Melons rebound

07/02/2012 08:50:00 AM
Steven Maxwell

click image to zoomWhen the U.S. melon sector looks back on 2011, it is unlikely to be remembered as a vintage year. While world economic markets continued to face difficulties, the sector experienced its own crash in the form of September’s deadly listeria outbreak. Eventually linked to contaminated cantaloupes from Granada, Colo.-based Jensen Farms, the bacteria claimed the lives of 32 people and sickened 146 others across 28 states.

 

Economic impact

Steven Wright, director of produce and floral for Tops Friendly Market, which operates in New York and Pennsylvania, says the outbreak “basically destroyed” the category for months.

“Consumers not only lost faith in cantaloupes, but honeydews, watermelon, and the cut-fruit equivalents of each,” he says.

Although Wright says Tops’ melon sales had rebounded strongly by March 2012, damage to the category had already been done. “Until that time, we were 40% down every week,” he says.

Likewise, Patrick Morris, buyer for Thibodaux, La.-based Rouses Enterprises LLC, says despite a great deal of marketing undertaken at the time of the outbreak to preempt concerns, sales “tanked right away.” The Rouses Markets chain comprises more than 30 stores in Louisiana and Mississippi.

“Once we got consumers in our area educated as to our sources for cantaloupes, they came back, but it took a couple of months,” he says.

Dan Andrews, owner of Dan Andrews Farms in Bakersfield, Calif., says the consequences of the outbreak were “devastating, both individually and for the cantaloupe industry as a whole.”

“Consumer confidence dropped to all-time low levels, and retailers pulled cantaloupe off the shelves for a short time, then gradually restocked,” he says.

However, it was not only smaller growers that were affected. Dionysios Christou, vice president of marketing for Del Monte Fresh Produce, Coral Gables, Fla., says the company’s melon sales were also affected.

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“We all lost much in terms of money and product — the consumer’s fear of eating any cantaloupe had a negative impact on sales as a whole,” he says.

Despite this, Christou says conditions in the market are improving, with retailers once again promoting melons and Del Monte Fresh is hopeful demand will continue to grow.

From a supply standpoint, Wright expects volumes to remain stable with ample supplies. “The major shippers we deal with have remained steadfast to their programs and are working diligently to turn a negative into a positive,” he says.

Danny Mandel, president and chief executive officer for Rio Rico, Ariz.-based grower-shipper SunFed, says the market appears to have recuperated well, although he says he believes it will take time for all consumers to come back to the category.

However, given lighter winter production and more

conservative plantings this spring, Mandel says markets have actually been quite strong.

In fact, he says early 2012 was marked by a strong upturn in sales.

“It’s been the best five months for cantaloupes and honeydews since I’ve been in the business — go figure. It certainly didn’t hurt that we had great quality and good supplies,” he says.

Tops also posted strong unit and dollar growth in March, April and May, Wright says.

“A combination of time and good weather has begun to heal negative perceptions — our geographic distance from the problem also helped quicken the recovery,” he says.

Morris of Rouses also is confident the category will recover during 2012 but says he expects the process, for the Rocky Ford region in particular, will take much longer. “We still have customers ask if the cantaloupes are from Colorado,” he says.

Despite such concerns, Wright says Tops has experienced a “real win” by promoting the personal watermelon segment, with sales up 50% year to date.

Pairing personal melons with cantaloupes through promotions has also lifted the entire category and brought consumers back to cantaloupes, he says.

“Once the initial scare died down, we actually went with an aggressive route, running a couple of hot promotions and giving customers an education at the same time,” Morris says.

 

Improving standards

Part of the reason for the recovery, says Wright, has been a renewed emphasis on improving standards. “Everyone has examined their operations and pushed food safety standards up a notch,” he says.

While Wright says most suppliers were already following standards, the outbreak refocused energies into exploring how safety could be improved.

Morris says that such a move is well overdue.

“The fact that it took so long for this to come out in public was the scary thing,” he says. “We need to be able to say right away where and when something was grown and distributed if there is an issue.”

From the supplier side, Mandel says that although all elements of food safety are “already being given tremendous attention” regarding imports, “perhaps less pressure and vigilance” is placed on domestic producers.

“What is lacking is a commitment on the part of all retailers to only procure from grower-shippers who are fully vested in food safety and to require the same from companies who act as intermediaries,” Mandel says.

He adds that SunFed’s products offer transparency through the HarvestMark certification program.

Despite last year’s events, Morris says melons continue to sell well, with cantaloupes still ranking in Rouses’ top two, while sales of speciaty varieties — particularly honey, golden and sugar kiss — have seen a significant increase in sales.

Likewise, Wright says cantaloupe remains the driver of the melon category, with locally grown athena cantaloupes performing particularly well.

Aside from conventional melons, Morris says two segments — organic and fair trade — are becoming particular “hot trends.”

“We are asking all of our vendors if they have organics and if they are fair trade or part of the Rainforest Alliance,” he says.

In terms of merchandising, Morris says Rouses Markets focuses shopper attention through bins at store entrances and spillovers in the produce department. Mobile ice beds and refrigerated cases are also used to highlight fresh-cut fruit.

During the summer months, Tops uses high-profile melon displays in both the fresh produce and home sections to drive sales, while cut slices display quality and color to consumers.

“From a retail standpoint, we took a major dollar and unit hit after the listeria outbreak, but we have now turned the corner and are seeing the consumer back and actively engaged in the category,” Wright says.



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