By JILL ROSENFELD
Now that pre-cut, pre-washed lettuce has become almost ubiquitous in supermarkets nationwide, what does Ready Pac Produce Inc. have on its menu for future growth?
The Irwindale company has licensed its name and processing techniques to a Cincinnati operation, which has begun processing and packaging cantaloupe, honeydew melon, grapes, and various citrus and tropical fruits.
"We think fruit will be as big a category as vegetables," said company founder and Chief Executive Dennis Gertmenian. "In fact, we argue that it's more inconvenient to cut up a cantaloupe than a head of lettuce. Our sales of fruit have been doubling every year. The obstacles have more to do with the technology than with anything else. We needed to improve the shelf life, the price point, the packaging and the quality."
Dick Spezzano, a produce and floral consultant who has been working for Ready Pac, said that within four years, cut fruit could represent as much as 30 percent of sales. "That's the scope of its potential," he said. "As volume increases and technology advances, they'll get the normal increase in productivity and other synergies," he said.
About half of Ready Pac's revenues come from sales of bulk cut vegetables to restaurants. The other half comes from sales of pre-cut, pre-washed iceberg and gourmet lettuce blends sold in supermarkets.
On the retail end, Ready Pac controls about 65 percent of the Southern California market for pre-cut lettuce. Nationally, Ready Pac has a market share of about 14 percent, said Mike Celani, senior vice president of retail sales. Only two other companies, Salinas-based Fresh Express and Westlake Village-based Dole Foods Co. Inc., have a larger share of the market.
The fresh-cut packaged salad industry has been growing tremendously, thanks to new packaging that has increased the products' shelf life, and the demand for convenient, fresh foods. Salad sales have driven Ready Pac's growth, doubling its revenues in the last four years, said Gertmenian. Revenues are projected to be "in the neighborhood of $240 million" for 1998.
"Now companies are introducing more vegetable mixes, such as stir-fry mixes and soup mixes," Edith Garrett, president of the International Fresh-Cut Produce Association.
Companies are putting together salads with ready-to-eat pastas and other foods, she said. And fresh vegetables are straying from the produce section, ending up on shishkabob skewers in the meat department, and in "overwap" trays with other bean soup or meat stew components.
Cut fruit has also been keeping the industry very busy, although the volume has not nearly caught up with the vegetable products, said Garrett. "It's wetter, sweeter, and has a shorter shelf life than vegetables," she said. "They still have to make some adjustments in packaging. Fruits are more easily damaged."
Ready Pac has just launched its fruit venture, and is testing its products in Stater Brothers and a few other markets.
Spezzano said there is a strong demand from supermarkets for the cut fruit, because the products currently being offered are processed by store employees. "There's a major desire to discontinue doing that because of the food safety issue, and sanitation, whereas Ready Pac does it in one central place, and they use state-of-the-art sanitation and food safety techniques," he said. "The entire plant is dedicated to cutting fruit. They have in-house laboratories and everything else, so the chance of error is really slim."
But competition looks to be tough, said Garrett. "There are regional processors all over the country cutting fruit," she said.
And for a centralized operation like Ready Pac, the challenge will be doubly tough because of fruit's short shelf life. Whereas salads last between 10 and 14 days, fruit only lasts between six and eight days, she said.
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