Skip to main content

FRESH FOOD: A brand-new bag

Fresh-cut doesn't have time for a midlife crisis. Consumers are hungrier than ever for more convenient and nutritious foods, and that's put fresh value in the value-added fruits and vegetables business. Food retailers and fresh-cut suppliers are being presented with one of the most important long-term opportunities they're likely to get: to expand their portfolio of offerings in a meaningful way and advance this largely mature category to the next generation.

As Jerry Welcome, president of the Alexandria, Va.-based International Fresh-Cut Produce Association (IFPA), sees it, several key developments are "obviously converging that certainly translate into a lot of very positive things in regard to our members' products."

Of paramount importance, says Welcome, is the "firm hold that fresh-cut fruit is taking in the marketplace, both at the foodservice and retail levels." Indeed, the introduction of fruit salads at Wendy's, and sliced apples and gourmet salads at McDonald's, has "reinvigorated the quick-serve restaurant segment, which heretofore has been challenged to bring products to their menus to hold and retain their clientele."

Moreover, in light of the new nutrition guidelines and the obesity epidemic, Welcome says, "People are looking at alternative products, and we're consequently seeing a lot more of our products showing up in lots of nontraditional places, like convenience stores, Starbucks, and other places where people are increasingly looking for options [to substitute for] sandwiches or sugary foods."

But the key to it all, say industry players and observers, is that vendors and retailers have to make the process as easy and satisfying as possible for consumers. That means offering the right products delivered and maintained via an airtight cold chain, right down to consumer-friendly portioning and packaging.

Back at retail, consumers are looking for easier ways to increase their fresh produce intake, which is prompting continued development of salad-based meals and kits. Welcome says this proves consumers are more ready, willing, and able to accept those products, which ought to be sending retailers off in search of companies that can bring more product innovation to the cold case.

"More and more schools are also taking a good look at their vending programs," adds Welcome, "which not only creates additional inroads for introducing fresh products to children, but will also have long-term implications for the industry down the road."

To help its members take advantage of these highly favorable converging trends, IFPA is "educating and focusing significant attention on the important role of packaging, which really sets products apart. I would challenge our member companies to look long and hard at their packaging applications, because I think there's a lot of room for improvement, for many [lines] to become more consumer-oriented in terms of products and packaging, especially with regard to reclosable packages."

Challenges ahead

While Welcome is quick to commend the strides the industry has made on the technical side, which are yielding products with good shelf life, he also says he believes many suppliers are fearful of the price increases associated with moving to reclosable bags. "But somebody along the line will take that leap of faith, and really benefit from doing so."

Noting that "one size doesn't fit all," the trade group exec also expects to see vendors expand the number of next-generation single-serve packaged salad SKUs in the market. "Having said that, I also believe grocery stores need to do a much better job of maintaining the cold chain, to make these products available for a longer period of time," continues Welcome. The key to doing so is more robust supply chain management applications that rely on more sophisticated logistics to control and maintain an unbroken cold chain.

He adds, "The other challenge on the retail side is a need to better merchandise and develop shelf space for these high-value fresh-cut products," including untapped cross-merchandising opportunities in the meat and deli cases "that are key areas where retailers can help themselves."

Welcome's assessment of the market's window of opportunity, and the challenges involved, rings true with Mark Drever, president and c.e.o. of Salinas, Calif.-based Fresh Express. "Value-added produce is absolutely unlike any other business in the world," he says. "There are unique demands at every stage of the process -- for example, the fragility of the raw product and the speed with which huge quantities must be carefully moved through production, the proficiency and precision required for optimal atmospherics or for time and temperature controls, the time and trust required to nurture satisfying customer relationships, and the step-ahead insight and technological innovation required to create winning new products -- all of which combine to dictate a positive or negative experience for consumers."

And it's the consumer experience, "one salad at a time, that determines overall category success," says Drever. "If any of the interrelated components of the business are out of whack on a consistent or even intermittent basis, the resulting negative consumer experience can drive the category down."

With roughly $1 billion in annual revenues and an estimated 40 percent share of the packaged salad segment, Fresh Express pioneered the bagged salad category in 1989 with a patented breathable bag. The company, formerly owned by Richmond, Va.-based Performance Food Group Co., was recently acquired by Cincinnati-based produce powerhouse Chiquita Brands International, Inc. for $855 million in cash. The deal between two of the most recognized names in the produce business is expected to close sometime in the second quarter of 2005.

Drever says current plans call for the Fresh Express management teams, structure, and strategies to remain intact, with the company operating as an independent entity, doing what it does best.

"The single most powerful determinant of a company's -- and a category's -- success is a stable, knowledgeable, and deeply experienced cross-company management team that has the know-how and the wisdom to adeptly balance and steer through the highly complex aspects of the value-added produce business," he says. Fresh Express's single most powerful advantage "is our stable of veteran managers who are far and away the best in the business. They have been through the fires of learning together, and know what's at the heart of delivering the best possible value-added produce experience. That's the most critical 'trend' of all. It's what will bring both consumer and retailer delight -- and with that, consistent financial performance and value."

Even as the acquisition was proceeding, on March 31 Fresh Express launched nationwide a line of Premium Recipe Complete Salad kits, which Drever says will aptly satisfy "the fresh opportunity for retailers to expand sales and profits with an exciting new array of high-demand, high-margin complete salad kits."

New value equation

The new collection of premium, ready-to-toss salads, with suggested retail prices of $3.49 to $3.99, features today's most contemporary flavor trends, including a BLT Caesar Salad, Bleu Cheese Vinaigrette, Caesar Supreme, exotic Asian Supreme, and the industry's first retail fresh Broccoli Salad.

Product and ingredient variety has been an important driver of business over the past 12 months, says Bob Whitaker, v.p. of product development and food safety at NewStar Fresh Foods, LLC, also based in Salinas. "There continues to be an increasing interest in spinach and spinach blend salads, vs. traditional iceberg and romaine salads," he says, because consumers are seeking out alternative flavor profiles and more nutritious options to standard iceberg/romaine salad fare.

Whitaker, chairman of IFPA's 2005 board of directors, also cites the concept of "value added" broadening to include customer-ready or customer-convenient products like romaine hearts, bagged broccoli crowns, celery hearts, and single-head wrapped and leaf lettuces.

"These types of products reduce consumer handling at retail, which likely has a food safety and quality benefit, while providing an opportunity to brand the product and provide useful consumer and retailer information," Whitaker explains. Many of the new product entries NewStar has developed and introduced in the last 12 to 18 months fall into the category of "consumer-convenient, value-added products," he adds.

To meet the growing demand for fresh spinach and baby spinach salads and blends, NewStar has opened a new processing facility in Salinas that, according to Whitaker, "offers state-of-the-art processing technology to permit us to produce a high-quality product in a food-safe environment."

Whitaker further notes the development of a chopped green onion product for the retail and foodservice sectors. "We're also working on developing a line of customer-convenient products for specific customers," he continues.

John Loughridge, v.p. of marketing for Coral Gables, Fla.-based Del Monte Fresh Produce, says the "booming" fresh-cut market reflects the need to serve time-starved consumers.

Del Monte's fresh-cut line includes a full array of fruits and vegetables such as Gold Extra Sweet Pineapple, honeydew, cantaloupe, grapes, watermelons, carrots, broccoli, cauliflower, snap peas, and grape tomatoes.

Most recently, the company began offering half melons and pineapples with overwrap. "While many retailers cut in-store, using Del Monte Fresh Produce as their supplier reduces stock-outs and lost sales while also reducing the inherent liability of cutting in-store," explains Loughridge.

Del Monte, he adds, is developing products for a variety of eating occasions, "some of which include grab-and-go products, deli ingredients, salad kits, soup bases, mixed vegetables, fruit for baking applications, and a host of other products."

With Del Monte selling more product into the produce, deli, meat, and bakery departments of many retailers, Loughridge says new packaging is coming on line, such as corn-based, biodegradable items.

Moreover, with national trends that find more consumers seeking out more prepared foods and ingredients, Loughridge says Del Monte Fresh "is well positioned to be the supply partner of choice for retailers, with our 11 facilities across the country that allow us to provide just-in-time cutting and delivery."

The demands of the market are bringing vendors and retailers closer together in partnerships, he adds, "constantly innovating and deepening partnerships with select retail customers who are equally committed to making fresh-cut a major destination." Working together strategically allows for a much deeper information exchange and "joint tackling of both opportunities and obstacles, which speeds change and shortens our reaction time," observes Loughridge.

When asked what he considers the primary challenge facing food retailers with regard to the fresh-cut category, Loughridge says, "Cold chain is key. Many retailers are quickly moving to state-of-the-art refrigerated display cases, which preserve product quality while cutting shrink. Any item with a weaker cell structure is more challenging," he adds, noting watermelon as a prime example.

For its part, Del Monte Fresh is using the freshest, highest-quality raw materials, says Loughridge, and it has strict production and cold chain controls in place that are supported by its network of 11 cutting and distribution facilities.

Robert Schueller, director of public relations for Los Angeles-based Melissa's World Variety Produce, considers recent innovations in packaging technology the biggest driving force behind fresh-cut's second-generation explosion.

New technology has allowed Melissa's to launch several new convenience products -- including peeled baby beets, chopped onions (red and yellow), and peeled garlic -- that will be featured at the upcoming FMI/United Fresh Fruit and Vegetable Association show in Chicago.

"This is just a start on where the industry is going," says Schueller, adding that the best way for retailers to take advantage of heightened consumer interest is to offer all types of products, ranging from the traditional bulk to packaged and fresh-cut, "to respond to the needs of all types of shoppers and maximize profits for the produce ring."
This ad will auto-close in 10 seconds