The fresh-cut produce industry is dynamic with innovations and new developments almost daily. To bring readers a complete view of the past, present and future of the industry, Fresh Cut asked several industry leaders questions on the state of fresh-cut. Following are excerpts from their responses. Visit www.freshcut.com to read the respondents’ entire answers.
How has the fresh-cut produce industry evolved from its beginnings?
Alessandro Turatti, Turatti Srl: We operate in several areas of the food industry, and I can assure you that fresh-cut is definitely the one that is evolving fastest. In this market, what was new six month ago can be old now. It is a very challenging and exciting industry.
Many technological advances occurred in the 1980s and 1990s (improved washers, continuous dryers, faster and more reliable packaging machines). These developments moved (the industry) toward quality, hygiene and shelf-life improvement.
Dennis Gertmenian, Ready Pac: (It is now) much more sophisticated in selling, marketing, distribution, processing and raw material sourcing. (There is) greater variety for consumers at retail, and penetration into QSRs (quick-service restaurants) and other out-of-home consumption channels is really at infancy stages still.
Jerry Welcome, IFPA: I’ve only been in the industry for two years, and I know it has grown considerably since the mid-1980s when these products started hitting the retailers’ shelves. There’s been significant growth in the foodservice sector as well as at retail, and as more Americans eat out this trend will continue. Convenience has been the key to growth, and the whole issue of obesity has helped push a healthy diet. These have probably been some of the biggest growth factors.
Jim Gorny, United Fresh Fruit and Vegetable Association: The industry started in the foodservice sector – particularly for QSRs. One of the reasons was for food safety, to take preparation of fresh fruits and vegetables out of the chaotic back room and put them in a more controlled factory environment. And for cost control. In back of QSRs, they have limited cooler space. This way they could bring it in more consistently. QSRs were the primary driving force that helped the industry take off in the mid-’80s. Then it was retail. Companies could afford to have manufacturing equipment that could bag large numbers quickly, efficiently and effectively. That allowed the industry to move into the retail side of things. Even today, I’d say 60 percent is in the foodservice sector. When most consumers think of fresh-cut products, they immediately think of bagged salads. Behind the scenes, in many restaurants, things are cut up – mushrooms, lettuce, potatoes – things you’d never think of. Both the retail and foodservice side are still growing. It’s really been a great ride.
Kathy Means, PMA: Oddly enough, we’ve had fresh-cut for quite a while. Folks had been doing some fresh-cut at stores for years. The big explosion came with the bagged salads. Certainly baby carrots were one of the big explosions. And the explosion that is happening now is probably fruit. There’ve been several explosions. It came when we (obtained) the technology. Having the technology made it possible. Convenience is one of the top reasons consumers buy fresh-cut. We couldn’t really do it until we had the right smart films, technology for cutting and bagging it and making sure there was significant shelf life for consumers.
Matthew Caito, Caito Foods: Clearly, there are two distinct categories in fresh-cut: fresh-cut vegetables (including salads and carrots) and fresh-cut fruit. Fresh-cut vegetables are dominated by national companies that have been able to achieve economy of scale in their production near their growing bases.
Cut fruit started regionally and nationally about a decade ago. Early national producers had difficulty with the short shelf life and transit. The major players today have regional assets to get cut fruit to retail in a shorter time. National players have come back into cut fruit and are able to compete against regional producers.
Tony Freytag, Crunch Pak: The main thing is acceptance. When we first introduced sliced apples five years ago, the first comment was, “why do we need to slice an apple?” Today, that is no longer the issue. It is accepted by retailers and consumers alike.
What has the last year looked like for fresh-cut produce? What types of innovations and trends did you see?
Turatti: The fresh-cut market has been flourishing and developing in countries where a few months ago was it not even existing (e.g. Greece). Products like Bistro To Go of Ready Pac represent a very interesting evolution.
Gertmenian: (I’ve seen) expansion of fruit driven by McDonald’s success with apples and grapes; consumers in retail and foodservice “trading-up” to products that have more variety and items that are unusual and different than mainstay salads that are mostly iceberg and romaine blends; the expansion of fresh-cut into complete meal solutions with the launch last year of Ready Pac’s Bistro To Go range.
Welcome: I think the fresh-cut sector has had a good year overall. There’s been significant pressure by retailers on their suppliers of fresh-cut produce to hold costs down so we haven’t seen any significant price increases. It remains to be seen if volume has grown much over last year, but I think we are seeing more new product introductions and I remain confident that trend will continue. Fresh-cut fruit, more salad mixes, cut onions and peppers are just a few of the new items I’ve seen in greater quantity in retail.
Gorny: There have been a lot of innovations. Certainly fresh-cut fruit products have taken off in the last year, especially with McDonald’s. There are a lot of new products that were never imaginable before. Microwaveability still continues. People are starting to use more microwaveable packages. There are barbecue bags with a viewing window where you can roast vegetables on the grill. Looks like foil except for clear window. There are a lot more kits that can be assembled at retail or foodservice. Components are in separate packages, and (consumers) can open them and prepare it all fresh and on site. They don’t mix it until it’s ready to go. And it’s all portion-controlled so there’s no guessing. Meat products – grilled chicken. Home meal replacements. We’re starting to see things like pastas being included. You’ve not only got fresh-cut vegetables, but the pasta might come with that particular product. There’s a lot of innovation.
Means: The last year has been pretty good for fresh-cut. One of the competitive factors is mixes: salad mixes from key marketers and other folks as well. We’ve seen some more organic salad mixes. We’ve seen a lot in the fresh-cut fruit arena. We had some technology issues with fruit. Melons, cut pineapple, we’ve seen those for a long while at the store level or retail distribution center. One of the things that helps is we’re seeing it in fast food. Very often, consumers will take what they see in restaurants and say, “I could buy that for home.” That helps increase awareness. We’ve seen expansion in convenience stores. Not for family shopping – for lunch today or a snack on the road. It’s a little bit of a different feel to it.
Fresh fruit technology is definitely out there. They continue to work on and improve the films to enhance shelf life. We hope everyone is paying closer attention to the cold chain. One of the most critical issues in fresh-cut is the cold chain.
Caito: Branding will continue to play an important part in all fresh-cut produce, especially for retail customers. Biodegradable packaging will gain momentum. Regional flavors and ethnic tastes will be addressed through new product formulations.
Freytag: According to Nielsen data, we have seen a 300 percent increase in the sliced apple category alone. Overall, the cut-fruit category has seen significant increases as well.
Where is the fresh-cut industry headed?
Turatti: Convenience, convenience and again convenience. That was the beginning and that’s the future too.
Gertmenian: More variety, more organic, larger selection through all retail channels, further breadth of offerings in QSRs, vending, schools, stadiums, etc.
Welcome: I see growth in the trend for more private label products at retail. I also see a growing trend in fresh prepared meals that would include protein, starch and vegetable all in the same container ready to microwave. I see the introduction of new packaging concepts that will increase the choices of fresh-cut fruits and vegetable products. Perhaps more single serve and recloseable features in fresh-cut packaging. I think fresh-cut processors will continue to be innovative in their product offerings and work with customers to develop specific products to match regional and local markets. So more customization based on the customer’s needs, more ready-to-eat fresh products in easy-to-eat-out-of containers (dashboard dining) and single serve healthy snack type products for school lunches.
Gorny: We’re becoming more and more the refrigerated foods industry and not so much fresh-cut fruits and vegetables any more. If your company can master handling fresh-cut fruits and vegetables, then you can easily handle the proteins, the cheese, the other components that can go with them. Our industry has a tremendous advantage. They already have the experience with the most perishable products. Many younger consumers consider salads an entrée. All of a sudden, that provides you the platform – the sky’s the limit. However inventive you want to be on what that salad’s comprised of. We’re starting to be refrigerated foods companies as opposed to just fruits and vegetables, although that will continue to the base.
Means: I don’t see an end to the growth, that’s for sure. Growth may not be as exponential because fresh-cut is so well established, but I still expect to see very strong growth. Consumers want it. When we asked them why they are buying fresh-cut produce, the top reason was health and nutrition, 30 percent because of convenience and quality, and taste also ranked high. That’s something we believe. Produce sells for a variety of reasons. It’s not all about health, though that’s very important. Convenience, taste and nutrition. With fresh-cut, clearly those are the top reasons people are buying fresh-cut. Fresh-cut, I think, is definitely here to stay. We continue to see innovations from all of the companies – not just in salads, carrots, broccoli, fruit. We’re seeing more and more ingredients fresh-cut, things like the diced onions. We’ve also seen folks offering mixes – celery, onion and carrot. We’re seeing some expansion in those areas, the cut potatoes – anything to take the hassle out of the preparation at home. When we asked consumers what they use it for, (they could give multiple answers) 60 percent use it as an ingredient, 62 percent eat it as is. I think paying attention to that ingredient market is not a bad idea. Half buy for a snack, one-third buy to eat on the run, one-third to prepare as an appetizer. Consumers are getting used to fresh-cut. This is a normal part of their produce experience, and they’re using fresh-cut in a lot of ways. Salad is critical, but it’s not the only thing going on out there. They’re buying all the different things. I think they’re receptive to new ideas. Lettuce, salad, tomatoes, onions, pineapple and broccoli.
Caito: Fresh-cut will continue to consolidate and reinvent itself in ways that are harder to duplicate for other produce categories because fresh-cut produce requires processing functions that can be done away from growing areas. Partnerships, licensing and co-packing are trends that will continue. Environmentally friendly packaging will become much more affordable and prevalent.
Freytag: More items, more selection, more variety.
What will the fresh-cut industry look like in five years? 10? 25?
Turatti: Fewer, bigger players (consolidation will continue) with a larger number of distribution centers. A larger number of companies supplying services to the industry.
Gertmenian: It will double in size at the very least. Fruit will show the most noticeable change as it passes the billion-dollar mark in sales within five years, driven by quality, product and packaging innovation and proper cold chain management. All of the categories are vastly underdeveloped and will become a more dominant part of the overall produce industry as consumers continually seek the best of taste, nutrition, healthiness and convenience without compromise.
Welcome: Probably not all that different than now. I suspect you will see some consolidation, but there will still be strong regional and niche processors who can meet the needs of buyers in their area. As shelf life continues to expand I see the opportunity to source and ship fresh products from a lot of different growing areas. I see the opportunity to introduce exotic fruits and vegetables that will continue to shape this industry in the years ahead. Everyone will be looking for the new products, the new tastes, whatever that will excite their customers. I think we will see advances in new seed varieties, production capabilities, food safety, transportation and packaging that will enable more growth in international trade of fresh-cut products.
Gorny: In the next five to 10 years, you’ll see more consolidation because of the buying community being more consolidated. There will always be an opportunity for diverse, small entrepreneurial companies that are doing a lot of the cutting edge, pioneering development work. You’ll often find a small, diverse entrepreneur company starting with a new type of products. As time goes by, new technology comes around and they find new ways to do it. In the next five to 10 years, you’ll see more consolidation, but there will always be a place for the small, regional processor coming up with new products, particularly as we move into the refrigerated food area.
Means: I think we’ll continue to see competition on types of fresh cut – lettuce blends, new mixes. More in the ingredient area, using them to prepare at home. It’s not going to go away. I would expect it to continue to grow and expand – especially in the fruit area. I think it has a strong future. It has an expected future. This is not a fad. Consumers want it; they’ve told us they want it and it’s up to the industry to provide that. It’s up to industry to develop technologies with the proper attention to quality. Food safety cannot be compromised – there cannot be a mistake. Consumers expect what they buy in the store to be safe. We have to be sure that everything we can do is done to assure food safety. You get a black mark against it, and consumers’ confidence is easily lost and hard to rewin.
Freytag: Bigger names will be involved, and niche branding will emerge.
What are the biggest issues facing the fresh-cut industry?
Turatti: From our point of view, stronger automation and attention to the sanitation issue. The standard shall evolve closer to the meat and milk industry.
Gertmenian: Food safety and consumer confidence on the issues side. As far as opportunities, it’s really all about availability and accessibility – whenever and wherever the consumer eats. We as an industry need to improve upon the quality of the cold chain to make fresh-cut foods and snacks available where only ambient foods have been until now.
Welcome: The biggest challenges we face are in maintaining the safety and quality of our products in commerce, new product innovation, new packaging concepts and styles. Increasing productivity at the plant level, adding automation, reducing labor costs, and managing input costs. All of these factors will add to the growth and profitability in the industry in the future.
Gorny: Biggest issues are downward price pressures. No matter whom you talk to, people are consistently experiencing downward price pressures from their buyers. The other issue is increased regulatory requirement. Increased necessity for paper trail. They’re no longer just in the food business, they’re in the data management business. COOL, allergen labeling, more and more regulatory requirements. It requires you to keep a lot of paperwork. The third biggest issue is labor. I think we look to Europe for that issue. If you go to Europe and visit a fresh-cut facility, you’d see a lot more robotics because they’re a little bit ahead of us. The answer is potentially robotics. Doing as much of this stuff as we can, especially repetitive, boring, dull tasks that can be accomplished by machines. I think there are answers down there.
Means: Food safety is up there. They continue to pay attention to that. Improvements in technology. This is all the behind-the-scenes stuff. Making sure they’ve got the right quality, shelf life. Consumers sees constant innovations in offerings. I mentioned the ingredient items, certainly fruit. Fruit is moving forward. I think (we need to find) ways to incorporate more of that in foodservice. We’d all like to see more fresh produce on foodservice plates. The consumer’s looking for convenience, foodservice is looking for reduced labor costs. What can we offer foodservice to continue to improve what is offered on the menu? How do I get into McDonald’s? Wendy’s? How do we get consumers to choose this at the quick-service outlet? Wendy’s just withdrew a fruit cup. How do we make sure consumers are buying that and are choosing that so foodservice operators will keep that on the menu? How do we make sure we’re worthy of a spot on that menu? You need to have consumers purchasing that. It has to be fun. There has to be convenience and nutrition.
Caito: Transportation and energy costs are the biggest issues facing the category. Food safety, food security and government involvement are also major issues. Consumer education and consumption trends will dominate product innovation and channel development.
Freytag: Consistent quality. There are many that get into the business today and do not recognize the many challenges ahead to produce a quality, good-tasting product day in and day out. Crunch Pak’s key objective is to have sliced apples that taste and eat the same in July as they do in October. There can be no variance in that eating experience. The consumer will decide who succeeds based on the product.
Should there be national food safety standards specifically addressing fresh-cut produce?
Turatti: Let me answer you about the European situation. IFPA will be the key player on this topic. There is a strong need to harmonize the different national regulations and laws, and most of the major players on the old continent gave the association the task to elaborate an action plan on this topic. (e.g. Chlorine is forbidden is some countries and allowed in others.)
Gertmenian: No – I think individual companies, IFPA and other industry organizations are working well with the government to get the very best results.
Welcome: I think FDA would be reluctant to set a food safety standard for fresh-cut products. I’m not sure they would. Food safety is not an option in this industry; either you produce a safe and wholesome product or you are going to be put out of business.
Gorny: First, there already are stringent standards with regards to food safety in the industry – the Food, Drug and Cosmetics Act and the Sherman Act in California. There is a zero tolerance for pathogens. There really are stringent standards. Certainly the FDA will be publishing shortly a guidance document for the fresh-cut industry. But the industry has really done a great job on getting out in front on this issue. It’s been well done by the industry up until this point. There’s zero tolerance for adulteration if there’s a human pathogen or chemical that could cause harm. It applies to all foods. The government doesn’t regulate by industry. They prefer to use the Food, Drug and Cosmetic Act.
Means: Anything that’s done on the production side goes for whole and cut. When it comes to fresh-cut, you have different processes. When you are doing fresh-cut, you should have HACCP, GMPs. You’re going to have different requirements for safety in the plant, especially when you have product that is washed or triple washed. We advise consumers they do not need to wash that again. I don’t think it needs more stringent standards, it needs different standards because it’s a different kind of process. There is not a requirement that it is more stringent than absolutely safe. Another thing fresh-cut has that whole product doesn’t have is passing through metal detectors. That’s part of a GMP or HACCP program.
Caito: National standards are essential for consistent and efficient production throughout the category; however, the industry cannot and should not wait for the government to get involved. The industry needs to support trade associations, especially the IFPA, to be the vanguard of standards to protect everyone operating in the field. Too much money is invested in this industry (for it) not to be proactive.
Freytag: The USDA has food safety standards, as do many states. IFPA has done a great job of instructing and offering advice on what is required. I don’t believe there’s need for additional standards if companies just follow what is out there. Crunch Pak is also Kosher and organic certified, as well as third-party certified by two different outside companies. Some may choose to go the extra mile, as we have, others may not.
Who should be responsible for making sure food safety standards are met?
Gertmenian: Any party that participates in the growing, processing, distribution and selling of fresh-cut.
Welcome: The company producing the product.
Gorny: It’s a statutory obligation with food safety standards (law) set forward. It’s in everybody’s best interest. Consumers who get sick or die aren’t good take-home buyers. Everybody has to do their part and more targeted laws probably aren’t the solution.
Means: Everyone. Everybody has a role to play: the grower is responsible for what’s put on crop; shipper, harvester, packer are responsible for making sure fresh-cut products are harvested, washed, packed correctly. In the plant, it’s making sure all of that happens. The ultimate responsibility is with every link in the distribution chain. Certainly, we have oversight groups like FDA. FDA has the government role. Industry has a role throughout every link. Consumers have a role as well – make sure they are keeping it cold, having clean hands when preparing it, not cross contaminating, making sure they’re not putting fresh-cut items onto the cutting board that held raw meat. Everybody has a role in food safety. Sometimes when you say it’s everybody’s responsibility, it’s nobody’s responsibility, but anyone who breaks the link endangers everyone in the chain.
Caito: The industry and trade associations should ensure that standards are met. Trade association members should read and understand standards and should not support companies that do not meet these standards. Companies that do not meet industry standards make the landscape more difficult and dangerous for everyone else.
Freytag: At Crunch Pak, we take the responsibility very seriously. Ultimately, it is up to the producer to step up to make the investment in people, product and facilities to get it right.
What are the biggest areas of promise for the industry?
Turatti: All the areas addressed to a better quality of the product. Customers will become more exigent.
Gertmenian: The consumers need to consume healthy and convenient foods. This means providing innovation in products and packaging as well as distribution and cold chain management to get fresh cut in arm’s length of consumers selecting their next eating occasion.
Welcome: I think the biggest area of promise is in the industry’s overall capacity to develop new consumer products. There’s no question in my mind that if we can continue to come up with innovative ideas in products, packaging and services this industry will continue to grow and prosper. There are a lot of innovative thinkers in this industry and there are a lot of really good suppliers ready to provide the technology needed to bring these new products and services to the marketplace.
Gorny: I think we’ve got great products. In some of the areas we have tremendous opportunities to improve taste and flavor. We have a tremendous opportunity in the U.S. and the world to deal with the obesity epidemic by providing convenient, healthy foods. Getting younger people, particularly children, get ’em hooked on fresh fruits and vegetables. They’ll carry those eating habits through their entire lifetimes. I think we can make a huge impact on the nation and the world with regard to better health. That’s one of the reasons that United (Fresh Fruit and Vegetable Association) is working very hard on school lunch programs and WIC programs to get fresh fruit and vegetables included in those programs.
Caito: Bio-degradable packaging, enhanced shelf-life technology and packaging and improved transportation methods for raw materials and finished products.
Freytag: We will see many developments in the near future in package capabilities that extend shelf life. This will open new marketing opportunities for us.
Do you feel that consumers are using fresh-cut produce as much as they can be?
Gertmenian: No – not even close, according to several marketing surveys. Fresh-cut salad leads with a household penetration of about 80 percent, but the average household is only purchasing about once a month. With better merchandising and innovation, the category can easily double or triple in size. Fresh-cut fruit and vegetables are even further under-developed.
Welcome: I think we have a lot more opportunities out there.
Gorny: I think we’re only really touching the tip of the iceberg. We need to do a better job of selling consumers on the value proposition. Typically, when you go to foodservice buyers or consumers, they want to buy it as a same price as the raw agricultural commodity. We have a tremendous educational opportunity to educate consumers and foodservice operators on the value proposition we have. That’s one of our biggest hurdles in the consumer market. It’s not about shelf-life extension. It’s all about pleasing consumers and making sure they are repeat buyers. That’s really the key. We need to communicate the tremendous benefits of these phytonutrients and the benefits you hear about every day in the newspaper. It all goes for naught if it doesn’t taste good. Value propositions, taste, flavor and health benefits.
Means: Probably not. I would say there’s still a lot of room for growth. (Look at) the growth in the convenience store market. When I go in to grab something at convenience store, am I grabbing chips, or a cup of fresh-cut apples or carrots or veggies and dip? There’s a lot of growth in the ingredient market. You may need recipes on it. Here’s celery, carrot and onion mix, what would I do with that? On the bag: here’s how to do a quick chicken noodle soup. We need to educate consumers on how to use these (products). We need to (emphasize) taste, convenience and nutrition and the uses of fresh-cut products.
This comes from psychology experts, demographics people: it’s a good thing for families to get together and have a meal around the table. There are the games people: family game night. Team up with the games people and promote dinner as well. You clear off the table, convenience products make clean-up nothing, preparing is nothing. It’s not all up to consumers to figure out what to do with it, I think we can help them. The foodservice as well. That’s a way consumers are using it without knowing they’re using it.
Caito: The obvious answer is no. However, consumption continues to grow. The challenge for the industry is to bring increased consumption through continuous innovation: new products, new packaging, new tastes, new cost points.
Freytag: Given the growth the consumers are accepting fresh-cut at a high rate. We believe it will only grow.
Will the recent attention in the news media about food-borne illnesses affect the fresh-cut produce industry?
Gertmenian: Yes – whenever there is consumer doubt, consumption will be negatively affected. However, consumers have been shown to be resilient and recognize that there are far more benefits to the fresh-cut alternatives than risks, and recent consumption data continues to show growth despite the short-term issues.
Welcome: If they persist, absolutely. However, I’m confident we are going to address these issues successfully in the very near future. But remember, these are raw agricultural products, there isn’t a kill step in this process, therefore food safety systems will continue to be very important.
Gorny: In the long run, I would say not. It is an opportunity for the industry to take a look and see what they’re doing with the systems they have in place. Is it sufficient? Is it being implemented? That’s what that issue is all about. I think there’s never zero risk associated with food. It’s always a tragedy when someone gets sick from a foodborne illness, but there’s never a zero risk. It’s a time for overall evaluation from field to fork.
Means: Yup, I think so. As I said, food safety is not negotiable. If folks don’t have a strong food safety program that they are using every single minute of every day, they don’t belong in this business. Once a reputation is lost, it’s hard to get it back. It’s hard to say that because mistakes happen, but mistakes can’t happen. Reporters love the surprise element in anything: “it’s healthy for you, but look, it could hurt you.” A lot of it may not be fair or warranted, but once it’s out there, it’s out there. We have to be absolutely vigilant. The government is paying far more attention to us than before. We are working diligently to address all of FDA’s concerns with research, guidance and communication.
Caito: Media reports always bring attention to the industry, often in a negative way. In several instances, the media does not fully understand what they are reporting, so it is critical that all levels of the industry support groups such as the IFPA that are working to educate the media about fresh-cut produce. The industry needs a consistent, knowledgeable and accountable voic