THE GREEN GIANT DOESN’T LIVE IN CALIFORNIA ANYMORE - Foodopoly: The Battle Over the Future of Food and Farming in America - page 51

“Fresh cut” is a category of shipper geared to selling fruits and vegetables to food service and retail
stores. Taylor Fresh Foods, a privately owned company, is among the largest suppliers of prepackaged
salads and fresh-cut fruits and vegetables, and it grew large because of numerous acquisitions. The com-
pany has plant locations in Arizona, Colorado, Florida, Maryland, Mexico, Tennessee, and Texas. Al-
though it was originally focused on food service, it has moved into retail, grown through numerous acquis-
itions, and boasts more than $1.3 billion in annual sales.
A handful of large publicly traded multinationals that initially sold tropical fruit grown on plantations
now also dominates fresh and packaged produce. Dole has its headquarters in California, is the largest pro-
duce company in the world, and employs sixty thousand full-time and seasonal workers to produce three
hundred products in ninety countries. Although the company's highest volume of sales comes from bana-
nas, it markets a large number of frozen, fresh, and packaged fruits and vegetables.
Chiquita Brands, previously known as United Fruit, not only is well known for its bananas but is also
the largest producer of greens for private-label brands, for which it competes with Dole. As one of the
largest processors of private-label canned vegetables, Chiquita sources internationally. One of its subsidi-
aries, Fresh Express Inc., leads the market in the consumer packaged-salad business, producing 40 million
pounds each month.
Nonetheless, even the largest suppliers of produce are affected by the market power of the retail giants.
Walmart, Kroger, Costco, and Safeway control more than 50 percent of grocery sales, giving them the mar-
ket power to dictate prices to suppliers. The largest retailers have streamlined and centralized purchasing
systems that require suppliers to provide high volumes of year-round produce. Facing added pressure dur-
ing the economic downturn, they are seeking to squeeze additional costs out of their supply chains.
Produce suppliers must pay a variety of fees, promotional allowances, and other charges beyond the cost
of the actual product to do business with the largest chains. Retailers require complicated sales arrange-
ments that include high-volume discounts and automatic inventory replenishment. They want services that
lower their costs, such as having bar-coded price lookup (PLU) stickers applied to the individual pieces
of produce delivered to their distribution centers. Each retailer has complex and different food safety re-
quirements, including the use of a range of third-party food safety certifiers. These companies specialize
in assessing a supplier's compliance with the grocery chain's standards.
This account management approach to sales includes chain-specific research on target customers, the
design of displays, the positioning and mix of products on the produce aisle, and the development of
branded value-added products, often targeting children. Produce suppliers and their trade associations are
even supplying research on demographics and the consumer psychology of buying different varieties of
produce.
Produce is important to these retailers, contributing 10 percent to 12 percent of their total store sales
and almost 17 percent of net store profits, according to Cook's research. They demand guaranteed high
volumes of uniform produce of a consistent quality—no blemishes allowed. The pressure that retailers put
on suppliers means that large and small growers are told what to grow to achieve a long shelf life and be
shippable. This compromises diversity, taste, and even nutrition, since vitamins decrease each day after
harvest. The grocery store tomato is a good example. It has been bred to be shipped, stored, and looked
at—not to be delicious or even worth eating for anyone who has tasted a tomato grown locally.
Retail chains have demanding requirements for specific packaging, transportation, cooling, and special-
ized containers. They often refuse shipments because they fail to meet a specific requirement. They are
particular about the appearance of produce: consumer research shows that freshness is an important factor
for consumers in selecting the place they shop. Produce departments are becoming larger and more diverse,
with many value-added products. Specialized packaged and marketed products, such as prewashed lettuce
or carrots and cabbage grated for coleslaw, increase profitability. Many retail chains use produce to attract