FRESH-CUT INDUSTRY URGED TO EXPAND CHOICES

ROBERT VOSBURGH

TAMPA -- Buoyed by the phenomenal success of fresh-cut salad mixes and baby field carrots, one major retailer called on industry suppliers to chop their way into other categories like citrus and potatoes.

"We're living in the land of missed opportunities, and shame on us in the produce industry -- from the seed companies all the way up to us retailers -- for missing this golden opportunity to [increase] our businesses," said Ron McCormick, director of produce for Wal-Mart Supercenters, Bentonville, Ark.

McCormick was a panelist who discussed fresh-cut's future at a seminar at the annual convention here of the United Fresh Fruit & Vegetable Association, based in Alexandria, Va.

"We strive to measure our success by double digits, increasing sales on an item in the store by at least 10% a year," he said. "We blow that number away with bagged salads, and it's happened year, after year, after year."

McCormick noted that consumers have spurred greater sales by "trading up" from simple iceberg mixes to gourmet, restaurant varieties containing radicchio and frisee, which carry a higher price point.

"We're increasing the customer's palette for buying things that are different," he said. "And we have that potential with a whole variety of other produce items, that will bring them back into the produce department and affect their consumption everywhere."

From his vantage point as one of the country's largest retailers, operating nearly 1,000 supercenters, McCormick noted that the sales growth in existing fresh-cut categories has been driven by consumers' satisfaction with consistency, quality and convenience.

"We can't continue to sell them a product that's going to take more than 13 minutes just to get ready," he noted, referring to a study showing the average meal-preparation time in today's home clocks is at that time point.

"We really have to get serious about fresh-cut," McCormick said. "[Retailers] are looking for initiatives that dramatically increase consumption, can be profitable for both retailers and growers, and bring a lot of people back to the table eating produce."

Citrus has been attempting to break into the value-added business for years. Still, the No. 1 fruit crop in the world has significant hurdles to jump before it can land in the fresh-cut section, according to Mohamed Ismail, scientific research director, fresh fruit, for the Florida Department of Citrus, Lakeland, Fla.

He specifically mentioned grapefruit, which has suffered a 21% decrease in consumption over the past 20 years. The primary reason is that grapefruit is still sold as a "large yellow object with a peel that requires a great deal of preparation in order to be consumed," he said, noting that the fruit's decline has come at the expense of other citrus items like mandarins and tangerines, which are much easier to skin.

There are several methods of peeling in existence, according to Ismail, but they can be troublesome. Manual peeling is labor intensive, and most mechanical devices still require manual placement to properly align the fruit in the peeling cylinder.

FDOC developed a high-speed system in 1998 that holds promise for fresh-cut citrus like grapefruit. Capable of processing 48,000 oranges in 8 hours, the latest working prototype peels back the rind in a star shape -- regardless of the location of the stem button. Using an enzyme infusion, the process turns out a peeled product with a shelf life of up to 14 days under proper case temperatures of 35 degrees Fahrenheit.

Today, only whole-peeled and partially split grapefruit products are in stores, and only in a limited fashion. Ismail displayed potential new products that could build consumption of grapefruit. One was a two-well plastic tray sealed with a peel-away lid containing peeled sections and a side of dipping sauce or sugar. Another product was a resealable deli-style quart container holding whole peeled sections, ideal for salads, he said.

Potatoes have made several recent forays into the fresh-cut category, but production of parcooked, sliced products has been limited to a dozen entrepreneurial processors, said Budd Middaugh, executive director of the National Potato Council, Greenwood Village, Colo.

"No large national brand exists in this category to date," he noted. "Consumer awareness and adoption of these new products is still low."

The lack of brand-name muscle has hindered marketing efforts, as well as a lack of direction from the various potato trade organizations. But this is changing as consumer demand for convenience products continues to swell, Middaugh said.

"Right now, most consumers don't know precut potatoes exist," he said. "Distribution at retail is limited. And there's no consistent product location in the store."

Current store merchandising has placed the potato products in the produce section adjacent to bagged salads; in the dairy case, with eggs and butter; in the meat case; and in displays merchandising fresh meals, Middaugh said.

The multiple locations create confusion in consumers' minds, and lost sales opportunities at store level, he said.

Research on the issue last summer conducted for the potato industry found that only half of convenience-seeking shoppers were aware of precut potato products to begin with.

However, of those respondents, 77% who had tasted the products said they would purchase them again within a three-week period.

A subsequent study of retailers showed that sales increased 40% when the potato items were merchandised with value-added meats. Conversely, 80% of retailers polled said they placed the products in the produce section -- positioning that garnered the lowest purchase responses from consumers, the study found.

Wal-Mart's McCormick noted that sales of fresh-cut potatoes in his stores are not performing at an optimum.

"I think one of the 'misses' that keeps us retailers from realizing [success] is that big focus on margin," he said.

McCormick pointed out that there are decreased margins on the higher-end salad mixes, but retailers accept this because the tremendous sales volume of those products offsets margin loss with a big bump-up in sales dollars.

Emerging fresh-cut categories like potatoes and citrus need the support of major processors and the various commodity groups to gain deeper penetration in the supermarket, McCormick said.

"I think that the major suppliers should be out there buying or cooperatively supporting these entrepreneurs," he said. "Because if they can drive that product to me, through their supply chains, and into my stores, then I can afford to put in the [fixtures] and devote the space for them, and live through a period of time of no margin on those items -- as long as I have some sense that we can duplicate the success we've seen with bagged salads and baby field carrots."