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fresh cut marketing packaging
Managing Processing Pitfalls
Demand is growing in response to escalating health awareness, packaged food and ready-to-drink beverages.
MBY CHUCK GREEN
ore retailers are relin- quishing control of cre- ating fresh-cut fruits to local and regional pro- cessers, rather than doing
the cutting themselves.
In fact, the fresh-cut industry is expanding
more rapidly than other sectors of the fruit and vegetable market due to its supply of both the foodservice and retail industries, as well as its expanding production and access to new markets across the globe, according to a study, Processing and Preservation of Fresh-Cut Fruit and Vegetable Products, published in the November 2016 issue of London-based Intech- Open, a global publisher of scientific journals.
The growth rate of the sector has accel- erated in the past few years and is expected to register a compound annual growth rate of 8.3% through 2023, according to the study, Fruit and Vegetable Processing Market — Global Trends & Forecasts (2019 - 2024), which is from Hyderabad, India-based market research firm Mordor Intelligence.
What’s behind the demand for this market? Health awareness among consumers, increased demand for convenient food and ready-to-drink beverages and increased demand for fresh-cut fruits and vegetables are clear drivers.
For retailers, precise packaging of fresh- cuts helps increase the shelf life of products which, in turn, leads to increased trade.
SAFETY FIRST
Food safety is also a factor, which is a key reason processors are gaining more traction, says Darin Eastridge, produce buyer for Chandler, AZ-based Bashas’ Family of Stores, which has more than 130 stores throughout Arizona and in New Mexico.
Fresh-cut processors must follow proper safety and sanitation procedures to prevent foodborne illness, according to the U.S. Department of Agriculture Food and Nutrition Service. Most processing facilities will test for fecal coliforms, and generic E.coli (also known
104 / JUNE 2019 / PRODUCE BUSINESS
as Biotype I/II) to ensure Environmental Protection Agency potable water standards are being met. Water testing of produce wash water may be done throughout each shift as a precau- tion. Although not mandated, the produce processing industry typically tests for presence of specific pathogens on the product, including Listeria spp, Salmonella and E.coli 0157:H7.
What’s more, all produce processing compa- nies should have a microbial testing program. However, some conduct testing in-house, while others may outsource this verification step.
According to Mordor Intelligence, high capital investment and increased concerns over hygiene and safety are expected to restrain the fruit and vegetable equipment market growth.
THE TRUE COST OF CUTTING: LABOR
Besides investment in equipment, Eastridge says cutting fruit in-house also requires signifi- cant investment in labor and training to achieve the food safety standards required. “Food processor companies have controlled environ- ments designed for cutting fruits and vegeta- bles, resulting in a consistent variety.”
Not only that, various regulations regarding fruits and vegetable processing are laid by orga- nizations — such as Canadian Food Inspection Agency, the U.S. Food & Agricultural Orga- nization and European Food Safety Authority — that need compliance from fresh-cut proces-
sors. This is expected to pose challenges for fruit and vegetable equipment suppliers. Innovations and technology advancements provide growth opportunities to the key manufacturers.
Then there’s the issue of labor at store level, which may be cost-prohibitive for retailers, says Joe Granata, director of produce sales at FreshPro Food Distributors in West Caldwell, N.J. Labor costs already take up approximately 14% of grocers’ average revenues, according to estimates from the National Grocers Associa- tion, and those costs could rise further as more states and cities raise their minimum wages.
If that occurs, fueled by government action and industry competition, some grocers and food retailers are developing ways to keep profit margins intact without passing along costs to customers, according to a 2017 industry anal- ysis from Boston-based global management consulting firm L.E.K. Consulting.
L.E.K. consultants point out that while the easiest way for a retailer to respond is to try to pass price increases to the consumer, the savviest food retailers — the ones who may win lasting advantage — are fashioning strate- gies that maintain margins and keep customer prices in check, say Chris Randall and Rob Wilson, managing directors in L.E.K. Consult- ing’s Consumer Products and Retail practice and authors of Rising Labor Costs – and What Retailers Can Do About Them.