Challenges and Opportunities
Looking ahead to 2015, Produce Processing talked with several leaders around the industry to get their take on trends and issues as it relates to produce processing, focusing on fresh-cut, frozen and/or canned. Those interviewed included:
Rutgers Food Innovation Center
Bridgeton, New Jersey
Vice President of Sales and Marketing
Gold Coast Packing
Santa Maria, California
Gina M. Jones
Vice President, Research & Development
Produce Marketing Association
Senior Vice President, Sales
Direct Advantage, LLC
Vice President of Regulatory and Technical Affairs
American Frozen Food Institute
Q: What do you think are the top trends influencing the produce processing industry right now?
Jones: Preparing for omni-channel retailing. The need for transparency due to digital technologies. The use of robotics and mechanization in both the field and the supply chain. The influence of Generation Z on consumer purchases. The influence of health and wellness concerns on the category.
Swartwout: Just in time, customized value-added products. Small-run nonconventional items. Organics. Custom blends and recipe kits. The expansion of ever more sophisticated menu items, particularly in the fast-casual dining and retail grocery segments, has resulted in a barrage of new SKUs that challenge established produce processors. Just-in-time (JIT) deliveries, due to reduced distributor rack space.
Cooperhouse: There’s more of a movement towards convenience. Quality. That frozen customer is looking for a product that’s already cut up. There’s more of a movement towards not purchasing the commodity, but purchasing the value-added option. In the fresh-cut industry, that means where side dishes might be not just buying individual fresh cut vegetables, but seasoned diced potatoes, vegetable medley, already ready for being sautéed or grilled. It’s taking convenience to a higher level. Value-added will just get more extreme.
Scattini: The whole kit market it not only expanding, it’s exploded; seeing kits with protein included is becoming more prevalent. The juicing trend has also played a significant role.
Q: In what direction do you see the fresh category/produce processing moving in the next five years?
Swartwout: More local and regional processing to meet the demands for local-sourced ingredients (when available) and reduced order lead times, on an increasing number of SKUs. Increased specialization, JIT ordering and smaller product runs will require innovative plant remodels and change the way of doing business for many processors.
Scattini: Get more automated on some of the things we do – in packaging, instead of having an operation where you have physical man labor packing bowls and putting lids and labels on, have machines do that for us. It all comes back down to how much companies are willing to invest. A lot of people are still doing it the old-fashioned way.
And the direction I see produce processors moving in the next five years is that the line between produce processing and food manufacturing is becoming more and more blurred. (In the past), produce companies have not touched protein and protein companies have not touched produce; the line is being blurred as produce companies are putting out salads with grains, quinoa, proteins … produce processors are not necessarily just produce processors anymore.
Jones: More click and collect of groceries from supermarkets. Better use of social media. The development of a more educated workforce. More value-added packaging.
Cooperhouse: I see canned competing with frozen more than it has in the past. The frozen products on the market now are superior to canned and also competing against fresh … if you have a frozen counterpart, it can compete against canned on the one use and fresh on the other use. And also I’m seeing customers switch from canned to frozen that use it in foodservice applications … the two of them together are competing against the end user that wants a shelf-stable item.
I think in general it’s certainly moving toward clean labels, no ingredients being added, all-natural, the absence of sulfites, the absence of sweeteners. And it’s definitely moving toward local – for the U.S. customer, my take on the meaning is ‘Made in the United States,’ not just made in my region or my state. And I think there’s a reality that there’s going to be more of a desire for non GMO ingredients.
Q: What are the major challenges facing your industry?
Jones: Water. Meeting the increasing demand for food. Reduced availability of labor, requiring more mechanization. Consumer demand for information.
Swartwout: The complexities of running large-volume, staple fresh-cut items, but also serving the need for the increasing number of niche items will continue to be a challenge. Labor costs and availability. Obamacare costs and uncertainty. Regulatory burdens, particularly in California, plus the FSMA and EPA at the federal level. Trucking costs and shortages.
Cooperhouse: The biggest challenges are just going to be increased global competition in those (fresh-cut, frozen, canned) categories.
Scattini: Labor. Water. Food safety. We have a tremendous labor shortage in the U.S. We need immigration reform or something to supply workers that are needed in the field. We’re seeing growers (let fields go unharvested) because they can’t get the help to get the job done. Water – everyone knows what’s going on there. Food safety – we’re going to be required to do more things and the regulations that go along with that.
Q: What advances in technology would you like to see?
Cooperhouse: Technology and equipment that can enhance quality, that can slice or dice, for example, with the minimal amount of degradation through texture and product breakdown. Enhanced packaging processes. Food safety is really going to be of increasing importance, (so) equipment (that can be easily sanitized) and minimize potential harborage of pathogens.
Scattini: If someone were able to develop a kill step for fresh produce, that would be tremendous, but I don’t know if it’s there. More packaging automation. And I think we’re lacking in foreign object detection … I think there’s room for improvement there.
Q: What do you see being the biggest governmental and regulatory issues in 2015?
Garren: There are going to be a couple on the food safety front. Obviously, FSMA and the different rules to be published in 2015 … the industry is getting ready for the final implementation. We’ve been working with the Food Safety Preventive Controls Alliance … to create curriculum to help small and medium-size processors get ready for the new rules. AFFI has an FSMA readiness self-assessment tool we developed in partnership with the Seneca Corporation. It’s an online self-assessment tool that helps frozen food facilities determine their compliance with FSMA preventive controls regulations. It will likely be 2016 when we see enforcement. In talking with the FDA, we’re very encouraged with the FDA position of educating before we regulate. They are committed to helping industry understand before we start seeing violations.
On the nutrition side, we’re going to see more related to changes in packaging … proposed changes to the facts panel. Certain changes being proposed are things such as added sugars, possibly adjusting sodium information. Particularly for vegetable processors, the addition of added potassium as a nutrient on the fact panel is important … they have a great story to tell related to potassium and some of the other nutritional content. It’s been about 30 years since they updated the nutrition facts panel. We have exponentially increased the number of products out there and small and midsize companies will need additional time to implement (the new labels once the requirements are approved).
Jones: Food Safety Modernization Act.
Swartwout: FSMA, new EPA regulations, water and wastewater restrictions, immigration reform.
Cooperhouse: Obviously everybody’s talking about FSMA. What’s really changing in the industry is the absolute increase in the number of retailers and foodservice operators that used to suggest, and are increasingly requiring, that their suppliers of products they consider to be of higher risk be SQF (Safe Quality Food third-party certification program) or be GFSI (Global Food Safety Initiative) certified … all of the major retailers, I believe now, or a majority, have a program in place. They have a food safety team that’s on their staff. And they’re assessing risk of their suppliers. For example, they’ll say the canned is not a risk, frozen is lower risk, fresh is a higher risk.
Q: What do you see as being the most important things a produce processor should be doing in 2015 to be successful?
Jones: Continue to collaborate across the supply chain, including the sharing of data to allow for a more efficient supply chain.
Cooperhouse: Enhancing food safety and quality assurance programs is foremost for two reasons: because government has raised the bar and customers have raised the bar of what they are looking for … it is not something you feel like you should have to do, but something that is core to your ambition … And a commitment to enhancing freshness … differentiate your business through quality and having the freshest possible product that really maximizes the attributes that consumers are looking for.
Scattini: I think food safety and traceability have to be paramount. The pressure is on us to … keep getting better and better at it.
Sidebar: Secret to Success is Innovation
Most of our respondents listed the same item when it came to our last question about what it takes to be successful: Innovate.
“Do things differently,” Bob Swartwout said. “Get ahead of menu, taste and cultural trends and embrace them. Redesign and rethink plant layouts and locale.”
Swartwout suggests that processors seeking locations to expand would do well to look to the suburbs, where both tax incentives and labor are more available and the costs of doing business are less than they might be in the big city 30 or 40 miles away.
“They want to be on a rail spur and near an interstate highway,” he said. “They don’t need to be in downtown Cleveland.”
Cooperhouse said companies that want to be successful should differentiate themselves from the pack.
“As manufacturers, we need to be much more consumer driven about how our products are being used because our competition is going to be doing that,” Cooperhouse said. “We’re not just selling products anymore, we’re selling solutions. We need to embrace how a consumer might use that, through social media, through various foodservice applications.
“The base of our selling products really needs to change and be much more consumer driven and solution oriented.”
Scattini said processors need to think outside of the box.
“We have to develop more products,” he said, “and be open to opportunities that exist, but that may not be exactly in the world we’ve lived in.”
Kathy Gibbons, contributing writer