Convenience Culture: Value-Added Produce

One only has to look around produce departments to notice the growing popularity of value-added produce. Sliced apple packs and bagged salads don’t go lonely in coolers with items like diced shallots, ready-to-microwave broccoli, chopped squash and trimmed leeks to keep them company.

Every day, coolers feature more varieties of salads and fresh-cut fruit and vegetables.

“On value-added fruit, the unique items per store per week increased 6.4% last year, that’s about double the average for the total produce department,” said Steve Lutz, executive vice president of the Perishables Group, a division of Nielsen. “And value-added veg increased at 3.5%, which is just slightly above the average for total produce.”

Retailers have been expanding their value-added products for good reason.

While customers have been moving away from traditional produce in the past year due to price increases, that is not the case with value-added fruit and vegetables, Lutz said.

“They’ve increased in dollars, but they also increased in volume as well,” Lutz said.

Value-added fruit saw 4.6% growth in volume sales versus a year ago, while value-added vegetables had a 7.5% volume increase, according to the Perishables Group data that tracks produce that has been cut, mixed or plattered, not including packaged salad.

The value-added category has been very strong for Associated Food Stores, Salt Lake City, according to Produce Category Manager Bob Newton.

“The organic side is definitely where we’re seeing a lot of double-digit increases in cut veg [and] salad ... here at Associated,” Newton told SN.

The economic recovery has also been a factor in the renewed growth in value-added.

“We saw the growth rate come off of everything, but convenience items suffered during the recession as price became the bigger driver, and as we’ve come out of the recession we’ve seen consumers shift back toward their more traditional purchase habits,” Lutz said.

Moore, Okla.-based GFF Foods hasn’t had the same luck with organic value-added products as Associated has, but certain areas of value-added have had strong performance.

“My area just doesn’t care much for organics. Unless you get [the price] down so cheap they’ll buy it. Organics in our area just isn’t a big seller,” David Dozier, produce manager and co-owner of GFF Foods.

While small packages of cut celery and carrots aren’t popular with GFF Foods’ customers, customers with families do purchase vegetable trays. During Oklahoma State University and University of Oklahoma football games, Dozier said he usually sells twice as many veggie trays as usual.

Fresh-cut fruit and packaged salads are big sellers as well. Dozier approximated sales were up 5% to 10% in cut fruit compared with last year. Elderly customers buy small packs of cut fruit for the convenience, and customers with families buy the larger containers, he said.

“I usually hear [customers with families] say it’s also convenient for them that husband and wife both work and they don’t want their children to eat candy and junk food,” Dozier said. “That if they have that in the ice box ready for them, they’ll just go for that instead of the junk food.”

Sales of packaged salads have been stellar at GFF Foods. Dozier approximates sales are up 35% to 40% from last year.

“We offer a lot more different varieties. It used to [be] all you could sell was the packaged salad mix. Now there’s a lot of demand for the leafy Romaines and the Italian blend and the American blend.”

Packaged Salads Lead Sales

Packaged salads have led the way in vegetable sales last year, with 14.8% of total dollars in the 52 weeks ending Oct. 31, 2011, down only 0.4% from 2010, according to a recent report by Mintel that cited data from the Perishables Group.

And, recent data from Chicago-based SymphonyIRI Group shows packaged salad unit sales up almost 2% in the 52 weeks ending Jan. 22.

With the popularity of packaged salads growing, and 59% of surveyed consumers reporting that they eat salads at least once per week, Mintel noted that retailers and brand marketers have an opportunity for more salad promotion.

The research firm suggested retailers promote salad mixes with other ingredients, like the fresh fruit category leader berries, or other vegetables or even meat. Also, retailers can give customers ideas for salads they can make on their own.

Whole Foods Market has been taking advantage of new ways to promote value-added vegetables in different departments.

A Whole Foods Market in Manhattan, N.Y., offers a dinner kit for scallop or shrimp fajitas that includes the seafood, chopped onions and red and green peppers for $13.99.  The kit includes a recipe that notes the additional ingredients needed to make the fajita. Located in a refrigerated case in front of the seafood counter, the kit gets a meal started for consumers and ushers them into other departments with the recipe instructions.

And, in a “Health Starts Here: Meals in a Minute” section within Whole Foods’ produce department, customers can scoop and pay by the pound for fresh-cut vegetables like broccoli and cauliflower florets, or a ready-to-cook soup mix of butternut squash, parsley and rutabaga. The section also features a variety of small fresh-cut packaged items.

The retailer clearly notes on signs when produce has been prepared “in-house,” suggesting the product is freshly prepared.

At Trader Joe’s, the line between value-added and bulk is continually blurred with few items offered without packaging.  Items prepared to make cooking easier are the norm.

In addition to a large packaged lettuce and greens section, the store offers chopped vegetable mixes like one made of asparagus, mushrooms and onions ready for stir frying; diced onions, shallots and garlic ready to be thrown into a meal; trimmed and cleaned green beans; packages of shredded cabbages and slaws; English peas and broccoli and cauliflower florets that can be steamed in the bag in the microwave.

Putting the rapid growth of the category in historical context, Ron Pelger, president and chief executive officer of RonProCon, a Reno, Nev.-based produce and floral consultancy, noted, “I’ve never seen a category take off so fast since the kiwi fruit. And, you’re going to see more and more new innovative packages come out in the future.”

To merchandise value-added products, Pelger recommends putting products in free-standing refrigerated cases on the sales floor.

“And the reason for that is, whenever take any item off your normal display that’s inline and you bring it out into the open on the sales floor, it gets more attention by the consumer.”

Pelger also recommends retailers steer clear of ice beds because of the labor involved, the cost of ice machines and the potential food safety hazards if a product isn’t pushed entirely below the ice.

GFF Foods’ Dozier also draws attention to his value-added items by placing items front and center within the store and departments, so the products are the first customers see.

“That’ll make them think about grabbing that [fresh-cut fruit item] before grabbing the other fruit that they have to cut,” said Dozier.