Despite premium prices, value-added produce grows

Articles
September 14, 2011

Despite premium prices, value-added produce grows

While shoppers shave spending elsewhere, they pay more to buy fruits and vegetables packaged to deliver convenience, smaller portions and snacking varieties.

Produce price hikes during the second quarter of 2011 caused total unit volumes of fruits and vegetables to dip one percent versus a year ago, as consumers held their spending in line in this economy - with one big exception.

Value-added fruits and vegetables and organics rose in unit volume versus a year ago, suggesting that consumers are willing to pay a premium for their fresh produce preferences, noted the FreshFacts on Retail report, issued by the United Fresh Foundation (UFF) with the Perishables Group and sponsored by Del Monte Fresh Produce. What's behind the gain? People seek convenience, smaller portions and snacking varieties, says UFF, noting that popular packaged salads are tracked separately from the value-added grouping.

The report defines value-added fruits as: fresh-cut fruit in cubes, chunks or cored without preservatives; sold in a tray with plastic overwrapping, perhaps halved or quartered; or sold in a plastic cup or jar with juice or preservatives. Dollar sales of value-added fruit rose 3.0% and unit volume jumped 5.0% in Q2 versus the same period a year ago; demand climbed as the average retail price declined by 1.9%.

How did the different value-added fruit segments perform?

  • Fresh-cut drove 69.0% of dollar sales - the segment rose 3.4% on a unit gain of less than one percent and a 2.7% rise in the average retail price.
  • Overwrap accounted for 19.3% of dollar sales - it rose 4.8% on a unit gain of 7.2% and a 2.2% decline in the average retail price.
  • Cups and jars were 11.7% of dollar sales - it declined 2.4% on a unit increase of 9.4% and a 10.8% fall in the average retail price.

The report defines value-added vegetables as: fresh cleaned and cut for use as a side dish, often microwavable in the bag; cut up in a tray for multi-person eating occasions; ingredient mixes and medleys ready for use in a recipe or meal; fresh cleaned and cut, and sized for one to two people. Dollar sales of value-added vegetables rose 5.6%, and unit volume jumped 7.0% in Q2 versus the same period a year ago; demand climbed as the average retail price slid by 1.3%

How did the different value-added vegetable segments perform?

  • Side dishes drove 53.1% of dollar sales - the segment rose 10.2% on a unit gain of 10.8% and 0.5% dip in the average retail price.
  • Trays were 21.0% of dollar sales - it declined 2.1% on a slight unit gain of 0.2% and a 2.4% slide in the average retail price.
  • Meal prep accounted for 16.9% of dollar sales - it climbed 2.7% on a unit increase of 0.8% and a 1.9% rise in the average retail price.
  • Snacks were 9.0% of dollar sales - it rose 4.4% on a unit gain of 6.4% and a 1.9% drop in the average retail price.

Organic fruits and vegetables also posted healthy gains in Q2.

  • Organic fruits account for 3.8% of total fruit/vegetable dollar sales - the segment rose 12.5% on a unit gain of 5.6% and a 6.6% increase in the average retail price.
  • Organic vegetables account for 6.5% of total fruit/vegetable dollar sales - the segment climbed 9.1% on a unit gain of 4.9% and a 4.0% rise in the average retail price.