COVID upends equilibrium of produce sales in Southwest marketplace
The trend for fresh produce consumption continues to spiral upward, even though the ongoing coronavirus COVID-19 has skewed purchases heavily on the retail side, suppliers say.
Supplies of some items have been sporadic in 2020, said Roy Deki, salesman for foodservice and wholesale with Phoenix-based Epic Produce Sales.
“Volume is definitely off,” Deki said July 8. “I do bell peppers, squash, lettuce, pretty much everything — nothing seems to be moving more than anything else, other than maybe fruit.”
Watermelons were “hard to find,” and cantaloupes were “good and tight,” he added.
As for consumer melon preferences, the Origami cantaloupe is attracting much attention — and a lot of sales, said Barry Zwillinger, owner of Scottsdale, Ariz.-based grower-shipper Legend Produce, which focuses heavily on Origami production.
“It’s a big hit here in the Southwest with the major chains, with the flavor, aroma and eating quality,” Zwillinger said of the Origami. “The sales here are superior.”
Prices are up, too, but that isn’t a huge obstacle to sales, he said.
“Sales demand is increasing significantly, from what we’ve seen in the past and what our projections were,” he said. “The last 60 days, our demand and pricing structure is up significantly over what we’ve seen in the last 20 years.”
Consumers buy with flavor in mind, he explained.
“Stores in the past haven’t come in our direction with the Origami because of a higher price, but those stores have seen sales in store decline on the cut-from-the-vine harper melon. It looked great, it looked good cut open, but it didn’t have the eating quality.”
The COVID-19 pandemic may play a role in higher sales, Zwillinger said.
“Where they had to be aggressive on price before — maybe it’s related to the COVID because they’re eating at home more — they’re finding they can still keep the same volume, which increases their overall movement and have higher prices in the store,” he said.
“At the end of the day, the guy in the ivory tower isn’t worried about volume of movement as much as overall sales, so if the store is selling melons at $1.50 or $2, their sales are up, as opposed to featuring melons at a low price. They’re finding they don’t have to do that now. That fits in the sales scheme we’ve had the last seven or eight years.”
Value-added sells
Convenience is a driving force in the Southwest, said Jake Macek, vice president of sales with California Specialty Farms, which supplies Coosemans Phoenix.
“On the retail level, especially with specialty produce, it all has to be value-added, whether it’s in some sort of packaging that’s more earth-friendly or biodegradable or just less plastic,” he said.
“A lot of people are trying to get away from clamshells as best they can. The only problem is the cost of it. Getting away from clamshells typically means more costs are going to be typically incurred by us as the grower or packer, and trying to pass those costs down the line is a little more difficult than one might think.”
Packaging also a consideration in an upward-trending organic category, Macek said.
“If something is organic, especially, people are looking to find ways to put (it) in something that’s compostable,” he said. “The problem is passing the costs along.”
At retail, according to The Shelby Report, Fry’s Food Store, with 111 locations, continues to dominate chain business in Arizona, with a market share of 29.52%.
Safeway (79 stores) and Walmart Supercenter (65 stores) follow, with respective market shares of 15.73% and 14.93%. Albertsons (31 stores) has a share of 6.07%, with Food City Supermarket (36 stores) and Sprouts Farmers Market (27 stores) at 5.92% and 5.77%, respectively.
Foodservice gets some help
Foodservice in the region has struggled through the pandemic, with schools closed for the summer and restaurants operating under social-distancing and other restrictions.
That’s been a challenge to produce distributors who deal in the foodservice channel, said Sara Matheu, media relations director for Rosemont, Ill.-based foodservice distributor US Foods, which has a branch in Phoenix.
“Many of our restaurant customers have remained open in some capacity during COVID mandates, primarily optimizing or building out take-out and delivery operations,” Matheu said.
“As a consultant to our customers, we have been helping operators adapt to the changing environment — helping them optimize take-out operations and helping them plan for reopening efforts.”
Foodservice customers are looking for support with labor costs and inventory optimizations as their operations have evolved during the pandemic, Matheu said.
“For example, many customers have been adapting their menus to optimize them for take-out and delivery, refining and focusing their menu offerings to their most popular items and items that travel well in to-go containers,” she said.
“Many are also leveraging value-added items to help with labor costs. For example, items that are already chopped and/or prepped.”
Preparing to reopen a restaurant in the face of a changing pandemic can be complex and challenging without the proper resources to help guide planning efforts, Matheu said.
“Since the pandemic started, we have made many resources, webinars and tools available on our website for operators to navigate the ongoing changes in the industry,” she said.
Recently, US Foods launched a “Restaurant Reopening Blueprint Guide” to help operators with approaching regulatory requirements, principles for planning and effective reopening, best practices for “approaching front-of-house and back-of-house operations;” and specific solutions for other foodservice formats such as cafeterias, quick-service restaurants, fast-casual restaurants, food courts, and bars and lounges.
“And we have also given out free reopening kits to independent restaurant owners to help support restaurant reopening efforts in communities across the U.S.,” Matheu said.
The reopening kits provide independent restaurant operators with must-have supplies such as masks and safety guidance posters as well as resource guides to navigate state and local COVID-19 reopening requirements and help create a “safer environment for staff and customers alike,” Matheu said.
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