Fresh-Cut Category Continues to Grow

MATTHEW ENIS

HOUSTON — Driven by demand for convenient products, as well as a renewed consumer focus on healthy living, fresh-cut produce has become one of the fastest-growing categories in the produce department, according to data discussed here this month in a workshop presented by research firm the Perishables Group at the Produce Marketing Association's annual Fresh Summit convention.

Fresh-cut produce, including all precut, ready-to-use fruits and vegetables, posted a 5.6% gain in dollar sales growth during the past year to reach $3.1 billion, according to the West Dundee, Ill.-based firm. These gains helped contribute to a 4.6% increase in sales growth for all fresh produce.

Growth was led by fresh-cut fruit, with 7.7% dollar sales growth. Fresh-cut vegetables were up 3.9%.

But new products and innovation are the category's big story. When fresh-cut melon — a relatively mature segment of the cut-fruit category — is excluded from the data, fresh-cut fruit sales are up by 14%. Similarly, when dominant segments like cut mushrooms and baby carrots are removed from the fresh-cut vegetable numbers, that category is up by 11%.

Notably, fresh-cut apples grew by 38.3%, mangoes and papayas were up 31.8% and 25.2%, respectively, and oranges were up 53.9%. As a newer product, green beans posted the biggest gains in the fresh-cut vegetable category, with 155.7% growth in dollar sales. But other emerging products also performed well, with pea pods up 11.1%, fresh-cut onions up 16.3%, cut peppers up 17.7% and corn up 20.5%. Mixed vegetables — which currently represent almost 20% of total fresh-cut category sales — also built on their popularity, growing dollar sales by 10.3%.

“Variety and assortment were one of the key differentiators between stores that do well and stores that don't,” noted Jonna Parker, senior account manager for the Perishables Group.

Category-management strategies for fresh-cut produce still vary a great deal from region to region and from retailer to retailer, Parker noted. But, during the past year the category enjoyed positive performance in every region of the country apart from the East Coast, where the category is more mature. Weekly volume sales there were down 2.1%, although rising prices helped the category post 1.8% dollar sales growth.

By contrast, sales growth was up 11.5% in the Central U.S., off of 5.3% unit volume growth. And, retailers in the South managed 14.6% sales growth off of 3.5% unit volume growth, also reflecting rising prices. In the West, gains were more balanced, with 11.1% volume growth spurring a 10.9% increase in dollar sales.

The category's growth is especially good news for conventional supermarket operators. In a national survey of 3,000 consumers, the Perishables Group found that more than 50% of supermarket shoppers say they buy fresh-cut produce at least once per week, and only 6% said they never bought fresh-cut produce. Only 20% of supercenter shoppers said they purchased fresh-cut items that frequently, and 7% or fewer shoppers bought them that frequently in the specialty, convenience, natural food and club channels.

When asked why they didn't regularly purchase fresh-cut produce, respondents to the survey most frequently said the products were too expensive.

“Price is the key barrier,” Parker explained. “Current buyers, though, are less price-sensitive. Once you have an established item, you'll find that you have to promote it less frequently.”