Issue 23: Fresh Cut Produce

Issue 23
July/August – 1995
Story Title: Fresh Cut Produce
Author: Roger Fox

“The fresh-cut market is considered the ‘next frontier’ in Australian vegetable and fruit marketing, and trends in Europe suggest it has huge potential.”

The Fresh Cut industry is scarcely known in Australia, but it’s big business in Europe. Essentially the idea is to turn fresh fruit and vegetable products into a washed and packed item, ready to eat. Salad mixes are an obvious example and these are already starting to appear on Australian supermarket shelves.It describes the marketing of fruit and vegetable products as Known in Europe as the “New Fresh Concept”, it is a classic example of value adding.

One of the first countries to embrace the Fresh Cut technology was France, where it is now well established. A key player is Scalime France, a company which pioneered the Fresh-cut business in France and now specialises in licensing Fresh-cut technology throughout the world. The company has a joint relationship with Ready Pac in the USA, and is about to start a processing facility in Australia, in collaboration with Harvest Freshcuts Pty Ltd of Brisbane.

So what exactly defines the Fresh-cut industry? The French describe it as the ‘4th Range Market’ – where the 1st range is fresh produce, the 2nd range is canned, and the 3rd range frozen. describe it as the “4th Range Market” The 4th range market sees the utilization of new technologies in order to bring to consumers value added products, which are ready to eat, offer quality and security and have a limited shelf life. The technologies involved in producing Fresh-cut items include modified and controlled atmosphere, low temperature pasteurization and intermediate moisture (osmosis).

The emphasis is on freshness, for which cold chain treatment is essential at each stage of the product’s movement. No preservatives of any sort are used and his is also emphasized in the marketing of Fresh-cut products.

The official line from Scalime is that “4th Range Technology consists of methods to peel, wash, trim, cut, grate or chop fresh fruits and vegetables, and then pack them in such a way that the modified atmosphere generated within the pouches is optimal for the fruits and vegetables preservation and minimal for microbial hazard to humans.

The fruits and vegetables must be kept at a constant temperature of 0°C to 3.9°C (32° to 39°F), prior to sale to consumers and their shelf life will not exceed 5 to 13 days, depending on the individual vegetables used. The 4th Range of fruits and vegetables are marketed both through retail and institutional food services.

But the establishment of a fresh cut industry in France has not been without its hurdles. Nowhere is this more apparent than in the shake up that has occurred at the processing level. At its peak, there were over 70 Fresh-cut processors – now there are only 10! One of the reasons behind Scalime’s success has been its ability to utilize the latest technology developments from Alimentec, a French Research and Training Centre in Food Technology, located near Lyon.

Alimentec operates from a US$26 million complex performing applied research for the food and related industries. Three of their main areas of research are Air Technology (drying, maturing and conserving food), Hygiene and sanitation of food equipment, and packaging. Centre in Food Technology.near Lyon, nserving food); food equipment; and Packaging Technology.

Market Research
In developing the Fresh-cut market, Scalime has conducted market research to follow buying trends and create a profile of consumers. Their results show that about 20% of French consumers are buying Fresh-cut products on a regular basis. Seventy-one percent of regular buyers are from higher and middle income categories. The age group 25-50 makes up 2/3 of the sales volume. Most of the Fresh-cut products are consumed in urban areas of France, notably Paris and Lyon.

Consumption patterns show that the leafy vegetables account for more than 90% of the sales volume – 50% of these are salad mixes and 42% are a single leaf vegetable in a bag. The single leaf products are increasing in popularity, but there has been a significant decline in sales of chopped and grated products. New product sizes are developing, including family sizes (500g) and mini-formats (18-125g).

Seventy-four percent of fresh-cut products are sold on the retail market, while the remaining 26% are sold to the food service sector. According to Michel Bicheron, President of Alimentec and a partner in Scalime France, these proportions are expected to reach 50/50 by the year 2000.

The European Scene
At present, the UK is the fastest growing market in Europe, with a wide variety of products in the retail segment. products in the retail segment. The quality department store chain Marks and Spencer now sell 90% of their produce as fresh-cut. (This trend could repeat itself in Australia, since packaged fresh-cut products would fit in with the image of high quality food Halls such as David Jones, whereas loose green groceries would not).

Holland is a very big consumer of Fresh-cut vegetables, 30% in the food service sector and 70% retail. A lot of the volume is made of Fresh-cut vegetables for soup making and ready to cook mixes. It is however, a very competitive industry, with 40 processors competing in the market.

In Germany, consistent quality improvement in recent years has helped increased the sales volume. Prior to this, a long period of poor quality caused market decline and a very bad image for fresh-cut products in consumers’ minds. Five processors dominate the market, and sprouts and Asiatic type products are the fastest growing segments in the retail sector.

The Fresh-cut industry is relatively recent in Italy. Forty processors are currently competing on this market and production capacities are exceeding demand. Consequently, prices are low and quality generally poor. Overall, market growth is negative. Paradoxically, Italy is among the world leaders in Fresh-cut equipment.

The Danish market is dominated by 5 main processors. Eighty percent is Food service and 20% retail and the range of products is quite varied: eg. whits cabbage, grated carrots, iceberg lettuce, celeriac, sprouts etc.

According to Michel Bicheron, the European market for Fresh-cut vegetables is far from being homogeneous. France and the UK are leading the market at retail level with product and process innovations. Holland is a serious challenger. Germany and Italy are still in a fragile position due to a lack of quality. The remaining countries of Europe are still considered beginners in this market.

Most sectors of the Fresh-cut industry started in the 1980s, but few developed consistently over the last ten years. After several years of ‘trial and error’, there has been a resurgence recently, enhanced by consumers awareness of Fresh-cut and progresses made in the logistics-distribution area (the Cold Chain).

There is little export business of finished products between European countries, which tend to support their own markets. However, most of the raw materials are imported from Southern countries, especially during the Winter period.

The 5th Range Market – The Next Frontier
The 5th Range technology refers to vegetables which are pre-cooked under vacuum at low temperature. It was developed during the 1980s to answer the needs of Food service industries, mainly restaurant chains and catering companies. The products must be kept refrigerated and have a shelf life of 21 to 30 days.

The retail market for these 5th Range products has developed slowly, due to high consumer prices and limited shelf space. Potatoes represent 50% of the sales volume, while other vegetables available are carrots, zucchinis, Belgian endives and vegetable mixes.

Other examples of 5th Range products are fresh soups, and fresh purees, both of which can be quickly heated in a microwave ovens.

Research & Development
Over the last ten years, the Fresh-cut industry has been enjoying a high level of product, processing and packaging innovations, many of which have come out of France. Now, more R & D projects are being carried out with funding from the EEC. Among these are:

Termal treatments for fruit-based products using “acti-joule”, micro-wave and ohnic energy.
Improvements in hygiene and quality in ready to eat fruits, for example by using a small quantity of ascorbic acid.
Research into better adapted raw materials (varieties) for fresh-cut fruits and vegetables.
Research on the influence of product and packaging atmosphere on the growth and survival of pathogen micro-organisms.
Research into new packaging materials – for example biodegradable packaging.
The Fresh-Cut Industry in Australia
The Fresh- cut industry in Australia has to date been small and lacking any general market awareness. But all that looks about to change.

Queensland company Harvest Freshcuts hold the Australian license for Scalime of France, which also covers New Zealand and Asia. This arrangement gives them access to Scalime technology, which includes seed selection, production and building design, processing protocols and, processing protocols, machinery and ongoing research and development.

Rob Robson is the Director of The Harvest Group, parent company of Harvest Freshcuts. He estimates that current annual sales of fresh cut produce in Australia are unlikely to exceed $5 million – less than 0.1% of retail sales. According to Rob, the fresh cut category has existed in Australia since the early 1980s, but has been poorly addressed by retailers and processors. The food service area is reasonably well supplied, albeit with a relatively low quality product. The retail market is sporadically supplied with a product that is inconsistent and unreliable product. But it would not In both the USA and western Europe, trends indicate a major shift towards the consumption of minimally processed, ready-to-eat produce, in place of traditional whole produce. Rob quotes estimates which suggest that this trend will achieve 25% of all produce consumed in these markets within six years. Interestingly, these markets have also shown a steady increase in the per capita consumption of fresh produce, which has been attributed solely to the availability of products in the Fresh-cut category.

In the USA, where the fresh-cut industry has existed since1986, around 6% of produce sales are fresh- cut. The growth in 1994 was a staggering 93%. The industry in the US is now estimated at US$2 Billion at retail and $1.9 Billion for food service. This is projected to grow to $13.4 Billion retail and $7 Billion food service within 5 years.

According to Rob Robson, the emphasis of Harvest Freshcuts operation will be on high quality and consistency of product. The Cold Chain is integral to this – a temperature of 0° to 4°C must be maintained for shelf life, similar to fresh cream. For this to work, retailers will need to invest in multi-deck chilled cabinets.

Harvest Freshcuts are committed to World’s Best Practices and quality assurance standards. Their progression from a $250,000 pilot plant to a $5.5 million pilot plant indicates a high level of confidence in the capacity of the Australian fresh cut market to emulate trends overseas.