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Bidding for school programs results in healthy profits

WASHINGTON — Funding for federal programs that support fresh produce deliveries to schools is skyrocketing and so are profits for produce companies that have tapped the young market, panelists said in an Oct. 1 session at the United Fresh Produce Association's Washington Public Policy Conference, here.

Boosting kids' consumption of fresh produce and tapping the youth market are priorities for United Fresh and they're paying off. Companies such as Del Monte Fresh Produce, Gold Star Foods and Muir Copper Canyon Farms shared success stories from jumping into the new market.

Phil Muir, present and chief executive officer of Salt Lake City-based Muir Copper Canyon Farms, noted the budget for the Department of Defense Fresh program has increased more than 200 percent in recent years, while the U.S. Department of Agriculture's Fresh Fruit & Vegetable Program's budget has jumped more than 2,000 percent.

"What customer do you have that has a growth curve like that?" Muir asked.

With the smart snack program being rolled out in 2014, more market opportunities are expected, he added.

His company saw an 800 percent increase in sales volume from 2006 since it began supplying schools with fresh produce. Muir offered plenty of advice to companies thinking of tapping the school market.

Companies should get to know school purchasing practices, offer a lot of variety in produce and come up with solutions for schools in terms of marketing, packaging and educational messages about fresh produce.

Recognizing that a new snack program is coming in 2014, Muir said his company is developing a juice product for the first time that can be included in the bidding package for next year.

Gold Star Foods has been in business for more than three decades but is new to the produce market and sees the potential payoff of reaching young children in the school lunch program -- a $1.4 billion market.

In 2011, Gold Star Foods sold no fresh produce, but fresh produce represents 18 percent of sales in 2013, said Sean Leer, vice president of sales for Global Star Foods.

Leer said the company has had to expand its cooler twice due to increases in sales and has doubled its sales-per-meal figures.

For the future, he sees a fragmented market that could pose opportunities for a national or regional footprint in school fresh produce sales. That would be one way to improve quality and take care of costs, he said.

All of Del Monte Fresh Produce's nine fresh-cut produce facilities in the United States supply schools, said Dennis Christou, vice president of marketing for Del Monte.

Four years ago, Del Monte started testing fresh produce vending machines with an eye towards the school-aged children market.

There have been challenges in designing and operating vending machines that can accommodate temperature needs for fresh-cut produce and bananas, along with ensuring perishables are switched out regularly, he said.

But Christou said Del Monte sees the new vending machines as an investment in growing a new market of young children who will be parents and teach their children about the benefits of eating fruits and vegetables.