ATLANTA -- The fate of fresh-cut is hanging in the balance, according to industry officials at the Newark, Del.-based Produce Marketing Association's convention here.
"We are truly at a crossroad," said Steve Junquiero, director of produce and floral operations at Save Mart Supermarkets, Modesto, Calif. "I believe [fresh cut] will forge on straight ahead."
While the fresh-cut phenomenon is one of the produce industry's brightest stars, there are worries it may burn out if retailers, grower-shippers and others in the industry are unable to keep its potential in sight.
"The sky's the limit in this category -- managed properly," said Phillip O'Neil, vice president of sales and marketing at Fresh Express Farms, Salinas, Calif.
"Managed improperly, I think we'll be talking about the good old days of value-added."
Junquiero noted the growth experienced by the fresh-cut industry during its first five or six years. In 1993, the prepackaged salad industry brought in $235 million in sales, a 114% increase over the previous year, according to Junquiero. In 1994, sales rocketed to $442 million, an 88% increase, and last year the category accounted for $714 million in sales, a 62% increase over 1994.
By the end of 1996, the industry is expected to bring in about $856 million, Junquiero added.
"We've had some great growth," O'Neil said.
As impressive as this year's numbers are predicted to be, they only translate to a 17% boost in sales over last year -- one reason industry leaders are calling this "a defining moment."
"We can no longer enjoy this growth [simply] with the introduction of new items," Junquiero said. "This category must be managed and supported."
In 1993, 40% of the households in America had tried fresh-cut products at least once, according to O'Neil, and that figure rocketed another 11 percentage points, to about 51% the next year.
But in 1995, the number of households reporting they had purchased fresh-cut produce at least once was about 53.8%, only a 2.8 percentage point increase from the previous year.
And O'Neil said officials expect that figure to "shake out at barely 54%" at the end of this year.
O'Neil admitted that marketing for the product has to improve.
"Barely half the households know it's out there," he said.
O'Neil said this was a promising statistic, however, in that if the industry is able to find a way to hit the other half of the households, it could see profits of $4 billion annually.
But he pointed out a number of other reasons why the industry may be slowing down.
O'Neil was critical of most components in the fresh-cut chain, but rested most of the weight on the shoulders of the retailer.
"We're not getting fresh enough product to the customer," he said.
One recommendation produce pundits generally have for ensuring fresher product is keeping it at the proper temperature. But in an audit by the company of 500 stores in 22 cities, O'Neil said, retailers are not even close.
"Thirty-six to 40 degrees is our target," he said. "Less than 4% of stores are where they're supposed to be.
O'Neil said his company's packaged salads have a shelf life of 21 days at 35 degrees, but the company recommends keeping them on shelves for no more than 14 days.
"We know what the real world is. The average temperature of a cold case was about 50 degrees," he added.
"You want to lower shrink in this category, improve your refrigeration," O'Neil said.
Giving shoppers consistency and easier access at the display case is another way O'Neil believes this category will again begin to prosper.
"Do something to clean up your shelf," O'Neil said. "Just make this easier for the consumer -- we all benefit."
Along those lines, O'Neil said, many retailers are not stocking products correctly.
"There are a lot of out-of-stocks out there; when an item is [not on the shelves] that means it's selling," he said. But retailers will typically replace the item with another, which may not move off shelves as well, or at all, he added.
As far as smaller growers are concerned, the thinking is that the best way for fresh-cut to prosper is if two or three of the major grower-shippers are running the show.
"You're going to have to have a couple of people who can do it well, and make money doing it, and then you'll have the also-rans," said O'Neil.
