Going up: Fresh-cut sales

Consumers are searching for signs that an economic recovery is really taking place, looking at trends such as stabilizing home prices and lower unemployment rates.

Add one more item to the list of encouraging signs: increased sales of fresh-cut and convenience foods. These stronger sales are a good sign for the fresh-cut industry and portend better days for the economy as a whole.

Higher sales of convenience foods are among the most notable retail grocery trends in recent months that affect the fresh-cut industry.

“We are seeing the reemergence of convenience foods across grocery stores and within all fresh departments (deli, bakery and produce),” said Steve Lutz, executive vice president of the Nielsen Perishables Group. “During the recession, consumers became tighter with their food dollars and convenience foods lost a lot of their sales growth. Some categories, like packaged salads, had been on a downward trend for several years.”

Loosening purse strings
Instead of paying extra for a product such as a bag of shredded lettuce, shoppers were saving money and buying heads of lettuce. With better economic times returning, they are now more comfortable spending the extra money.

“The segment who wants and will buy those items are coming back and we’re seeing a pretty good increase in dollars and volume,” Lutz said. “Some people would express surprise at the strength of those product categories right now. I don’t know if that would have been predicted going into 2011 and 2012.”

The fourth quarter 2011 FreshFacts on Retail report released by the United Fresh Foundation paints a picture of strong dollar and volume sales of value-added produce and organics, even in the face of higher prices. In the same quarter, higher prices caused a decline in volume of produce sales as a whole.

Weekly overall produce dollar sales rose 3.3 percent compared to the fourth quarter of 2010, while volume declined 1.2 percent. All categories of value-added fruits and vegetables saw price increases. Volume rose in the fourth quarter for value- added vegetables and declined for value-added fruit.

For the fresh-cut category, weekly dollar sales per store rose 3.8 percent, while volume rose 0.9 percent over the fourth quarter of 2010.

“Fresh-cut fruit was once again the highest selling category within value-added fruit, accounting for more than three-quarters of value-added fruit dollar share this quarter,” according to the FreshFacts report.

Easy & healthy
Convenience and health continue to be a driving trend for stores across the country, and produce managers are working to use fresh cut to take full advantage.

“In the middle of all the concern about the economy, fresh-cut produce and product that makes the preparation of a meal more convenient are the fastest-growing categories,” said Maria Brous, director of media and community relations for Publix Super Markets. “There will continue to be increased demand for ‘ready to eat’ or ‘ready to heat and eat’ fresh produce.”

At Hy-Vee, a Midwest supermarket chain, innovation enters into the picture as well. Jason Sheridan, assistant vice president of produce operations, said his company is always looking for new blends and items not currently available.

“Cut fruit is a recognized healthy snack and we will continue to see consumers use this as a snack at work or at home instead of having a snack that will not help them feel good about themselves,” Sheridan said.
Demographics remain a constant driver of fresh-cut and overall produce trends. For Publix stores, the growing Hispanic population has been a significant factor, as has the wider population.

“There is a halo effect in that while the product is merchandised more widely for the Hispanic customer, other demographics also learn to cook with and enjoy the product. Papaya and mango are examples of products that are quite popular in fresh cut now,” Brous said.

Smaller household sizes, which translate into smaller package sizes, remain a major player. Those one- or two-person households will only purchase large package sizes for special occasions. Young families are key players as well.

“Young people in general tend to be more open to packaged products,” Lutz said. “We know, for example, that households with kids are huge consumers of things like cut apples, little plastic containers of peaches and things like that.”
                                                                                                                                                                                                                                              –Lee Dean, Fresh Cut contributor

 


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