Growing Strong: Meeting consumer demand key to keeping fresh-cut healthy in 2013

Positive.

Growing tremendously.

Stronger than ever.

Those some of the terms used by members of the United Fresh Fresh-Cut Processor Board as they evaluate the state of the fresh-cut industry going into 2013.

The optimism comes from momentum created by steady growth in fresh-cut, driven by demand for an innovative, tasty and healthy product. The challenge is to keep the momentum going in the face of challenges such as recalls, maintaining high product quality and labor issues.

“The overall outlook for fresh-cut is positive,” said Tony Freytag, senior vice president of marketing for Crunch Pak. “We continue to see increases as more and more consumers are highly aware of the benefits of fresh fruits and vegetables.”

The numbers support fresh cut’s strong position. According to a June 2012 study conducted by the University of California-Davis, fresh-cut sales were projected at $11 billion annually, including sales in all grocery retail channels, making up about 16 percent of total retail produce sales. Add in sales through foodservice channels and that number rises to $27 billion. In supermarkets, 61 percent of fresh-cut sales are packaged salads, 27 percent vegetables and 12 percent fruit.

The reasons for this strong position are clear to Jan Berk, vice president of San Miguel Produce. Fresh-cut offers convenient products that make it easier for consumers to eat healthier and get value from a fresh, flavorful product that will last. Pricing is consistent and the product is 100 percent usable, with no waste. Innovation and convenience score big with shoppers, too.

“New products are more likely to be bought by a consumer if they are prepared and packaged in a consumer-friendly pack that is ready to use,” Berk said.

Economics, both micro and macro, offer opportunity and challenge to the fresh-cut industry. A weak recovery affects the amount of disposable income for shoppers, which in turn influences the amount of extra money they will pay for a convenience item. But shoppers are showing signs of clearing that hurdle.

“Similarly to other produce categories, fresh-cut produce sustained a blow to growth over the recession,” said David Masser, president of Sterman Masser Potato Farms. “Fresh-cut produce, however, has seemed to rebound more profoundly than other categories due to people willing to pay for convenience and healthy alternatives despite higher retail prices.”

Demand for both retail and foodservice fresh cut will skyrocket when and if the economy recovers, said Bob Swartwout, vice-president of sales at R. S. Hanline. Demand for lettuce and salads have leveled off over the past few years due to a maturing of the market and a move to private labeling.

“Cut fruit sourced from outside vendors has declined with many retail chains back to cutting in-house, due to ‘just-in-time’ and flavor concerns, but it also relates to shrink management,” Swartwout said. “That said, the future should be bright, while the fresh-cut industry will have to change to meet new challenges and the need to shrink the time from process to use.”

Another form of economics, home economics, offers fresh cut a golden opportunity, largely because of the low-waste nature of the product. The upside: better packaging, improved technologies and processing practices have combined to create products that are 100 percent usable. The challenge: fresh-cut processors are working in an environment where they need to maximize their profits while acknowledging that the customer will want more for less.

“Reduced cost expectations are going to come to a breaking point at some point,” said Gina Nucci, director of healthy culinary innovation for Mann Packaging. “The fact that someone across the country can buy a head of lettuce for 99 cents and a bagged salad for only $1.99 still baffles me … and that people still want it for less! In the end, the consumer will have the final say.

“Quality is a given. If the fresh-cut industry doesn’t produce a quality product, then we’ll all be out of business.”

Meeting that desired level of quality will require a number of things, said the Fresh-Cut Processing Board members. Great taste, consistent quality and value, new products, natural products and locally grown raw material are among the attributes customers look for.

“Consumers are looking for unique, bolder flavors and textures to add to their menus,” Berk said. “In addition, high nutrition density in vegetables such as kale and fruits such as cantaloupe have been ramping up demand this past year, and will continue to be a focus for many consumers.”

New products in the near term will feature better packaging for “grab-and-go” portability; innovation in portion sizes; more choices, including enhanced lines of regional and fusion products; more convenient sizes and packaging; and products that combine better taste and quality with fewer ingredients.

The biggest challenges to fresh-cut in 2013 and beyond will be food safety in general and recalls in particular.

“The threat of recall hangs over all of us,” Freytag said. “When those occur, we can see an entire category decline very quickly as consumers lose confidence in the product at an alarming rate.”

Food safety and quality concerns present a challenging environment for marketers, who will need to use innovative methods such as the Internet and social media, which will continue to play an increasingly important role.

“Social media has already become the norm,” said Dan’l Mackey-Almy, president of DMA Marketing Solutions. “The social connection to fresh products is on the rise across various buyers, influencers and consumers alike.”

As social media use becomes more established, the fresh-cut industry should be prepared to begin the next chapter of the marketing revolution: the recruiting of brand ambassadors.

“We’ve established communities and implemented strategies for growth. Now it’s time for phase two: attracting and converting customers into loyal brand ambassadors through content, offers and information that draws them in and creates interest and action on their terms,” Mackey-Almy said. 

Whether they are called ambassadors, followers or tribes, customers devoted to fresh-cut will then be motivated and equipped to spread the message via product packaging, social media and other digital tools. As millennials take center stage, the use of these new technologies will be key to how produce is marketed, Mackey-Almy said.

Equipment plays a huge role in fresh-cut processing, and fresh-cut companies are looking to it to help allay concerns about labor, quality assurance, safety and cost of production. Processors and equipment manufacturers alike are looking for ways to customize production and use methods that are product-specific, which will help satisfy consumer demand for smaller specialty packs.

“Downscale production equipment and lines are going to be needed to satisfy the demand for more customized cuts, blends and commodities in lower volumes,” Swartwout said. “More emphasis on portion packs, recipe packs and ready-to-cook/eat will drive these operation plans.”

Lee Dean, editorial director