Company Finds Michigan Location Just Right For Fresh-Cut

April 7, 2007

The team at Peterson Farms Fresh recognizes opportunity when it comes knocking. The Shelby, Mich., company was one of the first companies to supply fresh-cut apple slices for McDonald’s when the fast-food giant launched its Apple Dippers in 2004. It was the first time the Peterson family had made its foray into fresh-cut produce. Since then, there’s been no turning back.

Though McDonald’s continues to make up a significant portion of Peterson Farms Fresh’s business, the company is venturing into the retail arena with products like a Bake-at-Home Apple Crisp kit and multi-pack packages of apple slices, orange wedges and single-serve grape packages.

Sarah Peterson-Schlukebir, who handles sales and marketing, said the company will continue to develop new products as the market demands.

“We’re at the tip of the iceberg,” she said. “Our philosophy is we never want to stay at the same place. When you’re stable is when you start to decline.”

Among the products Schlukebir is especially excited about are the company’s packs of fresh-cut oranges. The orange wedges come in a multi-pack with five 3-ounce packages and have a 14-day shelf life.

“We’re so excited about the oranges,” said Earl Peterson, president of Peterson Farms. “We did months and months of research to put out an orange that’s got that great flavor.”

Research is the one area that remains constant for Peterson Farms Fresh. No matter what the fruit, the company spends time and money making sure the product is just right.

“It takes that time and effort and figuring out how you climb the mountain and solve the individual problems and put out that great, great product,” Peterson said.

It’s not just the varieties that take research. The entire process – from variety to packaging – is scrutinized.

“You have to start at the food science,” Schlukebir said.

The most time-consuming step, though, can be packaging – from finding the right film for each variety to making sure graphics draw in customers without hiding the product.

“Graphics are ever-changing,” Schlukebir said.

The company goes through at least two rounds of packaging ideas before deciding on the final version. Peterson Farms Fresh has an on-staff person dedicated to designing packaging.

Once they have the product and the packaging, Schlukebir said getting new products to the marketplace can be a challenge.

“It’s very hard to get new products in through the channels,” she said. “We need to get the excitement out there.”

Schlukebir said she was shocked at the number of people in the Midwest who didn’t know they could buy fresh-cut apple slices.

Peterson Farms Fresh receives daily e-mails from parents whose kids got fresh-cut apples slices at school and want to be able to find them in the stores.

“Parents are looking to expand healthy alternatives,” Schlukebir said.

Promising Opportunities

Peterson Farms Fresh is expanding their presence of apple slices in the vending arena. Schlukebir said there’s great interest in replacing the standard whole apple with fresh-cut apple slices in various vending machine applications.

Most times, the whole apples offered in vending machines are badly bruised and not appealing. Fresh-cut apples would make an ideal vending machine treat, and Schlukebir said they’ve had “tremendous” interest from vending machine companies.

Organic products also are proving promising for Peterson Farms Fresh. Schlukebir said the company gets more phone calls about the organic apple slice products than the conventional packages.

Peterson Farms Fresh sells organic apple slices in multi-packs with five 2-ounce packages as well as in a 12-ounce package. The apples have an 18-day shelf life.

“There is a growing segment of the population that wants organic or that organic would influence their purchase,” Schlukebir said. “There’s tremendous growth, and demand exceeds supply.”

To process organic apples, Peterson Farms Fresh had to be certified, as did the company’s suppliers. Because organic products have to meet specific guidelines, Peterson Farms Fresh starts its day with the organic processing and moves into processing the conventional product later in the day. The entire plant is cleaned at night to prepare for organic processing, and the cycle starts again. The antioxidant solution put on the apples also differs from that on the conventional apples.

Distribution

The company’s location in the Midwest has proven to be beneficial. With easy access to two-thirds of the country’s population, Peterson said his company has an advantage over companies that are on the West Coast.

“We can produce it one day and it’s at our customer the next,” he said.

With a tight shelf-life window, quick delivery is important. Every product from Peterson Farms Fresh ships within 12 hours and arrives at the customer’s door with at least 15 days of shelf life.

Michigan has proven to be a prime location because it’s already a retail outlet for apples, with a developed distribution chain.

Peterson Farms Fresh operates on a just-in-time basis, with one to two shifts depending on the size of the order. Some days employees may be needed to work a full shift, while other days – when orders are smaller – not as many people are needed.

“Fresh-cut takes such a unique group of people, a flexible crew,” Schlukebir said.

Future Prospects

Peterson Farms Fresh has an ambitious growth strategy. The company looks to release at least one new product every six months, Peterson said.

“When customers think of fresh-cut, we want them to think of us,” he said.

Though she couldn’t be specific about what Peterson Farms Fresh would come out with next, Schlukebir said it will be “nontraditional fresh-cut fruits – not a staple item.”

“We expect our customers want us to have a complete cross-section of other fruits available to them,” Peterson said. “We’re building new equipment and attempting to do fruits that people have never really been able to do with a machine and do it successfully.

“We’re researching being able to do it successfully to make it to the shelf-life to have great taste and look fantastic. You can do that with a lot of fruits by hand, but to make this work at the retail marketplace, we’ve got to figure out how to do that mechanically.”

Peterson said the success of his fresh-cut enterprise depends on making the curve – not following it.

“What we want to do is start to do other fruits that you just don’t find in the fresh-cut sections,” he said.