Of the five fresh produce categories showing an increase in volume in 2011, value-added vegetables were in first place, posting a 7.5% increase, and value-added fruit came second, with a 4.6% increase, said Steve Lutz, executive vice president of West Dundee, Ill.-based Nielsen Perishables Group.
"They’re not the minute categories people may have thought of a few years ago when there weren’t many items out there," Lutz said "These are large categories — larger than the entire stone fruit or avocado category."
Part of this growth is being driven by increased availability of value-added products available, he said, and consumers are loosening their purse strings as recession fears lift. Quality, selection and better targeting with better packaging are all fueling growth, he said.
The only cloud on the horizon is gas prices, he said. According to Nielsen data, a dollar increase in the price of gas takes about $100 a month out of the average household budget.
Fresh-cut and value-added products in increasingly colorful and high-tech packages continue to lure time-starved customers.
Convenience continues to be a major driver of consumer demand, but consumers have to see the value, said Bryan Silbermann, president and chief executive officer of the Newark, Del.-based Produce Marketing Association.
"A good example is the emergence of smaller pack sizes responding to changing demographics like one- or two-person households," Silbermann said.
Processors must cater to all demographics or risk limiting sales, said Noel Brigido, vice president of operations for Canadian processor Freshline Foods, Mississauga, Ontario.
"You’ve got single people buying for their own lunches, moms buying for their children and an elderly crowd who keeps sliced apples in their fridge because they don’t want to prepare or bite into a whole apple," Brigido said.
The demand for healthier snacks that kids enjoy is also driving sales in unconventional places, said Steve Kenfield, vice president of sales and marketing for Kingsburg, Calif.-based HMC Group Marketing Inc.
The grape grower is seeing demand for its value-added grapes beyond schools and supermarkets to hospitals, country clubs and a Florida theme park.
Packaging remains a Catch 22 for growers, said Kevin Stanger, senior vice president sales and marketing, Idaho Falls, Idaho-based Wada Farms.
"People want value-added convenience so you have to give them a potato that’s ready in five to eight minutes instead of an hour in the oven," Stanger said.
Rexburg, Idaho-based Wilcox Fresh, which markets seasoned, microwavable Potato Jazz and Zingers, has seen sales pick up in the past six months as the economy improves, said Jim Richter, executive vice president sales and marketing.
While value-added potatoes remain less than 1% of the potato category, Richter said the value-added category is exciting because it gives traditional commodities a chance to break out of the endless supply and demand curve and give customers a restaurant-quality dining experience at home for $2.99 to $3.99.
Nelia Alamo, director of sales and marketing for Oxnard, Calif.-based onion-grower Gills Onions, said 2011 was one of Gills’ best yet at retail, and she’s expecting a good 2012.
"There’s cooking going on, but it’s more assembling than cooking," she said, adding that some magazine recipes now call for fresh-cut vegetables.