SUMMER GEMS

Robert Vosburgh

If it's summer, it's fresh-cut fruit.

Honeydew, cantaloupe, watermelon, pineapple, grapes, strawberries and blueberries paint a refreshing, vibrant palette for hot-weather consumers, and retailers are augmenting their own in-house programs with an increasing variety available from vendors to meet seasonal demand, SN has learned.

"When the melons are plentiful, business is real good, but it's a strong year-round business for us," said Dennis Baker, director of produce operations, Harps Food Stores, Springdale, Ark. On average, category sales range from $600 a week in smaller stores to "a couple of grand a week" in the larger units.

It always wasn't this way. For years, retailers treated fresh-cut fruit almost as an afterthought, a final effort to get a ring on the last date of sale. Today, the cups, bowls and platters lining ice beds and reach-in cases are made of super-premium fruits that serve as a critical contact point between the consumer, and convenience and quality.

"If it's not the freshest, best quality we can get our hands on, it doesn't go in the cups," Baker said. "It doesn't come into our stores."

It's a category that has become a signature item for the fruit side of the produce department; so naturally, retailers today want nothing but the best going into their cups and bowls.

"If you have a customer buying a small tub for lunch, you want them to get the best impression they possibly can because they're probably thinking this fruit reflects what you sell in your department, as well," said Doug White, category manager, produce, for Minyard Food Stores, Coppell, Texas.

Statistics show that the category is growing, and prospects are sunny. Like salad greens and fresh-cut vegetables, fruit has gained additional sales potential when it is precut and packaged ready to go. Based on the most recent data from Chicago-based Information Resources Inc., the dry, fresh-cut fruit category accounted for $238 million in annual retail sales in the past 12 months, a 15% increase over the previous year.

By comparison, fresh-cut vegetables account for $1 billion in retail sales, and bagged salads weigh in with $2 billion in sales annually, according to the International Fresh-cut Produce Association.

As attractive as the profits might be, a number of factors involving fruit come into play that aren't an issue with the other value-added produce. Some -- like labor and sanitation -- are issues directly linked to retailers at store level. Others, such as shelf life and profitability, speak to the pitfalls within the category itself.

Leading regional and national processors report that the increasing retailer interest and consumer demand for fresh-cut fruit products have now made it profitable for them to invest in the technologies required to set up a system that protects fruit's greater sensitivities from farm to store.

"[Fruit] is severely underdeveloped relative to the cut-vegetable market, in part because the technical challenges in fruit are more significant than in vegetables," said Jill Albrinck, senior vice president of strategy and new business, Chiquita Brands International, Cincinnati.

Albrinck said fruit is more reactive to poor handling, improper cutting and seepage of juices that can accelerate deterioration. For these reasons, fruit requires a "total-system" approach more than other commodities.

"It's about getting rid of the contaminants that can lead to decay; using [modified atmosphere packaging] technologies with packaging that is different and more innovative than on the vegetable side of the market; and reducing all the other factors that cause decay," she said.

Chiquita, which is constructing a facility dedicated to cut-fruit production in the Midwest, is preparing to introduce a line of dry, single and combined fruit packages of watermelon, cantaloupe, honeydew, grapes and strawberries. Products will last up to 12 days if handled correctly, said Albrinck.

The idea of total integration is foremost on the minds of processors, since one of their key marketing strategies is to do more than merely augment retailers' in-house programs during times of high demand.

"For fruit to be successful it has to be very entwined with the whole supply-chain process: How the fruit is sourced and delivered promptly from where it's harvested to the processing facility; processing that fruit in a very clean environment because it's more susceptible to environmental issues; and then, the logistics of moving it all from the facility to the customer," noted Tom Lovelace, chief executive officer and chairman of Fresh Express, Salinas, Calif.

Well-known for salad mixes, Fresh Express now has a cut-fruit program in single and multi-pack sizes in more than 1,300 retail outlets in the West.

"I think it's a great category with a tremendous amount of opportunity," he said. "But I also think there's still a tremendous amount of work to be done by both the manufacturing and processing community, as well as our retailer/food-service customers to handle the product better and have them merchandise it more effectively."

Wild Oats, Boulder, Colo., finds itself in a unique position because, while it is interested in cut fruit, the 100-store natural food chain is looking one step further, with a selection of organic items. Mark Zeller, produce category manager, said the company's ongoing transition from a somewhat loose network of multiple banners to centralized operations has allowed officials to evaluate more of what their customers want.

"If you were to run 'organic produce sold' data, you'd see that about 70% of what we sell, and what we target, is organic. Our preference, because we use our organic selection to set us apart from our competitors, would to be to get one of the bigger suppliers to put together a full line of organic," he said.

Wild Oats stores are still somewhat autonomous in what they choose to offer, though three divisions in the West are using products supplied by Ready Pac, Irwindale, Calif. Ready Pac processes single-fruit items such as watermelon and golden pineapple; and fruit mixes like "Summer Splash" with strawberries, cantaloupe, honeydew and grapes, and "Meddlin' Melons" consisting of cantaloupe, watermelon and honeydew. The company's package sizes range from 6-ounce single-serve cups up to 52-ounce bowls and 80-ounce compartmentalized fruit trays.

The variety of flavors and sizes isn't exclusive to supermarkets. Fruit is showing up more on restaurant menus -- Fresh Express is helping McDonald's test fresh-cut apple slices in Happy Meals -- and that is helping to fuel demand.

"You can go to a 7-Eleven, and some of the fast-food restaurants have got cut fruit -- and this certainly creates more competition for us, but it also broadens exposure, so it in turn I believe it helps when people come to the grocery store and see us offering it," said Minyard's White.

One area of growth is among ethnic shoppers, he said. Minyard's 26-store Carnival chain caters to the Hispanic population, which is heavy on fruit consumption.

"You can get locked into thinking that there's a certain way they'll buy or certain things they'll buy, or that they're limited on funding, but that is not the case," White said. "Hispanics don't mind paying the dollar for a good presentation. Quite frankly, they're the ones picking up that lunch container [of cut fruit] more than anyone else."

Among the specialty items offered in Carnival stores is an in-store cut mango on a stick that's overwrapped on a foam tray with a package of chili powder and a lime wedge.

"They seem to go after the impulse buy that everyone's after, more so than what I've seen with the traditional crowd," he said.