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Pundit’s Mailbag — ‘Sunkist Has A Winner’ With Jarred Fruit Line

Jim Prevor’s Perishable Pundit, August 31, 2007

Our piece, New Sunkist Jarred Fruit Line May Lift Sales Of all Produce Items, brought this thoughtful response:

It would be my bet that Sunkist has a winner with the introduction of its jarred fruit line. My reaction is based on first-hand front line experience in the introduction of fresh-cut fruit to the retail trade during my days at Del Monte Fresh Produce. Just 10 years ago, the fresh-cut fruit category was being touted as the next big thing and that it would rival the growth seen in the packaged salad and baby carrot business. However, there were many challenges to this effort, most of which still remain, that stymied the growth.

First, consumers have a much higher “taste expectation” when it comes to fruit versus lettuce, broccoli and carrots. We expect fruit to always taste good in its natural form, but we are much more forgiving with vegetables. That is why God invented salad dressing.

While it is very possible to sometimes deliver true fresh-cut fruit to retailers that tastes good, it is virtually impossible to do it all the time. The discipline required in a typical fresh-cut fruit operation regarding raw product procurement and the maintenance of strict absolute production standards is frequently trumped by the pressure to operate at a profit. What a novel concept.

Second the shrink on fresh-cut fruit typically runs between 20 and 40 percent. The retail price points required, given these levels of shrink, makes the value proposition difficult to swallow, which has placed further limitations on growth. The one exception to this seems to be the higher priced combination party trays that seem to be doing well. They are typically purchased as gifts as an alternative to that $15 bottle of wine that we take to a dinner party.

Now back to the Sunkist product. I remember when Del Monte Foods (not Del Monte Fresh) introduced its Orchard Select line of fruit packed in the nostalgic mason jars. It was a brilliant marketing move on their part to position the product in the produce department even though it was essentially canned fruit in a jar. They then followed up with their single serving version which was simply the same product in smaller pieces, which is now canned fruit in a cup.

The retail community embraced this new “perceived” fresh-cut fruit entry with shelf life measured in months rather than days, and it became a big hit in the product department. And because it was refrigerated and merchandised in the produce department, Mrs. Consumer embraced it as well as it delivered a consistent taste profile with a long shelf life. The retail shrink, instead of 20 to 40 percent, suddenly dropped to single digits.

Now we have the Sunkist product, which appears to be very similar to the Del Monte offering. Sunkist, which in my opinion is one of the big five marquis consumer brands in the produce department which also includes Dole, Del Monte, Chiquita and Green Giant. Will it sell? I think so. One thing my 30 plus years in the fruit business has taught me. “The best selling fruit is the fruit that is on the shelf”.

— Woody Johnson
Vice President Sales & Marketing
Green Giant Fresh by Growers Express
Salinas, California

We appreciate Woody’s letter and find his points about the fresh-cut fruit business astute. We are also in agreement that the refrigerated jarred fruit category can easily sustain a second player and that Sunkist has good prospects in this space. As Woody shrewdly notes, the consumer can’t buy the product if it is not in the store and Sunkist, with its brand and contacts, seems likely to be able to get the product on the shelf.

A big question mark, though, is how Del Monte Foods will react. Coming from the grocery end of the business, they are used to things such as slotting fees, and if they see Sunkist as a real competitor, we bet they will try to tie up the space by buying it up and, thus, freeze Sunkist out of the game. Whether Sunkist and its licensee, Old World Industries, are prepared to compete on that level, we may well find out.

Sunkist also hasn’t publicly defined exactly how it will sell the product. Will it have salespeople specializing on this product, or is this just one more thing for a citrus salesperson to do? It will probably do better if it has a dedicated sales force.

What is also interesting about Woody’s comments is the issue it raises regarding the meaning of “fresh” to consumers. We thought it funny that in the link we ran in the article in which we pointed out that Sunkist’s last licensee was a start-up advertising on the internet to find co-packers, the company also advertised that it was looking to secure "canned fruits" to use as raw material for the re-packed product. These fruits included Mandarins, peaches, pears, apricots, pineapple, tropical fruit and mixed fruit.

This is clear evidence of what Woody points out… that an old-style glass canning jar and a “MUST BE REFRIGERATED” label can transform a canned product selling on the grocery shelves for pennies into a “fresh” product that sells for big bucks.

One wonders when the global warming folks are going to start protesting against the needless expenditure of carbon used in refrigerating products that do not require refrigeration!

One of the interesting things about produce brands is that because, traditionally, stores carried only one brand of each produce item, all the long established major brands are not upscale. When Wal-Mart started its produce effort and Bruce Peterson decided to use produce brands to gain equity in produce — an area where Wal-Mart had no equity — he had no problems getting branded produce. It never occurred to, say, Chiquita or Ocean Spray, to decline to be sold in that venue.

In deli, however, Boar’s Head wouldn’t sell to Wal-Mart — just as loads of brands of clothing won’t sell to them.

At retail we can find the Del Monte logo on both jarred, refrigerated product and in canned product — the brand may provide some level of comfort and safety to consumers, but the value added seems to be a glass jar and the need for refrigeration.

We wish Sunkist nothing but success. The real problem is that with the citrus used in the jars likely to come from China and other countries, the ownership of Sunkist is likely to be unwilling to invest a lot of money to battle Del Monte Foods if it decides to fight, which it probably will.

One possible outcome: as Woody mentions, Del Monte Foods started out with its Orchard Select line. It then acquired Unimark’s Sunfresh brand in 2000. The wild card is Old World Industries. If it doesn’t have the stomach for the fight, perhaps, in time, Del Monte Foods will also acquire the Sunkist license in this product line.

We appreciate Woody’s letter and look forward to watching Sunkist roll out. We wish them well.

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