The slowdown in the once almighty prepared fruit and vegetable category’s sales came as a nasty shock to many in the industry, but now the sector is emerging leaner and meaner.
Sales have been driven by prepared vegetables and vegetable mixes this quarter and the industry has seen new ready-trimmed Tenderstem broccoli and ready-shelled peas reach the shelves. The cook-in-steps meal deals at retailers have also given prepared vegetables an extra sales boost.
The static bagged salad sub-category is also set for some innovation from the likes of Florette and Southern Salads. As reported in last week’s FPJ, Florette has revealed its new Christmas bagged salad lines as Christmas Salad, which contains baby leaves, cherries and cranberries, with a spiced orange dressing, the Fruit Dipper - a mix of pineapple, grapes, melon and raspberry coulis - and the Veg Dipper, which contains carrot batons, broccoli and cauliflower florets. It will be interesting to see which makes the most sales.
But the industry remains cautious and £1 price points are still key in the supermarkets.
Prepared root vegetables, potatoes, brassicas and stirfries are continuing to buck the trend, and it is the general feeling that a tightening of belts and a reduction of prepared lines, especially when it comes to fruit mixes, will stand the industry in good stead.
“The future of the category will continue to be tough; it is difficult for many to make money, therefore there will be winners and losers,” says Gavin McNally, managing director of fresh vegetable producer and processor Parripak. “It is unfortunate that smaller manufacturers may cease to exist, but we are all under pressure, particularly when providing retail own brands, where we have no leverage to gain any brand value from our products. We think the future is positive and we will look to continue increasing our market share.”
On the catering front, prepared options are simmering along nicely, with Christmas menus beginning to make an appearance. Orders coming in are very much the usual fare, with bulk-pack carrot batons, chopped root vegetables and prepared Brussels sprouts leading the way.
“There are still new lines coming through and new items are appearing on the menus,” says one supplier to the catering industry. “Prepared fruit is quiet, but it may be the time of year. Not a lot of people go for cut melon or mango as we go into autumn. People turn to root vegetables and the like. And a lot of the prepared fruit offer is expensive in the first place; although it is dear for a good reason, it is not really recession food. All prepared produce is a high-value purchase, but some are more useful than others.
“Kitchens are more likely to buy in potato fondants in an under-skilled catering environment.”
The prepared fruit market continues to plateau, but retailers’ offers and price points have kept the sub-category fluid. Top-end multiples are still looking for a point of different and are keen to stay ahead of the game, although new lines have usually been limited to the top 100 stores in the country.
“Everybody is talking up and there are signs of growth for sure,” says one fruit supplier to processors. “But I believe disaster is looming as well. There is a lot of high-level risk across the industry regarding insurance cover. In some cases in, cover has been completely removed and in others has been reduced dramatically. It makes life very difficult for importers now.
“After Christmas will be a difficult time. We are finding that people have started to pay more slowly. Importers are having to advance money for crops to be secured and grown, then they have to pay for freight collection; all for very slim margins. Then we are supplying processors with zero or little credit. It is safer to put your money in shares. That’s just the way the industry is at the moment.”
And now the prepared fruit mainstay, fresh-cut melon, is going to be even more expensive because of a shortfall as a result of an abrupt end to the Spanish season and a short Brazilian and Central American offer.
Brazil’s melon season has been tight for the last two years and will be shorter still because of a decrease in melon plantings. And according to sources, production in Central America will be low because of an lack of investment in the area. “Quality is good so far, but the Spanish season left a hole in the market and the price is going to be high,” says an insider.
The heat has also been on for the prepared vegetable sector. “Sales for us have been relatively buoyant, but we have faced huge margin pressures, as have many in the industry,” says McNally. “We have tried to make ourselves more efficient than ever before, with ongoing investment in the business both technically, with factory improvements, new vegetable processing technology and improved infrastructure across all expertise within our team. We are in a very competitive market, therefore we strive to be the first choice with our one-stop-shop offer.”
The industry has changed in its demand for more value products including potatoes, carrots, onions and swedes, with less demand for exotics such as chillies, spring onions and peppers.
As the current market demands, processors are working towards engineering out expense in raw materials and production. Efficiency is key to providing value products and passing on the best value to cater for consumer demand.
According to Parripak, there is a definite repositioning with the move into traditional, lower-priced root vegetables, while there is still a demand for convenience food products from consumers.
So it seems that optimism is seeping through the prepared fruit and vegetable industry. “The industry has opened up a bit and processors are hedging their bets by supplying from a lot of companies rather than a few,” says one insider. “But people are still only buying the essentials and promotions and the £1 price point are still the main game in the retailers.”
INNOVATING THROUGH RECESSION
Kanes Foods has always been hugely innovative and continues to be through the recession, says Jeremy Folkard, sales and marketing director at the bean sprout grower and prepared fresh produce processor.
Kanes Foods took over the Hazelwood site in Evesham 20 years ago under owner John Randall’s innovative eye. At the time, the factory was a beetroot processing plant. Since then, we have moved into producing stirfry packs, prepared vegetables and leafy salad bags.
We strive to use the best packing techniques and technology. We used to buy dried noodles but four years ago we started to make our own authentic fresh noodles. We also carry out a huge amount of new product development (NPD) and have a team of chefs dedicated to devising new recipes, dressings and sauces to accompany the freshly prepared vegetables and salads. This category’s growth is dependant on NPD and it has to remain at the forefront.
We have always served the supermarkets and they actively encourage us to buy local as it is fresher and cheaper, as well as saving on food miles. But we are also mindful that we need a geographical spread of supply. If we are hit by freak weather in Evesham, there are farms we can source from in Lancashire, Cambridge, Norfolk and Lincolnshire, as well as France, Spain and Italy out of season.
The supermarkets encourage us to be a low-cost operation and we keep tight control over costs. We are very efficient; if we aren’t, there will be some other company that will have its eye on our business. We are the biggest processor in the Evesham area and have plans for further expansion.
Our prepared vegetable factory is a relatively new addition and for two years now we have produced lines such as sliced spring greens, diced butternut squash and sweet potato, and mixed cabbage and leek. These lines were a natural progression from handling vegetables for our stirfry packs. Kanes Foods products are mainly packed in supermarket-own branding, but we have our own Baby Basil Salad, which sells under the So Fresh brand.
Our products have not seen a massive decline in sales, but there has been a slight change, as consumers have turned to preparing their own produce in the recession. But we expect to see an upturn soon as the country comes out of economic downturn. Prepared produce ticks all the boxes for taste, variety, convenience and, of course, helps towards your 5 A DAY. It should be and will be a growth area.
We are working on a lot of new product lines and the supermarkets have been driving the average weight of purchase by link saves; you can buy a stirfry, bag of noodles, sachet of sauce and pack of meat for a set price. This is perfect for the prepared industry and it allows the consumer an input into making the meal, although they are being guided. The category is expanding and the ready-meal industry has suffered a big downturn during the recession - if the household budget is squeezed, ready meals are the first to go.
This area was hit with floods two years ago and even with that huge problem, we coped. Growers did a fantastic job and the crop was not all under water. As always, it is all about quality. We are asking customers to pay a premium for prepared and if they are let down by the product they tell their friends. We have to make sure we deliver on shelf life and quality, and let the product speak for itself.
