Category Review: Canned Fruit and Vegetables - Thinking Inside the Can

April 15, 2008
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A quiet revolution has been taking place in the fruit and vegetable category during the past few years. Fresh and frozen alternatives underwent a makeover - complete with ultra-convenient packaging (e.g., steamable and single-serve) and upscale product mixes, while their canned and bottled counterparts found themselves a bit lost among the shelves.

Indeed, both the total canned/bottled vegetable category and the total canned/bottled fruit category experienced a decline in unit sales during the 52 weeks ending Dec. 30, 2007, according to data from Chicago-based Information Resources Inc. (IRI), posting 5.0 percent and 3.5 percent drops, respectively (data exclude Wal-Mart). Private label fared even worse, with unit sales falling 5.4 percent and 4.5 percent.

But retailers might be able to tempt consumers back to the canned and bottled set, especially in the current uncertainty-laden economy. After all, these staples cost much less - and have always been convenient.

However, the innovations currently taking place inside the can probably will be even more important to growing these categories.



“[We have] a very favorable outlook, as the growing consumer trends of greater health and nutritional awareness bode well for the entire fruit and vegetable category,” says Kathy Sheldon, vice president, category management for Seneca Foods LLC, Modesto, Calif.


A Little Excitement, Peas

In the overall vegetable arena, premium products should remain important, as more consumers “trade up” to higher-quality ingredients, says Mintel Inter-national, Chicago. Manufacturers and retailers have room to make vegetables more appealing to shoppers, the company adds, “through new variants or visual appeal.”

Adding some excitement to the canned and bottled side are upscale items such as artichokes, peppers, sun-dried tomatoes and Asian offerings, notes Bill Butler, chief operating officer for Norwood, N.J.-based Mitsui Foods International, a wholly owned subsidiary of the global Mitsui & Co.

“There is a definite movement across the country with many of the major retailers to develop an upscale private brand that is in addition to their [everyday] private brand,” he says.

Mitsui produces items such as marinated artichokes, sun-dried tomatoes in olive oil, roasted peppers in olive oil, white and green asparagus, and pickled baby corn from Asia - all in glass. The upscale items also bring a taste benefit to the table, says Evan Hyman, senior project manager for Mitsui Foods.

“You know it’s something marinated in an olive oil, and you’re not necessarily going to be able to prepare that at home in a short time,” he says.

Such specialty items also represent a boost to the retailer’s bottom line, Butler stresses.

“Maybe 10 years ago, they were provided on the shelf [by] DSD distributors under a whole hodgepodge of brands,” he says. “Now [retailers] are putting all that stuff under whatever their upscale brand is, and they’re getting lower pricing than through a DSD house, and it all goes under their private brand sales base.”

Some retailers are planning complete lines of canned and glass items, he adds, including myriad renditions of favorites such as artichokes, as well as combinations of Asian vegetables.

Emmanuelle Bommier, general manager for Millington, N.J.-based Bonduelle Inc., agrees that a bit of change is important to the canned vegetable category’s future growth - and not just the addition of private label specialty vegetables. In Europe, her company offers what she terms “upscale basic” vegetables - canned goods such as Mediterranean-style mixes with high-quality eggplant, zucchini and more.

Bommier says she’s fielded inquiries from customers who’ve traveled to Europe and sampled - and been impressed by - these high-quality branded items.

“I think that some people really could be ready to pay more to have a good quality [product] that’s ready to eat,” she says.

Even if prices were to rise a bit, the category still would be attractive to bargain-hunting shoppers.

“Frozen and fresh is not as good a value for your dollar, and it’s no better for you,” says a spokesperson for Lodi, Calif.-based Pacific Coast Producers. “And it’s safe and tamper-proof and lasts longer. So there’s nothing better than canned; it’s just that people have forgotten about it.”



Recipe-Ready

Canned tomatoes and beans remain the bright spots in this category. Sales for the total “other” (non-green) beans category rose 4.5 percent for the 52 weeks ending Dec. 30, 2007, IRI data show, and climbed 8.9 percent in private label. As for canned tomatoes, data from New York-based Nielsen show total sales up 3.4 percent for the 52 weeks ending Jan. 26, 2008.

Creating new excitement in the canned tomato category are a suggested link between tomato consumption and the prevention of certain types of cancers, as well as recipe-ready value-added products, says the Pacific Coast spokesperson.

“U.S. consumers love the convenience of having to take fewer steps,” he says. “Private label has come a long way, too, in the past 10 years - the private label shares keep going up and up, and the packaging keeps getting better and better.”

The canned tomato consumer skews toward the older female head of household (35 to 64-plus), with canned tomato and tomato sauce consumption slightly higher among non-Caucasians and Hispanic consumers, reports Gary Petersen, marketing director, corporate brands for Elwood, Ind.-based Red Gold LLC. He adds that 81 percent of canned tomato users prepare a home-cooked meal three or more times per week.

Although it’s a mature category, the canned tomato sector is no slacker on the innovation side. Easy-open cans, aseptic boxes and glass jars have been launched on the packaging side, Petersen notes, while value-added flavors and innovative cuts have stirred up excitement within the can.

But such innovations have met with mixed results, Petersen says.

“Consumers rejected the glass packaging and have not responded favorably to aseptic boxes and pull-top lids,” he says. “Petite diced cuts, however, are the fastest-growing innovation in recent years. More changes are on the horizon, as canned tomato manufacturers attempt to meet the consumer’s needs for convenience, flavor and nutrition.”

Innovation in canned tomatoes (including a move toward all-natural ingredients) can work to differentiate one store brand from another, Petersen adds. But consumers are not just looking for the canned product - they’re also in search of recipes in which to use it.

“A successful recipe - one that endears the cook to his/her family and friends - can ensure repeat purchases if the product used has a unique flavor that is difficult to replicate,” he says. “Ro*Tel brand is a prime example of this. [Consumers] purchase Ro*Tel to make ‘Ro*Tel Dip’ or Ro*Tel Chicken.”

As for canned beans, their sheer convenience positively impacts their sales, says Frank Lynch, executive vice president for Faribault Foods, Minneapolis.

“There’s a lot of vitality in the canned bean business because there aren’t as many alternatives,” he says. “The alternative is buying [dry] beans, soaking them and cooking them - hardly a convenience item.”

Beyond convenience, a growing Hispanic population, the continued popularity of Mexican foods, and increased health awareness are driving strong growth in the bean category, Lynch adds. Lower-sodium items are gaining in popularity as well, as are more bean varieties and complex pairings with ingredients - to create, for example, a Caribbean-style or Santa Fe-style side dish.



Lynch suggests that retailers arm consumers with information about the positive nutritional aspects of their private label beans - and how to get more of the protein-packed products into their diets. Retailers also would benefit from bundling such offerings with the other ingredients needed to make a specific recipe, be it a soup, a chili or even a salad.


Looking Peachy

Consumers also are clamoring for excitement inside the fruit can - as well as the bottle and bowl.

According to Mintel, organic and natural products are key category trends in the overall fruit category, as are health claims that emphasize the benefits of fruit consumption.

On the traditional canned fruit side, consumers continue to seek out private label products that are equivalent to national brand quality - at a better price point, Butler says. But, in a situation that’s playing out similarly to what’s occurring in the vegetable arena, a growing number of consumers are acquiring a taste for imported upscale items. A few new favorites include mandarin oranges, tropical fruit salad and white and ruby red grapefruit.

For retailers, that can mean working with suppliers who source from a number of countries. Here, quality assurance is critical.

“We are the only importer in the United States that has a full-time English-speaking QA/QC team employed globally,” Butlers says.

Fruit bowls - the 4-oz. offerings started by Dole about six years ago - also are driving growth in the canned fruit aisle, the Pacific Coast Producers spokesperson notes.

“Any reputable retailer in the U.S. has a bowl program now, and they’re going like gangbusters,” he says. There’s still an opportunity - they’re only four or five years old in private brand, so [the category’s] still developing and going crazy.”

Also red-hot are Splenda-containing and fortified fruits, the spokesperson says.

“I believe the decision tree starts with the fact that consumers are looking for wellness [solutions], and most of the fortified or Splenda items have a sub-brand on them,” he says. “As soon as they see that very recognizable sub-brand, it stops them in their tracks and they say, ‘Hey, I can eat this.’ And that is really going to drive the category.”

Pacific Coast is packing “close to a million cases” of Splenda-containing products annually now, the spokesperson adds, whereas two years ago, it wasn’t packing any.

Ready for more good news? The consumers ingesting these products are new consumers, so their purchases aren’t taking away from other portions of the canned fruit category.

He expects to see the same type of behavior on the up-and-coming fortified side - a category Del Monte created last fall with the launch of Del Monte Healthy Kids canned peach chunks and fruit cocktail fortified with vitamins A, C and calcium.

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