Fresh-cut, value-added produce sales rise - The Packer

Fresh-cut, value-added produce sales rise

03/08/2011 12:35:00 PM
Jim Offner

Some may argue that the economy is still slumping, but to purveyors of fresh-cut and value-added produce, times are good.

According to the Perishables Group, which released a study in October, sales of prepared vegetables was up 34.8% since 2005, and fresh-cut fruit was up 23.3% in the same period.

In 2010, stores averaged $1,587 in fresh-cut fruit sales per week per store through July 31, and $804 in the vegetable category, according to the report.

“Basically, what it showed was cut fruit and vegetables were doing pretty well,” said Steve Lutz, vice president of the West Dundee, Ill.-based Perishables Group. “They both had good years. What struck me was certainly on fruit, some of the growth was coming from distribution. You’re not only getting people buying more. It’s a function of having more products available per store and more stores selling.”

The study showed a 3.2% dollar increase in the total produce category, while volume was up 1.5%.

Lutz noted that in prepared fruit, dollars were up 11.4% and volume increased 10.8%.

“That’s a pretty good growth rate compared to the overall department,” he said.

The prepared vegetable category was about half that level of growth, at just over 5%, Lutz noted.

“You could look at veg and see it’s only growing at half the rate, but it’s growing at double the rate of the total produce department,” he said.

The Perishables Group study found more types of products are finding their way to the marketplace and in an expanding roster of venues, including convenience stores and even pharmacies.

In terms of growth, fresh-cut pineapple and watermelon led the growth in the category, with more than 10% sales increases last year. Overall, the category grew by 7.3%, according to the report.

On the vegetable side, side dishes accounted for 56.5% of the category, although prepared meals showed 7.3% growth to occupy a share of 14% of the category. Vegetable medleys, at 15.9%, were the primary drivers.

“A lot of prepared fruit items are being added,” Lutz said. “Vegetables aren’t benefiting from the same trend. There has not been as much product innovation on the veg side, but you realize they got there first.”

There’s no reason to believe the value-added/fresh-cut category won’t continue to grow, Lutz said.

“I think you have to be pretty optimistic about it,” he said.

Ease of use is just part of the story, said Maria Brous, spokeswoman for Lakeland, Fla.-based retail grocery chain Publix Super Markets Inc.

“Convenience and quality are the key for our customers,” she said.

Steve Kenfield, vice president of sales and marketing for Kingsburg, Calif.-based HMC Group Marketing Inc., sees snacks as an emerging player.

“I think the snack produce category is emerging ever so slowly,” he said. “I think really it’s a question of getting that category established as its own separate category. People have been working on it for years, but it’s starting to gain some traction.”

Maintaining that growth may present some hurdles as non-traditional produce retailers get into the market, said retail consultant Ed Odron, president of Odron Produce Marketing & Consulting, Stockton, Calif.

“Sales continue to be challenging, to say the least,” he said. “As an example, check your Sunday paper and look at the first five pages of any drug store ad. All food, and they are getting into perishable along with Target and others. The pie is only so big and retailers are struggling as theirs gets smaller.”

But for the moment, there still appears to be plenty of room for growth for all fresh-cut retailers, said Jim Richter, Overland Park, Kan.-based executive vice president of sales and marketing for Rexburg, Idaho-based Wilcox Fresh.

“It continues to go up overall,” he said.



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