PANEL ACKNOWLEDGES PRECUT FRUIT FUTURE HANGS IN THE BALANCE

AMY I. STICKEL

ATLANTA -- Inconsistent raw supply and a lack of automated technology are two major stumbling blocks for processors on the road to bringing precut fruit into supermarkets.

At a packed-house session of the International Fresh-cut Produce Association's convention here, an international panel of speakers acknowledged that the precut fruit business, despite all the hype, still has a long way to go before catching up to its older and highly successful sibling, precut vegetables.

"The question used to be, 'Where's the beef?' Now, it's 'Where's the fruit?' " said Chris Nelson, executive vice president of Ready Pac Produce, Irwindale, Calif. and president of the company's fruit division.

"We're all talking about it, but there's been very little to show for it yet in the marketplace," said Nelson, who moderated the panel session.

Some projections peg all precut produce, including fruit and vegetables, as growing to a $19 billion industry by the year 2000, from about $5 billion now, he said. "I think it's going to be hard to make those kinds of projections."

New products are needed to drive the category, and fruit would fit the bill.

"Just as our growth has come from innovation and new products to this point, future growth is going to have to come from fresh-cut fruit, for one," he said.

Fresh-cut fruit products are available today, but the melon slices, fruit salads and other items out there are generally done in the back rooms of supermarkets.

"What we bring to the party are going to be labor savers," he said. "We've got to drive the cost out of that category, and we've got to give retailers true labor savers. If we can provide them with fresh-cut products, that's going to free labor up for the front of the stores," he said. However, a caveat to that progress is the need for automation at the processor level, which is an expensive proposition, he said.

"It's a chicken and egg problem. We can't take on any more business because we're not making any money. We're not making any money because we're not automated, and we're not automated because we're not doing enough business. That vicious circle is a hard problem to solve," he said.

Ready Pac faces another challenge in trying to smooth out the supply chain, Nelson said, using the off-season melon deal as an example.

"We got so spoiled, being in California and being no more than a few hours away from our supplies and raw materials," he explained.

"Jumping into fruit, we hit the winter time in December, and I flew down to Honduras," where Ready Pac sources melons. "I turned my watch back 50 years." The problem was that the conditions there were primitive compared to U.S. agriculture standards, he said. In fact, lack of automation and inconsistent supply has kept at least one regional processor, Prema Pak, Smyrna, Tenn., from expanding its retail base.

"The response to our retail program has been exceptional," said Leigh Rainey, marketing director for Prema Pak. "We receive calls weekly for new business, but we've maximized our capacity."

Prema Pak is supplying 175 Kroger Co. stores in the South with its "Heart Garden" line of precut fruit.

"A tremendous learning curve was necessary for the development of our fresh fruit program," said Rainey. "Product specifications were determined in theory, but almost impossible to accomplish in today's melon market. "The melon market is geared towards grocery expectations, with the outward appearance and smell. It is not concerned with how large the inside cavity of the melon is, or the taste and sweetness factor," she said. Sourcing is no cakewalk either, she said. "Off-shore melons have been another problem. With the volatility of pricing and the varying raw quality, we had a very large learning curve on this type of procurement," she said. Processing equipment has been yet another challenge. "As with vegetables in the beginning, fruit equipment was almost nonexistent. We started our program by hand-cutting, and just now are beginning to see equipment come into the mainstream," she said. After dealing with those obstacles, processors still need to convince shoppers that precut fruit is worth the added expense, she said. Prema Pak tried working with several consumer focus groups to ensure the company was offering the right products, the right packaging and the right price.

"Consumers gave us their ideas of what they thought were the proper price points for product lines," she said. "Now, without scaring you, I will say it was far less than what is needed to make any money at this."

To Rainey, that signals a problem with the perception of value. "We need a large amount of consumer education. We feel we are definitely getting the hard-core convenience shopper, but to get the majority of the retail population, we will need to educate and show the value of the product," she said. In Europe, meanwhile, price is still an issue despite the market's longer history of processing fresh produce for retail use, according to two international panelists at the session.

Michel Bicheron, a partner in the processing company Scalime, based in France, and also president of Alimentec, a technical society, warned that quality is still not up to snuff. "The average product is of decent, but only average, quality. It is not super yet," he said. "How much more can we ask the consumer to pay for fresh-cut fruit?"

To help ensure quality, French fruit processors have voluntarily reduced the shelf life of their products, he said.