest courts and nobles.
Knowledge about the luxurious orange fruit spreads ...
For 250 years the orange was a proper luxury good. As Wikipedia puts it, a luxury good is defined by limited resources, limited distribution channels, centralized production, full control of the value chain, high quality of craftspersonship or high service quality. In other words, a luxury good is a thing that is hard to get but you sort of never needed it anyway.
From the 14th to the 16th centuries, artists helped to widen the knowledge of oranges by using the fruit as a motif in poetry and paintings. On top of this, translations of Moorish gardening writings into Dutch, French, and English supported the availability of agricultural knowledge about the fruit. By the mid-1600s, Dutch agriculturists like Rembert Dodoens (16th century), and scholars from Leiden University wrote books for the urban citizenry on how to grow oranges at home as an investment.
Soon, Peasants developed a taste in oranges too. 17th-century-sources describe how orange fruits and its branches were found for sale scattered at peasantry markets in Paris and Amsterdam, and small amounts of orange juice found its way into French and Italian cuisine.
What happened? In the course of 200 years urban citizenry and peasantry — social classes outside the aristocracy — copied the behavior of the aristocratic lifestyle. The orange was a manifestation of a luxury good available in the 1600s. Non-nobles had similarly copied the aristocracy’s taste in sugar and other luxury goods around the same time. Just think of today’s society, regular people still copy upper-class consumer-behavior, but the orange was replaced by Louis Vuitton purses and Porsche cars.
… and more classes copied royal behavior.
By the mid-1700s, almost every part of the orange was used and could be sold. The fruit was eaten, used as decoration, or given to seafarers to seal trade deals with indigenous peoples — yes, there are records where European traders give orange fruits in return for trade rights; the seeds were traded among merchants, and again with indigenous peoples in colonies; the juice drunk and used for dishes and perfumes; the zest found its way into perfumes and dishes; the branches and leaves used as decoration and gifts. In short, every part of the orange provided economic value (= commodification).
Since the demand for the orange fruit grew, the production needed to be scaled up. Scaling up the production of a good requires significant changes in the logistics and supply chain, while its costs need to be met by the value the fruit provides.
The newly conquered colonies in the Americas offered an opportunity for growing oranges because they provided ideal climate conditions and enough arable land. Besides the increase in arable land, maritime and land trade routes became safer due to newly founded shareholder companies providing financial assistance in securing Atlantic routes from piracy and religious wars ending on the European continent in the late 17th and 18th centuries. Thanks to those safer routes, more goods arrived at their customers in Europe. The orange became more available, and its prices decreased.
Suddenly the availability of goods increased.
Imagine. A gram of sugar was the Christmas present for a Spanish royal princess in 1500, now in the 1800s sugar was widely available to nobility, urban citizens and peasants — that was an incredible change. In the 1800s, many previously considered luxury goods became consumer goods, such as candles, clocks, tea, coffee, oranges, and sugar. Similarly, oranges too became easily available to lower economic classes in the 1800s — the orange fruit became a consumer good.
A consumer good is anything that satisfies a sudden desire or need, which can be satisfied through other goods too; and the consumer has a variety of options to choose from, all satisfying the same desire or need. By the 19th century, the subsistence economies of Europe began being replaced by economies of scale. This shift lasts until today. The latter is still the dominant form of organizing and optimizing production. It's based on a large consumer group dictating what is produced as opposed to the small number of consumers in subsitence economies.
What happened since the 1800s …
Multi-directional trade (= describes a model of economic exchange where resources and goods are exported and imported by countries in various complex directions) kickstarted in the 1600s and keeps increasing until today. Innovations in various areas have always helped to simplify the exchange of goods in many directions. First, the speed of exchange increases through innovations in transportation, such as steam engines in trains and ships, or later electric-powered engines. The faster a good reaches its end consumer the lower the costs for the producer.
Once goods travel fast enough the challenge is to decrease the number of breaches between the different means of transportation. A way to decrease such breaches is legal harmonization and medium standardization. The example of the Iberian gauge system shows both: EU law harmonized trade between the three countries and simplified the exchange of goods in terms of customs, legal security, and other aspects; the standardization of the gauge system increased the speed of border-crossing and decreased the costs because goods do not have to wait and be put on a new train. Both increase the flow of goods and information.
Another example of increasing trade simplicity was the standardization of shipping containers. The largest orange producer in the world, Brazil, ships 96% of its production to Europe. On its way to the supermarket, the orange travels in a container from the place it was harvested all the way over the ocean to its country of destination via truck, train, ship, train, and truck again. Imagine how much time it costs to change containers whenever the harvested oranges change mean of transportation. A seemingly small change like the introduction of standardized containers simplifies shipping and trade because you can save time during the shipment by keeping the goods together. The introduction of the Standard European gauge had a similar effect on keeping goods together in the same containers.
From the market stand to a specialty shop to supermarket chains.
Today the orange fruit is widely available in every European supermarket. From the supermarket shelf, the orange reaches you, the consumer. For this to happen the costs of production and logistics had to drop. Every step in the orange’s history told so far contributed to lowering the production costs, but a big shift in decreasing the costs of distribution was still ahead:
the introduction of the supermarket in the 20th century.
The early days of retailing saw mostly specialty shops. In the late 1800s, butcherers, bakeries, fishmongers or greengrocers appeared. Those specialty shops replaced the market stands from the 1600s and 1700s. At those specialty shops, products were fetched by an assistant from shelves behind the merchant’s counter while customers waited in front of the counter and indicated the items they wanted — all sounding very familiar to a market stand, right?
Specialty shops generally functioned similarly to market stands, but were enclosed and indoors. Similar to market stands, the number of customers who could be attended to at one time was limited by the number of staff employed in the store. The practice of fetching items for the customer was slow and labor-intensive, therefore expensive and not suitable for serving masses. Economies of scale try to optimize time and money intense processes, therefore the practice of an assistant fetching your items was an opportunity to be replaced. The supermarket is such an optimized concept, where the consumers do the fetching themselves.
The supermarket as a form of distribution channel is a fairly new concept. In the time between the two World Wars, American shopowners experimented with self-service shops in cities to tackle the inefficiency and labor-intensiveness of specialty shops. After World War II, the concept of supermarkets took off in Europe too. The cheap self-service character of supermarkets replaced the cost-intense assistant fetching you every item. Economies of scale found ways to reduce the costs in supermarkets wherever possible from shopping carts to shelves arranged in sections mirroring the household to low salaries paid to the farmers and the people collecting the fruit.
Today, most supermarkets are part of large retail chains, this is also a way of reducing costs. Large chains due to their size can buy goods in bulk at lower prices from the manufactures to further reduce the costs. Instead of delivering oranges to every single supermarket, a distribution center of a parent company supplies individual stores of a chain to reduce costs. A truck delivers a container of oranges to a central distribution center from where the oranges are sorted and consolidated with other goods to supply one store. Those containers then go out to the individual supermarkets of a region, cutting costs and time, which reflects in lowered consumer prices.
Practices such as bulk buying of goods (often through long-term contracts), standardizations in production and distribution as well as concepts like supermarkets all function as sources of economies of scale. The rise of this new economic reality has flared consumerism through the abundance of goods at a low cost. The products you see in a supermarket today, are the result of economies of scale at work. You can put many other goods in the place of the orange and find a similar story to be true, like sugar or dates. This development still happens to products today, such as quinoa and avocados — both went through a similar development like the orange otherwise they would not be in the low price retail.
The story of orange commodification is exemplary of how infrastructure development drives prices down. However, the price reduction is not only the result of established channels of delivery such as international harbors, shipping, rail, and street networks. This reduction IS distributed along the whole production-consumption line. And the distribution of this cost is uneven with its heaviest weight falling onto the labor force. People engaged in the production not only work for low wages but also are permanently exposed to highly carcinogenic pesticides.
In a weird way, the situation of peasants growing oranges for their lords in the 1500s is not much different from today. The suffering has just been outsourced overseas and spread thinner across a bigger part of the global population. This is the economic reality we live in. Every commodity has the backtrack of being established as an accessible good. And many of these stories can tell a lot about the way our society operates.