Despite issues with supply, the prepared fruit and vegetable industry is optimistic, with insiders predicting an increase in demand from consumers, even though most of the fresh produce sector is preparing itself for a rocky year. And, if the hustle and bustle at Freshconex in Berlin this month was anything to go by, this category has got a bright future ahead of it.
However, a shortage of popular prepared fruits has caused prices to escalate for suppliers, with some anticipating that the price rise will eventually trickle through to the consumer. Due to weather conditions and climatic changes, bananas from Costa Rica have been short and citrus levels are low in the market. Demand for the most popular prepared ingredients - pineapple and melon - is high, and production is not delivering the goods. This quarter has seen melon crops hit by whitefly in Brazil, and demand outstrip supply on pineapple. “Prices coming from growers are high,” says one supplier to the prepared industry. “Whether that will affect the processors, and therefore the consumers, is another thing. But it is going to be a fairly tight time for everyone involved over the next couple of months.”
Suppliers have also found it hard to keep up with demand this quarter, and shipping services have caused problems. “It is hard to keep up the supply,” says one insider.
“In a nutshell, demand is going to outstrip supply, but obviously the industry is putting things in place to increase production and availability all year round.”
Despite these fears, insiders are confident that the economic slowdown will not affect the mighty prepared market. Fresh-cut fruit is really saving the day, with a
30-40 per cent growth year on year. According to suppliers, more enthusiasm for the sector is coming from retailers, and the industry has successfully moved consumer attention from whole fruit to prepared, as it did from wholehead lettuce to mixed leaves. Besides the obvious advantages of convenience and price, many believe that both consumers and the foodservice industry are aware of the savings they make on wastage by buying prepared produce.
Last year was a good one for prepared fruit, and some believe that this is because new varieties bred specifically for processing have started to be produced on a commercial level. The feeling is that, because of these new varieties, the popularity of prepared fruit and vegetables can only increase from now on.
As expected, prepared pomegranate has proven its worth and “gone through the roof” in popularity this quarter. The fruit is performing well in both mixed packs and single fruit packs and, as with most prepared fruit packs, the 250g pack is fast growing in popularity.
Prepared snack packs of blueberries are another item that continues to grow, and the product is pushing forward with no indication of a slowdown.
Yet another example of how a little bit of innovation in the prepared industry can spark a revival, supermarkets are moving from selling prepared fruit in trays to cartons; a trend that the industry expects to grow. The variety of snack packs and designs is pushing the prepared fruit sector forward, and new additions like Sainsbury’s mixed berry pre-pack design has caused waves within the industry, not only because of its retail price, at £4.99 for 600g, but because of its obvious appeal to consumers even in a time of apparent economic slowdown.
Some believe that the mix of strawberries, redcurrants, blueberries, raspberries and blackberries in separate compartments, which came onto the shelves in January, is a shining example of how the sector will survive consumers tightening their purse strings. Others consider the pack a step too far, at a time when the cost of food is becoming a number-one consideration for the consumer. “The packet is too big,” says one supplier. “Yes, it is convenient for a dinner party or a day at the office, and there is always going to be someone who can afford to buy items like this, but the £2.50 snack pack will always do better.”
The mixed fresh-cut pineapple and melon pre-pack remains in demand but, according to insiders, supermarkets are looking out for innovative ideas to spruce up the item. However, this might be hard to do. “Melon is practically in every fruit salad available,” says one supplier. “Which means that we are dealing with lots of different countries with differing weather patterns. The cost has definitely increased throughout the winter season; fuel and labour costs are increasing all the time. And then there is the currency issue; certain countries are looking to be paid in US dollars.”
Niche lines such as prepared vegetable stir-fry packs have also seen an increase in demand this quarter, and it is prepared vegetables like courgettes, broccoli, baby corn, Tenderstem broccoli and peppers, that the sector considers to be “recession-proof”. Chilli pepper, lemongrass and ginger have added value to a sector that may have been losing interest, and made prepared vegetable packs a must-have item in UK supermarkets. “I think prepared vegetables are a recession-proof product, and people are not going to cut down on them,” says one insider. “Now, more than ever, strong flavours are going to be important, and we can make that more exciting.
“If you consider a 300g pack of unprepared runner beans, for example, consumers eat half and throw away the off-cuts, but with a prepared pack you can eat all of the pack. Coupling convenience and efficiency in financial hard times is a good combination. So I think we will actually see growth in this area this year,” he adds.
GREENVALE AP IN CHIPPER FORM
volumes of prepared potato varieties have been good over the last three months, with additional business coming on stream from both new and existing customers, says Edward Davies, Greenvale AP’s process director.
Inflationary pressure in terms of raw material and utility costs have led us to seek price increases to offset these large increases. The last 12 months have seen substantial growth, which has helped to smooth out seasonal vagaries in demand.
Swancote Foods, which Greenvale AP acquired in July 2007, specialises in numerous prepared potato lines, which are sold to a variety of bluechip food manufacturers around the UK and Ireland. We produce an extensive range of freshly cut potato products, either diced, sliced or whole. Our products are all additive- and preservative-free, and that is a major selling point.
The very difficult growing season has led to a high proportion of poor crops, which has meant that we have had to work hard to maintain our quality of prepared crops. It is years like the last where a well-invested processing business can manage the difficult quality of the raw material and survive the economic climate. Availability of crop for processing has been good, mainly due to our extensive procurement team and good relationship with our growers.
Greenvale AP, as a group, has a highly reputable relationship with the multiples - primarily Tesco and Sainsbury’s. Pre-pack potatoes are supplied directly to the multiples through our fresh potato packing operations. The supply of these operations gives Swancote Foods vertical integration, with full traceability, food safety and technical protocols to give the best quality and value supply.
As to shifts in consumer demand this quarter, customers in general are keen on adding something different to their lines; they are becoming more and more interested in provenance and named varieties.
The growing trend of supplying additive- and preservative-free ingredients is sure to accelerate, and is an important trend as far as the company is concerned. We have worked hard to remove items such as sulphur dioxide from our processing facilities.
Organic is an area we are looking into developing ingredients for, and an issue we think will increase in importance in the future for prepared produce. Currently, volumes of organic prepared potato products are very low, and it will be interesting to see if these rise to economic levels.
I believe that the level of capital investment needed to sustain both new and existing products will continue to be more difficult to justify. For example, stainless steel prices have resulted in new processing equipment becoming very expensive.
I believe the industry will become more and more competitive in the future, and this will make it difficult for new companies, unless they have a unique selling point to offer. Rationalisation of the industry will continue as everyone seeks economies of scale.
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