The Added Value of Private Label
For years, consumers have turned to value-added produce for its freshness and convenience. And recently, the category has seen some rather healthy sales growth.
During the first quarter of 2013, value-added fruit posted dollar growth of 10.7 percent and unit sales growth of 2.9 percent compared to the same period the previous year, states the first quarter 2013 edition of “Fresh Facts on Retail,” a report issued by the Washington, D.C-based United Fresh Produce Association and the Nielsen Perishables Group, West Dundee, Ill. Fresh cut fruit was the top-performing variety, the report adds, accounting for 81.5 percent of category sales.
Value-added vegetables also experienced dollar and unit sales increases during the same period, the report states, climbing 12.7 percent and 12.1 percent, respectively. Vegetables packaged as side dishes saw the greatest unit sales growth during the period and accounted for 57.7 percent of value-added vegetable sales.
“Value-added produce remains a key driver in the produce department,” says Kathy Means, vice president of the Produce Marketing Association (PMA), Newark, Del. “Though the recession affected value-added sales, this category is still important to many consumers and a key part of any produce departments offerings.”
And according to Means, private label offerings in value-added produce could help retailers secure customer loyalty.
“The trends for value-added, in general, are just as important to private label products as to national brands,” she explains.
Defining the category
Value-added produce can be as simple as a tray featuring halved or quartered fruit with plastic overwrapping, fresh-cut fruit in chunks or cubes packaged in a plastic container, or perishable fruit found in juice or preservatives sold in jars and cups, states “FreshFacts on Retail.” It also can include vegetables served up in a microwave-safe bag for use as a side dish, vegetable trays (with or without dip), smaller portions of vegetables packaged together for snacking purposes and meal-prep items that are ready for incorporation into a recipe, it adds.
But what makes shoppers want to purchase value-added produce? According to PMA’s August 2011 “Consumer Attitudes Toward Packaged Fruits and Vegetables” report, six factors can help influence consumer purchasing behavior in the category:
- Regardless of how the fruit or vegetables have been packaged, value-added produce must be convenient, or the consumer will balk at the higher prices associated with the packaging.
- Consumers want to be able to see and inspect the packaged produce the same way they would bulk items; packaging that prevents consumers from doing so becomes a deterrent to purchasing.
- Consumers like seeing recipes on produce packaging. Recipes are one way to demonstrate the convenience — and therefore, the value — of the packaged produce, and they encourage trial by individuals who would initially be hesitant to try a new produce item.
- Consumers want specific information on the labels, including use-by or sell-by dates, nutrition information and the location where the produce was grown.
- Packaging size is very important to shoppers. Providing a variety of sizes — both smaller sizes for single-person and small households and larger sizes for bigger households — will appeal to consumers.
- Consumers are interested in the environmental impact of the packaging. If the packaging is recyclable, the label should clearly indicate that fact.
How to attract
One way retailers could attract consumers to their store brand value-added produce is by offering innovative packaging that differentiates the private brand from the national brand, Means says. The packaging could differentiate by extending the shelf life of the fruit and vegetables, maintaining their quality or more effectively showcasing the products, she adds.
Providing a unique product also could help drive sales, says Kelli Beckel, senior marketing manager for Nielsen Perishables Group.
“The number of unique value-added fruit items selling on store shelves increased 6 percent in the latest 52 weeks [ending July 27, 2013]; fresh-cut fruit drove this growth, increasing the number of unique items selling 17 percent,” she states.
Beckel notes that freshly cut mangoes, watermelon, apples and mixed fruit drove the growth. She believes that freshly cut fruit satisfies the growing consumer demand for convenient, healthful and fresh snacking options.
Additionally, offering a desirable selection of private label value-added produce gives retailers another opportunity to gain consumer loyalty, Means says. However, retailers must ensure that each customer has a great experience with their own-brand value-added produce.
“A bad experience will [ensure] that customer won’t buy again,” and he or she will tell others not to buy it, Means adds.
To prevent a bad experience, Means recommends that the retailer first ensure the quality of the produce through proper ordering, handling and merchandising. Then, it must market the products in a way that focuses on the needs and desires of customers — and makes them feel understood.