PRODUCE MARKET REPORT

Fruit Report                                      Date: May 26th, 2010

Apples

B.C. storage varieties continue to wind down for the season however the Washington storage deal remains to be quite good with a number of excellent varieties still available which include Gala, Fuji, Granny Smith, Red & Golden Delicious, Jazz and Pink Lady. New Zealand Gala Apples now available in limited supply.

Berries

Excellent value available on all listed varieties of Strawberries, Blueberries, Blackberries and Raspberries. We should see “pint” Blueberries available in about two weeks. With early California Stone Fruit still pricy fresh assorted California / Mexican berries is still your best value in the produce department. Display front & center.

Cherries

California Cherries now available in good supply with costs down about 12% from last year, quality is looking quite nice. So far consumer demand is very promising, as far as Washington and B.C. is concerned we are expecting crops to be delayed by at least two weeks this year due to unseasonably cool weather this spring.

Melons

New crop Cantaloupe and Honeydew now available in good supply with excellent quality, although priced higher than last year we are starting to see prices fall as supplies move out of Mexico into Southern California. We expect to see price hikes of over 20% on Seedless bin Watermelon as crops move from Mexico to Arizona and then California, even with the price increases Whole Seedless Watermelon prices are comparable to the start of last year’s season.

Citrus

Although the Navel market is nearing the end of the California season we are quite impressed with over-all quality this year. The fruit remains to be firm, sweet and juicy, we do expect to see prices elevate for next week. Good supply still available on easy to peel, seedless Peruvian Satsuma Mandarin Oranges, available in bulk 22lb and 6x3lb units.

Grapes

For the record Chilean Grapes are now finished for the season as we enter the Mexican/California markets. Green Seedless Perlettes and Red Flame Seedless now available in good supply as consumers move towards these new crop beauties. We expect to see prices drop quickly over the next couple of weeks making these new crop Seedless Grapes very Ad worthy.

Stone Fruit

We now have available in good supply new crop California Nectarines, Peaches and Apricots with new crop Plums only a couple weeks away. With pricing comparable or better than last year we expect to see strong consumer demand and with excellent volumes this season. Although the fruit sizing is small we expect to size up quickly over the next few weeks.

Tropical Fruit

Excellent value still available on Latin Pineapple, Haden Mangos and volume filled Avocadoes.

Vegetables

Asparagus

With the Washington Asparagus deal finished early we were fortunate to purchase new crop out of friendly Manitoba. We hope to see steady supplies well into June. Quality this week has been excellent with strong retail demand.

Broccoli & Cauliflower

Broccoli pricing remains to be competitive with good supplies available out of central California. Cauliflower markets remain to be tight with high pricing however we are now seeing signs of this easing next week as supplies start to increase. Quality is excellent on both commodities with strong sales.

Celery

No major market changes to report this week with good quality available. Please trim and crisp before displaying to extend shelf life and enhance flavor.

Cucumbers

Markets stable with no changes to report this week. For added variety and selection be sure to offer your customers the convenience of Baby English Cucumbers available in 8x5 pack units or for added price value 4x5lb unwrapped English Cucumbers.

Corn

Beautiful quality this year on new crop California Desert Grown Sweet Corn, the challenge is whether we receive Yellow, Peaches & Cream or Bi-Color. Pricing is down slightly from last year with strong consumer demand for all three varieties.

Lettuce

Due to cooler California weather this spring we have seen these markets tighten up with pricing up 10-15% over last year. The good news is the Salinas Valley is expecting nice weather to finally hit which should increase supply over the next few weeks. Overall we have not seen any major quality issues.

Onions

New crop varieties are now coming out of Washington State however prices have only decreased marginally on Dry Onions as these markets remain to be at all time highs with no major price relief on the horizon. Green Onion markets remain to be very competitive with excellent quality available.

Peppers

New Crop California Green Field Peppers now available at seasonal market prices, quality is beautiful. B.C. / Alberta Greenhouse colored Peppers available in good supply with good pricing on Red Hothouse and slightly higher pricing for Yellow and Orange. For added value and impulse purchasing be sure to offer your customer’s 5x2lb mixed bagged Peppers and 3-pack Stoplight Peppers.

Potatoes

Domestic storage Potatoes continues to offer the best value in the produce department with prices far lower than last year. Over-all quality on Russets and Reds continue to be very good along with strong demand at retail. We now have an excellent supply of new crop California Reds and Whites available in 10x5lb bales and 50lb bulk packs, pricing is very attractive this season. For those of you who prefer the convenience of a smaller pack size we now carry 12x2lb Creamer Potatoes in White, Red and Yukon.

Tomatoes

If 33,000 pounds sold weekly is any indication we are expecting an excellent summer season on assorted Hothouse and Field Grown Tomatoes. Current tonnage and consumer demand is very strong on the entire Tomato category.  Be sure to take advantage of this and expand your displays now by moving the category up towards the middle of the produce department. Variety & Selection is Key!

The Weather Story

California weather although pleasant under partly cloudy skies with temperatures in the low to mid 20c range is certainly not experiencing the heat that they have had in previous years. The availability of product in most cases is still quite good however the cooler weather has slowed the growth of certain products. Cool weather further up the coast in Washington State brought the Asparagus crop to a quick halt resulting in us moving into Manitoba product sooner than expected. Florida and Mexico on the other hand seem to be getting their fair share of sunshine and heat with temperatures moving into the 30c range.

Here in Western Canada namely B.C. and Alberta the weather situation is rather disappointing with isolated rain and unseasonably cold weather. We can deal with the much-needed rain but temperatures in the 7-10c range tend to restrict consumers from seasonal activities and the purchases associated with them.

Thankfully there’s lots of summer ahead and hopefully the weather will not disappoint so bring on the heat!

The Buy & Sell Side

It’s interesting how things change from one year to the next, the spring of 2009 for wholesalers and retailers alike were very aggressive in regards to record sales. Overall, last year was one of the strongest years we have seen in some time with the exception of certain highly competitive pocket areas. The great recession as I like to call it left many of us feeling confident and optimistic about the future of retailing.

Now it’s the spring of 2010 and many of us in food wholesaling and retailing are scratching our heads saying what happened and where did the business go? Technically we are told that the recession is now over as the economy starts to breathe again and unemployment is starting to recover in many job sectors.

If this is the case than why are sales struggling this year in the food business while other sectors in general merchandise appear to be enjoying some excellent growth at least that’s what the numbers are suggesting. There’s no question that consumers want to spend and resume past buying practices at least on certain commodities. From auto sales to shoes sales consumers are starting to feel confidant and secure once again at least until the next bubble bursts or international catastrophe.

It’s not that consumers have stopped purchasing food or even “sin” foods or prepared foods but how they shop for these food products has changed. Call it a delayed reaction to the recession if you will but many consumers at all income levels have become more price or value conscious. What we are seeing is a conscious effort to shop and live by the flyers that are delivered to your door on a weekly basis. If it’s not on sale or at least value priced the purchase may be forfeited that particular week or shopping occasion. After all, someone will have it on sale sooner or later!

The percentage of advertised products purchased by consumers is likely up substantially over the last six months or so where regular priced merchandise has gone the other way.  My best estimation is the percentage of advertised item penetration has gone from 25-28% of total sales to 30-35% at least in the “produce department”. This is a self-fulfilling prophecy where wholesalers and retailers in their good judgment attempt to increase or maintain customer count have become considerably more aggressive in promoting their Ad mix and Ad price points. The end result is higher Ad markdowns, eroding profitability and in some cases a continuing decline in over-all business. With the entire industry at wits end to hold on to market share there is no simple solution other than to go back and review the basics, understand the numbers, current trends and reformulate an action plan.

In some cases the action plan is to simply hold on by controlling costs, inventory levels, supply costs, labor and reduce the cost of goods through aggressive purchasing. Here are some other important points to consider.

Evaluation

-         Evaluate assortment and category management of what sells and what doesn’t.

-         Evaluate variety & selection in comparison to local area competitors.

-         Evaluate inventory levels, stock control, packaging supplies and ordering procedures.

-         Evaluate retail price files to ensure competitiveness with local area competition.

-         Evaluate customer counts and average purchases.

-         Evaluate current sales trends, department penetration to total store sales and gross profit performance.

-         Evaluate advertising performance & in-store feature performance.

-         Evaluate labor effectiveness and coverage during critical peak sales periods.

-         Evaluate merchandising, marketing & seasonality of your produce department.

-         Evaluate over-all quality control, freshness, product rotation and department shrink.

-         Evaluate cleanliness and over-all department presentation.

-         Evaluate current service levels and customer satisfaction.

Implement

-      Competitive pricing structure that meets or beats local area chain stores.

-      Increase variety & selection to build category sales and profitability.

-      Effective in-store feature program to build average purchases, (4-6 items weekly).

-      Consider EDLP pricing on selected items with long-term stability.

-      Promote wholesaler Ad programs with “front & center” displaying on key items.

-      Consider additional promotional activities, “Sidewalk sales”, “Moonlight Madness”, “Outdoor Farmers Market Sale” or “Produce Managers Sale” Etc.

-      Ensure effective labor coverage during peak sales periods.

-      Implement a “First-in-first-out” quality and freshness first program.

-      Implement proper ordering & stock control based on realistic sales and labor targets.

-      Be current and seasonal on department merchandising presentation.

-      Establish a close working relationship with your wholesaler for additional price support.

-      Support and promote local producers when in season.

-      Make good use of signage using the right size sign for the right size display.

-      Establish a daily/weekly systematic cleaning and sanitation program.

-      Be of service, be available and be knowledgeable when assisting your customers.

-      Recognize, trust and support your employees for their efforts in supporting your business or department.

Have a great week everyone!

Keith