Value-added items brighten companies' bottom lines - The Packer

Value-added items brighten companies' bottom lines

03/15/2013 02:11:00 PM
Mike Hornick

Fresh-cut and value-added fruits and vegetables get much of the credit for the modest sales growth produce departments enjoyed in the past year. As consumers vote for convenience with their dollars, it’s a trend that’s likely to continue.

For fruit, fresh-cut rose almost 17% in dollars in 2012 over the previous year while value-added was up 12%, said Steve Lutz, executive vice president of Nielsen Perishables Group, West Dundee, Ill. Value-added vegetables rose 12%. Department-wide, produce grew just over 4%.

By volume, value-added vegetables were up 15% at retail in 2012 after gaining 10% the year before, according to Nielsen Perishables Group. Side dishes spurred that with a 16% volume gain. New products lifted the overall category as unique item count rose 11%.

“People are still time-starved and I think they’re getting more time-starved,” said Noel Brigido, vice president of operations for Canadian processor Freshline Foods, Mississauga, Ontario.

“There have been a lot of single-serve applications this year for the snack or filler market, for shoppers to grab something quick. It’s up dramatically.”

“What we continue to see across all fresh foods is consumers seeking out items that deliver convenience,” Lutz said.

“There are more items coming into the store.”

“If you end up with more items on the shelf, you’re either decreasing shelf space for existing items to allow more in, or you’re expanding the space,” Lutz said.

“I can’t prove it, but my guess is that fresh-cut items are continuing to pick up display space. With the growth rates we’re seeing I’d really doubt it’s otherwise.”

Some of the space gains for fresh-cut are coming from the deli department and beyond.

“We continue to get a lot of competition from deli,” said Ed Odron, owner of Stockton, Calif.-based Ed Odron Produce Marketing Consulting.

“Look at a Safeway deli — Taylor Farms is supplying a lot of those. Alongside the fried chicken and pizza, the salad section is getting substantial. We all thought it would hurt produce sales, but it hasn’t and might have even enhanced it with complementary items. Value-added is profitable in both.”

Fresh-cut and snacks

Produce Marketing Association research shows two-thirds of consumers buy non-salad fresh-cut items, said Kathy Means, vice president of government relations and public affairs.

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