Fresh Del Monte Produce Inc. remains committed to supplying melons, even as the company restructures the business to emphasize higher-profit specialty varieties and reverse a sales slump that’s stretched at least 18 months.
The company has a “full pipeline” of new cantaloupe, honeydew and watermelon varieties in testing phases and is expanding production of its “MAG” variety that was introduced in some U.S. markets in January, said Dennis Christou, vice president of marketing.
Early results for the MAG, which is being grown in Arizona and California for summer and fall seasons, “indicate strong consumer preference” for the variety, he said.
Since 2010, Fresh Del Monte scaled down its traditional melon business as it concentrated on expanding specialty varieties. Net sales in the company’s melon business have declined six consecutive quarters amid a “volume reduction strategy,” according to previous statements.
Traditional melons grown outside the U.S. have become increasingly commoditized in recent years, “with more emphasis being placed on extended shelf life and high yields at the expense of the enjoyable eating experience,” Christou said Aug. 18 by e-mail.
The melon category has thus “suffered tremendously, especially during the offshore season,” he said.
Meanwhile, two of Fresh Del Monte’s biggest U.S.-based competitors, Cincinnati-based Chiquita Brands International Inc. and Westlake, Calif.-based Dole Food Co., said they discontinued North America melon sales in recent years. Melons became an increasingly difficult business for multinational fruit companies, partly because weather and other factors lead to widely varying quality from year to year, analysts say.
In an Aug. 2 conference call, Mohammad Abu-Ghazaleh, Fresh Del Monte’s chief executive officer, said the traditional melon business “isn’t rational,” and that many retailers “don’t care” about quality but rather are focused on price. The CEO said he does not “see much of a future” in traditional melons.
During the second quarter, Fresh Del Monte’s melon sales fell 23% compared to the same period a year earlier to $41.9 million, as volume tumbled 22% and prices fell 2%. Melons accounted for about 4% of overall net sales of $1.04 billion, compared to 8% in the fourth quarter of 2009.
Nonetheless, Fresh Del Monte remains a leading player in the offshore and domestic seasons for North American melons, Christou said in the e-mail.
“We intend to continue to produce and supply premium Del Monte quality melons to support the needs of those customers who recognize the quality and value of our product, as well as the consistency and high levels of service we provide to them,” he said.