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Retail View: Back to the future with packaged produce

A young shopper surveying the retail produce landscape over the past decade would most likely conclude that packaged produce items have gained market share from bulk items and call it a trend. The observer a bit longer in the tooth might note the same thing, but determine that bulk might make a renaissance, as it has so many times before.

This time might be different.

There are several factors that are seemingly driving this shift to packaged produce, and some of them do seem irreversible.Inhouse-packagingThis package of cut Brussels sprouts was prepared in the backroom as stated by the sticker on the front of the package.

Anthony Totta, founding member of FreshXperts, a produce industry consulting firm, spent the 1980s in the retail industry. That was before the value-added revolution that brought a lot of packaged produce to the department, but after the 1960s and ‘70s when packaging proliferated in most of the nation.

Totta recalls that many shoppers hit the stores in that era with a list in hand and a specific budget in mind. The housewife — and that’s who was shopping — liked the price certainty of packaged produce. But as time went on, Totta said bulk displays, giving the consumer more choice, once again became popular. For much of the past two decades, value-added with its packaging gained market share but bulk displays of many items were also very evident.

But now packaging appears to be taking over again.

Dick Spezzano of Spezzano Consulting Service in Monrovia, CA, estimates that even in California, which has long been a devotee of bulk displays, about 65 percent of produce sales involve packaged items. Not only is the value-added department continuing to grow, so are packaged or bagged offerings of many traditional bulk commodities such as grapes, berries, apples, citrus, potatoes and onions. Pure bulk items are few and far between.

“Think about it,” said Spezzano. “Nothing new is coming in bulk. All the new items are packaged.”

That tends to be true whether it’s a value-added fresh-cut product or a new grape, apple or citrus variety. Marketers of even these traditionally bulk items are packaging their new offerings as specialty items in clamshells or pouches.

Totta listed food-safety concerns and convenience as two of the various drivers of this packaging trend. There is a perception, he said, that a product in a package exposed to less handling is a safer item. And the convenience has been well chronicled. Two-income families are looking for grab-and-go items where much of the preparation has already been done.

“They are willing to pay for that convenience,” said Totta.

Ron Pelger, a columnist for The Produce News as well as owner of RonProCon, a produce consulting firm, isn’t quite ready to call packaging a trend, but he agrees that it has infiltrated several items such as grapes and berries.

“We no longer display grapes and berries loose,” Pelger said. “Packaging has actually made life easier, safer and more convenient for those two major produce items at the retail level. It has saved on labor and shrink immensely as well as preventing slips and falls on the sales floors. Packaging is a necessity these days.”

He said packaging also helps tremendously at the checkout stand, eliminating guesswork — and errors — by the cashier.

“This has encouraged retailers to handle more variety in the produce department that they didn’t in the past,” he said. “It helps increase sales.”

Longtime produce veteran Jack Bertagna, who retired recently after 50 years in the retail business, also has noted the increase in packaging. He said that produce trends tend to come and go, but he sees evidence that packaging on the rise again.

Spezzano said one interesting thing is that some retailers are now doing the packaging in store. It started about four years ago with a relatively primitive setup, he said. He mentioned several chains, mostly on the two coasts, that are doing tremendous business by offering fresh-cut fruits and vegetables, with the cutting taking place in the back room or by a local supplier.

Shrink is up a bit, but he said retailers are willing to live with that because sales are up by a much higher proportion. He noted that discussions with a particularly aggressive produce manager revealed that the in-house, fresh-cut department in that store is close to producing about 2 percent of total produce department sales.

“That’s more than the floral department in most stores,” Spezzano said. “That’s tremendous.”

Pelger said labels stating “Store-made fresh daily” or “Made right here” are a definite draw for the average customer, calling these labels a “silent sales rep.”

Totta thinks it is a bit ironic that in-store handling, trimming, cutting and packaging of the produce is coming back. In the 1980s, he said retailers did a lot of that work because they had to.

“We bagged celery, cut butts, trimmed leaves and packaged a lot of lettuce in house,” Totta said. “We tried to get away from that, though, because the cost of labor was too high.”

Today’s consumers, he said, have shown that they will pay for the convenience, and so a product with that extra back room labor can be priced accordingly.

Bertagna sees one competing trend that could stop packaging in its tracks: Organic produce doesn’t lend itself as easily to packaging, and it is registering big sales gains. “Organic sales will grow because the younger generation will force this growth.”

He added: “As you look at department layouts now, organics are from 10 to 30 percent in the stores, and some specialty stores even more. I truly think that we will see this trend flip completely over, where regular produce will become less than 30 percent in the department.”

If Bertagna is right, it would seem to fly in the face of increased packaging as the organic customer is seemingly more environmentally conscious and likely has a bias against packaging.