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Value-Added Produce Is Here to Stay

Value-Added Produce Is Here to Stay

Value-added produce can help retailers get customers to try produce items that they otherwise wouldn’t purchase
Value-Added Produce Is Here to Stay
Preparing value-added private label produce adds increased labor costs to the bottom line.

As customers descend on produce aisles again or scan supermarket web pages, many are looking for easy meal ideas. What about a multi-item salad, or soup, or stew? Or maybe enjoying a delicious butternut squash without the hassle of peeling or cutting it? Or a luau featuring fresh pineapple bites, without a pineapple that bites back? Customers bought more value-added produce during the height of the pandemic, and they show no sign of going back to peeling and slicing now.

Produce department sales reached $69.6 billion, with an increase of 11.4% in dollars versus a year ago for the 52 weeks ending Dec. 27, 2020, as noted in the 2021 “Power of Produce” report from Arlington, Va.-based FMI — The Food Industry Association. The survey, conducted for FMI by San Antonio-based 210 Analytics LLC, found that 40% of customers purchase more fresh fruit now than pre-pandemic, and 35% purchase more vegetables.

According to the 2021 “Power of Produce” report, sales of value-added produce came to $15.5 billion, including value-added lettuce, or 22.3% of total produce sales. Without lettuce, value-added produce still increased by a strong 12.4%.

However, while value-added produce experienced strong gains in 2020 for value-added vegetables, at 11.4%, sales of value-added fruit were flat, at 0.3%. 

The pandemic exerted its influence on loyal shoppers in overall produce as well as in the value-added segment. The share of core value-added vegetable customers, purchasing on either a frequent or “whenever available” basis, increased from 31% in 2019 to 37% in 2020. Fruit didn’t change significantly. According to the survey, more than three in 10 shoppers believe they will purchase more value-added produce in the upcoming year — the highest share in four years. According to FMI’s survey, core value-added shoppers should be catered to by retailers, because their spending is above average and they shop weekly. These shoppers also indicated that they intend to purchase more value-added produce in the future.

Equipment Can Aid the Value-Added Produce Bottom Line

Bucky Slagle, director of produce and floral for Food City, aka K-VA-T Food Stores Inc., based in Abingdon, Va., isn’t the only supermarket director considering equipment that will help with labor costs for private label value-added produce. While sales of pre-washed, pre-cut product are soaring, costs for those who do the slicing and dicing are also going up. Consequently, many supermarkets are looking at available equipment to slice off labor costs.

There are several companies that offer equipment to not only help labor costs, but also to preserve more of the product. One example is Astra Inc., a Japanese manufacturer with its U.S. headquarters in Torrance, Calif. The company sells its Peel-A-Ton and other equipment for processing produce in stores, delis and commissaries. According to Astra, its equipment peels off only the rind, so there’s less waste.

Oslo-based Tomra Food has regional and manufacturing offices around the world. While much of the company’s equipment is aimed at manufacturers, there are items for supermarkets, too, including a brusher, a dry-peel separator and a washer.

The Value-Added Opportunity

What holds other customers back from buying more? Price. While the retailer needs a higher price on value-added produce to compensate for labor and possible equipment costs, rotating promotions can pull in more sales. As produce managers know, the average retail price for value-added produce is usually twice that of conventional or unprepared produce. Shoppers who understand that pre-cut, pre-washed produce can save time and increase convenience will come back to taste and purchase more value-added items.

Value-added produce provides another opportunity for shoppers. Some customers have seen only the outside of a jackfruit, butternut squash or rambutan. Based on just their outward appearance, these and other vegetables and fruits might not make it into the shopper’s bag. However, encountering value-added offerings with the bright orange of the butternut squash or other fruits’ lucious “insides” showing may prompt more customers to purchase these otherwise slightly strange-looking items to take home. Also, cutting up certain vegetables and fruits can be extremely difficult, so some customers skip these opportunities for healthy food.

Value-added fruits and vegetables can be displayed in the store in different ways from conventional produce. Photos of the prepped produce can be appealing, or a display of recipes can sell more value-added items. Recipes using value-added fruits and vegetables can persuade shoppers to grab a card or download the cooking directions from a website. Value-added produce can become a new part of Thanksgiving, Hanukkah, Christmas, a family reunion — any special get-together. Also encourage customers to add this convenience to any nightly meal. Butternut squash, for example, is microwaveable. Pre-cut melons and apple slices are good for a simple but tasty dessert. Charcuterie is big now, and value-added produce can bring a healthy dimension to the board.

Who is the Value-Added Shopper?

FMI’s survey found that shoppers were seeking good nutrition and health when buying fruits and vegetables during the pandemic. The core value-added produce shopper has some characteristics that differ from the average produce customer. Most value-added vegetable shoppers are more focused on healthy eating and may live in urban areas, and they have above-average produce consumption and trip frequency to the supermarket. They may be older Millennials; have kids at home, usually ages 7-12; and may have high-income households, and they shop online.

Surprisingly, there are differences among value-added fruit shoppers. They may have kids living at home, and they live in cities, have high incomes, and are male and above-average fruit consumers. Their households may be larger, they may visit the supermarket more often and may be Millennials, and they shop online.

Name Brand or Store Brand?

A wide array of name-brand value-added produce is available. Take Charlotte, N.C.-based Dole Food Co., for example. In addition to numerous salads, Dole offers value-added vegetables from arugula to a vegetable medley, and even microwaveable asparagus. The company’s list of fruits in various packaging is even longer, and includes rambutan and jackfruit.

Food City, aka K-VA-T Food Stores Inc., based inAbingdon, Va., carries the top brands. The store chain, with more than 130 locations in Virginia, Tennessee, Kentucky and Georgia, also has private label value-added items in its produce departments. Bucky Slagle, director, produce and floral, expects value-added produce to keep growing in sales. There was a slight drop in sales when prices nationwide increased recently, but Slagle expects convenience produce items to increase in sales. He promotes value-added produce items in Food City’s weekly circular, in which two pre-cut items are highlighted in a section of the ad called “Shortcuts.”

Preparing value-added private label produce adds increased labor costs to the bottom line. Slagle says that he’s considering having some manufacturers bring in samples of equipment to see which ones might help with labor costs on value-added private label produce at his busiest stores.

Value-added produce requires little to no preparation, and has many uses. It can replace snacks, at least some of the time, since it’s so much easier to reach into the refrigerator, pull out a bag of pre-cut pineapple, and snatch a piece or two. In some homes, new habits may have been learned during the pandemic and are now enjoyed on a regular basis. Home chefs who prepared more elaborate, hearty meals for families rather than visit restaurants still plan to use convenient meal solutions featuring items such as pre-cut produce, according to survey findings.

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