Value-added produce checks consumer, retailer boxes
As long as there have been produce departments, there has been value-added produce, Bruce Peterson says. But the sophistication and breadth of value-added produce sales has never been bigger.
“Back in the day there was value-added product out there, except that it was done in the back room,” said Bruce Peterson, president of Arkansas-based Peterson Insights.
Whether it was halves of watermelon or shucked sweet corn on a foam tray, produce managers found ways to appeal to the shopper’s need for convenience.
“The value to the customer was that they didn’t have to shuck the corn when they got home,” Peterson said.
What has changed since those days decades ago is the motivation to save labor in the store, give more options to shoppers, reduce worries about in-store food safety practices, and create more sophisticated ways to track sales, he said.
“Clearly labor is being taken out of the back rooms of the store and put into central processing,” he said.
That allows labor to be used in other ways in the department.
Juicing of oranges and other fruit in the store used to be fairly common, Peterson said, but that practice has retreated because of food safety and regulatory concerns.
The food safety element of cutting and juicing produce has become more concerning to retailers.
“When you have (cutting produce) under a central processing facility, you can have better control of the environment and control of the process,” he said.
That compares to uneven food safety practices of countless employees in the back rooms of dozens of stores, he said.
State and federal food safety regulations about how value-added produce is manufactured and refrigerated also have discouraged back-room produce cutting and juice.
“No pun intended, but the juice wasn’t worth the squeeze,” Peterson said.
Also, from a management perspective, the explosion of value-added packs has given retailers new insight about what drives consumer purchases.
“Because it’s in a package, because it has got a UPC on it, now you could become more sophisticated in your data management and how you display things,” he said.
Besides making it easier for retailers to manage data, Peterson said buying value-added produce made it effortless for consumers. Shoppers are no longer required to take the time to figure out how to prepare a salad, how to slice vegetables and how to bring produce to the table.
In that way, the convenience of value-added produce is helping to relegate the art of cooking to “hobby” status, he said.
The rise of value-added packs also has blurred the line between fresh and processed, and created big stretches in the produce department dominated by plastic packaging.
“I think we’re getting further and further away from what back in our day we used to call fresh fruits and vegetables,” he said.
“I’m not saying that’s a bad thing, but I’m just saying that is the evolution of it.”
Even produce department employees don’t need the same skills and training to handle packaged produce, in comparison with whole produce.
While there is a desire by some consumers to shun plastic packaging, Peterson said that shoppers still want convenience. The sweet spot for retailers and consumers may be more earth-friendly packaging options, he said.
“I think where the big opportunity is going to lie is in what the package will look like, and I think you’ll get into more biodegradable and more environmentally-friendly plastics,” he said. He predicted big development in earth-friendly packaging in the next five years.
In any event, Peterson doubts that consumers are willing to go back to the old ways of buying fresh produce.
“I think we’re at a point of no return, because I just don’t think the consumer wants to go back to slicing and dicing; the convenience factor is going to outweigh that,” he said.
“I just really believe that the consumer is too far down the road to go back to the day when they say, ‘Well, I’m just going to buy all this stuff and chop it up all.’” he said.
Value-added produce is a robust category within the produce department and continues to grow, said Steve Lutz, vice president of insights and innovation for Category Partners LLC, Idaho Falls, Idaho.
Lutz said he believes there is every reason to think that value-added will continue to grow.
“If I was to make a prediction, I would say it will grow faster than whole produce,” he said.
Meal solutions and convenience are powerful long-term trends for shoppers, he said.
Consumers have more options for salads than anyone could have predicted 40 years ago, he said.
“Back when I was at the Washington Apple Commission (in the 1980s), there was still the California Iceberg Lettuce Commission; at that point, people were dabbling with cutting up lettuce and it was sort of viewed as, ‘Why would I want to pay three times as much for half as much product just because somebody can cut it for me?’” he said.
Times are much different today and consumers lean heavily on value-added salads.
Lutz also thinks plastic packaging won’t drive consumers away from value-added. Instead, alternative packaging will emerge to speak to consumer demands.
“The industry seems to be negotiating their way around (anti-plastic sentiment) and so I don’t see why the longer-term trends of consumers opting for convenience would be altered,” he said. “Packaging options will grow and become more price competitive.”
Fresh-cut and value-added vegetables may have better growth prospects compared with prepared fruit, he said.
“With vegetables, almost by definition, the product requires preparation before use,” he said.
That is less true for fruit, since fruit is typically ready-to-eat as whole produce.
“How much spinach would we be selling if the only thing we sold was the big giant leaf spinach like we used to see?” he said.
“Instead, you’re selling a product that is immediately consumable.”
Private-label value-added options will grow, Lutz thinks, but the food safety issue is important to consider.
“If you end up with a major food safety event and it’s got a retailer’s name on it, that can create some pretty big ripples across a wide variety of products and impact consumer confidence for the brands,” he said.
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