The Fresh Report

• Total consumer purchases of fresh fruits and vegetables in the U.S. during 2000 were $78.5 billion. The various retail channels that produced those sales are as follows:

P Direct Marketers ………… $  1.2 billion or 2%
P Retail Stores …………….. $38.0 billion or 48% (includes all formats)
P Food Service …………….. $39.2 billion or 50% (includes restaurants)

• The various channel participant values in generating total sales of fresh fruit and vegetables are as follows:

P Merchant Wholesalers …..  $ 51.6 billion
P Grower/Shippers ………… $19.7 billion 
P Imports …………………    $  5.5 billion
P Exports …………………    $  3.4 billion

• Most produce today still moves from grower-shippers through merchant wholesalers to retail food outlets (food stores and foodservice establishments). Between 1987 and 1997, the share of produce moving through merchant wholesalers, including wholesale produce markets, declined while the share of shipments to large self-distributing grocery retailers increased. Merchant wholesalers have survived by becoming larger, performing more functions and consumer services, and handling a large assortment of specialty produce items.

• Per capita consumption of fresh produce increased 12% during the period between 1987 and 1997. Consumers, responding in part to increased health concerns, are demanding year-round supplies of fresh produce items like grapes, strawberries, asparagus, mangos and melons.

• As food retailers continue to consolidate and expand and take advantage of economies of size, more firms are introducing supply chain management practices such as centralized procurement and E-commerce technologies to provide for continuous inventory replenishment. Industry consolidation, the introduction of new technologies, changing consumption patterns and new marketing and trade practices are important dynamic forces that are likely to continue to shape produce markets and market channels for some time to come.

• During 2000, U.S. grocery sales grew by 3.4%, reaching $570 billion (all outlets). In 2000, the retail food business continued to evolve away from traditional grocery channels, particularly toward super centers. Wal-Mart Super centers grocery sales (30% of total store sales) have reached $1.7 billion, making them the fourth largest food retailer in the U.S. In fact, Wal-Mart operates 862 of the country’s 1,283 super centers and is expected to open an additional 150- 180 in 2001. Other super center operators such as Meijers, Fred Meyer, Kmart and Target are also expected to add to their super center store counts. The total number of projected super centers by 2005 is projected to be 2,020.

• Wholesale Club stores also continue to grow, with both Costco and Sam’s Club planning to add 40 stores in 2001. BJs is also growing with 60% of store sales coming from food.

• In 2000, there were 127,000 grocery stores, which generated $472.7 billion in sales. Supermarket sales were $365.4 billion, or 77% of total food store sales.

• In 2000, there were 31,500 supermarkets with annual sales of $2 million or more. In 2000, the supermarket industry posted its highest net profits in nearly three decades at 1.25% of sales. Operating income, at 3.03%, was near the 10-year high of 3.05%.

• The supermarket share of retail produce sales was 88% in 1998 (super centers were 10%). The produce share of total supermarket sales was 12.8% in 1998 and is projected to be 14.5% by 2004.

• Vegetables account for 64.1% of fresh produce sales for supermarkets and fruits represent 34.4% of produce sales (the balance is for miscellaneous items like fruit baskets).

• Avocados accounted for 1.3% of total supermarket produce sales in 1999, melons accounted for 4.9%, pineapples represented 0.4% and asparagus accounted for 1.1% of produce sales.

• In 1999, total U.S. fresh produce consumption was 322 lbs./person (a growth of 13 lbs./person or 4% since 1995). Fresh vegetable consumption in 1999 was 190 lbs. / person, an increase of 6 lbs. / person or 5%. Fresh fruit consumption in 1999 was 132 lbs./person, an increase of 6 lbs./ person or 5%.

• The following will provide a summary of per capita consumption growth for selected produce items:

• The volume of fresh produce imports in 1999 increased 2% but has increased by 23% since 1995 and is expected to grow by 13% in 2001.

• Fresh vegetable imports were forecasted  to increase by 7% in 2000 (f.o.b. – point of entry) and were valued at $1.877 billion in 1999. Fresh fruit imports were forecasted to increase by 1% in 2000 and were valued at $2.846 billion in 1999.

• In 1999, fresh asparagus imports were valued at $66 million (f.o.b. – point of entry), avocados were valued at $45 million, cantaloupes were valued at $72 million, honeydews were valued at $62 million, mangos were valued at $98 million, and pineapples were valued at $104 million.

• In 1999, fresh asparagus imports represented 49.4% of total yearly supply, avocado imports represented 27% of total supply, cantaloupe imports represented 36% of total annual supply, honeydew imports accounted for 18% of available supply, mango imports represented more than 98% of available supply and imported pineapples represented 75% of total annual supply.

• The amount of produce procured directly from the grower/shipper continues to increase. Much of this direct buying is greatly facilitated by an increase in the number of field and regional produce buyers.

• More growth in “partnerships” between growers, suppliers and shippers is expected. These “partnerships” are turning into teams from each company being assembled in buying and selling offices that work in partnership to create mutually acceptable growth.

• As “partnerships” continue to grow and become more mutually beneficial, shifts in responsibility for key tasks occur. As a result, grower/shippers are taking on the responsibility for more channel functions in an effort to continually “add value” to their partnerships.

• Category management continues to gain strength as more supermarket companies are engaging in category management for their produce departments. The Produce Marketing Association, whose membership includes nearly all of the leading supermarket chains in North America, has identified category management as one of the primary drivers for improving selling margins and gaining closer linkage to their primary suppliers.

• The distribution system that supports the produce industry is in a state of gradual and continuous change. Today, retailers and grower/shippers believe that there are more critical issues impacting the supply chain than in the past and they believe this list will grow and the issues intensify in the future. At the heart of these issues there are three underlying concerns for both grower/shippers and produce retailers: food safety, quality control, and profitability.

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